Dear Members,
The Board of Directors ("Board") takes great pleasure in presenting the Sixth
Annual Report on the business and operations of the Company together with the Audited
Financial Statements of the Company for the financial year ended March 31, 2023.
FINANCIAL HIGHLIGHTS
In compliance with the provisions of the Companies Act, 2013 ("Act") and the
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 as amended from time to time, the Company has prepared its standalone
and consolidated financial statements as per Indian Accounting Standards (Ind AS')
for the Financial Year 2022-23. The financial performance for the year ended March 31,
2023 is as follows:
(Rs. in Lakhs)
Particulars |
Standalone |
Consolidated |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
Revenue from operations and other Income |
2,21,015.64 |
2,06,710.74 |
2,48,516.15 |
2,37,654.67 |
Earnings before interest expenses, tax, depreciation and amortisation
(EBITDA) |
3,434.01 |
8,497.41 |
3,615.49 |
10,077.13 |
Finance costs |
9,070.16 |
7,600.82 |
11,521.46 |
9,696.61 |
Depreciation and amortisation expense |
9,687.32 |
9,353.05 |
13,172.84 |
12,575.00 |
Profit/(Loss) before tax |
(15,323.47) |
(8,456.46) |
(21,078.81) |
(12,194.48) |
Tax expenses |
- |
- |
(39.13) |
(48.44) |
Profit/(Loss) after tax |
(15,323.47) |
(8,456.46) |
(21,039.68) |
(12,146.04) |
Other comprehensive income /(loss) |
(197.90) |
(315.90) |
(199.67) |
(316.41) |
Total comprehensive income/(loss) for the year |
(15,521.37) |
(8,772.36) |
(21,239.35) |
(12,462.45) |
The financial results and the results of operations, including major developments have
been further discussed in detail in the Management Discussion and Analysis Report.
MANAGEMENT DISCUSSION AND ANALYSIS
In compliance with Regulation 34 of the SEBI Listing Regulations, a separate section on
the Management Discussion and Analysis, which includes details review of operations,
performance and future outlook of the Company, is annexed hereto forming part of this
Report as Annexure-A.
DIVIDEND
In view of the accumulated losses, the Board of Directors of the Company do not
recommend any dividend for the financial year ended on March 31, 2023.
Dividend Distribution Policy of the Company, as required under the SEBI Listing
Regulations has been uploaded on the website of the Company and can be accessed at
http://www.spencersretail.com/investor.
CORPORATE GOVERNANCE
The Company is committed to focus on long term value creation and protecting
stakeholders' interest by applying proper care, skill and diligence to business decisions
and adhere SEBI Listing Regulations and to follow and implement best practices in
Corporate Governance in letter and spirit.
In compliance with Regulation 34 read with Schedule V of the SEBI Listing Regulations,
a Report on Corporate Governance for the year under review is presented in a separate
section as Annexure-B alongwith Additional Shareholders Information as Annexure-C
to this Report.
A certificate from Mr. S.M Gupta of M/s. S.M.Gupta & Co., Company Secretaries, the
Secretarial Auditors of the Company confirming the compliance with the conditions of
Corporate Governance, as stipulated under the SEBI Listing Regulations, is annexed to the
Corporate Governance report.
ANNUAL RETURN
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act and Rule 12 of the
Companies (Management and Administration) Rules, 2014, the Annual Return as on March 31,
2023 is available on the website of the Company and can be accessed at
http://www.spencersretail.com/investor.
DIRECTORS AND KEY MANAGERIAL PERSONNEL _KMP_
As a part of succession planning and since Mr. Shashwat Goenka is overseeing business
operations of the Company, Dr. Sanjiv Goenka (DIN: 00074796) has decided to step
down from the position of Chairman and Director of the Company with e_ect from close of
business hours on May 22, 2023. Consequntly, the Board of Directors at its meeting held on
May 22, 2023 has unanimously decided and approved the appointment of Mr. Shashwat Goenka
as the Chairman of the Company w.e.f. May 23, 2023.
In terms of the provisions of Section 152 of the Act read with Article 100 of the
Articles of Association of the Company, Mr. Shashwat Goenka (DIN: 03486121), Director of
the Company, will retire by rotation at the ensuing AGM and, being eligible, o_ers himself
for re-appointment. The Board of Directors on the recommendation of Nomination and
Remuneration Committee (NRC) has recommended his re-appointment.
Presently, the Company has four Independent Directors i.e. Mr. Utsav Parekh, Mr. Pratip
Chaudhuri, Ms. Rekha Sethi and Mr. Debanjan Mandal.
Mr. Utsav Parekh (DIN: 00027642), Ms. Rekha Sethi (DIN: 06809515) and Mr. Pratip
Chaudhuri (DIN: 00915201) were appointed as Independent Directors of the Company, not
liable to retire by rotation, for a period of five years, with e_ect from November 14,
2018 to November 13, 2023.
The Nomination and Remuneration Committee (NRC) of the Company had evaluated
performance(s) of Mr. Utsav Parekh, Ms. Rekha Sethi and Mr. Pratip Chaudhuri and found it
to be satisfactory and in view of their performance(s) and based on the recommendation of
NRC, the Board has recommended to the members of the Company at the forthcoming Annual
General Meeting of the Company, the re-appointment of Mr. Utsav Parekh, Ms. Rekha Sethi
and Mr. Pratip Chaudhuri as Independent Directors of the Company, not liable to retire by
rotation, for a second term of five consecutive years, with e_ect from November 14, 2023
to November 13, 2028.
In the opinion of the Board, all the directors as well as the directors proposed to be
re-appointed possess the requisite qualifications, experience and expertise and hold high
standards of integrity. All the Independent Directors are exempt from the requirement of
passing the proficiency test. The Company has received necessary disclosures/declarations
from all the Independent Directors of the Company confirming that they meet the criteria
of independence prescribed under the Act and the SEBI Listing Regulations. In terms of
Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of
Directors) Rules, 2014, as amended, Independent Directors of the Company have registered
their names in the data bank of Independent Directors maintained with the Indian Institute
of Corporate A_airs.
The list of key skills, expertise and core competencies of the Board is provided in the
Report on Corporate Governance forming part of this report. During the year under review,
the Non-Executive Directors of the Company had no pecuniary relationship or transactions
with the Company, other than sitting fees received by them.
Changes In Key Managerial Personnel (KMP)
During the year under review, Mr. Devendra Chawla resigned from the post of CEO &
Managing Director of the Company w.e.f. January 20, 2023 and Mr. Anuj Singh (DIN:
09547776) has been appointed as the Chief Executive Officer and Managing Director and also
as KMP of the Company w.e.f. March 22, 2023 by the members of the Company vide Special
Resolution passed through Postal Ballot on May 12, 2023.
Mr. Rama Kant, Company Secretary of the Company resigned from the Company and was
relieved from the services w.e.f October 10, 2022 (closing of the business hours) and Mr.
Vikash Kumar Agarwal (ACS: 19583) was appointed as the Company Secretary & Compliance
Officer and also as KMP of the Company with e_ect from February 14, 2023.
NUMBER OF MEETINGS OF BOARD OF DIRECTORS
During the year under review, five Board meetings were held, the details of which are
given in the Corporate Governance Report which forms part of this Report.
SHARE CAPITAL
During the year under review there has been no change in the authorised, issued,
subscribed and paid up equity share capital of the Company.
The equity shares of the Company are continued to be listed on BSE Limited (BSE')
and on National Stock Exchange of India
Limited (NSE'). The Company has paid the requisite listing fees to the Stock
Exchanges for the financial year 2023-24.
PUBLIC DEPOSITS
During the year under review, the Company has not accepted any deposits from Public /
Members under Section 73 of the Act read with the Companies (Acceptance of Deposits)
Rules, 2014 and as such no amount of principal or interest was outstanding as on the date
of the Balance sheet.
STATUTORY AUDITORS AND AUDITORS' REPORT
As per the requirement of sections 139(2) of the Act, M/s. S.R. Batliboi & Co. LLP,
Chartered Accountants (Firm Registration No. 301003E/E300005), were appointed as the
Statutory Auditors of the Company for a term of five consecutive years at the third Annual
General Meeting of the Company held on August 3, 2020.
The Auditors' Report on the Financial Statements of the Company for the year under
review does not contain any qualifications, adverse or disclaimer remarks. No fraud has
been reported by the Auditors to the Audit Committee of the Company or to the Board. The
Notes on financial statement referred to in the Auditors' Report are self-explanatory and
do not call for any further comments.
SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT
The Board had appointed Mr. S.M Gupta of M/s. S. M. Gupta & Co., Company
Secretaries, as the Secretarial Auditor of your Company to conduct Secretarial Audit of
the Company for the financial year 2022-23.
Secretarial audit of secretarial and related records of the Company were conducted by
the aforesaid Secretarial Auditor and a copy of the Secretarial Audit Report is annexed to
this Report as Annexure-D. Secretarial Audit Report of Natures Basket Limited, the
material unlisted subsidiary of the Company, is also attached to the Report as Annexure-D1.
None of the above Secretarial Audit Reports contain any qualifications, reservations,
adverse remarks or disclaimers.
SECRETARIAL STANDARDS
During the year under review, the Company has complied with all the applicable
Secretarial Standards issued by the Institute of Company Secretaries of India and notified
by the Ministry of Corporate A_airs, Govt. of India, relating to Meetings of the Board of
Directors and General Meeting(s).
RELATED PARTY TRANSACTIONS
All contracts / arrangements / transactions entered into by the Company with related
parties during the financial year were in in accordance with the provisions of the
Companies Act, 2013 and the SEBI Listing Regulations. All such contracts or arrangements
were executed in the ordinary course of business and at an arm's length basis and approved
by the Audit Committee. During the year, the Company had not entered into any contract /
arrangement / transaction with related parties having potential conflict with the
interests of the Company and which could be considered materially significant. Hence, the
disclosure of Related Party Transactions (RPT) (in Form AOC-2) as required under Section
134(3)(h) of the Act is not applicable to the Company for the financial year 2022-23.
The Policy on materiality of RPT and on dealing with RPT as approved by the Board is
available on the Company's website and can be accessed at
http://www.spencersretail.com/investor.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the financial year under review, the Company has complied with the provisions of
Section 186 of the Act, with respect to loans given, investments made and
guarantee/comfort provided etc. and details thereof are given in the notes to the
financial statements.
COMMITTEES OF THE BOARD
The Board has constituted following statutory Committees according to their respective
roles and defined scope:
1) Audit Committee,
2) Nomination and Remuneration Committee,
3) Stakeholders' Relationship Committee,
4) Corporate Social Responsibility Committee and
5) Risk Management Committee
Details of the composition, terms of reference and number of meetings held for
respective committees are given in the Report on Corporate Governance.
The various Committees of the Board focus on specific areas and make informed decisions
in accordance with the relevant regulatory requirements and terms of reference.
CODE OF CONDUCT
The Company has adopted a Code of Conduct for its Directors and senior management
personnel and the same can be accessed at: http://www.spencersretail.com/investor.
All Directors and senior management personnel have a_rmed the compliance with the Code
of Conduct and Ethics for Directors and Senior Management.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) and 134(5) of the Act, your Directors, to the best of
their knowledge and belief, confirm that: a) in the preparation of the accounts for the
financial year ended March 31, 2023, the applicable Indian accounting standards have been
followed along with proper explanation relating to material departures, if any; b)
appropriate accounting policies have been selected and applied consistently and judgments
and estimates have been made that are reasonable and prudent so as to give a true and fair
view of the state of affairs of the Company at the end of the financial year and of the
loss of the Company for the period; c) proper and sufficient care has been taken for the
maintenance of accounting records in accordance with the provisions of this Act for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities and during the year under review, neither the statutory auditors nor the
secretarial auditors reported to the Audit Committee of the Board, any instances of fraud
committed against the Company by its officers or employees. d) the annual account have
been prepared on a going concern basis; e) internal financial controls laid down by the
directors have been followed by the Company and that such internal financial controls were
adequate and operating effectively and; f) proper systems to ensure compliance with the
provisions of all applicable laws were in place and were adequate and operating
effectively.
BOARD EVALUATION
In order to ensure that the Board and Board Committees of the Board are functioning
effectively and to comply with the statutory requirements, the annual performance
evaluation of the Board, Board Committees of the Board and Individual directors were
conducted during the year. The evaluation was carried out based on the criterion and
framework approved by the NRC. A detailed disclosure on the parameters and the process of
Board evaluation as well as the outcome has been provided in the Report on Corporate
Governance.
INDEPENDENT DIRECTORS MEETING
The Independent Directors of your Company met on February 14, 2023, without the
attendance of Non-Independent Directors and members of the management. The Independent
Directors reviewed the performance of Non-Independent Directors, the Committees of the
Board and the Board as a whole alongwith the performance of the Chairman of the
Company and assessed the quality, quantity and timeliness of flow of information
between the management and the Board that is necessary for the Board to effectively and
reasonably perform their duties.
CRITERIA ON BOARD DIVERSITY AND DIRECTOR ATTRIBUTES AND REMUNERATION POLICY FOR
DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The Company recognises the importance of a diverse Board in its success and believe
that a truly diverse Board will leverage differences in thought, perspective, industry
experience, knowledge and skills including expertise in financial, global business,
leadership, technology, and other domains, will ensure that Company retains its
competitive advantage.
In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with
Part D of Schedule II to the SEBI Listing Regulations, NRC is authorised / empowered for
determining qualification, positive attributes and independence of a Director. Additional
details on Board diversity are available in the Corporate Governance that forms part of
this Report. The NRC is also empowered for recommending to the Board, a policy relating to
the remuneration of the Directors, Key Managerial Personnel and other employees. The
Company has devised inter-alia the Remuneration Policy and the same can be accessed on the
Company's website at http://www.spencersretail.com/investor.
RISK MANAGEMENT
Your Board has formed a Risk Management Committee to frame, implement and monitor the
risk management plan of the Company. The Committee has been entrusted with the
responsibility to assist the Board in a) overseeing, monitor and review the risk
management plan and ensuring its effectiveness. b) ensuring that all material Strategic
and Commercial including Cybersecurity, Safety and Operations, Compliance, Control and
Financial risks have been identified and assessed and c) ensuring that all adequate
risk mitigations are in place, to address these risks. The Audit Committee has additional
oversight in the area of financial risks and controls. The major risks identified by the
businesses and functions are systematically addressed through mitigating actions on a
continuing basis.
CORPORATE SOCIAL RESPONSIBILITY
In accordance with Section 135 of the Act and the Rules made thereunder, the Company
has formulated a Corporate Social Responsibility Policy, a brief outline of which along
with the required disclosures are annexed as Annexure-E as a part of this Report.
No amount was required to be spent by the Company on CSR activities during the financial
year as the Company had incurred continuous losses in the past.
The aforesaid CSR Policy has also been uploaded on the Company's website and may be
accessed at http://www.spencersretail.com/investor.
VIGIL MECHANISM / WHISTLEBLOWER POLICY
Pursuant to the guidelines laid down under Section 177 of the Act, and the Rules made
thereunder read with the SEBI Listing Regulations, the Company has a Whistleblower Policy
(Vigil Mechanism) in place for reporting any actual or potential concerns pertaining to
any instances of irregularity, unethical practice and / or misconduct. The Vigil Mechanism
provides a mechanism for employees of the Company to approach the Chairman of the Audit
Committee of the Company through Company Secretary, for redressal of any irregularity,
unethical practice and/or misconduct. No person has been denied access to the Chairman of
the Audit Committee and there was no such reporting during the financial year 2022-23.
The policy has been disclosed on the Company's website and can be accessed at
http://www.spencersretail.com/investor.
ANTI SEXUAL HARASSMENT POLICY
The Company is committed to provide a safe and conducive work environment to all its
employees and associates and has zero tolerance towards sexual harassment at work place.
The Company has a policy on Prevention of Sexual Harassment at Workplace in line with the
requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition
& Redressal) Act, 2013. Adequate workshops and awareness programmes against sexual
harassment are conducted across the organisation. The Company has constituted an Internal
Committee(s) (ICs) to redress and resolve any complaints arising under the Prevention of
Sexual Harassment Act (POSH), Training / awareness programmes are conducted throughout the
year to create sensitivity towards ensuring respectable workplace.
Details of complaints received / disposed during the Financial Year 2022-23 are
provided in the Report on Corporate Governance. Further there was no complaint pending as
on March 31, 2023.
SUBSIDIARIES
As on March 31, 2023, the Company has two wholly-owned subsidiaries, Natures Basket
Limited (NBL) and Omnipresent Retail India Private Limited (ORIPL). NBL Limited is the
material Subsidiary of the Company.
In terms of the provisions of Regulation 24(1) of the SEBI Listing Regulations,
appointment of Independent Director of the Company on the Board of material Subsidiaries
is not applicable to NBL. The Company has formulated a Policy for determining Material
Subsidiaries. The Policy is available on the Company's website and can be accessed at
http://www.spencersretail.com/investor.
The Company has prepared consolidated financial statements for the Company and its
Subsidiaries in the form and manner which is in compliance with the applicable Indian
Accounting Standards and the SEBI Listing Regulations and the same has been audited by
M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, the Statutory Auditors of the
Company.
The consolidated financial statements for the financial year 2022-23 forms a part of
the Annual Report and shall be laid before the Members of the Company at the ensuing AGM
while laying its standalone financial statements. Further, the Auditors Reports of
Subsidiaries do not contain any qualifications, remarks or disclaimer. Pursuant to the
provisions of Section 129(3) of the Act read with Rule 5 of the Companies (Accounts)
Rules, 2014, a statement containing the salient features of the Financial Statements of
the Company's Subsidiaries in Form AOC-1 is attached to the consolidated Financial
Statements of the Company.
Furthermore, pursuant to the provisions of Section 136 of the Act, the Standalone
Financial Statements of the Company, Consolidated Financial Statements along with relevant
documents and separate Audited Financials Statements in respect of subsidiaries are
available on the website of the Company and can be accessed at
http://www.spencersretail.com/investor. Shareholders desirous of obtaining the Audited
Financials Statements of the Company's Subsidiaries may obtain by requesting the same.
COST RECORDS
The provisions of Section 148 of the Act pertaining to cost audit and maintenance of
cost records are not applicable to the Company.
EMPLOYEE STOCK OPTION
Your Company has formulated Spencer's Retail Limited Employee Stock Option Plan 2019
(ESOP Scheme') for benefit of its employees as per applicable regulations of
Securities and Exchange Board of India as amended from time to time and the said schemes
are in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations,
2021, as applicable. The purpose of above ESOP Scheme is to provide the employees with an
additional incentive in the form of options to receive the equity shares of the Company at
a future date.
The Company aims to reward employees of the Company for their continuous hard work,
dedication and support through ESOP. The main objective of the ESOP Scheme is to recognise
employees who are performing well, a certain minimum opportunity to gain from your
Company's performance thereby acting as a retention tool and to attract best talent
available in the market.
1,20,000 options were granted under the Employee Stock Option (ESOP), 2019 Scheme and
is being implemented through a trust viz. Spencer's Employee Benefit Trust
("Trust") in accordance with the provisions of SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021 and involves the secondary market acquisition
of the Company's equity shares by the Trust through the Stock Exchanges.
Details with respect to employee stock options under the ESOP Scheme as on March 31,
2023 are provided in the table below:
Particulars |
Number of Equity Shares / Options |
1. Total number of options outstanding at the beginning of the year |
90,000 |
2. Total number of options granted under ESOP Scheme during the Year |
NIL |
3. Options vested during the year |
30,000 |
|
77 |
Particulars |
Number of Equity Shares / Options |
4. Options exercised during the year |
NIL |
5. Options lapsed or forfeited during the year |
1,20,000 |
6. Total number of options outstanding at the end of the year |
0 |
The total number of options outstanding at the end of the year was Nil as Mr. Devendra
Chawla, who was granted the aforementioned options has resigned from the Company w.e.f.
January 20, 2023 and he has not exercised the said options within 2 months of his
resignation. Hence, as per the terms and conditions of the said ESOP Scheme, the options
granted as well as vested has lapsed.
A certificate from Mr. S.M Gupta of M/s. S.M Gupta & Co, Secretarial Auditors of
the Company, with respect to the implementation of the Company's Employee Stock Option
Scheme(s), would be kept at the ensuing Annual General Meeting of the Company for
inspection of the Members.
AWARDS AND RECOGNITIONS
The Company has been a proud recipient of numerous awards and recognitions during the
year 2022-23. The significant ones among them are listed hereunder: Certified as
"Great place to Work" 4th Year in a Row.
Spice Icon Award 2022.
Golden Spoon Award: Images Most Admired Food & Grocery Retailer of the Year
Supermarket Chain National. Innovative Retail Concept of the Year
Launch of Spencer's Value Market.
Retailer of the Year Food & Grocery - Spencer's Retail Limited. The
Human Side of Things for Apprenticeship Project Implementation.
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE
COMPANY
There are no material changes and commitments, affecting the financial position of the
Company that have occurred between the close of the financial year ended on March 31, 2023
and the date of this Board's Report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY ANY REGULATORS, COURTS AND
TRIBUNALS
No significant and material order have been passed by any Regulator(s), Court(s) and
Tribunal(s) impacting the going concern status and the Company's operations in future.
CORPORATE INSOLVENCY RESOLUTION PROCESS INITIATED UNDER THE INSOLVENCY AND BANKRUPTCY
CODE, 2016 _IBC_
There are no proceedings, initiated by any Financial Creditor or Operational Creditor
or by the Company, under the Insolvency and Bankruptcy Code, 2016 as amended, before
National Company Law Tribunal or other courts during the financial year 2022-2023.
CHANGE IN THE NATURE OF BUSINESS
During the year under review, there was no change in the nature of the business of the
Company.
INTERNAL FINANCIAL CONTROL _IFC_ AND THEIR ADEQUACY
The Company maintains adequate internal control systems, policies and procedures for
ensuring orderly and efficient conduct of the business, including adherence to the
Company's policies, safeguard of its assets, prevention and detection of frauds and
errors, accuracy and completeness of the accounting records and timely preparation of
reliable financial disclosures in all areas of its operations. The services of internal
and external auditors are sought from time to time. The Company believes that it has sound
internal control systems commensurate with the nature and size of its business. The
Company continuously upgrades these systems in line with best-in-class practices.
The reports and deviations are regularly discussed with the Management and actions are
taken, whenever necessary. The Audit Committee of the Board periodically reviews the
adequacy of the internal control systems.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN
EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under sub-section (3)(m) of Section 134 of the Act, read
with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed hereto and forms part of
this Report (Annexure-F).
PARTICULARS OF EMPLOYEES
As required under the provisions of Section 197 of the Act and Rule 5(3) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, particulars
of the concerned employees forms a part of this Report. However, as per the provisions of
Section 136(1) of the Act, the Annual Report and Accounts are being sent to all the
members of the Company excluding the aforesaid information. The said statement is also
available for inspection by the shareholders at the Registered Office of the Company
during business hours on working days of the Company. Any member interested in obtaining
such particulars may write to the Company Secretary of the Company through email at
spencers.secretarial@rpsg.in. The same will be replied by the Company suitably.
None of the employees listed in the said Annexure are related to any Director of the
Company.
Disclosure pertaining to remuneration and other details as required under Section
197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, are annexed hereto and forms part of this Report (Annexure-G).
INDUSTRIAL RELATIONS
Industrial relations in the Company continued to be cordial during the year. A detailed
section on the Company's Human Resource initiatives is forming part of the Management
Discussion & Analysis annexed to this Report.
GREEN INITIATIVES
Pursuant to the relevant circulars issued by Ministry of Corporate Affairs (MCA),
Government of India and Securities & Exchange Board of India (SEBI), Notice of the
sixth AGM and the Annual Report of the Company for the year 2022-23, are being sent to the
Members only by email.
The Company supports the Green Initiative' undertaken by the MCA, enabling
electronic delivery of documents including Annual Report etc. to Members at their e-mail
address already registered with the Depository Participants ("DPs") and
Registrar and Transfer Agent ("RTA"). Additionally, the Company conducts various
meetings by means of electronic mode in order to ensure the reduction of carbon footprint.
In view of the above, shareholders who have not yet registered their email addresses
are requested to register the same with their DPs/ the Company's RTA for receiving all
communications, including Annual Report, Notices, Circulars etc. from the Company
electronically.
ACKNOWLEDGEMENTS
Your Directors wishes to place on record their appreciation for the valuable services
rendered by the employees of the Company, across levels. The Directors would also like to
express their appreciation to the bankers, the regulatory authorities, the trade
suppliers, the customers, the financial institutions and the shareholders for their
continued support and co-operation.
|
On behalf of the Board of Directors |
|
Dr. Sanjiv Goenka |
Place: Kolkata |
Chairman |
Date: May 22, 2023 |
(DIN 00074796) |
Management
Discussion and Analysis
(Annexure A' to the Board's Report)
Spencer's Retail Limited (Spencer's' or SRL' or The Company'), a
multi-format modern trade retailer in India, is part of the RP-Sanjiv Goenka Group
(referred to as RPSG Group' or the Group'). The Company and its subsidiaries
engage in various categories of retail business, including staples, fast-moving consumer
goods (FMCG), and non-food items such as fashion, general merchandise, personal care, home
essentials, electrical and electronics. The FMCG category comprises food items such as
processed food, beverages, fruits and vegetables, fish and meat. SRL is known for its
unique brand image among its customers, backed by its specialty section that includes
Spencer's gourmet, patisserie, wine, and liquor. Additionally, the Company has taken a
significant step forward by introducing a new set of value market' store format,
which cater specifically to consumers who are value-conscious. With the latest edition of
the value market stores along with the wholly-owned subsidiary Natures Basket Limited
(Natures Basket' or NBL'), Spencer's is now catering to various consumer
classes i.e., the premium / gourmet segment, the aspirational, and the value-conscious.
Along with Omnipresent Retail India Private Limited (ORIPL), the Company's e-commerce
division, Spencer's has completely adopted the modern retailer business model to integrate
seamless service to its customers, both offline and online, and foster inclusive business
growth in the industry.
Global Economic Overview
The global economy showed exceptional resilience, as evidenced by robust labour
markets, substantial household consumption and business investments. The year 2022 brought
along some tough winds, impacting the global economy's overall growth run. But despite all
the challenges, it could not derail the economy from its growth trajectory and even showed
optimism in the latter half of the year. According to the International Monetary Fund's
World Economic Outlook, published in April 2023, the global economy grew by 3.4% in 2022.
Governments across the globe, responding to the challenges encountered by the world
economy, implemented tighter monetary policies and structural reforms. They increased
government spending to stimulate economic activities and improve the economy's outlook.
Thus, helping create a more stable and prosperous global economic environment.
After the Covid-19 pandemic, the world economy saw a rapid recovery in economic
activity, which was soon overshadowed by rising inflationary pressures that persisted
through the first half of 2022. According to IMF World Economic Outlook, April 2023, the
estimated real GDP growth figures for the advanced economy are 2.7% in 2022 and 1.3% in
2023. The estimated figures for emerging economies are anticipated to be 4.0% for 2022 and
3.9% for 2023. But with stricter monetary and financial policies onboard, the global
economy has gradually started to witness subdued inflationary risks from 2022 onwards.
According to IMF, global inflation is estimated to decline from 8.7% in 2022 to 7.0% in
2023, and to 4.9% by 2024. This forecast indicates the positive impact of the policies
implemented to counter the rising inflationary pressures and reflects the overall
stability of the global economy.
(Source:
https://www.imf.org/en/Publications/WEO/Issues/2023/04/11/world-economic-outlook-april-2023)
OUTLOOK
The year 2022 saw price volatility and inflation as the prime cause of concern globally
for the economy and policymakers alike. Looking ahead into 2023, we anticipate the
economic outlook to maintain a moderate stance, much like 2022, with an estimation of 2.8%
growth. In this challenging external environment, contractionary monetary policies will
likely continue to be implemented, while fiscal policies are expected to alleviate
cost-of-living pressures, in line with the adhered monetary policies.
ECONOMIC GROWTH TREND _REGION-WISE % CHANGE_
Indian Economic Overview
Indian economy has distinguished itself as the fastest-growing entity among major
economies. In the first half of 2022-23, the country achieved a robust growth of 9.7%
according to the Monthly Economic Review, November 2022 by the Department of Economic
Affairs. A sharp rebound of economic activities, especially the private sector consumption
and increased Government thrust on uplifting infrastructure, helped India sustain to
steady growth momentum.
In the first quarter of 2022-23, persistent inflationary pressure compelled the Reserve
Bank of India (RBI) to recalibrate its monetary policies. As a result, the Indian economy
has started to experience the easing of the inflationary grip while the inflation stood
moderate during the third quarter. This transformation in the economy is aiding the demand
scenario in the domestic market and enabling the country's economic wheel to roll in a
geared momentum.
The adoption of calibrated monetary policies aimed at controlling inflation, coupled
with steady growth in service activity, boosted demand and increased consumption. Due to
the higher inflationary pressure on food prices, retail inflation saw a three-month high
in January 2023. Previously retail inflation was led by a 12-month low in December 2022 at
5.72%, which went beyond the 6% tolerance band in January 2023.
(Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1894932
https://www.imf.org/en/Publications/WEO/Issues/2023/01/31/world-economic-outlook-update-january-2023
https://www.thehindu.com/business/Economy/expecting-slowdown-in-indian-economy-to-61-in-2023-from-68-in-2022-says-imf/article66452776.ece
https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=55178
https://www.hindustantimes.com/india-news/retail-inflation-shoots-up-to-3-month-high-of-6-5-in-jan-as-food-prices-bite-101676312602815.html
https://indianexpress.com/article/business/economy/core-inflation-continues-to-be-sticky-elevated-rbi-governor-8408576/
https://www.hindustantimes.com/business/iip-growth-declines-to-4-3-in-december-2022-nso-data-101676281033398.html
https://eaindustry.nic.in/eight_core_infra/eight_infra.pdf Monthly Economic Review,
November 2022 by Department of Economic Affairs)
OUTLOOK
International Monetary Fund (IMF) has maintained its growth projection of 6.8% for
India during the current fiscal year. However, owing to the external headwinds, the figure
might decline to 6.1% in 2023 and is anticipated to move up to 6.8% in 2024. With
increased Government spending announced in union Budget 2023-24 and a rise in private
consumption and investment, economic activity will further boost demand. Despite the
ongoing growth momentum, the Indian economy remains exposed to the impact of global
spillovers, which could potentially disrupt the trend. Therefore, while remaining
cautiously optimistic, it is essential to maintain vigilance and prudence in the near
future.
Indian Economy: A Snapshot
Indian Retail Industry
The retail industry has become one of the most dynamic and rapidly growing sectors in
India, currently ranking as the third largest contributor to India's GDP, accounting for
~10%. With an expected valuation of uS$ 2 trillion by 2032, the retail industry is poised
for growth. It functions around four formats: exclusive branded retail shops,
multi-branded retail shops, convergence retail outlets and e-retailers. The Indian retail
sector is a diverse competitive landscape, with a range of players, including departmental
stores, hypermarkets, supermarkets, cash and carry stores, and specialty stores. In-store
retailing remains the dominant channel in the market, but E-retailers are also gaining
popularity, driven in part by a shift in demographic preferences for online shopping
experiences over traditional offline methods. This trend has led the industry to undergo
operational transformations, and players are rapidly adopting new technologies to shape
the industry's future. As a result, many retail brands are transitioning towards a OMNI
Channel model to remain competitive in the changing retail landscape.
The retail business in India is witnessing opportunities owing to the robust recovery
in the domestic consumption pattern. The urban Indian consumer's purchasing power is
increasing along with the branded goods in categories like apparel, cosmetics, footwear,
watches, beverages, food, and even jewellery are gradually evolving into business and
leisure that are well-liked by the urban Indian consumer. Changing consumer preferences
coupled with emerging trends like seamless' retail, next-gen stores,
personalisation, the rise of new ecosystems, and emerging revenue models are likely to
shape the retail landscape in India. Recognising these trends and responding to them
proactively and in an agile manner will ultimately enable retailers to create a winning
strategy for the future.
OUTLOOK
The retail industry will be marked by a transitional development phase, driven by the
shift in consumer preferences towards online shopping experiences. Retail players are
responding to this trend by creating seamless retail experiences that are fully integrated
across all channels, rather than distinguishing between offline and online consumption
channels.
The traffic generation from e-commerce is disrupting the retail space. Technological
advancement has significantly transformed supply chain, production, and retail sales,
developing customer insight is vital for retail organisations whether for service
customisation or presence across multiple channels. According to Bain & Company
research, the e-retail division is anticipated to increase to uS$ 150-170 Billion by 2027
with a 25-30% annual growth rate. Also, the market penetration by e-commerce is
anticipated to grow to 9-10% five years down the line.
SPENCER'S TAKE
Spencer's has established itself as a multi-format modern retailer in India's organised
retail market. With both large format stores in Spencer's and small format stores in both
Spencer's & Natures Basket along with the new value market stores, the Company strives
to effectively cater to customer demands.
The Company's large format stores account for 85% of total sales, small format stores
(including Natures Basket) account for 15% of total sales. Going ahead, the Company's
OMNI-Channel' business model is expected to play a major role in driving growth in
the Indian retail industry. The accelerated shift to online sales with people decreasingly
bifurcating between online and offline shopping channels, retailers were agile in shifting
to digital platforms to sell their products and develop capabilities to meet the
increasing demand for door-step deliveries.
At Spencer's, a capable digital team contributes significantly to the Company's online
sales. The Company's mobile app and website enable a seamless customer shopping
experience. It continues to strengthen its OMNI-Channel' distribution along with its
brick-and-mortar stores. The Company also cater to its customers through phone and
ordering to enhance its Out-Of-Store' channel. This enabled Spencer's to stay
resilient amid challenges, facilitating a revenue growth of 6.6 % in 2022-23. At
Spencer's, the Company's digital team plays a vital role in scaling its online sales.
Spencer's ensure both its website and mobile app are continually improved and updated for
a better experience. Spencer's is committed to grow and strengthen its OMNI-Channel'
distribution strategy. This includes its online and brick-and-mortar stores.
Indian Retail Market Size
Indian Retail Sector: Opportunities and Challenges
OPPORTUNITIES
Changing Consumer Preferences
Today's consumer landscape shows a growing preference for one-stop-shop destinations,
from food and fashion to daily grocery requirements. More and more consumers are now
seeking comprehensive solutions under a single roof. Modern retailers aim to offer their
customers a personalised and seamless shopping experience. They prioritise providing a
high-quality journey that requires minimal manual intervention. Additionally, many retail
chains offer loyalty points, membership discounts, and other enticing offers to attract
and retain customers. These factors have contributed to expanding the customer base and
increasing preference for organised retail in India.
SPENCER'S TAKE
We, at Spencer's, keep ourselves updated according to the dynamic consumer preferences.
We are a one-stop destination with differentiated offerings and private brands catering to
the customers' requirements. Spencer's provides a good in-store experience, backed by
ambient, well-lit stores, standardised, scientific store design. This ensures higher
cross-selling, benchmarking methods, pricing competitiveness, exceptional tailored offers,
and short queue waiting times.
Under-penetrated Market
The Indian organised retail segment is an under-penetrated space and accounts for a
lower share percentage compared to developed and emerging countries. This indicates the
tremendous untapped potential in the segment. Over the last decade, evolving consumption
patterns have led to increasing demand from Tier - II & III cities, and due to
incremental urbanisation, the same demand traction has also been witnessed from Tier IV
cities.
SPENCER'S TAKE
Spencer's is leveraging its wide presence in the Indian markets. The Company is opening
stores in existing clusters by deepening presence in the relevant market, keeping its
profitability and sustainable growth aspects in mind. This makes the Company poised to tap
potential opportunities due to rising industry demand. The recent value market stores
launched by the Company owing to the incremental demand from regions, is the latest
endeavour to tap the under-penetrated market.
OMNI-Channel' Model
Breaking down boundaries between communication channels and providing a single
integrated brand experience across multiple touch points necessitate transitioning from a
multi-channel environment to an OMNI-Channel' ecosystem. An OMNI-Channel'
business model is imperative to meet consumers' potential needs. Convenience store
merchants have access to the necessary skills and resources to manage and operate this
retail channel effectively. By being closer to their customers and catering to diverse
needs, they are well-positioned to provide increased convenience. The implementation of an
OMNI-Channel' strategy, combined with expanded store penetration, will result in
faster product delivery and shorter turn-around times, ultimately enhancing the efficiency
of the overall business model.
SPENCER'S TAKE
Spencer's strengthen itself to become a fully-integrated OMNI-Channel' retailer
and for this purpose, the Company chose a hyper-local strategy. Contacting clients
directly and with contactless delivery via its Out-of-Store' channels to capitalise
on e-commerce. Introduction of new brands, goods, markets, and servicing in other
locations are other factors further providing expansion prospects to the Company.
Demographical Advantage
In India, Spencer's Retail Limited benefits from favourable demographic trends. The
number of middle-class customers is steadily increasing, and nuclear households are
predicted to reach 74% by 2025. Nuclear households spend 30% more per capita than combined
families. This growth is driven by a young working population with a median age of 24,
expanding metropolitan nuclear families, a rising number of working women, and
opportunities in the service sector. These demographic advantages position Spencer's
Retail Limited to tap into the growing demand and succeed in the dynamic Indian retail
industry.
SPENCER'S TAKE
The Company is expanding its footprints with a cluster-based approach so that serving
the customers can be addressed proximity based. This will provide the customers to avail
Spencer's services with greater ease and increase the footfall in the stores.
Concentrating stores in a cluster can lead to economies of scale for the Company in terms
of procurement, inventory management, and marketing expenses. ultimately, this will
maximise the potential of a specific geographic area by creating a concentration of
complementary stores.
Urbanisation in the Retail Sector
Rise in urbanisation makes more people concentrated in one location. This, in turn,
makes it increasingly easier to attract and serve more and more customers in a single
retail chain today.
SPENCER'S TAKE
Owing to the incremental demand outside from the established store concentration areas,
Spencer's has launched its new format of value market stores to efficiently cater the
demand and generate maximum outcome from the newer opportunities. These stores
particularly concentrate on urbanised areas to tap the opportunities within the
value-conscious customer segment.
Atomic Family
Over time, the joint family structure has evolved to adapt to the changing times and
has taken a new form of atomic or nuclear families. Today, with both partners working,
purchasing power of families is also rising. However, there is also a growing lack
of time' for day-to-day activities like grocery shopping. This is why the whole concept of
organised retail, which provides a one-stop retail solution under a single roof, is
becoming popular each day.
SPENCER'S TAKE
Spencer's has been one of the early entrants in the organised retail space. The Company
provides its customers with various retail solutions under a single roof for both food and
non-food items. The Company's position as a frontrunner in the industry gives it an edge.
Employment Opportunities Generated by Spencer's
Today's retail marketing is the largest job-generating industry. Employment in the
retail industry is provided to skilled, semi-skilled and unskilled persons who contribute
to the country's socio-economic development. Spencer's new stores/outlets are providing
newer employment opportunities for the community, thus contributing to the economic growth
of society and promoting betterment.
High Costs of Real Estate Properties Real estate prices in
Indian cities are increasing heavily. The lease or rent of the property is one of the
major areas of expenditure. A high lease rental reduces the profitability of a project. It
is difficult to find suitable properties in central locations for retail. |
CHALLENGES Competitive Pricing There is a price war between
different retail organisations, with everyone providing goods at low cost and offering
various promotional schemes. In such a case, retaining one's customers and expecting
loyalty from old ones is difficult. |
The Dominance of the Unorganised Sector The very first challenge
faced by the organised retail industry in India is competition from the unorganised
sector. Traditional retailing has been established in India for centuries. It is a
low-cost structure, mostly owner- operated, has negligible real estate and labour costs
with little or no taxes to pay. Customer familiarity that runs from generation to
generation is one big advantage for the unorganised sector. |
Indian Organised Retail Industry
The Indian retail industry is primarily divided into two subcategories Viz. traditional
retail and organised retail. Traditional retail is the predominant form of retail while
organised retail is a comparatively less penetrated option in India. In recent times,
there has been a notable shift in consumer preference towards a one-stop shopping
destination-kind of experience', which only organised retail can offer. The evolving
demographic landscape further amplifies this change.
In recent times, the retail segment in India has witnessed exponential growth primarily
driven by the incremental domestic consumption, increased household income, innovative
financing, and the convenience of digital payment. According to a report jointly published
by the real estate consultant ANAROCK and Retailers Association of India, the top 7 cities
in India (Bengaluru, Chennai, Hyderabad, Kolkata, MMR, National capital region (NCR), and
Pune) have added over 2.6 Million sq. ft. of mall space in 2022 27% higher than
2021. From the revenue part, the organised retail to witness 17-22% growth, backed by the
demand revival and increased penetration whereas the operating margin of the
brick-and-mortar retail is expected to expand by 14-16%. The notable fact is that the
brick-and-mortar segment encapsulates the 68% share in the retail market.
With the perception of the Indian retail sector transforming, retailers continue
altering their store models to meet the diverse customer demands across markets and
geographies. Owing to the rapid and widespread urbanisation in the Tier II & Tier III
cities, organised retail outlets are now becoming increasingly popular as a destination
for modern retailers. This enables the industry to grasp a greater market share among the
population while penetrating into underserved geographies with untapped opportunities.
Despite greater penetration of organised retail in the Indian market, the headroom for
growth is exceptionally vast. On a comparative note, the penetration of organised retail
in India is only 11.1% while it is 85% in uSA.
OUTLOOK
The Indian organised retail sector demonstrates a positive outlook, driven by policy
reforms and the growing trend of urbanisation. This industry's expansion is fuelled by a
consumption boom, resulting in greater disposable income, a focus on hygiene, evolving
lifestyles, and easy borrowing and usage of Buy Now & Pay Later' models.
Thereby, contributing significantly to India's robust and rising consumer culture.
Moreover, secure and hassle-free financial transactions enhance consumer trust and
encourage greater utilisation of e-commerce platforms and services. With retail activities
gradually returning to pre-pandemic levels and demand resurging, several international
brands operating in the Retail and F&B sectors are expressing interest in the Indian
retail landscape. This trend is expected to drive further growth across these sectors in
the future.
(Source:
https://wealthdesk.in/blog/what-is-ondc-and-how-will-it-impact-indias-retail-market/
https://retail.economictimes.indiatimes.com/files/cp/1294/cdoc-1661333692-ECOM_july_7_5in%20x%208in_Correction.pdf)
SPENCER'S TAKE
Spencer's caters to ~72% segment of India's overall organised retail market, comprising
Food and Grocery, Apparels, General Merchandise, Consumer Durables, Mobile and IT,
Furniture and Household items and Footwear. With only ~5% market penetration, the Grocery
industry offers significant growth potential for modern trade. Spencer's is poised to
benefit from these potentials given its capabilities, market understanding and diversified
offerings.
(Source: CRISIL Research)
Spencer's is well-versed in current industry trends, and the Company's experience
allows it to continually analyse its stores and drive efficiency, extend its consumer
base, and launch new stores. Further, the Company has expanded its reach by launching a
new value market stores. During the year, the Company launched 10 new value market stores,
totalling 1.45 lac sq ft. As part of its ongoing action plan, the Company is focussed on a
hybrid brick & mortar store model and OMNI-Channel' distribution.
Indian E-Commerce Industry Overview
The Indian e-commerce industry is witnessing a progressive momentum owing to the
increased penetration of mobile phones coupled with lower data carrier charges. The Indian
e-commerce industry has been on an upward growth trajectory and is expected to surpass the
uS to become the second-largest e-commerce market in the world by 2034. During the
COVID-19 pandemic, the e-commerce sector witnessed a consumer demand surge, which
sustained even after the situation improved. The widespread penetration of the internet
and smartphones and the rapid adoption and maturation of digital transactions has further
propelled the industry's growth. As a result, the e-commerce industry has been able to
capture a significant market share within a relatively brief period. The e-commerce market
is expected to touch $350 Billion in GMV (Gross Merchandise Value) by 2030.
Technology-enabled innovations like digital payments, hyper-local logistics,
analytics-driven customer engagement and digital advertisements will likely support the
growth in the sector. India is also planning to introduce Open Network for Digital
Commerce (ONDC). ONDC will enable e-commerce platforms to synchronise search results on
all the e-commerce platforms and display products and services from every platform. This
will further boost business for MSMEs (Micro, Small and Medium Enterprises) and help fuel
India's e-commerce growth. The growth in the sector will further encourage employment,
increase revenues from export, increase tax collection by exchequers, and provide better
products and services to customers in the long term. According to NASSCOM, the Indian
e-commerce sector is anticipated to be worth uS$ 200 Billion by 2030 as a result of
increased analytics, transactions, and internet penetration. Indian e-retail industry is
projected to exceed 300-350 Million shoppers, propelling the online Gross Merchandise
Value (GMV) to uS$ 100-120 Billion by 2025. According to Bernstein report, India's
e-commerce market is expected to reach ~uS$133 Billion by 2025 while the penetration is
going to be double in next 5 years. The e-commerce industry is gradually penetrating in
Tier 2 & 3 cities. By 2025, the direct-to-customer (D2C) e-commerce market is
anticipated to reach a worth of Rs. 100 Billion, a 32-times growth over 2023. Around 53%
of the consumers are from non-metros and 80% of Indian consumers prefer to shop from
smartphones. Considering these penetrations to go deep in future as well, the e-commerce
industry in the country is yet to witness its optimal growth.
OUTLOOK
The fast-paced internet and smartphone penetration are among the key enablers of
e-commerce in the country, at present. The total number of internet subscribers reached
836.86 Million in June 2022 while the smartphone base is expected to reach 1 Billion by
2026. This is in line with the forecast of India's digital sector reaching uS$ 1 Trillion
in internet Gross Merchandise Value (GMV) by 2030. Rapid technology upgradation and
adoption on a wide scale are transforming the retail industry. India's e-commerce sector
has thereon opened up various segments of commerce ranging from business-to-business
(B2B), direct-to-consumer (D2C), consumer-to-consumer (C2C) and consumer-to-business
(C2B). Major segments such as D2C and B2B have experienced immense growth in recent years.
India's D2C market is expected to reach uS$ 60 Billion by 2026-27. The overall e-commerce
market is benefiting from the boom in high-speed internet and smartphone penetration along
with the rise in income. With this,the e-commerce sector is expected to reach uS$ 350
Billion by 2030, and experience 21.5% growth in 2022 by touching uS$ 74.8 Billion.
SPENCER'S TAKE
We began our journey as an OMNI-Channel' player, serving clients through our
shops, e-commerce websites, and mobile application. We have enhanced our online platform
to provide seamless service delivery to our customers. Capitalising on the opportunities
that were boosted during the COVID-19 pandemic, we started pushing our efforts towards our
e-commerce subsidiary ORIPL (Omnipresent Retail India Private Limited). In 2022-23, ORIPL
registered its first-ever positive Operating Profit with a Gross Merchandise Value (GMV)
of Rs. 302 Crores.
Growth Of the Indian E-Commerce Market (2022-2030)
Growth Drivers of the E-Commerce Industry in India
ADVANCEMENTS IN TECHNOLOGY ADOPTION
The number of internet users in India is expected to grow to ~1 Billion by 2025 with
33% of them (330 Million) becoming online shoppers. The growing use of smartphones and
access to the internet via broadband, 4G, and 5G is predicted to increase the number of
online consumers. As a result, the e-commerce customer base is likely to grow in the near
term.
SPENCER'S TAKE
Spencer aims to leverage the OMNI-Channel network to reach customers directly. The
Company has invested heavily in multiple aspects to improve its customer experience. For
instance, the Company has enabled a touchscreen-driven point-of-sale system to scan the
available products quicker. Furthermore, contactless door-step deliveries, paperless
e-invoices, and digital payments through third-party payment processors are all available
to Spencer's customers.
SHOPPING EXPERIENCE
E-commerce humanises' the online shopping experience for users. It allows
customers to shop at their own ease with their preferences. The digital platforms have
options like sorting and filtering, which provide customers with a speedy shopping
experience while meeting their real-life expectations and requirements.
SPENCER'S TAKE
Spencer's has always strived to deliver an enhanced shopping experience by offering a
diverse product selection and a positive in-store experience. The Company includes a
bilingual call centre with professionals that handle client comments and questions from
all locations. Customers can contact the Company via various channels, including a
toll-free number, email, website, social media platforms. As a result, the Company
guarantees to reach a larger audience, assists them with their questions and feedback, and
provides them with a better purchasing experience every time. This backend assistance has
greatly aided the Company's ability to communicate with customers effectively.
Company Overview
Spencer's Retail Limited is an Indian multi-format contemporary retailer owned by the
RP Sanjiv Goenka Group. Headquartered in Kolkata, the Company, is among the leading
players in the FMCG space, with food and non-food items, including Fashion, Staples,
General Merchandise, Personal Care, Home Essentials, Electrical & Electronics and many
more. The Company's speciality sections are Gourmet, Patisserie and Wine and Liquor. As an
established player, Spencer's enjoys a healthy brand recall across its segments. With a
presence in over 44 Indian cities, Spencer's operates 186 Stores in India, including 35
Natures Basket Stores. The Company operates in three retail formats; small-format stores
with store sizes ranging up to 5000 sq. ft, catering to the daily and weekly top-up
shopping needs of consumers; large-format stores with store sizes over 5000 sq. ft. and
value market stores with average store sizes between 5,000-24,000 sq. ft.
Operational Overview
During 2022-23, the Company's revenue from operations stood at Rs. 2452 Crores with a
sustainable gross margin of 20.1%. This growth was mainly driven by the food and non-food
category mix (General Merchandise & Apparel), where the non-food mix touched its
highest figures in the previous three years to surpass the pre-COVID-19 pandemic levels.
During 2022-23, the Company's e-commerce business ORIPL also turned Operating Profit
positive for the first time with a GMV of Rs. 302 Crores. The growth was mainly attributed
to the consumer preference shift in the shopping medium. The Company also launched new
Value Market Store' format to capture the incremental demand from Tier III and Tier
IV cities due to increased urbanisation and demographic shift. These stores focus more on
value-conscious customers and will have a larger share of Spencer's private brands going
ahead.
Financial Review
Particulars |
Standalone for the Year ended |
Consolidated for the Year ended |
|
March 31 |
March 31 |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
Turnover (Figures In Rs. Crores) |
2210.16 |
2067.11 |
2485.16 |
2376.55 |
Return On Equity (%) |
(150.48%) |
(32.91%) |
N.A* |
(196.36%) |
Net Asset Value Per Share (Rs.) |
11.30 |
28.51 |
(16.69) |
6.86 |
Earnings Per Share (Rs.) |
(17.00) |
(9.38) |
(23.34) |
(13.48) |
*As the net-worth is negative as on March 31, 2023.
DETAILS OFS IGNIFICANT RATIOC HANGES
Financial Results |
2022-23 |
2021-22 |
% Change |
Reason for Change |
Interest Coverage Ratio |
(1.98) |
(0.41) |
387% |
|
Operating Profit Margin (%) |
(2.87%) |
(0.43%) |
570% |
|
Net Profit Margin (%) |
(7.03%) |
(4.23%) |
66% |
Increase in losses in current year |
Earnings Per Share (Basic) (%) |
(17.00) |
(9.38) |
81% |
|
Return on Net Worth (%) |
(150.48%) |
(32.91%) |
357% |
|
|
|
|
|
Increase in borrowings during the year and |
Debt Equity Ratio |
4.32 |
1.14 |
278% |
lower networth due to losses incurred in |
|
|
|
|
current year. |
|
|
|
|
Lower closing outstanding debtors and higher |
Debtors Turnover (Days) |
3.79 |
5.26 |
(28%) |
|
|
|
|
|
revenue during the year. |
|
|
|
|
Lower average inventory and higher revenue |
Inventory Turnover (Days) |
38.31 |
42.42 |
(10%) |
|
|
|
|
|
during the year. |
Current Ratio |
0.43 |
0.51 |
(16%) |
|
Consolidated |
|
|
|
|
Financial Results |
2022-23 |
2021-22 |
% Change |
Reason for Change |
Interest Coverage Ratio |
(2.42) |
(0.87) |
177% |
|
Operating Profit Margin (%) |
(3.90%) |
(1.09%) |
259% |
|
Earnings Per Share (Basic) (%) |
(23.34%) |
(13.48%) |
73% |
Increase in losses in current year |
Return on Net Worth (%) |
(139.83%) |
(196.36%) |
(171%) |
|
Net Profit Margin (%) |
(8.58%) |
(5.28%) |
62% |
|
Debt Equity Ratio |
(3.60) |
5.83 |
(162%) |
Increase in borrowings during the year and lower |
|
|
|
|
networth due to losses incurred in current year. |
Debtors Turnover (Days) |
3.45 |
4.48 |
(23%) |
|
Inventory Turnover (Days) |
39.06 |
41.89 |
(7%) |
|
Current Ratio |
0.42 |
0.50 |
(16%) |
|
Risk Management
Risk, at its core, involves the potential occurrence of adverse events. The way
Spencer's approaches risk management is the primary factor determining the Company's
ability to identify, evaluate, and effectively mitigate risks. This entails properly
assessing risks, using appropriate risk metrics, and ultimately succeeding in managing
them. By prioritising risk management, Spencer's can safeguard its operations and ensure
its long-term success. Each key risk type demands a specific set of skills and its
philosophical approach. Spencer's risk management framework has policies and procedures to
identify, evaluate, mitigate, and report risks. The Risk Management Committee, overseen by
the Board, identifies and evaluates threats using digital tools and draws mitigation
strategies accordingly.
Risk |
Description |
Mitigation |
I nventory Risk |
This risk of loss due to the unavailability of inventory leading to
customer dissatisfaction and reduction in customer loyalty. |
Store operations and supply chain teams regularly monitor inventory
levels to ensure adequate stock availability Flexible inventory procedure enables
real-time inventory reporting Analyses of essential data points to forecast inventory
levels allows timely reordering and maintenance of an adequate stock level |
I nflationary Risk |
The risk of loss due to the sudden change in prices because of unforeseen
conditions and procurement of products and fall in demand because of high prices. |
Regular analyses of inventory to promptly clear stock Prompt clearance of
stock through several in-store offers, coupons, and customised discounts. |
Competitive Risk |
The risk of loss to the Company arising from intense competition in the
retail store chain industry owing to differentiated products and new entrants of varying
sizes and store formats. |
Sustain brand visibility and differentiation through private brand
campaigns and other strategic initiatives. Implement strategies and campaigns to retain
and acquire customers, wherein Spencer's acquired Natures Basket for product range
expansion and widened customer base and reach. Specialty segments, including Spencer's
Gourmet, Patisserie, Wine and Liquor, and recently launched Epicuisine', provide the
Company with a much-needed differentiation. |
Supply Chain Risk |
The risk of potential loss to the Company due to supply-side delays
caused by interruptions in logistics and distribution networks. |
Distribution centres and third-party supply chain management for
logistical support help the Company mitigate this risk. Working closely with suppliers and
maintaining cordial relations with them helps mitigate this risk. |
Quality Risk |
The risk of loss of trust and customer confidence due to ineffective
product quality and services. |
Trained service team to patiently deal with customers' issues and
complaints, helps the Company ensure speedy and effective customer redressal. Regular and
rigorous quality and safety checks by quality team helps the Company ensure all quality
standards are followed. |
Human Resource Management
At Spencer's, people are regarded as the most vital assets for ensuring business
continuity. The Company recognises the importance of balancing personal growth and
professional development by providing a safe, conducive, and productive work environment.
Spencer's highly values its skilled and professional management team, viewing it as a key
driver for growth and success. To further improve business efficiency, devise prudent
strategies, set up robust systems, and become agile and dynamic to suit evolving industry
requirements, Spencer's relies on its experienced and talented employee pool. The Company
provides regular skill and personnel development training to improve efficiency and keep
employee morale high. The Company believes in providing equal opportunity to employers and
believes in nurturing diversity at workplace while ensuring equitable remuneration for
all. The Company hires people from all walks of life, across geographies. Being a
non-discriminatory employer that promotes value diversity at workplace, it hires people
with disabilities for roles that are friendly to their working condition as well.
Therefore, the Company remains dedicated to fostering a positive and healthy work
environment. With this, the Company strongly focuses on employee training and development.
Spencer's provides functional training and customer-first training programmes
Parichay', aimed at preparing its people for customer interaction. It also
provides further career development opportunities to the employees through its initiative
utthaan'. Creating an inclusive and supportive work environment at Spencer's is one
of its focus areas. Within this, employees are empowered in a way that encourages positive
behaviour, resulting in improved performance and value addition for customers. Therefore,
evaluation and recognition of top talents are undertaken through the Company's R&R
events such as umang' and utsav'. It believes that a motivated and happy
workforce, aligned with the organisational objects can propel the Company to the next
orbit of its growth. Spencer's has been recognised as Great Place to Work' for the
fourth year. As of March 31, 2023, the Company's consolidated talent pool stood at 5,462,
including women accounting for about 23% of the total workforce. Spencer's lays a great
focus on women's empowerment, encouraging female employees to participate in numerous
training programmes, such as Saheli' and Naari Shakti,' to nurture their
growth and development. Furthermore, the Company also employs individuals that would have
successfully National Apprenticeship Promotion Scheme (NAPS) training.
Spencer's Retail Limited, inaugurates its first all-women stores in the Eastern &
Southern India region, totally operated and managed by women employees at Mahamayatala in
Kolkata,
Habsiguda in Hyderabad and Royapettah in Chennai. The store team has 10 - 13 female
employees comprising of store operations team, riders, and security staff. The entire team
is committed to provide best-in-class shopping experience to our customers. This team
represents today's aspiring women of modern India who want to upgrade their skills and act
as breadwinners for their families. We, at Spencer's, have always empowered women
employees to come ahead and take lead roles and partner in the business. All women store
is yet another milestone achieved which showcases our diverse and inclusive culture
prevailing in the organisation. More than 22% of our employee workforce is fearless women
employees who not only manage their own homes but also manage Spencer's stores
effortlessly every single day.
I nternal Control System and Adequacy
Spencer's has implemented a comprehensive internal control framework to ensure the
protection of the Company in line with the size and intricacy of its financial reporting
and other operational data. The Company ensures all its processes are compliant to
established policies, procedures and statutory requirements. The Company has developed
well-documented guidelines, procedures for authorisation and approvals, including regular
audits. The internal audit system encompasses all financial and operational controls
across all divisions, functions, and departments. The internal audit team regularly
reviews the organisation's various functions and identifies opportunities for improvement.
The Company believes in conducting business ethically and responsibly. To integrate the
value system as an integral aspect of operations, Spencer's conducts regular knowledge
sharing and training sessions, as well as provides e-learning courses to enhance awareness
of the Code of Conduct and the Company's essential policies. This approach ensures that
employees remain up-to-date and well-informed, enabling them to uphold the Company's
values and principles in their day-to-day activities.
Cautionary Statement
The statements in the Management Discussion and Analysis section describing the
Company's objectives, projections, estimates and prediction may be considered as
forward-looking statements. All statements that address expectations or projections about
the future, including, but not limited to; statements about the Company's strategy for
growth, product development, market positioning, expenditures and financial results, are
based on certain assumptions and expectations of future events. The Company cannot
guarantee that these assumptions and expectations are accurate or will be realised. The
Company's actual results, performance or achievement may thus differ materially from those
projected in such forward-looking statements. The Company assumes no responsibility to
publicly amend, modify or revise any forward-looking statement on the basis of any
subsequent developments, information or events. To avoid duplication and repetition,
certain heads of information required to be disclosed in the Management Discussion and
Analysis have been included in the Board's Report.
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