Circuit City files for bankruptcy

Circuit city Stores, the No 2 US consumer electronics retailer, filed for bankruptcy protection on Monday, falling victim to tighter credit terms from vendors and a loss of market share to Best Buy, Wal-Mart Stores and other rivals.The retailer and 17 affiliates filed for Chapter 11 protection from creditors with the US bankruptcy court in Richmond, Virginia.

Circuit City filed a week after saying it would close 155 stores, or more than one-fifth of its retail base, and eliminate 17% of its US workforce. It also said it was considering all options to restructure. The company had lost money in five of the last six quarters.

In recent weeks, suppliers pinched by the global credit crunch have tightened terms, sometimes requiring up-front payments before shipping goods. Best Buy has said it might take over stores that distressed rivals close. According to the filing, Circuit City had $3.4 bn of assets and $2.32 bn of debts as of August 31, and more than 100,000 creditors.Among the company’s largest unsecured creditors are HP, Samsung and Sony, the filing shows. The largest shareholders include HBK Master Fund and First Pacific Advisors.

Reliance Retail’s JV with UK logistics co Wincanton falls through

The high profile joint venture between Reliance Retail and the UK-based supply chain powerhouse Wincanton which was to manage RRL’s transportation, warehouses and inventory have been called off. According to The Economic Times report, the reason cited for the fall off was that RRL was unlikely to meet its initial growth projections and generate expected volumes.

RRL and Wincanton had signed an MoU and negotiations had reached advanced stages. The talks, however, were derailed after Wincanton saw a gap emerging between its expectation and what was being rolled out on the ground in terms of RRL’s expansion. In November 2006, India’s largest conglomerate Reliance Industries announced its foray into consumer retail with Rs 26,000-crore investment.

The company has also initiated a slew of measures to tide over the current crisis, perpetuated by a slowdown in Indian retail consumption and global financial turmoil. The company has recently reduced the size of its Ahmedabad hypermarket by two-thirds and initiated several cost-cutting measures. A senior source pointed out that some tough measures are on the anvil yet again.

RPG group to set up JV with leading international food chain

The Harsh Goenka-spearheaded RPG group is close to finalising a joint venture with a leading international major to set up a coffee shop-cum-specialty-food chain in the country.The RPG group will hold a majority 51 per cent stake in the joint venture.

The JV will be run under the brand name of the international major and the agreement is expected to be inked shortly adding that the first chain of 15-20 outlets would be set up in Bangalore.

The RPG group plans to set up 250 such outlets in other major metros and cities over time.However the identify of the international major could not be known. The RPG group is a highly-diversified conglomerate with interests in tyres, retail, IT, power, telecom and power transmission and plantations.

The business plan for the venture is presently being fine-tuned.The business' concept would be more or less similar to those of other chains such as Barista or Cafe Coffee Day but the JV would give a strong focus to food offerings unlike other chains.

Indiabulls to invest Rs 10 bn in retail biz

Indiabulls Real Estate Ltd plans to invest 10 billion rupees to expand its retail business in the next 2-½ years.The real estate firm, which also houses the group's retail and power businesses, expects lease rentals of 10 billion rupees from two of its properties under development in Mumbai by the end of the next financial year.

The finance firm plans to launch its first mutual fund scheme by October.The Indiabulls group plans to focus on agri-based spot trading for its proposed commodity exchange, which is awaiting approval from the commodities market regulator.
Currently, all the three commodity exchanges only offer trading in futures.

Turtle looking to offload 20% stake

Shirt manufacturer Turtle is on the lookout for a strategic investor to offload 20% equity. The company will use the proceeds to part-fund its expansion plans.The idea is to not only garner funds but also look at an investor who would also buy in bulk from the company.The company is reportedly in talks with a large home-grown retail chain or a US-based investor.

The company will require about Rs 14 crore in 2008-09, of which about Rs 6 crore will fund its retail expansion plans while the rest will feed its working capital requirements.Apart from a stake sale, the company is looking at a debt component for raising this quantum.Turtle is now also eying Fiji Islands and Saudi Arabia. The brand already has a presence in Dubai.

Turtle has one plant in Bangalore and three in Kolkata with a combined manufacturing capacity of 1.8 million pieces per annum. Shirts form 70% of Turtle’s product portfolio. The rest comprise trousers, T-shirts and accessories.

Turtle forward integrated into retail in 2004 and is now present in 380 cities. However, now it is aiming at a deeper retail penetration to capture a larger slice of the Indian consumer’s mindspace.As part of this blueprint, it is setting up marketing teams for each state to support its distribution channels. It has also tied up with lifestyle stores like Indiabulls Mega Stores, Globus, Shopers’ Stop and Pantaloons for greater visibility.

Read more in
The DNA Money article

Future Capital picks up 28% in Sankalp Stores

Future Capital, the financial arm of Future Group, has picked up an estimated 28% stake in Sankalp Retail Value Stores, a franchisee of the US-based discount format, My Dollarstore. The discount format will now be a part of Pantaloon Retail’s larger strategy to set up imported bazaar concessions as a shop-in-shop concept in its hypermarket, Big Bazaar.

A team of Big Bazaar is working on setting up the new format which will offer a huge array of imported products at reasonable rates. Anil Biyani, Kishore Biyani’s younger brother, is likely to be in charge of imported bazaar, sources said. The format is also expected to help scale up the profit margins in Big Bazaar.

Read more in The Economic Times article.

Bharti eyes Big Apple as starter for retail feast

Bharti Enterprises, slated to start its retail business in the first quarter next year, may acquire Big Apple — the Delhi-based supermarket chain with 65 stores. Bharti’s acquisition blueprint in the retail sector may be a replay of its telecom business, where the group built up a pan-India mobile presence by acquiring telcos such as JT Mobile in Karnataka and Andhra Pradesh, Skycell in Chennai and Hexacom in Rajasthan.

A senior source said the Bharti Group and Big Apple are at fairly advanced stages of negotiations and if price expectations match, the deal could be sealed as early as next month. He also said Big Apple has quoted its price and Bharti has given a revised offer.

Read more in The Economic Times article.

Indiabulls to Open 30 Hypermarkets

After consumer finance and real estate, the Indiabulls Group is set to step into the retail business. Indiabulls Wholesale Services Ltd, a subsidiary of listed firm Indiabulls Real Estate Ltd, will set up 30 hypermarkets across as many smaller cities in the country in the next 15 to 18 months with an outlay of Rs 1,500 crore.

The first of these stores is expected to come up by March/April 2008 in one of the three cities the company is targeting simultaneously, confirmed Indiabulls director Gagan Banga.

These large-format stores, spread over 100,000 to 150,000 square feet, will be modelled on the lines of Costco Wholesale stores in the US, which operates the largest membership warehouse club chain in the world.

Read more in The Business Standard article.

Indiabulls Group firm to diversify into retail, power, telecom

Property developer Indiabulls Real Estate (IREL), a part of the Indiabulls Group, on Wednesday announced its plans to foray into the power, retail and telecom businesses.

IREL plans to open 30 stores in the initial phase which would sell household items in Tier-II and Tier-III cities of the country.On the 500 MW power project in North Maharashtra, Banga, Spokesman for IREL said the construction work would commence soon and the plant would go on stream in two years.Moreover, IREL has also applied for licences to launch telecommunication services in 22 regions of the country.

Meanwhile, in a filing to the Bombay Stock Exchange (BSE) today, IREL said it will issue 4.3 crore convertible warrants within the next 24 months to its three promoters and two Joint Managing Directors to garner Rs 2,322 crore to fund these proposed ventures.Company Chairman Sameer Gehlaut will invest Rs 1,080 crore and would be allotted two crore warrants, it said in its release.

Read more in The Economic Times article.

Koutons to raise Rs 146 cr in IPO

Leading apparel manufacturing company Koutons Retail India on Friday announced that it would set up an integrated manufacturing facility at Gurgaon in Haryana to augment its production capacity.

It would also set up its exclusive brand outlets throughout the country, Koutons Retail India Chairman D P S Kohli told reporters here today.

He said to fund these projects the company would be coming out with an IPO, which opens on September 18 and closes on September 21.The company proposes to raise up to Rs 146 crore through a 100 per cent book-building process by issuing 35.24 lakh equity shares of face value of Rs 10.The price has been fixed at Rs 370 to Rs 415 a share.

Yatra invests Rs 38 crore in Modi Build-Well

Euronext-listed Yatra Capital will invest ¤6.75 million (nearly Rs 37.86 crore) in a joint venture (JV) with Ahmedabad-based Modi Build-Well. The JV will develop a 5.90 lakh sq feet shopping mall in Bhavnagar. Modi Build-Well (MBL) is a subsidiary of the Himalaya Group based in Ahmedabad.

Approximately 30 per cent of the shopping mall has already been pre-leased to leading retail brands including Pantaloons, Globus, Big Bazaar and Adlabs, a release from the company said.

The current investment is fifth among the company’s Indian investments with other being investment in properties in Pune, Nasik and others. Following this, Yatra has invested euro79.32 million of the euro100 million that it raised in December 2006.

Read more in The Business Standard article.

Primus Retail acquires Weekender

Primus Retail, one of the leading small format retail chains in India, has acquired lifestyle brand Weekender from the Jagadish Hinduja family, the owners of Gokaldas Images.

Speaking on the acquisition, Primus CEO Balaji said:“Besides expanding our retail network, we have been looking at inorganic opportunities and acquiring a brand like Weekender will help us in expanding our portfolio, allowing us to consolidate our position as a leader in the apparel and small format retail industry.”

According to the release issued by Primus, Weekender has more than 50 stores including outlets in department stores. Primus plans to renovate the existing stores and plans to add more stores in the next 12 months.The deal size was not disclosed.

Spencer's in talks with global retailers for JV

Spencer's Retail, promoted by the Rs 11,500 crore RPG Group, is in talks with international retailers for a possible joint venture in India.Spencer's is also planning to introduce new formats and could explore the JV route to launch them.

"The new JV will not be in food retail since our existing formats function in that area. We are talking to couple of international players. The new venture will be consolidated by the group. Hopefully, we will be able to take a call on the new venture in a couple of months time,'' said Goenka.

Spencer's currently has 250 outlets across 40 cities. The company would
open 500 stores in the next 12 months and 600 stores an year after, he said. The company is planning to invest Rs 1,100 crore to expand its network of stores.

The company will use a mix of internal accruals, debt and equity to fund expansion plans."We will take a call on the initial public issue in the next 6 months," he said. The company expects a turnover of Rs 2,500 crore to Rs 3,000 crore a year in the next two years. Currently, its sales stand at Rs 750 crore.

Subhiksha to offload 10% in IPO

India’s largest chain of discount supermarkets, Subhiksha Trading Services Ltd, plans to offload a 10% stake in an initial public offering this fiscal year to fund its expansion programme as organized retail takes off in the country.

The promoters, who currently hold 65% of the stake in the company, will dilute their stake to 58%; investment firm ICICI Venture will pare its share to 29% from 32%; and the employees’ share will come down to 2.5% from 3%, according to R. Subramanian, managing director of Chennai-based Subhiksha, which currently operates some 700 stores that sell everything from mango to medicines.

Subramanian declined to say what he valued the company at or how much money the company plans to raise by off-loading the 10% stake. A spokesperson for ICICI Venture wasn’t immediately available for comment.

The company has been on a rapid expansion mode this year opening hundreds of stores in various parts of the country. Earlier this year, Subhiksha raised around Rs500 crore as part of the expansion plans to take the number of its stores to 1,000 by the end of the year. The company, which started out in 1997 as a single store, generated Rs803 crore revenue in the year ended March and is targeting Rs2,200 crore in sales this fiscal year.

Read more in The Livemint article.

Aditya Birla group to do retail business on its own

The 24-billion dollar diversified Aditya Birla Group on Friday announced its entry into domestic organised retail market with an investment of up to Rs 9,000 crore over three years to set up 1,000 supermarkets.

The group, which has interests in telecom, cement, textile and aluminium, had in January acquired control of the Trinethra supermarket chain in its run up to the retail foray.

Its retail stores would be christened 'More' and the first outlet would be opened in Pune this month.

While ruling out the franchisee model for the business, Birla said that the group would be setting up 1,000 super markets over the next two years of about 10,000 sq.ft each. The retail outlets will be in two formats -- hypermarket and supermarket, Birla said.

Read more in DNA Money article.

Grasim plans 30 new outlets by year-end

Apparel manufacturer Grasim Industries is planning to increase its exclusive brand outlets to 75 from the existing 45 by the end of this year, as the company eyes to capture a significant share in the domestic textile market.The company plans to extend the brand to all parts of the country and would penetrate Tier-I and Tier-II cities through these exclusive outlets.

The company had recently increased its garment manufacturing capacity to 18 million tonnes per annum from 15 million tonnes and would adopt international production
measures to suit international markets.

Grasim on Thursday appointed Bollywood actor Akshay Kumar as its brand ambassador and will come up with a TV commercial featuring the star by July-August.

Speaking on the global textile industry, Krishnamoorthy Grasim Industries President and Unit Head said, Indian garment market is expected to have a 15 per cent share in the global market by 2010 from the present 3-4 per cent.