Monday, August 14, 2006 01:52:45 pm
Q: The Economic Times is talking about how Lalu Prasad Yadav (whose pet project is public-private partnership) wants to make use of the vast tract of land available with the railways and wants to get into JVs with retail players. I believe your name is also as one of the potential candidates. What are your comments? A: In retail we have to expand everyday and have to be where the people are. The railways’ properties do definitely provide the opportunities for serving the customers. So if opportunities like these emerge, we have to seize them. Q: Are there tremendous opportunities, because railways' have a lot of land and I think that is the most attractive thought of the day? A: I think retail is all about location. And if that location is good enough for us and the consumers find it convenient to come there, then that opportunity could be explored. Q: How is the retail space in India emerging overall? What do you think of Reliance's mega plans of getting into retail? A: In India, organised retailing is in its infancy stage, that is, it is in the first stage of growth. The organised retail as we call it is only 3% of the total retail. So the market is huge. Secondly I believe, the 200 billion consumption market can go up to 250 billion if we can all start consuming value added products, which only a modern retail can provide. So I think the growth will come out of consumption. Then again, consumption will increase due to the growth which is happening, plus the organised and disorganised players' shares which can change. So I believe there is a lot of room for players to come in. We all are expecting a change, which I believe, makes the market more interesting. Q: Are you not worried about the fact that Reliance is talking about 1 lakh crore of turnover. Are you not worried about competition from Reliance? A: We are worried about everything that happens in the market place. But we are confident about ourselves and we believe that we understand the road that we have taken. We know the journey and this is helping us to go wherever we are going. Q: In July 2006, you had said that your expansion plan is about 30 million sq ft of retail space by 2010 and that you want to up your employee number from 13 thousand to 2 lakh. Can you tell us how this is going to be possible over the next 4 years, especially because it is a huge expansion amount that you are referring to? A: We have assigned a lot of property. About 16 million sq ft of retail space is already assigned which will come up by 2010. In addition, our real estate fund is also developing some retail space - a part of which will probably be the tenants. So there are lot of properties that are emerging which will take us to 30-40 million sq ft. Thus, with the kind of business that we have developed, we should be able to reach that mark. Q: So do you mean to say that the real estate cost will not influence, now that you have already started to forward contracts. Do you believe that your company will be insulated from the escalating real estate prices? A: Absolutely. Probably, we saw this coming a little early and we got into real estate acquisitions much earlier than everybody else and we had the opportunity also. So, now I think that opportunity should pay us some dividend in the long run. Q: We have been hearing about reports stating how small unorganised players in Rajkot want to take on the mights of Reliance and Pantaloon? Do you see this as a threat for the moment? A: What these retailers did was very interesting. I also read the report about how they want to get organised and bring in modern visual merchandising techniques. I believe these retailers have taken up the competition in a very proactive manner. We are there in Rajkot. We have opened our stores Bug Bazaar and Pantaloon. But I think the smaller players always have the best chance of doing better than us. I say this because they are the locals who know the business, the market and the geographies better. Hence I think this is very proactive movement on the part of these small retailers. Q: Is there an effort on part of Pantaloons to get these unorganised players into organised sectors? Is there some kind of understanding? A: This is a continuous process. But I believe if any retailer, whether big or small, is psychologically stronger, then he has a chance of doing better, as the markets are getting bigger and everybody will have a role to play. Q: Several global firms with lot of expertise in multiplexes and retails are coming in the country. In this regard, do you have any specific plans such as talks or Joint Ventures (JVs)? A: We always look at opportunities and in this case we look at businesses, which we are not aware of. Hence there is faster learning curve here. Then we join hands with people who know the business. In this way, we have done interesting tie-ups with Liberty, Gini & Jony, with Manipal on health care and with Talwalkars on gyms. So we tie-up with a lot of people, especially in business which we don’t know. Q: There were reports that there are foreign brands and that you are in talks with them. Please comment. A: I believe everybody talks to us, because everybody needs sales space to sell their products. So we sell everybody's products, because as retailers we have to give what consumers want. Q: Is there any specific targets on the number of brands that you would like to tie-up with on an understanding that they will sell through your outlets? A: Yes, we have targets, which are internal targets that are generally about what categories we want to build in, what brands we want to deal in, how much space can we allocate. So that's a category manager's job to understand this part of business. When we look at larger opportunity, we look at strategic and business alliances. Q: Your sales for the month of June were about 52%. Also just 3 quarters ago, you had said that you want to grow by 100% CAGR. Are you well on the track? What are your financial targets? A: Considering the property that is going to come in, I think we should be touching the 100% levels. Q: The other thing is of course the marginal sales per sq ft. How is that shaping up? A: In margin, there is a process of considering in our balance sheet as to what is the product mix that we sell, how much is the food portion, how much is the fashion portion, etc. This year, we are putting a lot of emphasis on fashion. So, if that works well, our margins can improve a lot. Q: Food vs fashion - what is the most lucrative balance? A: We want fashion to be around 45-50% of our revenue this year. And if we are able to do that, the margin levels can improve. |
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