Unrelated diversification
Entering business areas with high ROI prospects:
A basic diversification motivation is to improve ROI by moving into business areas with high ROI prospects. One approach is to enter high growth business areas. According to life style consumption study by Edelweiss Securities, organized retail trade in India is now finding its feet. Its share in the total retail pie is set to increase from the current 2 per cent to about 10 per cent by 2010. This will translate into approximately Rs1, 400 billion of retail trade by 2010 (Figure 8.19)
The study further says retail space is expected to increase from 10 million sq. ft. in 2002 to 80 million sq. ft. in 2010. Retail space development in leading centres will provide high impetus to retail growth as about 38 per cent of India’s high income households live in the top five cities (Mumbai, Delhi, Kolkata, Chennai and Bangalore), and an additional 28 per cent stay in mid-sized cities.
Significant growth in organized retailing during the next three years is expected in the metros and mini-metros through better performance of the existing stores, as well as opening of new stores. From 25 operational malls in 2003, the country is expecting over 600 malls by 2010. Accordingly Videocon Industries spotted organized retailing as the bright spot for future investments to the tune of Rs25, 000 crore by 2010.