Hero to open more stores this year
The Jakarta Post, Jakarta
More giants and heroes are coming! You can take this literally as leading Indonesian retailer PT Hero Supermarket is set to open five more of its hypermarkets, trading under the name Giant in Java, including Jakarta, and up to six more Hero supermarkets this year.
"We are responding to the hypermarket challenge as we feel that it is a part of the modern retail scene," Hero corporate secretary Vivien Goh said on Tuesday, mentioning that the investment would be funded out of the company's internal reserves and bank loans.
She said the expansion would require about Rp 150 billion (about US$16.5 million) in capital expenditure, although she did not give details.
Aside from opening more hypermarkets, the local supermarket chain, established in 1971, will also open more of its smaller operating units, like Guardian pharmacies and Starmart minimarkets, with around 20 outlets each set to be opened.
The company expects the plan will help to at least maintain the firm's 27 percent growth in sales this year. In 2004, the retailer booked Rp 8.5 trillion in sales and earned net income of Rp 34.3 billion.
Hero's aggressive move seems to be in line with a growth trend for hypermarkets, which last year saw the number of outlets double from 24 in 2002, with the figure predicted to triple this year.
The country's retail industry is reported to produce annual turnover of Rp 600 billion, according to a study by AC Nielsen.
Despite its major expansion plan, however, the company has a problem on its hands as it is facing a lawsuit filed by PT Matahari Putra Prima -- the holder of a 7.78 percent stake in Hero -- in the South Jakarta District Court.
Matahari, along with two individual shareholders, allege that Hero has been managed to serve the interest of certain shareholders and third parties -- in this case Pan-Asian retail group Dairy Farm.
The suit also alleges that Hero provided misleading information in relation to a tender offer process carried out by Dairy Farm subsidiary Nallaca BV earlier this year -- a move that in the end change Hero's ownership structure.
In its rejoinder, Hero says that the suit is baseless and that the firm intends to context the action in court, with the action scheduled to commence on March 31. Hero argues that the company has not caused any losses to shareholders and that the third party alleged to have interfered was in fact one of its own shareholders.
The tender offer resulted in a change in Hero's ownership composition as Nalacca bought 20.42 percent of the shares from the public.
As of today, PT Hero Pusaka Sejati owns 50.10 percent of the shares, while the Mulgrave Corporation BV -- another subsidiary of Dairy Farm -- holds 12.23 percent, Matahari 7.78 percent and retail investors 9.47 percent. (003)