For Office Use:

Grade

Communication for Managers

Group Assignment No. 1
“Avenue Supermarts Ltd.”

Submitted by:-
Group No.: 20
1. Kavya Shah (181130)
2. Prachi Jain (181143)
3. Sandip Patel (181155)

Section: A
Batch: MBA-FT (2018-2020)

Institute of Management, Nirma University

Date of Submission: 02/11/2018
Acknowledgement
We take this opportunity to sincerely thank the CFM team for giving us this opportunity to
prepare and present this comprehensive report on Avenue Supermarts Ltd. This report would
not have been possible without the guidance and support of Prof. Harismita Trivedi along with
the CFM team.

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Executive Summary
This report is a comprehensive study of one of the major retailers in India – Avenue
Supermarts. The report aims to give an overview of the retail industry in India with a brief
industry analysis, the major segments of the industry, geographical spread, and the trends in
exports. Subsequently, it mentions the major retailers in the economy with an overview of their
brands, employees, revenues and profits. It also gives a snapshot of the latest chunk of news of
the retail industry as well as the technological changes that are beneficial to the companies and
therefore, the industry. The focus then shifts to the organisational information of Avenue
Supermarts owned by Radhakishan Damani. It entails the history and development of the
company, its main areas of business, the products and services the company offers, the scope
of growth and expansion in a market full of competitors and rivals and the key alliances the
company has. Along with providing the key financial information such as revenue, profits and
ratios that is important to stakeholders that includes shareholders and potential investors the
report also provides an analysis of these key financials of the company, the latest trends that it
is betrothed with and its competitive position in the market.
(206 words)

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Table of Contents
Content Page No.
Business Information 4-6
Organisation Information 7-10
Financial Information 11
Key Performance Indicators 12
Performance Analysis 12-13
Financial Performance Analysis 14-15
Competitive position in market 16
Exhibits 17-19
References 20
Undertaking 21

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Business Information
Brief Industry Analysis:
The Indian Retail industry has emerged as one of the most fast-paced industries facing a lot of
dynamism with the entry of new and emerging players in the market. The total expenditure on
consumption is projected to reach US$ 3,600 billion, nearly double, by the year 2020 from US$
1,824 billion in 2017. The industry contributes nearly 10% to the country’s GDP and 8% to the
employment. It has received FDI equity inflows

Major Industry Segments:

1. Fashion, fitness and personal care
2. Health & pharmaceuticals
3. Entertainment retailing
4. Food & grocery
5. Catering retailing
6. Consumer electronics

Geographical Spread:
The retail industry in India is spread across all the major cities of the country.

Exports & trends in exports:

Owing to the increasing demand for locally-made goods and children’s toys in North America,
India’s exports have gained steadily not just in North America but many countries globally, the
value proposition being superior products, shorter lead time and scalability among local
manufacturers.

Major players in the industry:

With the Indian economy flourishing with the advent of LPG, the retail sector has grown leaps
and bounds with the following major players in the industry:
1. Reliance Retail: Established in 2005 by Mukesh Ambani, this retail giant now holds
45 subsidiaries that are some of the top retailers of India such as Reliance Fresh,
Reliance Digital, Reliance LYF & Jio, Reliance Trends & AJIO. Together, these retail
brands operate close to 3,800 departmental stores, as of April 2018, covering a retail
space of 18 million square feet. The company earned revenue of $45 billion for the
fiscal year 2017-18. The CEO of the company is V Subramaniam.

2. Future Group: Incorporated in Mumbai in the year 1987 by Kishore Biyani, who is
also the CEO, by the name Manz Wear. Some of its subsidiaries are Big Bazaar, Future
Retail, Nilgiris 1905, HyperCity, Pantaloons Fashion & Retail. The company employs
35,000 people and earned revenue of $3.5 billion in 2017-18.

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 3. Trent: Trent, owned by the Tata Group was founded in 1988 in Mumbai is the owner
of one of the best fashion brands, Westside, and other brands such as Star Bazaar, and
is in a joint venture with companies such as Tesco, Zara, and Lakeland. Employing
more than 25,000 employees, the company earned revenue of $2.5 billion in the year
ending April 2018. The CEO of the company is Philip N. Auld.

4. Aditya Birla Retail: Owned by Kumar Mangalam Birla and founded in 2007, Aditya
Birla Retail is retail arm of the Aditya Birla Group which has an annual turnover of
close to $50 billion. The retail brands owned by this company are Pantaloons, More,
Madura Garments, Idea Cellular, and Planet Fashion. Mohit Kampani is the CEO of
this retail giant with talks of Vishak Kumar succeeding Mohit Kampani as the next
CEO. The company earns an annual revenue of $2 billion.

5. Titan Company: Another retail giant under the Tata Group, Titan is co-owned by the
Tata Group and Tamil Nadu Industrial Development Corporation. The company was
incorporated in the year 1984 in Bangalore. The major brands owned by the retailer are
Titan Time, Fastrack, Skinn, Tanishq, Titan Eyeplus and, Sonata. With an annual
turnover of $2 billion, the company operates more than 1,000 departmental stores in
India employing as many as 7,500 employees. The CEO of the company is Bhaskar
Bhat.

Recent Industry News:

Sam Walton’s Walmart has its wholly owned Indian subsidiary Walmart India which said it
would invest about USD 500 million to open another 47 stores by 2022 to make a tally of 70
outlets across the country. The President & CEO of Walmart India, Krish Iyer said that 19
stores out of the 23 B2B Cash & Carry stores have achieved break-even with over a million
registered members.
Anuj Kejriwal, MD & CEO of Anarock Retail said the retail sector of India is projected to
grow to $1.3 trillion by 2020 from the current level of $672 billion, The factors that would lead
to this growth are the rapid pace of urbanisation and digitisation, rising disposable incomes and
the consequent lifestyle changes. Moreover, the liberalisation in FDI policies – 51% in multi-
brand retail and 100% in single-brand retail - by the central government has repositioned the
Indian retail sector. Additionally, the introduction of GST has attracted foreign players which
boost the growth of the retail sector.

Latest Developments/Technologies in the Retail Industry:

1. High degree of Personalisation: Personalisation not just means calling a person by his
or her first name. The word has a wider gamut now. Some retailers have gone to the
extent of enabling shoppers to build their own products. To cite an example, Dresden
is an eyewear retailer in Australia. It uses plastic wastes from beaches and fishing nets
to make affordable frames. It then allows its customers to create their own pairs of
sunglasses by interchanging lenses and frame parts.

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2. Voice Technology: We all have seen the onset of voice technology with Amazon
Alexa, Google Home, Apple Home Pod. These enable voice-based shopping on online
retail markets. Merchants have the opportunity to position themselves on the radar’s
target customers.

3. Drive-through pick-up locations: The fast-paced city life demands much more than
24 hours of a consumer’s time. And for this reason, many consumers are now moving
from large stock-up shopping trips to easier, need-based short trips which also prove to
be time efficient. These short trips do not require the consumer to walk aisles and aisles
of goods. Retail giants have come up with drive-through options which work exactly
how McDonalds drive-thru works. The consumer places an order of the goods at one
end and receives them at the other end of the retail store.

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Organisation Information
Introduction:
Avenue Supermarts Ltd owns and operates a hypermarkets and supermarkets by the name of
DMart. It is the most profitable value retailer brand of hybrid supermarts in India. DMart is a
one stop solution for the family to meet all the daily household requirements. It provides a wide
range of products from food and groceries to home décor and appliances.

History Development:
Avenue Supermarts initially was a private limited company incorporated as Avenue
Supermarts Private Limited on May 12, 2000 in Mumbai. Further the company converted from
a private company to a public company pursuant to special resolution passed by the
shareholders. Subsequently the name of the company changed to Avenue Supermarts Limited
(ASL) in 2011.
ASL owns and operates DMart, a supermarket chain headquartered in Mumbai. The brands
DMart, DMart minimax, DMart Premia, DHomes, Dutch Harbour etc are also owned by ASL.
DMart was started by Mr. Radhakishan Damani and his family and is now chaired by Ramesh
Damani. It is a chain of hypermarkets and supermarkets in India. It provides a wide range of
basic home and personal products under one roof. Each DMart store stocks home utility
products which includes food and groceries, toiletries, beauty products, garments, kitchenware,
bed and bath linen, home appliances and more at competitive prices.
The first store was launched in Powai in 2002 and now holds presence in 154 locations across
Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana, Chhattisgarh,
NCR, Tamil Nadu, Punjab and Rajasthan. In 2010 the total store count reached to 25 and the
revenue crossed the Rs. 1000 crore mark. Till today it has made its presence in 154 locations
with a revenue of Rs. 7500 crores. In March 2017, ASL filed Red Herring Prospectus with
SEBI for raising Rs. 1870 crore. The IPO was opened with a price band of Rs. 295 to 299 per
share and is currently debuted at Rs. 604.4 on BSE which is 102.14% higher than the issue
price.

Main areas of Business:

DMart provides a wide range of products under the following categories:
 Grocery and staples
 Daily essentials
 Home and personal care
 DMart brands
 Dairy and frozen (includes ice-creams and chocolates)
 Fruits and vegetables
 Bed and bath

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  Luggage
 Footwear
 Crockery
 Toys and games
 Plastic containers
 Home appliances
 Kids apparel
 Ladies garments
 Apparel for man

Organization structure:
Organizational structure allocates the clear roles and responsibilities for different entities such
as branch, department, workgroup and individual.
The top-level organization structure consists of:
 President
o Vice president
 Marketing manager
 HR manager
 Category manager
 Finance manager
 Operation head

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 President

Vice President

Marketing
Manager

HR Manager

Category
Manager

Finance
manager

Operations
Manager

The store structure of each DMart store is as follows:

 Store manager
o Assistant store manager
 Debt manager Assistant debt manager
 Team leader
o Team member
o Customer service desk
o Human resource
 Assistant HR
o Visual merchandise
o Administration
 Maintenance
 House keeping
 Security
o Cashing department
 Cashier

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 o Marketing
o Info tech

Store Manager

Visual Administration Cashing Marketin

Assistant Store Human Custom Merchan g Info tech
Department
Manager Resource er dise Maintena Security
Service nce
Desk Cashier
House
Debt manager Keeping
Assistant debt Assistant
manager HR

oTeam
leader

Team
member

Product/service Growth and Development:

The company started with its first store in 2002 in Mumbai. In 2007, DMart decided to expand
its reach to multiple locations. It then opened various stores at Ahmedabad, Baroda, Pune,
Sangli and Solapur. In 2012 – 13, its revenue increased from Rs. 260 crores to Rs. 3334 crores,
making it India’s third largest retail chain brand. At a time when other retailers were finding
ways to cut costs or slow down, DMart was expanding to open more supermarts.
By 2014 the company had made its presence to 75 stores across Maharashtra, Gujarat,
Bangalore and Hyderabad and also projected the revenue of Rs. 4500 crores in the particular
year.
DMart now accounts for a total of 154 stores across Maharashtra, Gujarat, Andhra Pradesh,
Madhya Pradesh, Karnataka, Telangana, Chhattisgarh, NCR, Tamil Nadu, Punjab and
Rajasthan.
Since its initiation, DMart has not shut a single store and also became the first retailer to cross
the billion mark profitably.

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Key competitors:
The key competitors of Avenue Supermarts ltd are:
a. RP – Sanjiv Goenka Group which owns the retail chain named Spencers.
b. Aditya Birla Group – More Store.
c. Tata Group-owned chain of hypermarkets named Star Bazaar.
d. Shoppers stop owned Hypercity.
e. Future Retail group owned Big Bazaar.

Achievements, rewards and recognition:

 On 10th of April 2017 D-mart was crowned as most expensive brick-and-mortar retail
stock in the world on key financial parameters.
 Radhakishan Damani, founder and promoter of retail chain D-Mart was nominated for
the outstanding business leader of the year award category in April 2018, by India
Business Leader Awards for his exceptional contribution in the success of D-Mart.

Financial Information:
The company started with zero value in 2000 and has become a retail giant in the last 18 years.
the company has always shown a steady growth because of its low pricing strategy.

As we can see, in the last five years, company’s revenue has increased from Rs. 4500 crores to
Rs. 15000 crore which is an increase of 233%, much higher than any other retail store.
DMart also increased its profit from Rs 160 crores to Rs. 784 crores. Due to its low pricing
strategy and not going on rented properties, the company tends to save large chunk of money
and increase its profits.

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Also, as per the figures, the prices of Avenue Supermarts ltd are much way higher than any
other retail brand.

Key Performance Indicators:

The key performance indicators are the factors which led us determine the progress of the
company with respect to past years and also with other companies.
DMart has witnessed a steady growth across key financial and operating parameters by
implementing a distinct store expansion strategy and operating cost efficiencies.
The major performance indicators of D-Mart are shown in the exhibits.

Performance Analysis
Trend Analysis

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Avenue Super Markets (D-Mart) the parent company of D-mart stores has shown a very bullish
trend over last five years. The company has been able to consistently add stores which has
helped it to increase its profitability and market capitalization. The company progressed from
adding 10 to 15 stores per annum historically to 20 stores in 2017 & 2018. Now the company
has raised the target further to 30 stores per annum by looking at the prospect of growth
opportunities in new geographical locations (Refer Exhibit 1).
D-Mart has recently touched a market capitalization of 1lakh crore rupees. On 6th March, 2018,
CRISIL revised its outlook on the long-term bank facilities and non-convertible debentures of
the Company to “Positive” from “Stable” and re-affirmed its ratings at “CRISIL AA”. Further,
CRISIL re-affirmed its rating on the Company’s commercial paper programme at ‘CRISIL
A1+’. Instruments with this rating are considered to have high degree of safety regarding timely
servicing of financial obligations and such instruments carry very low credit risk. “CARE A1+”
(CARE A one plus) is reaffirmed by CARE for the Company’s commercial paper / short-term
debt programme. With help of continuous positive growth and high rating in the segment by
the credit rating agencies D-Mart continues to enjoy high credit quality rating for its debentures
and long-term bank facilities /commercial paper programme.
As the company wants to expand its business at a faster pace than before it is utilizing all its
profit for the expansion purpose and thus the board has not approved any dividend since last 2
years. This shows the commitment of the company towards its vision and mission.

The growth trajectory:

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Financial Performance Analysis:

As visible from the above figures the company has continuously managed to increase its sale
at a rate of 25+% which grows the positive outlook towards the company. The company has

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also managed to grow its income from other than sales sources by 132% in FY 2018, this is an
exceptional increase in the growth and adds to the financial stability of the company.
D-Mart has been able to reduce its finance cost considerable at a rate of 51% which has helped
it to increase its working capital considerably. The company by all its effort of reducing the
cost and increasing the revenue has managed to increase its PAT exceptionally by 62%.
All the above financial parameters suggest that the company has a huge potential to grow at a
sustainable pace at expand its business considerably.
The stellar performance of D-Mart is not just confined to its retail business it has been noticed
in its equity as well. The company which came with an IPO in March 2018 at an offer price of
Rs.299 managed to get oversubscribed by 104 times. The share which were offered at Rs.299
per share opened with a blockbuster jump at Rs.604 up by 104%.

Source: https://economictimes.com

The stellar performance of D-Mart did not stop post listing it continued even after that and the
company managed to reach the market cap of Rs.1, 00,000 crore June 2018 when the share
price touched Rs.1593 per share. The level of trust developed for the company has been
increasing due it sustained growth trajectory, due to which various brokerage firms suggest a
buy rating for the share.

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Competitive position in market
D-mart has an upper edge over its competitors due to low pricing strategy. The major
competitors of D-mart are Future retail, Reliance Retail & V-Mart. In 2017 following was the
position of position of D-Mart against its competitors.

Though the number of stores with D-Mart are comparatively less than its major competitors,
its return on the number stores is more than all other major players in the market. Also, when
shares of Future Retail & Aditya Birla FAS have posted negative returns D-Mart has managed
to post positive returns. This suggests that D-Mart has huge competitive overhand over its
competitors due to its sustainable business model.

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Exhibits:

Exhibit 1:
The financial performance of D-Mart over a period of time.

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Exhibit 2:
Lowest price offerings of D-Mart across the stores:

Source: https://timesofindia.indiatimes.com

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Exihibit-3

Advertising strategies:

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References:
https://www.ibef.org/industry/retail-india.aspx
http://www.yourarticlelibrary.com/retailing/indian-retail-sector-top-6-key-segments/48094
//economictimes.indiatimes.com/articleshow/63033298.cms?utm_source=contentofinterest&utm_med
ium=text&utm_campaign=cppst
https://www.bizvibe.com/blog/list-of-retail-companies-in-india/
https://economictimes.indiatimes.com/industry/services/retail/walmart-india-to-invest-usd-500-
million-to-open-47-more-stores-by-2022/articleshow/66446697.cms
https://www.thehindubusinessline.com/news/indias-retail-sector-projected-to-grow-to-13-trillion-by-
2020/article25125747.ece
https://blog.vendhq.com/post/64901830951/retail-technology-trends
https://nrf.com/resources/retail-library/the-future-of-retail-perspective-emerging-technology-and-
store-formats
https://nrf.com/resources/retail-library/the-future-of-retail-perspective-emerging-technology-and-
store-formats

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 UNDERTAKING

To Whom It May Concern

We, Kavya Shah, Prachi Jain & Sandip Patel, hereby declare that this assignment is our
original work and is not copied from anyone/anywhere. If found similar to other sources,
we shall take complete responsibility of the action, taken thereof by, CFM Team.

Group No.: 20
Section: A
Batch: MBA-FT (2018-2020)
Date: 02/11/2018

Signature:

Name: Sandip Patel Prachi Jain Kavya Shah

Roll No.: 181155 181143 181130

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