MIRA
INFORM REPORT
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Report Date : |
17.06.2011 |
IDENTIFICATION DETAILS
|
Name : |
TRENT LIMITED (w.e.f. 28.06.1999) |
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Formerly Known As : |
LAKME LIMITED |
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Registered Office : |
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Country : |
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Financials (as on) : |
31.03.2010 |
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Date of Incorporation : |
05.12.1952 |
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Com. Reg. No.: |
11-008951 |
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Capital Investment / Paid-up Capital : |
Rs.270.351 millions |
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CIN No.: [Company
Identification No.] |
L24240MH1952PLC008951 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
MUMT00494E / MUMT0030C |
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PAN No.: [Permanent
Account No.] |
AAACP6133A / AAACL1838J |
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Legal Form : |
Public limited liability company. The company’s shares are listed on
Stock Exchange |
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Line of Business : |
Chain of Retail Store. |
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No. of Employees : |
3000 (Approximately) |
RATING & COMMENTS
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MIRA’s Rating : |
A (69) |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD 26000000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a part of TATA GROUP one of The turnover and the profit of the company has been improving.
Directors are reported to be experienced an The company can be considered good for normal business dealings at
usual trade terms and conditions. |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – April 1, 2010
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Country Name |
Previous Rating (31.12.2009) |
Current Rating (01.04.2010) |
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|
A1 |
A1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
INFORMATION DECLINED BY
Management Non Co-operative (Name Not Disclosed)
LOCATIONS
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Registered Office : |
Bombay House, 24, Homi Mody Street, Fort, Mumbai- 400001, Maharashtra,
India |
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Tel. No.: |
91-22-66658282 / 67009000 |
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Fax No.: |
91-22-22042081 |
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E-Mail : |
investor.relations@trent-tata.com
mmsurti@trent-tata.com |
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Website : |
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Corporate Office : |
Trent House, 10th Floor, G Block, Plot No. C-60, Next to
Citi Bank, Bandra Kurla Complex, Mumbai-400 051, Maharashtra, India |
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Stores : |
Located at :
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DIRECTORS
As on 31.03.2010
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Name : |
Mr. S.N Tata |
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Designation : |
Chairman |
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Name : |
Mr. F.K Kavarana |
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Designation : |
Chairman |
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Name : |
Mr. B.S Bhesania |
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Designation : |
Director |
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Date of Birth/Age : |
03.11.1933 |
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Qualification : |
B.Sc. LLM. Advocate, High Court, Mumbai and Supreme Court of India,
Solicitor, High Court, Mumbai, Supreme court of |
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Date of Appointment : |
17.05.1983 |
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Directorship in other company : |
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Name : |
Mr. A.D Cooper |
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Designation : |
Director |
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Name : |
Mr. K.N Suntook |
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Designation : |
Director |
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Date of Birth/Age : |
22.05.1935 |
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Qualification : |
B.A LLB (Advocate). F.C.S |
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Date of Appointment : |
22.08.1995 |
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Directorship in other company: |
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Name : |
Mr. N.N Tata |
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Designation : |
Managing Director |
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Name : |
Mr.
Z. S. Dubash |
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Designation : |
Director
(appointed w.e.f. 26th April 2010) |
KEY EXECUTIVES
|
Name : |
Mr.
M. M. Surti |
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Designation : |
Company Secretary |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
AS ON 31.03.2011
|
Names of Shareholders |
No.
of Shares |
Percentage
of Holding |
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(A) Shareholding of Promoter and Promoter Group |
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6281192 |
31.32 |
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(B) Public Shareholding |
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3863373 |
19.26 |
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|
4204 |
0.02 |
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Insurance
Company |
558631 |
2.79 |
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1708661 |
8.52 |
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2158492 |
10.76 |
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4590367 |
22.89 |
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829282 |
4.13 |
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875 |
-- |
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Directors
and their Relatives and Friends |
81800 |
0.31 |
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Total |
20056877 |
100.00 |
(1)
Indian
Bodies
Corporate
Individual
shareholders holding nominal share capital up to Rs.0.1 00 million BUSINESS DETAILS
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Line of Business : |
Chain of Retail Store. |
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Products : |
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PRODUCTION STATUS (Rs. In Millions)
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Particulars |
Unit |
Actual
Production |
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Apparels Others |
Nos. in Lakhs |
1.03 |
GENERAL INFORMATION
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No. of Employees : |
3000 (Approximately) |
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Bankers : |
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Facilities : |
(a) During
the year 2005-2006 the Company issued 13,10,047 Partly Convertible Debentures
of Rs.0.001 millions each. Of the above, Convertible Debenture of the face
value of Rs.400/- has been converted into one Equity Share of Rs.10/- each at
a premium of Rs.390/- per share on the date of allotment. The Non Convertible
Debenture of face value of Rs.500/- are redeemable at a premium of Rs.98/-
each on 7th July 2010.The Premium payable on redemption of Debentures
amounting to Rs.128.385 millions has been fully provided and debited to
Securities Premium Account during 2005-06.These Debentures are secured by way
of charge on assets of the Company costing at least 1.33 times of the value
of the Debentures in favour of the Debenture Trustees. (b)
During the year 2008-2009, the Company issued 500 Redeemable Non Convertible
Debentures - Series I of Rs.1.000 million each and 500 Redeemable Non
Convertible Debentures - Series II of Rs.1.000 million each on private
placement basis. These Debentures are free of interest and the Series I
Debentures were redeemed at a premium of Rs.0.133 millions each on 1st
October 2009 and the Series II Debentures are redeemable at a premium of
Rs.6.300 millions each on 2nd September 2010. The Premium payable on
redemption of these Debentures has been fully provided and is debited to
Securities Premium Account net of deferred tax. These Debentures are secured
by way of charge on immovable property of the Company in favour of the
Debenture Trustees as stipulated in the Debenture Trust deed. (c)
During the current year, the Company issued 500 Redeemable Non Convertible
Debentures of Rs.1.000 millions each on private placement basis. These
Debentures are free of interest and are redeemable at a premium of Rs.0.194
millions each on 21st October 2011.The Premium payable on redemption of these
Debentures has been fully provided and is debited to Securities Premium
Account net of deferred tax. (d)
Of the above secured loans amount payable within one year Rs.1155.024
millions (2008-09 : Rs.500.000 millions) (e) Of the above unsecured loans, amount repayable within
a year Rs.850.182 millions (2008-2009: Rs.0.342million). |
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Banking
Relations : |
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Auditors : |
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Name : |
N.M Raiji and Company Chartered Accountant |
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Joint Ventures : |
·
Trexa Admc Private Limited ·
Inditex Trent Retail India Private
Limited |
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Associates : |
Tata
Sons Limited |
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Subsidiaries : |
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CAPITAL STRUCTURE
As on 31.03.2010
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
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24000000 |
Equity Shares |
Rs.10/- Each |
Rs.240.000 millions |
|
5000000 |
Unclassified Shares |
Rs.10/- Each |
Rs.50.000 millions |
|
70000 |
Preference Share |
Rs.1000/- Each |
Rs.70.000 millions |
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Total |
|
Rs.360.000
millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
20035052 |
Equity Shares |
Rs.10/- Each |
Rs.200.351
millions |
|
70000 |
Cumulative Redeemable Preference Share |
Rs.1000/- Each |
Rs.70.000 millions |
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Total |
|
Rs.270.351 millions |
Notes:
1. Of the above -
(a) 1,08,81,021
Equity Shares were allotted as fully paid Bonus Shares by capitalisation of
Share Premium and
Reserves.
(b) 1,12,616 Equity
Shares were allotted as fully paid pursuant to Schemes of Amalgamation without
payment being received in cash.
(c) 70,000
Cumulative Redeemable Preference Shares were allotted as fully paid pursuant to
Scheme of Amalgamation without payment being received in cash.
2. During the year
2005-2006, the Company had issued 13,10,047 warrants to the shareholders along
with partly
Convertible
Debentures of which 5,62,121 warrants are outstanding as on 31st March 2009.
Each Warrant holder is entitled to apply for one Equity Share of Rs.10/- each
at a premium of Rs.0.001 million each within 30 days after the expiry of 54
months from 7th July 2005 being the date of allotment. During the current year,
the Company has issued 5,02,156 Equity Shares of Rs.10/- each at a premium of
Rs.0.001 million per share on the conversion of warrants. There are no warrants
outstanding as at 31st March, 2010.
3. The term of the
0.1% Cumulative Redeemable Preference Shares is of 20 years from 26th March
2010, being the date of allotment, with an option to the Company to redeem the
Preference Shares at any time after 36 months from the date of allotment. The
Board of Directors at their meeting held on 26th April 2010 have fixed 1st June
2013 as the date of redemption of the Preference Shares.
4. During the
year, the Company has granted 21,825 stock options under the Employee Stock
Option Scheme.
21,825 Stock
Options are outstanding as on 31st March, 2010.
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2010 |
31.03.2009 |
31.03.2008 |
|
|
SHAREHOLDERS FUNDS |
|
|
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|
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1] Share Capital |
270.351 |
195.329 |
195.329 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
6134.700 |
5872.344 |
5863.047 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
6405.051 |
6067.673 |
6058.376 |
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LOAN FUNDS |
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1] Secured Loans |
1155.024 |
1655.024 |
655.024 |
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2] Unsecured Loans |
1350.182 |
0.524 |
1.039 |
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TOTAL BORROWING |
2505.206 |
1655.548 |
656.063 |
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DEFERRED TAX LIABILITIES |
19.182 |
2.192 |
53.289 |
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TOTAL |
8929.439 |
7725.413 |
6767.728 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
2065.423 |
948.607 |
1025.742 |
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Capital work-in-progress |
169.029 |
138.262 |
227.110 |
|
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|
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INVESTMENT |
3951.759 |
3958.516 |
4693.375 |
|
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
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CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
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Inventories |
964.833
|
859.750 |
786.213 |
|
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Sundry Debtors |
30.862
|
37.628 |
30.260 |
|
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Cash & Bank Balances |
91.169
|
128.827 |
133.510 |
|
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Other Current Assets |
0.000 |
0.000 |
0.000 |
|
|
Loans & Advances |
3423.539
|
3095.922 |
1238.492 |
|
Total
Current Assets |
4510.403
|
4122.127 |
2188.475 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditors |
1007.324
|
877.641 |
867.681 |
|
|
Other Current Liabilities |
159.937
|
36.325 |
155.134 |
|
|
Provisions |
599.914
|
528.133 |
344.159 |
|
Total
Current Liabilities |
1767.175
|
1442.099 |
1366.974 |
|
|
Net Current Assets |
2743.228
|
2680.028 |
821.501 |
|
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|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
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TOTAL |
8929.439 |
7725.413 |
6767.728 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2010 |
31.03.2009 |
31.03.2008 |
|
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SALES |
|
|
|
|
|
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Income |
5874.810 |
5146.091 |
5141.588 |
|
|
|
Other Income |
225.173 |
319.888 |
322.706 |
|
|
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TOTAL (A) |
6099.983 |
5465.979 |
5464.294 |
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Less |
EXPENSES |
|
|
|
|
|
|
|
Operating and other expenses |
5536.251 |
5077.755 |
4989.373 |
|
|
|
Other Expenditure |
(113.759) |
0.000 |
0.047 |
|
|
|
Increase/ (Decrease) in stock |
0.000 |
0.000 |
(57.600) |
|
|
|
TOTAL (B) |
5422.492 |
5077.755 |
NA |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
677.491 |
388.224 |
474.874 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
60.482 |
13.130 |
13.100 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
617.009 |
375.094 |
461.774 |
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|
|
|
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|
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|
Less/ Add |
DEPRECIATION/ AMORTISATION (F) |
118.509 |
92.334 |
88.536 |
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|
|
|
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|
PROFIT BEFORE
TAX (E-F) (G) |
498.500 |
282.760 |
373.238 |
|
|
|
|
|
|
|
|
|
Less |
TAX (H) |
105.701 |
30.694 |
47.440 |
|
|
|
|
|
|
|
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|
PROFIT AFTER TAX
(G-H) (I) |
392.799 |
252.066 |
325.798 |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
205.367 |
240.263 |
|
|
|
|
|
|
|
|
|
|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
General Reserve |
40.300 |
26.800 |
|
|
|
|
Debenture Redemption Reserve |
50.000 |
150.000 |
|
|
|
|
Proposed Dividend -Equity Shares |
130.228 |
107.431 |
NA |
|
|
|
Proposed Dividend -Preference Shares |
0.001 |
0.000 |
|
|
|
|
Tax On Dividend |
21.629 |
18.220 |
|
|
|
BALANCE CARRIED TO
THE B/S |
372.679 |
205.367 |
NA |
|
|
|
|
|
|
|
|
|
|
EARNINGS IN
FOREIGN CURRENCY |
|
|
|
|
|
|
|
Sales and goods |
123.717 |
114.410 |
154.542 |
|
|
|
Fees |
102.644 |
0.000 |
0.000 |
|
|
TOTAL EARNINGS |
226.361 |
114.410 |
154.542 |
|
|
|
|
|
|
|
|
|
|
IMPORTS |
|
|
|
|
|
|
|
Finished Products |
46.835 |
25.025 |
17.783 |
|
|
|
Capital Goods |
0.813 |
15.474 |
31.709 |
|
|
|
Raw Materials |
0.126 |
0.000 |
0.000 |
|
|
TOTAL IMPORTS |
47.774 |
40.499 |
49.492 |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
20.53 |
13.70 |
17.92 |
|
QUARTERLY RESULTS
|
PARTICULARS |
30.06.2010 |
30.09.2010 |
31.12.2010 |
31.03.2011 |
|
Type |
1st
Quarter |
2nd
Quarter |
3rd
Quarter |
4th
Quarter |
|
Sales Turnover |
1622.140 |
1828.020 |
1971.300 |
1745.660 |
|
Total Expenditure |
1519.090 |
1770.090 |
1846.540 |
1699.210 |
|
PBIDT (Excl
OI) |
103.050 |
57.930 |
124.760 |
46.450 |
|
Other Income |
68.72 |
146.120 |
145.690 |
153.760 |
|
Operating
Profit |
171.770 |
204.050 |
270.450 |
200.220 |
|
Interest |
23.92 |
20.150 |
17.360 |
17.000 |
|
Exceptional
Items |
0.000 |
0.000 |
0.000 |
(28.400) |
|
PBDT |
147.850 |
183.900 |
253.090 |
154.820 |
|
Depreciation |
28.990 |
30.140 |
34.370 |
42.770 |
|
Profit
Before Tax |
118.870 |
153.750 |
218.720 |
112.050 |
|
Tax |
38.800 |
33.740 |
78.620 |
21.860 |
|
Reported PAT |
80.070 |
120.010 |
140.000 |
90.190 |
|
Extraordinary Items |
0.000 |
0.000 |
0.000 |
0.000 |
|
Prior Period Expenses |
0.000 |
0.000 |
0.000 |
0.000 |
|
Other Adjustments |
0.000 |
0.000 |
0.000 |
0.000 |
|
Net Profit |
80.070 |
120.010 |
140.000 |
90.190 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2010 |
31.03.2009 |
31.03.2008 |
|
PAT / Total Income |
(%) |
6.44
|
4.61 |
5.96 |
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
8.48
|
5.50 |
7.26 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
7.58
|
5.58 |
11.61 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.08
|
0.05 |
0.06 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Liability/Networth) |
|
0.67
|
0.51 |
0.33 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
2.55
|
2.86 |
1.60 |
LOCAL AGENCY FURTHER INFORMATION
COMPANY
HISTORY:
Subject is a retail operations company that owns and manages
a number of retail chains in
FINANCIAL
RESULTS
The preference
dividend recommended (proportionate for period outstanding) is Rs.0.001 million
Income for the year at Rs.6100.000 millions increased by 11.60% from the
previous year's Rs.5466.000 millions, while profit after tax for the year at
Rs.402.200 millions increased by 50.36% from the previous year's Rs.267.500
millions
MANAGEMENT
DISCUSSION AND ANALYSIS
A
separate section on Management Discussion and Analysis (MD and A) is included
in the Annual Report as required in Clause 49 of the Listing Agreement with the
Bombay Stock Exchange Limited and the National Stock Exchange of India Limited.
The MD and A includes discussion on the following matters within the limits set by the company's
competitive position: industry prospects and developments,
opportunities and risks, performance of key retail formats and material
operating subsidiaries, outlook for the business, risks and concerns, internal
control systems and their adequacy and discussion on financial performance.
SUBSIDIARIES
a)
Merger of SDPL and SRPL
The
Scheme of Amalgamation of Satnam Developers and Finance Private Limited (SDPL)
and Satnam Realtors Private Limited (SRPL) with the Company as approved by the
Hon'ble High Court of Judicature at Bombay has become effective on 12th March
2010 upon obtaining all sanctions and
approvals as required under the scheme. SDPL was a 100% subsidiary of the
Company and SDPL held 50% of the shares in SRPL. The Appointed date of the
Scheme was 1st April 2009. In terms of
the Scheme, the Company on 26th March 2010 has issued 70,000 fully
paid
0.1% Redeemable Preference Shares of Rs.1000 each to the equity shareholders
holding 50% shares in the erstwhile SRPL. Accordingly, the results of the
Company for the year 31st March 2010 include the figures of SDPL and SRPL for
the period 1st April 2009 to 31st March 2010.
b)
Fiora Services Limited (Fiora)
Fiora
continues to render various services to the Company in terms of sourcing
activities, warehousing, distribution, clearing and forwarding. The facilities
at the warehouse and distribution capabilities are being augmented to help
improve turnaround time and consequently availability of merchandize in the
stores.
c)
Westland Limited
The
Company acquired the equity shares of Westland Limited from its subsidiary
Landmark Limited on 8th December 2009 making Westland Limited a direct
subsidiary of the Company.
d)
Optim Estates Private Limited
The
Company had acquired all the equity shares of Optim Estates Private Limited
(Optim) making it a wholly owned subsidiary of the Company on 30th April 2010.
Optim is the owner of a property that is currently being used in the operation
of a Star Bazaar hypermarket.
e)
Other Subsidiaries
The MD
and A includes detailed commentary on the performance of formats managed by the
two key operating subsidiaries of the Company - Trent Hypermarket Limited (Star
Bazaar business) and Landmark Limited (Landmark books, music and gifts format).
The other subsidiaries of the Company continue to support the Company's real
estate related needs (eg. Nahar Theatres Limited) and otherwise have operated
during the period
within
the scope of their stated objects
Subsidiary
Accounts
The Company
had made an application to the Central Government pursuant to Section 212(8) of
the Companies Act, 1956 seeking exemption from attaching to its Balance Sheet,
copies of the Balance Sheet, Profit and Loss and other documents of its
subsidiaries. The Central Government vide letter dated 17th May 2010 has
exempted the Company from attaching the aforesaid documents of its subsidiaries
to its Balance Sheet for the year ended 31st March 2010. Accordingly the said
documents are not attached to the Balance Sheet of the Company. A statement
containing financial details of the Company's subsidiaries is included in the
Annual Report. The Annual Accounts of the subsidiary companies are open for
inspection by any investor and the Company will make available these Accounts
upon request. Further, the Annual Accounts of the subsidiary companies will
also be kept for inspection by any investor at the Registered Office of the
Company and the Subsidiary Company concerned.
Joint
Ventures
The
Company has in the previous year sold its investments in Virtuous Trustees
Private Limited pursuant to which its ceases to be a Joint Venture. The Company
has invested a sum of Rs.31.75 crores in the equity shares of Inditex Trent
Retail India Private Limited in the Joint Venture of the Company with Inditex
MANAGEMENT
DISCUSSION AND ANALYSIS
The
immediate economic backdrop continued to impact performance of companies across
sectors including organized retail in the Financial Year 2009-10 (FY09-10).
Consumer sentiment and business confidence registered a marked improvement
especially in the second half of the financial year with a host of sectors like
auto, IT services and NBFCs witnessing strong turnaround in off-take. The collateral
damage to growth from the global financial crisis and the domestic drought, was
more limited and better contained than was earlier expected. For instance, the
industry numbers seemed to have been aided by both monetary and fiscal stimulus
measures of the Government. The organized retail space in the first decade of
this century has been viewed as offering normous potential for growth. However,
post FY08 the industry witnessed a sharp moderation in expectations
with
most retailers across formats facing significant head winds in terms of
like-for-like growth, and challenge to viability of stores at rentals
contracted during FY07 and FY08. In the case of select retailers the issues
with the business model adopted perse seems to have impacted performance, only
to be made more vulnerable by the difficult economic environment. In the case
of the Company's principal formats also, the downturn seemed to play a role,
with customers cutting back on discretionary spending and possibly down-trading
to more hypermarket/ unbranded offerings. While the same store sales growth was
impacted during this period, nevertheless the slowdown was positive, especially
from a real estate and talent availability perspectives. Following the
pronounced slowdown, the industry witnessed a modest recovery in FY09-10,
especially in the second half.
Over
the medium to long term, most of the earlier arguments in favour of the sector
(demographics, penetration of organized retail and consumer profile) continue
to be valid, as they were previously.
Consider
the following:
Demographics:
seem
to confirm this hypothesis:
1. A
more evolved consumption basket vis-ŕ-vis the non-urban audience, with higher
proportion of spend towards housing, travel, apparel and medical needs;
2.
Higher and growing proportion of people in middle and upper income classes as
illustrated in the following chart;
3.
Superior and improving performance of the urban population in terms of 'quality
of life' measures including infant mortality, birth rate and death rate.
Have
led the underlying GDP growth over the past decade. These trends look set to
continue, and should also continue to aid increase in consumption levels over
the medium term.
While
the long term trends have been encouraging, in FY08-09 and FY09-10
(particularly the first half) the following two factors seemed to have impacted
urban consumption:
(i)
Credit availability and
(ii)
Job losses/wage freezes across sectors
Nevertheless,
these headwinds are now seen receding and coupled with the pay revisions across
sectors will are more likely to witness an uptick in consumption.
Economic
growth:
While
economic growth in India had slowed in the last year, the actual play-out was
marginally better than earlier expectations and significantly positive
vis-ŕ-vis the developed countries. The GDP growth levels in India continues to
be positive, and is expected to also aid the growth of organized retail in the
country.
Organized
retail penetration:
The
penetration level in 2007 was estimated at about 5.5% and was expected to grow
to over 16% by 2012. Though this expectation has now been scaled down to about
10%, the direction continues to be the same and the headroom still very
significant.
Consumer
profile/ behavior:
The
demographics coupled with less than 10% of the work force being directly
employed by the organized sector seems to contribute to a constant shift
upwards in the reference point of the average consumer - in terms merchandize
aspired for and value sought. Further, the following factors/ trends are seen
contributing to growth in spending overall, and particularly for organized
retail over the medium term:
·
Changing family level organization/
role definitions and exposure
More nuclear families
Increase in the number of working women
Kids being more informed and demanding
·
Increasing influence of cosmopolitan
media
·
Easier availability of jobs (especially
Outsourcing and IT related)
·
Increased availability of credit/
social acceptance of consumption aided by borrowings; it is estimated that about 13% of the people in urban cities
are currently making monthly payments for loans.
Hence,
they believe the longer term opportunity in the organized retail space in
1) The immediate economic backdrop
a. In
the first half of the year, the widely reported economic slowdown impacted
consumer confidence (sense of job insecurity and negative "wealth
effect" following the muted performance of the stock and real estate
markets) especially in tier one cities. However, post the completion of the
election process, and aided by the monetary and fiscal stimulus of the
Government - there has been perceptible improvement in sentiment, especially
with hiring increasing across sectors and salary freezes imposed in the prior
year being relaxed.
b.
Again in the first half, continued tightness in availability of retail credit
seems to have impacted consumer spending. Following the bottoming of rates in
2004-05, the credit off take for home loans and personal loans was robust for a
period, but the incremental disbursements started showing a declining trend
with rising asset prices and interest rates. Nevertheless, with the RBI easing
its monetary policy significantly given the slowdown and the global financial
turbulence, the benefits of lower rates on borrowings has been witnessed in the
last two quarters.
2) Business models
In the
case of select retailers the issues with the business model adopted perse seems
to have impacted performance, only to be made more vulnerable by the difficult
operating environment. Also, retailers with more robust format offerings seem
to have taken better advantage of the recovery in economic activity and
consumer confidence in the last two quarters. In the case of the Company's
principal formats (Westside and Landmark and less so in Star Bazaar) during the
slowdown, the first factor seemed to play a role, with customers cutting back
on discretionary spending and possibly down-trading to more cheaper/unbranded
offerings. Since the second half of
the
financial year, there has been perceptible recovery in the performance of
especially the Westside offering while the Landmark format is yet to witness a
marked improvement in customer off-take.
OPERATIONS
– WESTSIDE
The
Westside stores, the predominantly private label fashion apparel format,
continues to be the mainstay of the retailing business of the Company. This
format over the years has been rolled out across the country and currently
covers over 29 cities.
In the
year , seven new stores were opened -
In the
first quarter of this financial year three further stores have been opened in
Jabalpur (Samdariya), Mangalore (Citi Center) and Kanpur (Z Square), taking the
total number of operational Westside stores to 46.
During
FY09-10, the like-for-like sales growth of Westside stores was flat, especially
impacted by the economic backdrop in the first half. However, as can be
observed from the above chart the Company recorded seven new store openings -
being the second highest in any year since the inception of this format. In
many respects, this was facilitated by the pipeline of acceptable retail real
estate at more reasonable rates and contracted mostly during the economic
slowdown, and was consistent with the approach adopted by the Company in
FY08-09. The conviction of the Board and the management on the attractiveness
of the Westside format as a business model is one of the primary reasons to
continue expansion of the chain during this period, when several peers had
otherwise scaled down their roll-out plans.
Median size of Westside stores:
They
vary the size of planned Westside stores based on various factors including the
immediate micro-market, mall vs standalone presence and leasehold economics.
However, empirical evidence seems to suggest a size in the range of twenty to
twenty five thousand square feet selling area is preferable, as lifestyle
department stores much larger in area face viability issues (and therefore
limit the geographies that can be viewed as markets), and conversely those much
smaller offer customers too limited a range for them to be attractive
destinations for shopping. Hence, but for exceptions, the Company has desisted
from shrinking the format unless the location
on
offer was seen to be highly attractive and only as an exception;
Private
label vs branded merchandize:
They
continue to emphasize the role of private label merchandize and Westside is
ranked to be in the top quartile in terms of contribution of private label
merchandize to overall revenues. They believe higher private label content
facilitates not only helps in realization of better margins but also affords
other benefits like control over the merchandize design and quality - which
should allow for a better competitive position over the medium term. At the
same time, the intent is to make the offering complete and collectively more
attractive through the inclusion of select brands that account for upto 15% of
the overall merchandize range on offer. Further, during the period , they have
renewed the emphasis on increasing the efficiency of their supply chain to
effectively replenish their store network and significantly improve merchandize
availability levels in stores. While they continued to exercise restraint on
most cost line items during the year, they have selectively chosen to invest in
areas like improving fashionability of merchandize, a robust operations
organization and a more efficient supply chain and warehouse management system.
They believe incurring of these additional costs on the above initiatives is warranted
especially from a long term business model sustainability perspective, and they
expect to realize tangible benefits over the medium term.
As in
the previous year, the level of certain cost elements like electricity charges
in
In
summary, despite various challenges, including the economic slowdown in the
previous year, Westside as a format continues to be profitable and as stated
previously, the intent is to further scale up presence by opening as many new
stores in the near to medium term, subject to availability of acceptable retail
locations and estimated viability of economics at the store level.
OPERATIONS
- STAR BAZAAR
Star
Bazaar, the discount hypermarket format, has continued to receive augmented
commitment of resources in the period of review, and there are now seven
operational stores 3 in Mumbai (Andher Dahisar and Thane), two in
Consistent
with the commentary in the last year's report, the Company continues to view
food and grocery (FandG) retailing as a
substantial opportunity, which is worthy of being seriously pursued in the
medium term. FandG remains one of the largest categories and is estimated at
around 60% of consumer spending. Nevertheless, given the significantly lower
gross margins on FandG vis-ŕ-vis other merchandize (and therefore formats), the
need to evolve a economically viable business model is viewed to be critical.
And the performance of the Star Bazaar business over the last two years has
been encouraging and has aided the pursuit of the stated expansion plans with
greater conviction. Nevertheless, this business continues to incur operational losses,
especially on account of the under absorption of shared services and corporate
costs. Also, they believe this trend would continue until the business reaches
a critical mass over the next few years.
The
Star Bazaar business was transferred to Trent Hypermarket Limited, a wholly
owned subsidiary, as part of the portfolio reorganization exercise with effect
from 1st August 2008. The independent status post the transfer, has continued
to enable sharper management focus, and various alternatives for profitably
scaling up operations are being pursued.
Trent
Hypermarket Limited has a franchise and a wholesale supply arrangement with
Tesco Plc and its wholly owned subsidiary [Tesco Hindustan Wholesaling Private
Limited (THWPL)] in
Consistent with commentary in the
previous report, the plan and key initiatives in respect of the Star
Bazaar format include:
The intent is to scale up the number of stores in the country to about 50 over
the medium term.
Large box format - as with the existing store portfolio, the intent in the
medium term is to continue to focus on rollout of greater than fifty thousand
square feet Star Bazaar stores, especially given the need to contain per square
foot rentals.
Local sourcing and consumer catchment - establishing robust regional sourcing
arrangements is seen to be inevitable in-order to service a chain of large
hypermarkets in a profitable manner. Also, primarily from a traffic and
consumer behavior perspective, they do not see 'outside city limits' stores
being sustainable and hence the intent is to continue to focus on the immediate
hinterland of a proposed store and the catchment it affords.
Emphasis in Star Bazaar to be on Food as well as Non-Food merchandize - this
from a gross margin as well as from range availability perspective for the
customer.
Own label offerings - over time as the branding of the stores get entrenched, emphasis
would be on increasing the contribution of 'own label' offerings across
categories, as they do not see undue resistance from customers in respect of
value offerings and this again should contribute to making the business more
economically sustainable. This emphasis is also consistent with the estimated
share of private label merchandize seen in the case of entrenched international
retailers.
As
observed earlier, though the Star Bazaar business is still a mid-sized
operation, the results have broadly been in line with expectations and mostly
encouraging - with existing stores reporting strong same store sales growth in
recent quarters, the economic backdrop in the first half of FY09-10
notwithstanding. They see increasing visibility of scaling up this operation
into a consequential and eventually profitable business over the next few
years, aided by the strategies being pursued and the expertise accessed from
Tesco through the franchise and wholesale supply arrangements. However, in the
interim this business warrants significant investment of capital and is
expected to take 2 to 3 years before the shared services and central costs get
covered by the contribution generated from stores.
OPERATIONS
– LANDMARK
Landmark
stores - the books plus music, toys and furnishing format - are managed by a
subsidiary of the Company, Landmark Limited. As of date, there are 27
operational stores across the country including
airport and hotel stores. FY09-10 again proved to be a difficult year
for Landmark with the following factors contributing to its issues:
Difficult economic environment, especially in the first half;
Under performance of select new stores vis-ŕ-vis expectations;
One time costs relating to shifting of the Pune store to a more desirable location;
��
Costs incurred on the rationalization of store area in Tier 2 location stores
at
As a
consequence Landmark has reported a marginal loss in the financial year.
Landmark nevertheless registered a 16% growth in income to Rs.2280 millions (Rs
196 millions in Fy09) during the period, however, the profit before tax was
again negative at Rs16 millions (negative Rs.26 millions in FY 09) primarily
due the underperformance of select new stores, muted same store sales growth
and one time charges relating to rationalization/ shifting of certain stores.
Like in the previous year, in-store initiatives to generate additional income
like for promotional display, coffee shop fees etc. pursued by Landmark helped
offset the cost pressures in part.
Key
developments, observations and intent on approach in respect of the Landmark
format include:
In Q3 2009, a PE fund managed by the TVS group (TVS Shriram Growth Fund 1) has
taken a stake of just under 25% in Landmark Limited. Both the Company and TVS
infused funds into Landmark and this has aided Landmark to pay down its debt
funding, and facilitated the expansion program of the chain; and it also
divested its holding in Westland Limited (involved in the books distribution
and publishing business) to the Company as part of the portfolio restructuring
exercise;
As a retailer of books, Landmark has maintained its market leadership (in value
terms) and continues to offer the largest collection of books in the country
with over 100,000 titles in each of the larger stores;
"Teens" constitute a key target segment for Landmark and this is
expected to be of continued relevance as there would be an estimated half a
billion people under the age of twenty in India in a decade from now;
Empirical evidence suggests that "large box" presence in Tier 2
cities like
Structural changes have been concluded to address the issue of non-viable
stores in Tier 2 locations and the results on this front have been encouraging;
The Company has introduced a "gaming and tech zone" in select
Landmark stores, as the same is seen to be a significant growth window over the
medium term.
OVERALL
FINANCIAL RESULTS
Overall,
on a standalone basis the Company has reported a total income of Rs.6100
millions (Rs.5460 millions in FY09) for the period and a Profit Before Tax of
Rs.498 millions (Rs.283 millions in FY09) and
includes Rs.113.800 millions of profit on sale of a minority stake in
Landmark. The prior period results are not comparable as the Star Bazaar
business was sold to Trent Hypermarket Limited (a wholly owned subsidiary)
with
effect from 1st August 2008.
On a
consolidated basis the Company has reported a total income of Rs.11380 millions
(Rs.8850 millions in FY09) for the period and a Profit before Tax of Rs.91
millions (Rs.60 millions in FY09) and includes Rs.84 millions of profit on
account of sale of a minority stake in Landmark. Westside and Treasury
contributed positively to the results while Star Bazaar and Sisley contributed
negatively during the period. The review of the performance of the principal
formats has been covered in prior sections.
FIXED ASSETS
- Building
- Plant and
Machinery
- Furniture and
Fixture
- Office and
Other Equipment
- Vehicles
- Intangible
Assets
WEBSITE DETAILS:
ABOUT
TRENT
Established in 1998 subject is one of the pioneers of modern
large format retailing in
High quality, latest in style products, international
shopping experience and value for money pricing is the experience at a Westside
store. In a rapidly evolving retail scenario. Westside has carved has 40
Westside store measuring 15,000-30,000 square feet each across 23 cities in
Landmark is the largest book and music retail chain in
About TVS Shriram Growth Fund I
TVS Shriram Growth Fund I is a Rs.6000 millions domestic rupee
fund that is established with a vision to develop and nurture
Press Release:
SOAK UP THE SUN WITH
THE NEW SPRING SUMMER COLLECTION AT WESTSIDE
Westside unveils the
perfect wardrobe solutions to keep you cool this seasons
Mumbai, March 29, 2010: westside has unveiled its spring
summer 2010 collection to celebrate the onset of the season.
This summer, westside gives you the opportunity to power
your wardrobe with garden fresh prints and patterns, sun-kissed accessories and
unbeatable combination of home décor items. Westside has opened its doors for
fashionable, bright, vibrant and colorful wardrobe options to add the tropical
punch to your look this summer.
The westside ss10 collection, based on the mediterranean and
nautical themes will help you gear up for the summer. The collection brings-in
range of fashionable apparels, accessories, bags, shoes, foot wear and home
décor items.
Unwind and chill out with the new line-up of the spring
summer 2010 collection consisting of stylish, trendy and contemporary clothes. Perfect
for hot summer afternoons, the collection has beautiful array of delightfully
vibrant colors like fuchsia, yellow and deeper hues of emerald green, blue, and
red among others. The complete westside ss10 collection across apparels,
accessories, shoes and home décor is inspired by warm and sun-kissed hues.
The women’s wear at westside offers subtle and elegant
designs, styles in fabrics such as cotton, linen and net. Look effortlessly
good with westside’s graceful and ethnic line of anarkali style kurta sets. Let
your imagination run free at the mix and match section of the store starting
from price range of rs.599 onwards. Also, available are chic and comfortable
casuals in floral prints, pastel and nautical colours. The gia collection for
the plus size women also has a nautical touch to its apparels with price range
starting from rs.499 onwards.
The men’s wear at westside is inspired by ‘high school
nostalgia’’ and includes colours for the season- navy, green, yellow and red
also available are mid-blue denims and comfortable casuals starting from rs.
699 and ascot smart formals from rs. 899 onwards.
The trendy kids range includes shorts, t- shirts and hooded
t-shirts available at the price range of rs.299 onwards
Add the freshness of tropical island to your home this
season with pillow covers, bed-sheets, curtains, upholstery which offer a
fusion of indian and contemporary designs and prints in dual tones and
intricate embroidery. The price range starts from rs.199 onwards so, shed the
dark winter shades and indulge yourself in westside’s new spring summer 2010
collection. Whether in city, heading to the beach or an outdoor lunch, westside
offers you solutions to dress your diverse moods and keeping it cool yet
stylish!!!
Drop into your closest westside store and pep-up your
wardrobe this season with fun and colorful westside spring summer 2010 range.
Mumbai, march 29, 2010: westside has unveiled its spring
summer 2010 collection to celebrate the onset of the season.
This summer, westside gives you the opportunity to power
your wardrobe with garden fresh prints and patterns, sun-kissed accessories and
unbeatable combination of home décor items. Westside has opened its doors for
fashionable, bright, vibrant and colorful wardrobe options to add the tropical
punch to your look this summer.
The westside ss10 collection, based on the mediterranean and
nautical themes will help you gear up for the summer. The collection brings-in
range of fashionable apparels, accessories, bags, shoes, foot wear and home
décor items.
Unwind and chill out with the new line-up of the spring
summer 2010 collection consisting of stylish, trendy and contemporary clothes.
Perfect for hot summer afternoons, the collection has beautiful array of
delightfully vibrant colors like fuchsia, yellow and deeper hues of emerald
green, blue, and red among others. The complete westside ss10 collection across
apparels, accessories, shoes and home décor is inspired by warm and sun-kissed
hues.
The women’s wear at westside offers subtle and elegant
designs, styles in fabrics such as cotton, linen and net. Look effortlessly
good with westside’s graceful and ethnic line of anarkali style kurta sets. Let
your imagination run free at the mix and match section of the store starting
from price range of rs.599 onwards. Also, available are chic and comfortable
casuals in floral prints, pastel and nautical colours. The gia collection for
the plus size women also has a nautical touch to its apparels with price range
starting from rs.499 onwards.
The men’s wear at westside is inspired by ‘high school
nostalgia’’ and includes colours for the season- navy, green, yellow and red
also available are mid-blue denims and comfortable casuals starting from rs.
699 and ascot smart formals from rs. 899 onwards.
The trendy kids range includes shorts, t- shirts and hooded
t-shirts available at the price range of rs.299 onwards
Add the freshness of tropical island to your home this
season with pillow covers, bed-sheets, curtains, upholstery which offer a
fusion of indian and contemporary designs and prints in dual tones and
intricate embroidery. The price range starts from rs.199 onwards so, shed the
dark winter shades and indulge yourself in westside’s new spring summer 2010
collection. Whether in city, heading to the beach or an outdoor lunch, westside
offers you solutions to dress your diverse moods and keeping it cool yet
stylish!!!
Drop into your closest westside store and pep-up your
wardrobe this season with fun and colorful westside spring summer 2010 range.
Mumbai, March 29, 2010: westside has unveiled its spring
summer 2010 collection to celebrate the onset of the season.
This summer, Westside gives you the opportunity to power
your wardrobe with garden fresh prints and patterns, sun-kissed accessories and
unbeatable combination of home décor items. Westside has opened its doors for
fashionable, bright, vibrant and colorful wardrobe options to add the tropical
punch to your look this summer.
The Westside SS10 collection, based on the mediterranean and
nautical themes will help you gear up for the summer. The collection brings-in
range of fashionable apparels, accessories, bags, shoes, foot wear and home
décor items.
Unwind and chill out with the new line-up of the spring
summer 2010 collection consisting of stylish, trendy and contemporary clothes.
Perfect for hot summer afternoons, the collection has beautiful array of
delightfully vibrant colors like fuchsia, yellow and deeper hues of emerald
green, blue, and red among others. The complete westside SS10 collection across
apparels, accessories, shoes and home décor is inspired by warm and sun-kissed
hues.
The women’s wear at westside offers subtle and elegant
designs, styles in fabrics such as cotton, linen and net. Look effortlessly
good with westside’s graceful and ethnic line of anarkali style kurta sets. Let
your imagination run free at the mix and match section of the store starting
from price range of Rs.599/- onwards. Also, available are chic and comfortable
casuals in floral prints, pastel and nautical colours. The gia collection for
the plus size women also has a nautical touch to its apparels with price range
starting from Rs.499/- onwards.
The men’s wear at westside is inspired by ‘high school nostalgia’’
and includes colours for the season- navy, green, yellow and red also available
are mid-blue denims and comfortable casuals starting from Rs.0.001 millions and
ascot smart formals from Rs.0.001 millions onwards.
The trendy kids range includes shorts, t- shirts and hooded
t-shirts available at the price range of Rs.299/- onwards
Add the freshness of
Drop into your closest westside store and pep-up your
wardrobe this season with fun and colorful westside spring summer 2010 range.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals have
been formally charged or convicted by a competent governmental authority for
any financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.44.90 |
|
|
1 |
Rs.72.54 |
|
Euro |
1 |
Rs.63.39 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
69 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.