RPG retail firm plans public float

Giant, the retail chain of outlets from the RPG stable, is set to make an initial public offer that will bring down the Goenkas' stake in the company by 20 per cent.

The IPO will be used to part finance the Rs 200 crore (Rs 2 billion) expansion plan that the company has firmed up for the next one year.

The balance fund will be in the form of debt from banks and financial institutions.

At present, Spencers and other RPG group company hold the entire equity stake in Giant, which is close to Rs 20 crore (Rs 200 million).

Ernst & Young has been mandated the task of studying details of funding pattern of retail outlets.

The issue price and other details are, however, yet to be determined.

"Premium the IPO can command will be a direct factor of the number of outlets we have, prior to the issue. Hence, we will set up as many outlets as we can before the issue hits the market," explained Sanjeev Goenka, vice-chairman of RPG Enterprise.

The company has, in fact, lined up 14 Giant outlets by 2005 four of which will be in Kolkata.

"We intend to open two Giant stores each in Mumbai, Delhi and Chennai. Cochin and Hyderabad will have one each," Goenka said.

"We will open two Giant outlets in Kolkata at an investment of Rs 50 crore (Rs 500 million) soon. One of this will be on a 125,000 square feet area in southern Kolkata, while the other will be a relatively smaller one at 45,000 square feet," he said.

The company has also entered into an understanding with Indian Institute of Technology, Kahargapur, for developing organic varieties of fruits and vegetables.

"At present IIT along with RPG has set up a pilot project over one acre of land for producing organic fruits and vegetables. If this project succeeds we will enter into a memorandum of understanding with IIT for procuring vegetables and fruits grown over a much larger area that will cater to the demand in our stores," Goenka added.

"This will be our backward consolidation for the Giant chain of outlets," he said.

The project is aiming at reducing the product cycle to three months for fruits such as mangoes and papaya.

The project will also help us procure exotic vegetable and fruits such as broccoli, baby corn and passion fruit.