Readying to Expand

Continuing with our IPO introduction series, here is another retail company which plans to tap the primary market and wants to expand in a big way in Tier II and Tier III cities. V-Mart Retail Ltd (VRL) is coming up with a public issue of 57.46 lakh equity shares of face value of Rs 10 each. The issue consists of a fresh issue of 40.11 lakh equity shares by the company and an offer for sale of upto 17.35 lakh equity shares by the existing shareholders. The issue will constitute 32% of the fully diluted post-issue paid up capital of the company.

VRL is a pioneer in setting up retail departmental stores across various small Indian towns and cities such as Sultanpur, Ujjain, and Motihari. The company primarily operates in Tier-II and Tier-III cities. The company offers apparels, general merchandise and grocery  for sale at its departmental stores. It aims to cater the entire family needs. Based in New Delhi, VRL's operations are predominantly spread across northern, western and eastern parts of India.

With the first “V-Mart” store in Ahmedabad, having begun operations in October, 2003, VRL currently operates 59 stores spread across 51 cities and 10 states and union territories, with a total area of 4.82 lakh Sq Ft. The average size of its store is approximately 8000 Sq Ft and the company aims to cater to the untapped markets and middle class families under a modern ambience offering the feel of a large retail mall.

VRL's business verticals include apparels, general merchandise, and the Kirana Bazaar (grocery store). The 39 stores are “Mini Hyper Stores” retailing all verticals – apparels, general merchandise and kirana. The 20 stores, called as “Family Fashion Stores”, are focused on apparels and general merchandise. VRL is aiming to run its deparmental stores based on the primary concept of “value retailing” and is guided by its principles “Sabse Sasta Sabse Accha” and “Price 'Less' Fashion”.

The apparels business vertical includes apparels and accessories for men, women, boys, girls and infants. The general merchandise business vertical includes Non-Apparels such as footwear, books and stationery, toys and games, purses and clutches, fashion jewellery, bags and luggage; and Home Mart includes home furnishing, kitchenware, crockery and gifts and novelties. The Kirana Bazaar business vertical includes FMCG products, packaged food items, beauty and personal care, home care and staples.

The company proposes to utilise the funds to open 60 new stores, expand its distribution centres, fund its working capital requirements and for general corporate purposes along with meeting issue expenses.

However, these expansion plans will depend upon the funds that the company is able to raise. We will wait till the company announces the price band at which it intends raising money. Till then watch this space for more information on companies intending to raise money from the markets.