DCM Shriram to hive off rural retail business

The board of DCM Shriram Consolidated (DSCL) yesterday passed a resolution to hive off its rural retail business Hariyali Kisaan Bazaar into a subsidiary. After ramping up its operations from the current 65 outlets to 200-250 in 12-15 months, the company plans to get listed on the stock markets and attract private equity.

After the hiveoff, the company will be able to give stock options to key employees to retain them. The fast-growing retail business is witnessing a heavy churn at various levels.

“The expansion of Hariyali Kisaan Bazaar would be roughly Rs 150-180 crore. It will be primarily funded through the internal accruals of the company,” said Vikram Shriram, vice-chairman and managing director, DSCL.

The board has sought shareholders’ permission for the hiveoff and Shriram plans to set up the subsidiary in the next year.

The company right now is positive of a listing on the stock markets and investment from institutional investors/private equity.

Last year, the Australian Wheat Board had approached the Shrirams to buy a stake in the venture, though nothing had came out of it.

While DSCL has no plans of entering organised retail in the urban areas, it is looking at sourcing fresh produce from farmers to sell to large retail chains in the country. This business would also be a part of the subsidiary that the DSCL board proposes to hive off.

DSCL has retained Rabobank to prepare the business model and is currently running pilot projects with Pantaloon Retail’s Big Bazaar, RPG Retail’s Spencer’s and Subhiksha. courtesy:moneycontrol.com