Tatas open to selling stake in Croma chain to PE investors

[B. Karthick]

The Tata group may consider diluting its stake in Infiniti Retail —
its wholly-owned subsidiary, which runs the consumer durable chain
Croma — to private equity investors, said Infiniti chairman RK
Krishnakumar. “The company has enough funds to finance its expansion.
But, we will look at PE funding when the valuations are right,” said
Mr Krishnakumar, who is also a director of Tata Sons, the main holding
company of the salt-to-telecom conglomerate Tata Group. Infiniti
Retail has invested around Rs 220 crore till date, and will put in an
additional Rs 150 crore this year.

The retail chain hopes to break even in the current year. Currently,
17 of its 32 stores have achieved store-level profit. “Margins are
being negotiated with durable manufacturers, which will drive
profitability,” said Mr Krishnakumar. Croma is expected to record a
turnover of Rs 1,000 crore in calendar year 2009 against last year’s
Rs 657 crore. Same store sales, a more accurate growth indicator in
the retail industry, for Croma shows monthly rise of 14%, company
officials said.

Croma has stepped up focus on its private label (own brands) business
across various categories. “Our private labels in IT products and home
appliances are recording a very good growth and will ensure higher
margins and business volumes,” said Ajit Doshi, MD and CEO of Infiniti
Retail.

Infiniti, which has technical and sourcing agreements with Australian
retail giant Woolworths, hopes to notch up sales of over Rs 100 crore
from its private labels by 2011. The range of products include wine
coolers, split air conditioners, refrigerators, vacuum cleaners,
blenders, kettles, toasters, mini massagers, blenders, laptops and IT
accessories.