Magnit, Russia’s largest grocery chain in term of store numbers, plans to attract additional bank loans in the amount of RUB54.5bn (US$1.5bn) for its expansion plans.

The loans are expected to be provided by several Russian banks and, according to Magnit, the funds will be used to open new stores, to replenish its working capital and to invest in the centralisation of its supply chain. 

This year, Magnit is planning to invest nearly $80m and $60m in the construction of distribution centres and the development of its own transport system.

A source close to Magnit said the company was facing stiff competition from foreign chains, particularly Auchan, which is cutting costs and increasing the proportion of private-label lines it sells.

The current share of private-label lines sold in Magnit is estimated at 12%, although the company plans to increase this figure to 30%.