Subhiksha Trading Services, a Chennai-based supermarket and pharmacy discount chain, is all set to take on large format retailers. The company operates up to 140 discount stores in the southern city of Chennai and around 80 stores in infotech capital Bangalore and the IT-savvy South Indian state Andhra Pradesh, says Myiris.com, the Investment Research and Information Service website.

Speaking at the India Equity Show organised by IRIS Business Services in association with ICICI Direct.com, R. Subramaniam, Founder-CEO, Subhiksha, said that the retail sector in India had witnessed a significant boom in past two-three years with segments like consumer electronics and garments occupying a large space. Subramaniam said the current boom has been consumer driven rather than corporate investment driven. "With higher disposable income and consumer credit being freely available, the average Indian no longer thinks that borrowing is a sin," he said.

Responding to the speculation that large-format stores like Wal-Mart, Carrefour and Tesco are entering India, Subramanian said they did not pose a threat to Subhiksha because hypermarkets and supermarkets in India, unlike in the US, cannot offer big discounts because of the MRP system.

Their average discounts can be only between 1.5% to 2%.

Subhiksha operates on a format based on low cost and low capital investment, where it cuts down on margins and offers discounts up to as high as 10% on FMCG and pharma products. The company is in an expansion mode and plans to open 500-plus stores in Hyderabad , Bangalore , Ahmedabad, Delhi and the National Capital Region, Mumbai, Pune, Nashik and northern states within the next two years.