Aditya Birla Retail upbeat on private label business

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Aditya Birla Retail Ltd (ABRL), the retail arm of the $29.2-billion Aditya Birla Group, is bullish on its private labels business. The business, which currently contributes around 19% to the total revenues of the company, is expected to touch 30% over the next two years. This would be across verticals like FMCG, apparel and general merchandising, as private labels give a minimum of 10%-15% better margins compared with similar brands.

Launching its eighth hypermarket in Hyderabad which is spread over 53,000 sqft, Thomas Varghese, CEO, said: “Our strategy is to focus more on private labels as this is bound to increase our brand profile such as Feasters, More, Pestex, Enriche, etc.”

Currently, the portfolio covers 54 categories and has over 290 products in processed food, home care and personal care. It also has an additional 200 products in five categories of staple foods such as cereals, flour, pulses, sugar/salt, spices and edible oil. In due course, the company is planning to introduce private label brands in consumer durable and electronics as well.

The company has set a target to open 10,000 super markets and 64 hyper markets by 2015 with an investment of Rs 4,500 crore.

“By 2012, we want to be Ebidta-positive,”’ he said. The company hopes to clock a turnover of Rs 8,000 crore by 2015. The growth of the group was fuelled by acquisition of Hyderabad-based Trinethra Super Retail and Fab Mall in December, and the chain, now under the brand name More, has over 524 stores across 12 states.

Talking about foreign direct investment in the retail industry, Varghese said, “We are open to strategic partnerships once FDI is opened up.”

As per CII projections, the growth in the $400-billion retail industry is expected to touch 14% by 2013 from 6% at present, and there is room for more when the FII portfolio investment is allowed.

On acquisitions, Varghese said that ABRL is looking at small boutique players. “We are open to acquisitions and are currently evaluating certain regional players,” he said hinting that the focus would be more on Southern markets.

Source: The Financial Express

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