[2008-07-31]  Nakumatt warms up to public listing
With one leg straddling the regional market and the other deeply entrenched locally, Nakumatt Holding’s Operations Director, Mr Thiagrajan Ramamurthy ,seems like the proverbial hyena that split into two while pursuing different interests. But unlike the hyena, Ramamurthy is single-minded in his pursuit of a Pan-African Nakumatt, and says it is unlikely he will ever split.With arguably the most successful loyalty card programme in the continent, and rapid expansion plans that promise success, Ramamurthy believes that Nakumatt will be the biggest supermarket chain in Africa by 2012."We are working on a Pan-African plan that will see us enter markets such as Nigeria, Cameroon, Senegal and Mozambique amongst other countries by 2012," says Ramamurthy. "This is not a dream, but a reality that will come to pass."Ramamurthy says the supermarket’s tremendous growth in the past four years is an indication of the direction in which it is headed. The company has been growing at an average of 20 per cent annually since 2004. According to company statistics, Nakumatt recorded a million transactions a month in 2004.
Basket value
Current figures show that this has doubled to two million transactions a month. The basket value (average amount spent by customers per transaction) per day also increased from Sh700 to Sh1,150 during that period. The company does 60,000 to 65,000 transactions a day, bringing in Sh70 million.
Nakumatt’s annual turnover rose from Sh8 billion to Sh24 billion during that period.
Ramamurthy says the company is working to increase the number of daily transactions and revenue to 84,000 and Sh100 million. This, he says, will bring the basket value up to Sh1,300.
Nakumatt now has 19 local branches, but is planning to increase the number to 30 in the next 18 months. The director believes this will enable it achieve its sales targets. The company hopes to increase its branch network to 38 in the region within the next 24 months.
The chain store is planning to open three new branches in Kampala, Uganda and another three in Tanzania’s capital Dar es Salaam, before the end of this year and early next year, respectively.
The company says it will invest $30 million (about Sh2 billion) in the process, and believes this will help expand its customer base to more than one million people in East Africa.
In order not to tie up money in real estate, Nakumatt has been seeking landowners in the target markets and helping them draw up plans for buildings to house its stores. The chain has also been helping them get approval and funding, and guaranteeing rental income in return.
To raise money for the expansion, Nakumatt is planning to sell a percentage of its shares to the public next year through an Initial Public Offering (IPO).
To ready itself for the IPO, the company is strengthening its internal structures by developing manpower and investing in value adding systems. Besides new agreements with its suppliers, Nakumatt has also implemented a new Information Technology system called Oracle.
Wal-mart
The IPO will enable the chain to raise the capital required to facilitate expansion into other parts of Africa. Ramamurthy believes this could spur development akin to the one that supermarket Wal-Mart has brought to the US. Besides being the biggest supermarket in the US, Wal-Mart is also the largest employer there. The planned expansion will create 1,200 new jobs in the local economy.
Besides the loyalty card and 24-hour shopping concept, the chain store has 400,000 loyal shoppers who account for 65 per cent of the turnover. It is aims to bring this number up to 500,000 in the next month.


Source: standard