His unassailable slot as the king of India's organised retail looks shaky with the buzz picking up around Reliance's [Get Quote] mega retail plans.

Kishore Biyani, chief of Future Group (formerly Pantaloon [Get Quote]), says he's targeting to increase his group's turnover from Rs 2,000 crore (Rs 20 billion) now to over Rs 30,000 crore (Rs 300 billion) in the next four years.

Though many believe the group doesn't have the funds to make the investments needed to achieve this level of turnover, Biyani insists funds are not an issue. Sitting in his sparsely furnished office in downtown Mumbai, the 45-year-old CEO tells Shyamal Majumdar that the biggest challenge for him is managing the speed of India's retail growth and catering to the "the greeds and needs" of young consumers. Excerpts:

Is India's largest retailer worried about the imminent entry of large players like Reliance?

I never said I am the number one retailer in the country. I will be quite happy if I remain a formidable player. Competition will certainly make the market more interesting. Fortunately, we have the early mover advantage and are willing to learn every day.

You have been talking to Reliance Retail till recently. How did the talks progress?

I suppose it's not uncommon for friends to talk to each other in informal forums.

Is the market large enough for so many players?

The market can accommodate many players and Reliance is just one of them. Look at the figures. Organised retail constitutes just about 3 per cent of total retail in India, and is poised to reach 15-20 per cent in the next few years, which translates into a 40 per cent annual compound growth.

Since value retailing touches the mass of the population, it has the scope to almost double. For me, consumption is equal to development and retail will play a role in accelerating India's economic growth. The big challenge is managing the speed of growth.

You announced your decision to raise close to Rs 1,000 crore (Rs 10 billion) last week. This is nowhere near what is needed to meet your turnover targets. Aren't you being too ambitious?

This turnover is not going to be achieved only through retail. It includes financial services and others as well. The financial services business alone can earn annual asset management fees of around $20 million. Significant cash flow will also come from leasing out 90 per cent of the mall space to others, at a profit.

I will use only part of it. If I am able to convert even a negligible part of my footfalls to customers of my insurance business, there will be huge fees on distribution.

We will raise close to Rs 1,000 crore (Rs 10 billion) over the next 18 months. While Rs 500 crore (Rs 5 billion) will be raised by divesting stake in some subsidiaries, we are also looking at a preferential allotment of around Rs 200 crore (Rs 2 billion) and a follow up issue of around Rs 260 crore (Rs 2.6 billion).

Money is not a problem for us but we have to raise it judiciously in view of our aggressive plans.

Last year, we acquired 4 million square feet of retail space, we will acquire another 4 million square feet this year. The next year's plan is to buy 7 million square feet more. All of this has been booked at rates far below the current costs at which our competitors will have to buy space.

By 2010, the total space in our fold will be over 30 million square feet. As a strategy, we have always been aggressive on land and opening up of new stores. We are planning over 3,000 new stores by 2010 from 140 now.

What's the rationale for the diversification into insurance and other such sectors?

Every retailer in the world has only one vision - to capture the highest share of the consumers' wallet. I am just following that. We are in the consumption space - acquisition of new customers, be it in insurance products or washing machines - and our job is to facilitate that consumption through better lending.

The point is we are not doing it alone. There are organizations, which have the expertise and we are going to enter into economically beneficial partnerships with each of them.

For example, we have tied up with one of the world's largest insurance companies. We will do the same in the personal lending space also. We are talking to a few players right now.

You are still perceived to be a big city player. Is that assessment fair?

People keep saying this without realising that we are already in 29 cities and will be in 45 by December 2007. By 2010, we will expand to 85 cities and towns. We entered organised retailing with the first Pantaloon store in Kolkata - not a top-of-mind business location for anybody at that time. Today, Kolkata alone has the potential to give us Rs 1,000 crore (Rs 10 billion) business.

Big Bazaar has been accepted as a fashion value-format across India. When we ventured into cities and towns such as Sangli, Durgapur, Nasik and so on, we were surprised to see the rising consumerism there.

Your margins are under pressure and your cash flow is negative. These must be big concern areas.

It's a challenge and we have already put strategies in place. For instance, fashion garments give us the highest margin, and we have already raised their proportion to almost 40 per cent of the total sales at Big Bazaar outlets.

That's evened out the overall margin scenario. We have big plans to increase our presence in fashion through private labels, which already comprise around 65 per cent of the total fashion labels sold through our outlets.

Profit margins on private labels are at least 10 per cent higher than those on outside brands.