Home Store to tap Capital Market

Asia's largest one stop retailer of home products, The Home Store (THS) promoted by the Shahid Group, is planning to tap the capital markets to raise part of the funds for massive expansion and consolidation plans, which need anywhere between Rs 300 crore to Rs 700 crore.

The company, which stocks 37,000 kinds of products under the THS roof, is already talking to three venture capitalists to raise funds for diversifaction into various retail formats including hypermarkets, failing which it will go for an IPO in March 2002, Mr Arif Shiekh, president of THS told ET. "THS is a debt free company and we are a little apprehensive of tie-ups with VCs.

But, the company has achieved 2,980 per cent growth in a year and VCs have responded very positively. We might go with one of them in case everything works out fine," he said, without identifying the VCs.The company, which manufactures and sells products pertaining to all sections of the home -- dining, living, bedroom, kitchen, lighting, flowers, gifts, etc -- needs funds for various projects.

These include at least Rs 300 crores for six hypermarkets it plans to build in the National Capital Region of Delhi. Part of the funds are for expansion of THS to a 30-store chain from the current 22. The company plans to add one more store, to the existing seven in Delhi, one more to the existing two in Bangalore, at least two stores in Chennai this month, three in Hyderabad, and a store each in Cochin and Coimbatore next year. Each store envisages investment of Rs 80 lakhs to a crore.

THS also needs to raise capital for setting up the home section of the departmental stores in the Fun Republic, integrated family entertainment centres being set up by E-City Entertainment India, prmoted by the Zee Group.

"This tie-up for at least 26 Fun Republics all over the country, will also need finance," Mr Shiekh said. The company is also in talks with three major real estate companies in India for developing shopping malls, and has achieved a principal agreement with the Ansals, which will offer either existing prime property, or develop new property for the group.

THS has been approached by several retailers abroad for tie-ups, including the US major Stop and Shop for expanding into the country. Back home, THS is talking to several retailers and has already tied up with Piramal's Crossword in Mumbai.

"We are also waiting for the outcome of out talks with builders. If all goes well, we will need 50 per cent of funds for expansion plans," he said, adding that the confidence for such massive expansion arises from the fact that 85 per cent of the home products segment, estimated at Rs 800,000 crores, lies with the unorganised sector, and there is no competition from organised sector. Also, we believe in cooperating than competing."

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THS Hyderabad Launch Today

The "retale" of the twin cities is getting more interesting. Hyderabad, which is trying to promote itself as the ultimate retail destination in the country, has another retail major's presence to boast of -- The Home Store promoted by the Shahid Group.

The store launch, now scheduled for October 9, was supposed to be done in the first week of this month itself, but was delayed because of some export commitments, Mr Arif Shiekh, president of THS told ET. The store, which manufactures and sells home-related products ranging from Rs 7 candles to Rs 7 lakh crystals, and catering to all rooms of a home and office -- has been set up over 3,800 sq ft in upmarket Banjara Hills, with an investment of 80 lakhs to a crore.

The company which opened first in New York in 1952, entered India in 97, currently has 22 stores across the country, and is looking at at least three stores in this city alone. "We are so comprehensive, there's no competition. You can put up a complete home after walking into our store. The problems with purchasing from unorganised retailers importing home range products include inconsistencies in terms of dollar fluctuations and therefore price variation, and possibility of not being able to re-order a similar product," he said dismissing competition posed by other retailers.

"Eighty per cent of our products are manufactured here, so we get repeat orders for same items from corporates or households," he said. The company is however not looking at adding a manufacturing unit in the South. "We couldn't get the kind of space we require as the biggest manufacturer in Asia. In ceramics alone, we produce 23 million pieces a year. We are happy with the three manufacturing units in Muradabad, Khurja and Okhla in UP," Mr Shiekh added.