Thursday, January 4, 2007

Birla group’s retail arm buys Trinethra supermarket chain

Aditya Birla Retail, the unlisted retail arm of the diversified Birla group, has acquired Hyderabad- Trinethra Super Retail and its online shopping outfit Fabmall. The India Venture Fund-owned Trinethra Super Retail was founded in 1986 and is Southern India’s fastest-growing grocery retail chain. It has over 2500 employees and is headed by former Reckitt & Benckiser MD Pranab Barua. The Trinethra group has annual revenues of about Rs. 250 crores and has over 172 retail outlets spread across the four states of Andhra Pradesh, Kerala, Karnataka and Tamil Nadu. While the Trinethra brand is used in Tamil Nadu and Andhra Pradesh, in Kerala and Karnataka it is known as Fabmall.

The Birla group has been concentrating only on supermarkets and hyper-markets, the two formats in which the Hyderabad-based retail chain has a strong presence. Although the financial details of the Birlas’ retail business isn’t clear, it has been reliably learnt that the group would pump in Rs. 5000-Rs 6000 crores at least in the initial phase, which could be subsequently ramped up once the business grows.

The financing for Birla’s retail plans may come from its unlisted units. Birla TMT Holdings, an unlisted company, is likely to part finance the investment, while some debt could also be raised. Recently, the Birla group, via Birla TMT, had raised close to $980 mn by selling about 33% of its equity stake in telecom unit Idea Cellular, to about six private equity firms.

Retail is being touted as one of the fastest-growing sectors in India with potential market size estimated at about $300 bn. A recent PriceWaterhouseCoopers study estimates the size of organized food retailing in India at about $666 million and is expected to grow at about 30% every year. The growth will be largely driven by new large format stores like hypermarkets and supermarkets. The Trinethra chain of stores is primarily focused on food and groceries.

Read The Economic Times article.

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