High Street back with a vengeance

An edited version of this story first appeared in DNA Money edition on Wednesday, February 8, 2012.

India witnessed addition of over 15 million square feet (msf) of organised retail mall space across primary and secondary locations in the calendar year (CY) 2011. Interestingly, approximately 60% of the overall space i.e. more than 9 msf was added in the period between July-December (H2) 2011.

And according to a CB Richards Ellis (CBRE) report, more than 90% of the entire organised mall supply during the review period was led by cities like Mumbai, Pune, Bangalore and Chennai.  The CBRE study reviewed retail real estate developments in seven cities including NCR, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata.

Anshuman Magazine, CMD, CBRE South Asia Pvt Ltd, said the increased retail activity across key cities is an indication of the growing confidence of both domestic and international retailers in the India growth story. “On the back of growing urbanisation and an increase in the acceptance of organised retail, retailers have been expanding their operations across the country. The government allowing 100% FDI in single brand retailing has been a welcome step, however the caveats put by the government like making it mandatory for retailers to source 30% of their requirements locally are a dampener,” he said.

Presenting a promising outlook based on considerable increase in retailer inquiries, the report further said that retail mall rentals witnessed growth in prime city micro markets. However, the rental were stable in suburban (supply laden) destinations in key cities like NCR, Mumbai and Bangalore. A few micro markets of Pune, Chennai and Hyderabad witnessed correction but only with select mall developments.

While CBRE expects a significant increase in the transaction activity and size as a result of anticipated incremental demand, the experts also envisage a possible downside owing to large, retail mall supply pipeline in most leading cities. ‘This might lead to a demand – supply mismatch which might eventually lead to long-term pressures on retail rents in select micro markets’, the report said.

In fact, pressure on retail mall rentals has started showing up in a select few categories already. The developer of the recently launched Phoenix Market City Kurla was faced with the challenge of leasing the multiplex space in the mall. Industry sources said that, while PVR Ltd was initially approached by the mall developer for the multiplex lease, the film exhibition company (PVR) turned it down citing higher lease rentals.

“Eventually, a deal was inked with Reliance BIG Cinemas. However the multiplex chain walked out of the deal at the time of taking delivery as it felt the lease rentals were on the higher side. The mall developer then re-approached PVR with a mutually workable lease rental rate. PVR is currently in the process of getting the multiplex ready for launch which is likely to happen within the next few quarters,” said the source familiar with the development.

The general feeling in the retail sector is that while re-negotiations haven’t started yet, the process is likely in the first quarter of financial year 2013 (Q1FY’13). “Retailers who have already negotiated rates will take stock of the market situation by the end of current fiscal. Given the current economic scenario with financial standing of real estate companies, it is very likely that retailers will discuss rentals which will lead to some correction in the market. Having said that, high street locations will continue to enjoy a premium,” said a top official from a leading Indian retail company.

Echoing the sentiments, Pankaj Ahuja, proprietor, Rapid Deals (a Mumbai-based real estate consultancy firm), said rate negotiations are not happening in the established malls operating in south central and western suburbs of Mumbai. “However, some of the new mall developments that are not fully operational are facing challenges with lease rental rates. I wouldn’t be surprised if some of them take to reducing the rentals per square feet in an attempt to fill the retail space,” he said.

The quality of retail real estate is another problem faced by the Indian retail industry. A recent report by the research and real estate intelligence service of Jones Lang LaSalle (JLL) India cited that while substantial mall space is being built, only half of it is worth a second glance from retailers.

Ashutosh Limaye, head - Research and Real Estate Intelligence Service, Jones Lang LaSalle India, said in the report , “The trend is not confined to Mumbai as almost all cities in India are witnessing it. We are still stuck with the mistakes we made three or four years ago - jumping on the bandwagon and creating too many malls without reason. Few understood that building and running malls is a science, and that factors like catchment viability, location, supply benchmarking and mall management matter in their success.”

JLL estimates that 2011 saw a retail real estate supply of 13.8 million square feet hit the market, with 10.7 million square feet getting absorbed – it amounts to 130% of the figures for the years 2009 and 2010 put together.

With delays in completion and few retail-conducive projects being launched, it is malls, malls everywhere and nowhere to go for retailers. “Retailers have finally decided that enough is enough and have started scouting for stand-alone properties. With their eyes on old mansions, mixed-use buildings and small office blocks in established as well as emerging locations, big-format retailers and giant chains are mandating property firms to broker these deals for them,” said Limaye.

So while high streets were never out of form, they are now back with a vengeance. Properties which, with retrofitting, can enable retailers to start selling in no time at all are fast becoming precious assets for big retail companies. Even constructing glass cubes on plots that house the 'building next door' is seen as preferable over having to wait for properly located and configured malls to come along.

“In the world of retail, stagnation is the same as dying and these retailers have no intention of slipping into a market-induced coma. Moreover, these stand-alone stores are the perfect way of giving shoppers a personalised experience that many shopper often find missing in malls,” said Limaye.

‘Credit Suisse will steer Thomas Cook foreign exchange business sale’

This story first appeared in DNA Money edition on Tuesday, February 7, 2012.

UK-headquarterd Thomas Cook Group has appointed Credit Suisse Group to sell off its foreign exchange business in India, according to a Sunday Times report. The paper didn’t divulge the source though.

The tour operator is learnt to be pushing ahead with divestments of its non-core assets to raise £200 million in an attempt to lighten its debt load and shore up the balance sheet. Repeated calls and an e-mail seeking clarifications to the management went unanswered.

All along, the company has been in a denial mode. In a statement last month, Madhavan Menon, MD, Thomas Cook (India) (TCIL), had said the UK parent has no plans to sell its stake in the Indian entity. Media reports had earlier indicated that the Indian unit’s founders — Thomas Cook UK and TCIM — have pledged their TCIL’s 77.1% stake in favour of Royal Bank of Scotland (RBS) and that RBS has been engaged to find a buyer for the Indian unit.

On speculation in the British media about the parent company selling its foreign exchange business, reports had earlier quoted Menon saying, “We do not have such plans.”

TCIL’s foreign exchange business mainly deals in small-value remittance with Thomas Cook Express and money transfers with Moneygram or Express Money.

In 2006, the travel company had acquired LKP Forex and has over the years expanded its operations to 72 cities from the earlier 17.
Forex operations contribute approximately 65% of TCIL’s revenue. The company currently enjoys a sizeable market share — close to 50% — in the business and is witnessing a growth of 9-10%.

Thomas Cook swung to an annual loss last year after a series of profit warnings and the resignation of chief executive Manny Fontenla-Novoa in August. The mass-market travel group has taken a big blow from the economic slump, as consumers increasingly turn to the Internet to book their own vacations.

Dish TV eyes biggest pie of digital switch

This story first appeared in DNA Money edition on Friday, February 3, 2012.

Dish TV India, the country’s top direct-to-home (DTH) player, is gearing up to garner the maximum share of subscribers who would migrate to digital from analogue cable television in the four metros before June, the deadline for the switchover.

Industry experts say about seven million homes are likely to make the switch (from analogue to digital cable) in Mumbai, Kolkata, Delhi and Chennai, thereby opening up a potential market of 10 million new subscribers (homes with multiple television sets) for DTH and cable TV operators.

Of the six DTH players in the country, Dish TV India, the biggest, is optimistic of garnering a giant’s share of the new subscribers.

RC Venkateish, CEO, Dish TV India, said since digital cable has considerable presence in the four metros, close to 60% of the new subscriber base will be tapped by the DTH players.

“We expect to get anything between 26% and 28% of the new subscriber base that will switch from analogue to digital,” he said.

The Dish TV management has been working on this by readying the infrastructure to meet the surge in demand and will be pursuing it aggressively through above-the-line (ATL) and below-the-line (BTL) ad spend in the coming months. A new promotional campaign featuring film actor Shah Rukh Khan is on air.

In another technological innovation in the DTH industry, Dish TV has introduced a new product that offers unlimited recording capacity.

Christened Dish truHD+, the high definition (HD) box is being offered at no extra cost and will be sold at the price of existing box.

Salil Kapoor, chief operating officer, Dish TV India, said the unique feature of this box is its compatibility with any universal serial bus (USB) flash drive or hard disk drive (HDD).

“The new HD box comes with a software upgrade that allows consumers to simply plug-n-play an existing USB stick or HDD and builds an entire library of their favourite programmes. While most DTH operators charge a premium for their digital video recorders (DVRs), our idea is to expand the DVR market by making it accessible at the price of a normal HD box,” he said.

Dish truHD+ has a dual advantage of all HD and DVR features and the price includes the new box, along with one month Dish truHD Royale Pack.

As part of the promotional offer, Dish TV will provide a four gigabyte USB flash drive free.

Finding the best drinking water — by accident

This story first appeared in DNA Money edition on Wednesday, February 1, 2012.

In early 1990, Naveen Luthra, then just over 30, and his friend Deepak Mohan, who was the captain of an oil tanker, drove down through the sylvan, thickly forested Sahyadiri ghats towards Mulshi, about 100 km from Lonavala.

It was to be a fateful trip.

“He had made his pot of money and wanted to invest in land in India,” Luthra recalls.

They arrived in Luthra’s Maruti Gypsy at a site where they met some landowners, but the captain found the land valuations very high and soon gave up on the idea of investing.

“Deepak went back to the sea and unfortunately died two years later. However, I quite liked the place and ended up buying 100 acres as an investment with the idea of doing something when I would retire from my Customs clearance business,” said Luthra.

Later, during the monsoon sometime in 1996, Luthra took another trip and was completely mesmerised by Mulshi’s ethereal beauty. He started accumulating more land between 1996 and 2000.

“It’s a little over 1,500 acre now. I initially bought at Rs5,000 an acre but at the end of the entire exercise, my average buying price was about Rs10,000 per acre. While land prices were reasonably cheap then, my buying price would still be termed expensive in those days,” he said.

Luthra wanted to do something related to tourism and planned to develop a one-of-its-kind-in-Asia ‘cave-room’ hotel project at the site.

He had absolutely no idea how to source water for the project — as also for his personal bungalow being built there.

“I realised I will need huge supplies especially for the hotel project and started looking around. I even approached the Tatas to buy water from the Mulshi lake which they have a lease on, but they turned my request down. Digging borewells was very expensive in those days, especially because my requirement was 3 lakh litres per day, and I didn’t know how many borewells would have been needed for that.”

One day, a local familiar with Luthra’s land informed him about a natural spring on the property as the solution to his water problem.

An excited Luthra got two pumps installed and started drawing it out, just to assess the quantity available.

“It was May and we were pumping out over 3-4 lakh litres from the spring and the water level refused to drop any further. We realised there was enough, so we ran a test to see if it was also potable. We got the tests done from 3-4 different places and on the day the report came to my office, I showed it to my friend who was in the business of importing filtration equipment and exporting water treatment plants. On reading the reports, my friend inquired about the source saying the water was of very high quality. Another unique aspect was that the water was pesticide free,” he said.

What Luthra had drilled into was a biological hotspot, or “biologically richest and most endangered ecoregions”.
British environmentalist Norman Myers, who pioneered the concept, said a region must meet two strict criteria to qualify as a hotspot: it must contain at least 0.5% or 1,500 species of vascular plants as endemics, and it has to have lost at least 70% of its primary vegetation.

To put in perspective, India has 2,800 water brands of which only two are free of pesticides — Mulshi, and Aava from Sheelpe Enterprise, a Gujarat-based firm.

Luthra then spent another four years trying to identify the best way and means to bottle the water without disturbing its natural qualities. He launched the Mulshi Springs water brand briefly in 2008 but stopped to fine-tune it, and made the product ready for launch in 2009.

Immediately after the launch, a friend sampled Mulshi spring water with Oberoi Group chairman P R S or ‘Biki’ Oberoi,who personally visited the Mulshi spring, inspected the treatment and bottling plant and approved its use across his Oberoi and Trident hotels under their private label L’Quila.

Today the Oberoi group buys 17,000 bottles of Mulshi spring water every day. The pinnacle of acceptance for Luthra has been at Colette, one of the finest water bars in the world based in Paris.

“We consciously chose to be in Colette because gaining acceptance there would mean getting accepted globally. The thought was since I have one of the finest waters in the world, there is no reason why it should not be available at Colette,” Luthra said.

“Besides, it didn’t take me too much of a sales effort to convince them. The deal was concluded in a 30-minute conversation with the Colette management, of which 25 minutes was taken by them just to digest the fact that this water was coming from India especially because they didn’t think very highly about Indian quality and hygiene standards. We were able to change that perception and are now the only Indian water brand available in Colette. We may look at commercial exports in 2013-14,” he said.

Apart from Oberoi, private-label deals are on the cards with The Leela Group and ITC Hotels.

If you feel like taking a sip in Mumbai, it’s also available at BIG Cinemas, fine dine restaurants such as Hakkasan and Yauatcha and world food store dolce*vita at the Palladium Mall at Phoenix Mills.

RPG’s Spencer Retail is also likely to create a private label water brand to be sold in its retail stores across the country.

Today, Luthra Water Systems has a capacity for 25,000 glass bottles of and 40,000 PET bottles of water — which is not enough to meet the growing demand.

Another bottling plan with a capacity of 150,000 bottles is underway and will be operational by Diwali this year.

“Together the plants will have a capacity of 215,000 bottles daily. Work on the new plant will start immediately after 80% funding is cleared from Oriental Bank of Commerce. Total capex for the plant is around Rs25 crore,” he said.

A 750ml bottle of Mulshi Springs is priced at Rs50 in Maharashtra and Rs55 outside the state.

The 52-year-old Luthra said when the capacity expansion is completed; the company could be doing business of Rs30 lakh a day.

Not a bad rate of return from a parcel of land bought at Rs10,000 per acre.

Whoever invented the phrase money flows like water clearly had Luthra in mind.

Phoenix replaces hotels with residences

This story first appeared in DNA Money edition on Saturday, January 28, 2012

Phoenix Mills Ltd (PML), multi-use integrated property developer, is replacing hotel development plans of its hospitality subsidiary with residential due to change in economic scenario since 2007 when the projects were first planned.

Majority of the hotel plans of Phoenix Hospitality Co Pvt Ltd (PHCPL), including the one in Mumbai, have been changed to residential, commercial-cum-retail and residential-cum-hotel developments.

Interestingly, the commercial and retail spaces will be created for sale.

Shishir Shrivastava, group CEO and joint managing director, PML, said, “The environment has changed drastically since then (2007) and Phoenix Hospitality is not developing a few of these land parcels it held as hotel projects. As a result, certain formats have been changed to make the projects more viable. The idea is to monetise the land parcels by developing assets to be sold, replacing hotels which would have eventually ended up debt heavy.”

As per the changed plans, while the Pune land parcel will continue with residential development, the site earmarked for a hotel in Mumbai will be replaced with retail-cum-commercial space.

Similarly, the hotel project at PHCPL’s Bangalore (West) land parcel will be replaced by almost 1 million square feet of residential development. In Chennai, it will be a combination of residential and a small boutique hotel as against a hotel project. PML will, however, construct a 150-room hotel at Agra, as per earlier plans.

PHCPL was set up in 2007 as a special purpose vehicle, through which PML owned stakes in many assets (land parcels) across the country. A majority of these developments were earlier planned to be hospitality assets.

Under the original deal in 2007, PML was to invest Rs350 crore for raising its stake in PHCPL, which then had land parcels worth Rs120 crore.

Since then, PML has invested Rs154 crore in PHCPL and the funds were with the company as share application money.

PML has an option to invest another Rs200 crore and increase its stake to 75% in PHCPL from 56% now.

As for new projects, PML will launch a phase-wise residential project in June 2012 in Bangalore.

Spread across 16 acre, it will comprise nine towers of 30 floors each with two apartments on each floor. In all, the development will house 1,300 residential apartments of 2 and 1/2 BHK and 4-5 BHK, targeting the premium and luxury market segments.

Hero set to launch an Edition with Marriott

This story first appeared in DNA Money edition on Thursday, January 26, 2012.

Hero Group, India’s largest two-wheeler maker, is in advanced stages of discussion with New York Stock Exchange-listed Marriott International Inc to launch the global hospitality major’s ‘Edition’ hotel brand in India.

Industry sources said the creator of Edition, Ian Schrager — who is also known as the godfather of trendy boutique hotels globally — was in India last week for a discussion with the Munjals.

“He (Schrager) also visited their recently acquired cold shell in Gurgaon to get an idea of the site and its suitability for the Edition brand. The latest on this is that officials from Marriott and Hero Group are currently working on the finer details of their arrangement and an announcement to this effect can be expected soon,” said a source familiar with the development.

A Hero Group spokesperson did not respond to repeated calls and text messages.

Marriott International’s India office, however, confirmed the development.

“We are in discussions with them (Hero Group) and Ian Schrager was in the country recently to discuss the possible association. We are in the process of finalising the details. The team is currently working on the hotels design element and we are hopeful to start work on the project in another six months from now,” said Navjit Ahluwalia, senior vice president - hotel development (India and subcontinent), Marriott International.

With 250-280 guestrooms and a host of other facilities, the Gurgaon Edition will mark Hero Group’s foray in the Indian hospitality market. The hotel, to be operational sometime in late 2013-14 or early 2014-15, is being developed on a 3.9 acre plot that was acquired by Hero Group through a bidding process organised by Punjab National Bank.

The overall cost of getting this project operational would be Rs650 crore, Pankaj Munjal, managing director of Hero Motors, had said in an earlier interaction.

Edition's global development pipeline include hotels in six major global gateway cities on three continents by 2015. Among various locations being identified include one of Manhattan's (New York) landmark buildings – the Clock Tower, a historic building formerly known as the Berners Hotel in London and a hotel under construction in the former Seville Hotel at the Miami Beach location. These projects are owned and operated by Marriott International in an attempt to reflect confidence in the brand's future growth and success.  Hotels to be operated purely under management contract include under construction properties in locations like Bangkok, Abu Dhabi, Los Angeles and Gurgaon (India).

On the competitive set for Edition, Ahluwalia said the brand currently has no competition in the market and is addressing a space that has been left untapped / not captured yet by most global hotel companies. Interestingly, the Edition hotels will be operated by Marriott’s Ritz Carlton management team with the promise of offering a completely distinct level of service.

“Edition hotels are very unique properties addressing the next generation’s needs. We have been looking for partners who want to own a distinct customised hotel that customers will be looking for in the coming years. I think Munjals have that kind of a vision and they have already demonstrated it in some of their other businesses,” said Ahluwalia.

On the possibilities of a multi-property arrangement with the Hero Group given they have historical land bank in the country, Ahluwalia said, “Once we have a good relationship / partnership, we will explore other markets to go in to, together and do more Edition hotels across the country.”

Given the potential, Marriott International is optimistic about having more Edition branded hotels in the Indian hospitality market. “In fact, Schrager during his recent visit could very clearly feel the excitement in the Indian market for a customised luxury hotel. We certainly feel the markets of Mumbai, Bangalore and Goa would be ideal locations for future developments,” said Ahluwalia.

When asked if Marriott will take the investment route like the hotel company did in New York and London, Ahluwalia said, “We are not shy of investing in the Indian hospitality market and have already committed $30 million for the development of Fairfield brand with SAMHI Hotels Pvt Ltd. While our model has always been management contracts, we do invest wherever we feel there is a need for it. The Edition hotels in New York and London are owned by Marriott and we will eventually get an equity investor to buy these properties while we retain the management contract.  I think India has so many wealthy individuals who would want to own unique luxury lifestyle properties negating our need to invest. Instead, we are focusing on the right asset partners with ideal locations that can sustain a product like Edition.”

Introduced in 2008, the Edition brand is positioned as luxury lifestyle hotels combining the personal, individualised and unique experiences that Schrager is known for globally. The Istanbul Edition is the only operational project at present under this brand. In fact, media reports also indicated that another Edition development in Honolulu moved out of the network in August 2011 and its asset owners (M Waikiki LLC) had subsequently sued Marriott, saying the company had not developed the brand as much as promised.

Oriental Hotels exits Roots Corp

This story first appeared in DNA Money edition on Thursday, January 26, 2012.

Oriental Hotels Ltd (OHL), a subsidiary of Indian Hotels Co Ltd, has exited its investments in Roots Corporation Ltd (RCL), which owns and manages budget hotels under the Ginger brand.

The Compulsorily Convertible Preference Shares (CCPS) held by OHL were acquired by Singapore-based Omega TC Holdings Pte Ltd.

Anil P Goel, executive director - finance, IHCL, said the CCPS buyout has been converted and the entire deal is over.

“We had some investment from OHL in Ginger hotels so they have exited,” he said without giving details about other entities that exited though the CCPS conversion route. The deal is understood to have concluded sometime in the second half of 2011.

OHL is the Chennai-based associate company of Tata Group promoted Indian Hotels Co Ltd (IHCL) which owns eight hotels operated under Taj, Vivanta and Gateway brands across various south Indian cities.

The OHL deal was a part of Omega’s arrangement with IHCL announced in March 2011, under which the investment firm was to acquire the CCPS held by some existing holders for Rs70 crore.

Under the deal, Omega had also agreed to invest Rs150 crore in tranches for a minority stake, taking its overall investment in RCL to Rs220 crore.

Meanwhile, IHCL has posted a marginal increase in its net profit at Rs50.48 crore for the third quarter ended December as against Rs50.29 crore posted in the same period of the previous fiscal. Net sales rose 7.44% to Rs521.48 crore.

As costs bite, companies step up in-house recruitment

My colleague Promit Mukherjee is the co-author of this story which first appeared in DNA Money edition on Tuesday, January 24, 2012.

The slowdown appears to be pushing corporates to cut corners anywhich way possible.

That includes filling key positions with in-house talent rather than go for lateral hires.

The idea, experts believe, is mainly to save on costs they would otherwise incur by outsourcing the process to professional staffing and executive search firms.

The phenomenon is picking up slowly.

However, staffing and executive search firms operating in the outsourced recruitment business feel it is a matter of concern as it is eventually going to impact their business, which is already under pressure owing to a decline in the overall recruitment activity.

Dony Kuriakose, director, Edge Executive Search P, said more and more companies appear to be taking this route and that is likely to take shape of a trend as other companies are following suit.

“There were fewer companies earlier using internal human resources talent to do the sourcing and recruitment of candidates. Our interaction with a host of companies, however, indicates that the number of such companies is increasing and is likely to increase if the economic environment continues to deteriorate further,” said Kuriakose on the sidelines of the Seventh CEO Conclave organised by Executive Recruiters Association (ERA), which is a non-profit Chamber of Commerce representing more than 200 Indian executive recruitment consulting firms.

While using internal resources to hire people is being done across levels, the approach is more visible while filling entry-to-mid level positions.

“In fact, there are a few companies which have used this approach to identify and recruit top-level positions as well, though the number of such organisations is very small,” said Nikhilesh Mehta, CEO of the Pune-based Krehsst Recruitment Solutions.

While companies operating in the information technology and information technology enabled services sectors appear to be doing it more often, others in the pharma and life sciences, among others, have begun using internal HR resources to fill positions in their respective organisations.

Amit Zutshi, partner - commercial advisory services and transaction advisory services, Ernst & Young P, however, feels the outsourced recruitment fraternity should not worry much about this development.

“I think it is a very sporadic and seasonal trend adopted with a short-term view of saving on costs. There are companies who have tried doing it under stressed business environment in the past and there will be a few who will try doing it again,” he said.

Another challenge faced by the staffing and recruitment firms is the fact that companies have started asking them to scale back their fees per candidate.

The reduction, according to industry players, is 10-15% of the earlier agreed sum.

Vipul Varma of Focus Management Consultants P chipped in, saying companies indeed are bringing down fees for staffing and recruitment services. “For instance, if a company was using more than one recruitment consultant to fill the vacant positions earlier, consultants have started taking the assignments as an exclusive mandate while reducing their charges. The reduction in remuneration to a great extent gets hedged by the increase in the number of candidates being hired,” he said.

Dutch retailer Spar eyes more tie-ups to expand

This story first appeared in DNA Money edition on Thursday, January 19, 2012.

Spar International, one of the world’s largest independent food retail chains, is scouting partners to tap newer markets in India with its supermarket and hypermarket stores.

The company currently has 10 operational stores in India under a licensing agreement with Dubai-based Landmark Group’s Max Hypermarkets India Pvt Ltd.

Under the licensing deal, Spar offers knowledge transfer and international best practices, while the Indian partner takes on the responsibility of the entire business operations including capex outlay, day-to-day operations and management control.

Gordon Campbell, managing director, Spar International, said, “We are exploring new partnerships for expanding presence in India, especially in the eastern and southern regions.” Campbell was in India to participate in the Retail Leadership Summit organised by Retail Association of India.

The company has already tasted success with this approach in countries such as China and Russia and is confident of replicating it in the Indian market.

Asked whether discussions have been initiated with prospective partners for the new regions, Campbell said, “We intend to get on with that exercise soon. The partnerships will be for both large supermarket stores spread across 1,000 square metres (10,763 sq ft) to the standard range of hypermarket stores.”

Spar’s hypermarket stores generally occupy retail space between 3,000 square meters (32,291 sq ft) and 7,000 square meters (75,347 sq ft).

The Dutch chain’s India business is pegged at euro 70 million and currently has 10 stores — three in Bangalore, two in Hyderabad and one each in Mangalore, Coimbatore, Delhi, Pune and Gurgaon.

Of the 10 stores, five were added last year. The company will open its second store in Pune next month. Spar has set a target of 20 operational stores within the next three years.

“We have had a great response for our retail stores in India and it is quite heartening that majority of these outlets are profitable. A few new ones will enjoy that status after completing six months of business from the time of their launch,” he said.

On the company’s expansion plans with Max Hypermarkets, Campbell said, “There are over 20 retail sites for new Spar stores in active consideration across the geographies outlined in the licence agreement with them.”

Clearwater Capital Partners circles Kamat Hotels

This story first appeared in DNA Money edition on Thursday, January 19, 2012.

Investment firm Clearwater Capital Partners will be coming out with an open offer for shareholders of Kamat Hotels (I) Ltd (KHIL) to acquire another 26% of the share capital. This has become necessary after the firm exercised its right to convert the final tranche of 5,966 foreign currency convertible bonds (FCCBs).

Clearwater has offered to acquire 4,964,283 equity shares representing 26% of the post-conversion paid-up equity and voting capital at a price of Rs135 per share. The offer will open on March 6 and close on March 20.

KHIL promoters currently hold 51% in the company, which will creep up to 57%, post the merger exercise. The management had earlier said that it’s in the process of merging other promoter-owned businesses, including thehighly profitable restaurant operations and Lotus Resorts, into itself. This, the firm said, would lead to an integration of hospitality and food and beverage verticals, with strategic assets acting as a growth platform.

A successful open offer could give Clearwater Capital Partners (Cyprus) some management control, but that’s easier said than done as the KHIL promoters won’t be in a mood to dilute their holding in the company any further. In such a scenario, Clearwater Capital will only remain a significant minority shareholder.

Clearwater’s decision, according to the management, is positive for the balance sheet of KHIL as approximately Rs93 crore of debt gets converted into equity, besides substantially reducing the interest burden. It will also improve the company’s debt equity ratio from 2.86:1 (before FCCB conversion) to 1.61:1 (post conversion). KHIL’s market cap at conversion price of Rs125 per share will jump by Rs135 crore.