Fierce competition in the mobile retail space has claimed its first victim. The RP Goenka Group has sold its 50% stake in mobile and laptop retail chain RPG
Cellucom to joint venture partner Arun Nagar, founder and owner of Dubai-based Cellucom. Industry analysts peg the deal value at Rs 150-200 crore. However, this could not be independently verified. RPG group declined to provide details. While confirming the exit, a group spokesperson said, “This divestment is consistent with RPG’s focus on higher margin retail categories.” Cellucom is spread across Asia, Eastern Europe, South America and Africa. In October, Mr Nagar had announced plans to invest around Rs 300 crore on the India expansion, and said the company was adding 15-20 outlets every month. Currently, there are over 200 RPG Cellucom stores across the country, and the company plans to set up 500 stores by March 2010. It is expected that RPG Cellucom will rechristen itself to reflect the change in ownership. Cellucom, which is a mobile-and-IT product retail chain, has mandated Ernst & Young to find an Indian investor for the venture, said a source familiar with the development.
Showing posts with label rpg. Show all posts
Showing posts with label rpg. Show all posts
Saturday, December 20, 2008
Saturday, November 15, 2008
Spencer’s ties up with international apparel brand
Retail chain Spencer’s has signed an exclusive tie-up with international apparel brand Beverly Hills Polo Club (BHPC) and their collection will be available at Spencer’s stores located in 66 cities.“BHPC epitomises refined comfort and stylish elegance for today’s successful and confident Indian youth and we are very proud to associate with them,” Sanjiv Goenka, vice chairman of RPG enterprises said here at a press conference Friday.
Spencer’s, which is a part of the RPG group, already has a private label programme in fashion that has internationally acclaimed brands like Island Monaks and Mark Nicolas.
Goenka said: “BHPC covers a wide range of lifestyle clothing for both men and women. Fashion has been a significant segment in the evolution of Indian retail industry; not due to its size but the way it has influenced lifestyle.
“It was apparel that led multi- national brands to explore and invest in the Indian market, which set the ball rolling towards organised retailing,” he added.
Referring to the growing importance of fashion in Spencer’s retail business, Goenka said: “Fashion currently contributes 10 percent to the company’s revenue which is expected to increase to 25-30 percent in the years to follow.”
BHPC’s fall/winter collection comprises polo t-shirts, sweat shirts and sweat pants, casual shirts and trousers for both men and women. The merchandise starts at Rs.399 and goes up to Rs.1,499.
Spencer’s, which is a part of the RPG group, already has a private label programme in fashion that has internationally acclaimed brands like Island Monaks and Mark Nicolas.
Goenka said: “BHPC covers a wide range of lifestyle clothing for both men and women. Fashion has been a significant segment in the evolution of Indian retail industry; not due to its size but the way it has influenced lifestyle.
“It was apparel that led multi- national brands to explore and invest in the Indian market, which set the ball rolling towards organised retailing,” he added.
Referring to the growing importance of fashion in Spencer’s retail business, Goenka said: “Fashion currently contributes 10 percent to the company’s revenue which is expected to increase to 25-30 percent in the years to follow.”
BHPC’s fall/winter collection comprises polo t-shirts, sweat shirts and sweat pants, casual shirts and trousers for both men and women. The merchandise starts at Rs.399 and goes up to Rs.1,499.
RPG faces slowdown music in retail bazaar
NEW DELHI: RPG Enterprises, which runs Spencer’s, Music World and Books and Beyond retail stores, has slashed revenue target by 16-22% for its
retail business from Rs 1,800 crore to Rs 1,400-1,500 crore this fiscal on store closures and ‘challenging’ retail environment. “We closed 56 non-performing stores. Either the location of such stores was not good or we were paying very high rentals for the stores,” RPG Enterprises vice-chairman Sanjiv Goenka said, adding that the company didn’t intend to close down more stores. Spencer’s currently has 400 stores, including 32 large-format stores. Mr Goenka said company’s expansion plans remained intact, as it would spend Rs 2,500 crore on taking the total number to 750 stores by March ‘10. The company plans to add 50 stores by the end of the current fiscal. “The retail environment is challenging and the period up to March ’09 will be difficult,” Mr Goenka said, adding that a decline in inflation may prompt RBI to cut interest rates further fuelling demand from the beginning of the next fiscal. A stock market
turmoil, high rate of inflation and recent reports of job cuts have forced Indian consumers to defer purchases, putting pressure on retailers’ top line in the past six months. Diwali sales were weak at Spencer’s this year. “Earlier we used to have bumper sales on all 7-8 days leading up to Diwali. But this year, we saw such sales only on Dhanteras (two days before Diwali),” he said. Meanwhile, Spencer’s also announced a franchisee agreement with US-based apparel brand
retail business from Rs 1,800 crore to Rs 1,400-1,500 crore this fiscal on store closures and ‘challenging’ retail environment. “We closed 56 non-performing stores. Either the location of such stores was not good or we were paying very high rentals for the stores,” RPG Enterprises vice-chairman Sanjiv Goenka said, adding that the company didn’t intend to close down more stores. Spencer’s currently has 400 stores, including 32 large-format stores. Mr Goenka said company’s expansion plans remained intact, as it would spend Rs 2,500 crore on taking the total number to 750 stores by March ‘10. The company plans to add 50 stores by the end of the current fiscal. “The retail environment is challenging and the period up to March ’09 will be difficult,” Mr Goenka said, adding that a decline in inflation may prompt RBI to cut interest rates further fuelling demand from the beginning of the next fiscal. A stock market
turmoil, high rate of inflation and recent reports of job cuts have forced Indian consumers to defer purchases, putting pressure on retailers’ top line in the past six months. Diwali sales were weak at Spencer’s this year. “Earlier we used to have bumper sales on all 7-8 days leading up to Diwali. But this year, we saw such sales only on Dhanteras (two days before Diwali),” he said. Meanwhile, Spencer’s also announced a franchisee agreement with US-based apparel brand
Saturday, September 6, 2008
Hotspot and Mobile NXT new strategy
Organised mobile retailers like HotSpot and Mobile NXT have found a new way to deal with competition from mom & pop stores: make neighbourhood retailers their franchisees to sell mobile phones and accessories under their brand.
Currently, more than 70% of the mobile retail sector is unorganised and market analysts believe there is a huge potential for the franchise model. “The return on investment (RoI) for the franchisee is somewhere around 60-65%.
It will allow us to expand our presence and enter deep into the cities,” says HotSpot CEO Sanjeev Mahajan. HotSpot has recently adopted the franchise model with 25 stores operational in Delhi alone and has plans to expand to 100 such stores besides the 400 company-owned, company-operated (co-co) stores across the country.
“Customer experience and pricing is the crux of this business. Therefore, we provide stock management, professional training for the in-store sales team, and an after-sales customer support at all our franchised stores. The role of the franchisee is restricted to the operational level,” says Mobile NXT CEO Vijay Menon.
Mobile NXT adopted the franchise model in tier-II and tier-III cities across India in 2007. The company operates more than 55 stores all over the country.
Mr Menon, however, concedes that the franchise model in mobile retailing is difficult to adopt since there is no uniqueness in the product and the return on investment is not very attractive.
That is why players like Subhiksha and Mobile Store are refusing to join the bandwagon. They believe the franchise model is not profitable at this stage, given the low profit margins and low market penetration.
“We are concentrating on a co-co model based on pricing. We don’t think franchise model is the way to go, since the business already accounts for low margins; expanding through franchise would dent the margins further,” says Subhiksha president-marketing Mohit Khattar. Subhiksha operates the largest chain of mobile stores with around 1,300 stores all over the country.
Mobile Store CEO Rajiv Agarwal also feels that the franchise model in the current scenario does not hold much ground. “There is the risk of our brand value being diluted. This is a business where you cannot allow your service proposition to get diluted,” says he. Mobile Store has significant presence in the country with more than 800 stores.
However, RPG Cellucom head-marketing Biswajit Pandey feels that with improving margins and marketing strategies, the franchise model may take the front stage in future. The company currently operates over 25 stores.
“It’s a win-win situation since it allows rapid expansion and presence in local areas for the franchiser and an opportunity for the traditional retailer to enter the newfound trend of organised retail. Moreover, the operational costs in case of franchise model is low in comparison to co-co model, giving both the parties a better RoI,” says global management consulting firm Technopak chairman Arvind Singhal.
Currently, more than 70% of the mobile retail sector is unorganised and market analysts believe there is a huge potential for the franchise model. “The return on investment (RoI) for the franchisee is somewhere around 60-65%.
It will allow us to expand our presence and enter deep into the cities,” says HotSpot CEO Sanjeev Mahajan. HotSpot has recently adopted the franchise model with 25 stores operational in Delhi alone and has plans to expand to 100 such stores besides the 400 company-owned, company-operated (co-co) stores across the country.
“Customer experience and pricing is the crux of this business. Therefore, we provide stock management, professional training for the in-store sales team, and an after-sales customer support at all our franchised stores. The role of the franchisee is restricted to the operational level,” says Mobile NXT CEO Vijay Menon.
Mobile NXT adopted the franchise model in tier-II and tier-III cities across India in 2007. The company operates more than 55 stores all over the country.
Mr Menon, however, concedes that the franchise model in mobile retailing is difficult to adopt since there is no uniqueness in the product and the return on investment is not very attractive.
That is why players like Subhiksha and Mobile Store are refusing to join the bandwagon. They believe the franchise model is not profitable at this stage, given the low profit margins and low market penetration.
“We are concentrating on a co-co model based on pricing. We don’t think franchise model is the way to go, since the business already accounts for low margins; expanding through franchise would dent the margins further,” says Subhiksha president-marketing Mohit Khattar. Subhiksha operates the largest chain of mobile stores with around 1,300 stores all over the country.
Mobile Store CEO Rajiv Agarwal also feels that the franchise model in the current scenario does not hold much ground. “There is the risk of our brand value being diluted. This is a business where you cannot allow your service proposition to get diluted,” says he. Mobile Store has significant presence in the country with more than 800 stores.
However, RPG Cellucom head-marketing Biswajit Pandey feels that with improving margins and marketing strategies, the franchise model may take the front stage in future. The company currently operates over 25 stores.
“It’s a win-win situation since it allows rapid expansion and presence in local areas for the franchiser and an opportunity for the traditional retailer to enter the newfound trend of organised retail. Moreover, the operational costs in case of franchise model is low in comparison to co-co model, giving both the parties a better RoI,” says global management consulting firm Technopak chairman Arvind Singhal.
Tuesday, August 12, 2008
Vishal Retail offers good potential
Vishal Retail, one of the leading and growing companies in manufacturing and retailing of readymade garments (apparels), non-apparels and FMCG products, is a pioneer in discount retailing, focused on tier II and III cities in the country and is expanding its operations at a rapid pace. It operates in the industry which has posted tremendous growth numbers led by value retail and driven space addition and better growth in the existing stores over the last five years.
The company endeavors to facilitate the one-stop convenience with reasonably-priced products manufacturing at its own plant in Gurgaon, Haryana, Dehradun and Manesar with a capacity of 5,000 garment pieces per day in each unit.
The company has added of 3 million pieces per annum of garment manufacturing capacity in Dehradun and Manesar, 9 new warehouses with an area of 581,640 square feet and also implemented modules of SAP with an investment of around Rs 75 million.
The company plans to diversify the portfolio from apparel segment which accounts 61.2% of product mix to FMCG and non apparels both of which have a share of around 18% in folio mix. It has recently entered into an agreement with HPCL for opening retail outlets (store size varying from 500-1,000 sq ft) at selected fuel stations (around 1,000-1,500 locations). As per the contract, HPCL shall provide space to the company for either retail stores or warehousing at its mutually selected retail outlets. Launch of loyalty cards to attract customers, particularly females is also under planning process.
| Vishal Retail | |||
| Particulars | 2007 | 2008 | % Change YoY |
| Sales * | 6026.50 | 10053.10 | 67.00 |
| Net Profit * | 250.70 | 406.96 | 62.00 |
| EPS | 14.00 | 19.00 | 36.00 |
| EBIDTA | 694.30 | 1291.00 | 86.00 |
| Debt/equity | 1.9 (x) | 2.0 (x) | |
| *Sales, Net profit and EBIDTA in Rs million | |||
Vishal Retail registered a rise of 62% in net profit after tax at Rs 406 million for the financial year 2008 as against Rs 250.7 million in the previous year. The company reported earnings of Rs 19 a share in the year as against previous year`s earnings of Rs 14 a share. The total revenues of the company has increased by 68% from Rs 6,050.4 million to Rs 10,144.6 million for the period in comparison due to addition in retail space and increased footfalls.
During the fiscal 2008, EBIDTA margin has surged by 86% to Rs 1,291 million. The operating margin of the company seems to be under pressure due to organic expansion in manufacturing and human resource department, while strong network and rise in contribution from private labels can prove to be boosters for the same.
The total number of stores of the company has reached 126 stores spread across India, covering an area of 2,392,000 square feet. It has also maintained it consistency in customer service and operation which can be seen through rise of 2.03 times in daily footfalls at 182,396.
Vishal Retail has witnessed a rapid growth rate during the current financial year. Its garment manufacturing capacity is now around 4.5 million pieces per annum. With addition of new warehouses, it now has 29 warehouses with a space of 1.1 million square feet located in 8 key distribution centers and a fleet of 98 trucks and lorries.
All company locations are now linked through a company-wide VNC (virtual network connection) and video conferencing together with hotlines to provide online connectivity. This can be attributed to the implementation of SAP module with an investment of around Rs 75 million.
The Delhi-based company plans to open 70 more stores at a cost of around Rs 7 billion by the end of this year for which it is planning to raise around Rs 2 billion through a private equity route, while the remaining fund will be arranged through debt.
Vishal Retail is currently trading at a price of around Rs 390.40 a share. Shares of the company are trading at huge discount when compared with its peers. The company is valued at 20.55 times of FY2008 earnings.
However, the company faces significant competition in the retail industry. The competition can be faced from prominent players like Pantaloon Retail, Shoppers` Stop RPG, Trent and Lifestyle. Barring Kolkata, all the properties of the company are leased or licensed in company`s favor under various agreements. Disputes that may arise with owners of such properties may affect the profitability of the company. Raw materials including fabric are sourced from external suppliers, which constitute the largest component of manufacturing costs for garments. Rise in these input cost amid higher rate of inflation can dent the margins of the company.
To conclude, players focusing on value retail have grown much faster than those focused on lifestyle. The retailers are expected to pump in over USD 25 billion into the sector over the next four years to scale up their retailing operations and strengthen back-end systems. According to a research study, the domestic retailers who enjoy early entrant advantages at key retailing locations can look to gain a pan-India presence.
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