Godrej Industries is planning to increase the outlets of its premium gourmet stores, Nature's Basket to up to 40 stores in about three years but has ruled out bringing a foreign partner in the immediate future.
"We are not looking at FDI currently because based on the current FDI rule, I don't think Nature's Basket will qualify for FDI. But if the rules are changed later, we might look at it. But currently, we will run it as a 100 per cent subsidiary of Godrej Industries," Adi Godrej, Chairman of Godrej Industries told analysts.
He said the chain has been witnessing increase in same stores sales, which apart from opening new stores has helped] in the overall growth of Nature's Basket.
When asked about the expansion plans, Godrej Industries Head Finance and Corporate Services Ravi Venkateswar said: "We will go up to 40 stores in about three years time."
At present, Nature's Basket has 26 stores in Mumbai, National Capital Region, Pune, Hyderabad and Bangalore.The company intends to focus on the Tier I cities and is
not considering the Tier-II and Tier-III cities for expansion in the next three years.
"The thinking is for us to consolidate and deepen our presence in existing cities so that we have a higher local relative market share. That's the ultimate level of profitability," Godrej Industries Chief Strategy Officer Vivek Gambhir said.
"Once we get to a certain amount of minimum scale in our existing footprint, then we look to add more of it in Tier-II Tier-III cities but not in next three years," he added.
On whether the chain has started making operating profit, he said: "No, I think it will be at least 2¿3 years more before we are EBITDA (earnings before interest, taxes, depreciation and amortisation) positive, though we are EBITDA positive on stores that have been operational for at least three years." The company is confident that with the business model gradually evolving, more stores will become EBITDA positive in the next 1824 months, he added.