Spencer's Retail Limited (SPENCERS) Earnings Call Transcript & Summary

Good afternoon, everyone. It gives me great pleasure to welcome you all at the Fifth Annual General Meeting of Spencer's Retail Limited. In view of the continuing COVID-19 pandemic situation, the meeting is being conducted through video conferencing and other audiovisual means. As the requisite quorum is present, I declare the fifth AGM open. I would also like to acknowledge the presence of our Board members, auditors and scrutinizers in this meeting. In case there is any connectivity problem for me at any point, as per the decision of our Board of Directors, Mr. Devendra Chawla, [indiscernible] will conduct the rest of the proceedings of the meeting. I would now request our Company Secretary to brief you about some basic rules relating to the AGM.

Thank you, sir, and good afternoon, everyone. Question-and-answer session for members who have registered themselves as speakers, will open once all the regulations set forth in the notice are [indiscernible]. When the Chairman calls out the name of registered speaker, they may please keep their queries question brief. The company had provided the facility to the members to cast their vote through remote e-voting, which concluded yesterday. Members who have not cast their vote yet electronically and who are participating in this meeting will have an opportunity to cast their vote during the meeting through e-voting system provided by NSDL. The set facility will continue to be available for the next 15 minutes post conclusion of the meeting. Since the AGM is being held through video conferencing, other audiovisual means, there will be no proposing on seconding of regulation mentioned in the notice convening this AGM. The auditor report is not being read out since the accounts do not have any audit qualification. As required, all requisites registered, documents will remain accessible on NSDL website for inspection during the continuance of the meeting. Members list that the [indiscernible] of document by using the link provided in NSDL voting link. Thank you, sir. And now requesting Chairman, sir, to take the proceeding further.

Thank you. As we notice convening the meeting has already been circulated to all the members, I take it as read. Last year was a challenging year for us. COVID continued, and we had 2 waves of Covid. So we find that for us, West Bengal and East UP did relatively well. There was no drop in sales. And in a Covid year that was quite decent, not to have a drop in sales. However, Hyderabad, Tamil Nadu, Kerala, Bangalore, all had a decline in sales. Online sales increased to INR 122 crores. Owned deliveries were higher -- and overall, I think losses were lower, but hopefully, this year will be better. The Gift Studio, which was an interesting concept, dropped revenues of around between INR 16 crores and INR 17 crores, and the consolidated revenues were at INR 2,376 crores. Nature's Basket continues to do decently well and has a positive EBITDA of INR 17.7 crores. The effort to improve the effort to grow continues. And hopefully, when we meet next year, we'll have better results to show. I will now get on to the formal items on the agenda. Item #1, pertains to the adoption of stand-alone and consolidated financial statements. The notice has the detailed resolution. So this is an ordinary resolution, as stated in the notice. For Item #2, I request Mr. Chawla to take the chair.

Thank you, Chairman. I'll be reading out the item #2, reappointment of Dr. Sanjiv Goenka DIN No.00074796, who retires by rotation as a Director of the company. Ordinary resolution as stated in the notice. Chairman, I hand over the chair back to you. Over to you.

Thank you. Item #3 pertains to the reappointment of Mr. Devendra Chawla DIN No.03586196 as the Chief Executive Officer and Managing Director of the company. It's a special resolution and reads as stated in the notice. Item #4 pertains to the reappointment of Mr. Rahul Nayak as a whole-time Director of the company DIN No.06491536. It's a special resolution as stated in the notice. Can I invite the 3 registered members to speak. I will call out the names one by one. Mrs. Mascarenhas...

Can you hear me, sir?

Yes ma'am...

Am I audible [Foreign Language]

[Foreign Language]

Respected Chairman, [indiscernible] Dr. Sanjiv Goenka, MD Devendra Chawla, other members -- board members, my fellow shareholders. I am Mrs.[ CE Mascarenhas ], I'm speaking from Mumbai. First, I thank our company's Secretary, Mr. Rama Kant and his team for sending me an e-annal report and also registering me as a speaker at my request. Thank you, and also seeing that I am well connected and my audio video is okay. Thank you very much. Now our annual report is very colorful, informative, transparent -- self informative and at the same time adhering to the norms of all the norms of the corporate governance. Our working according to [indiscernible] is working is good because we are still growing up. There is still losses are there, but retailing is also very difficult business. So -- and since we are on a growth trajectory, what is important, I feel according to me is only the market cap. I look at Dmart, though they are cash rates, but they are not giving any dividend because they are parking all the money in the stores. So I feel we also will be that way one day with the more and more stores and digital platform. Of course, we are more on the digital platforms. Next is, I congratulate for all the awards and accolades and especially being digital -- and a major shift to D2C, providing a shopping experience appropriate for each stage of digital maturity. I also appreciate the CSR work and also the ESG initiatives taken. Thank you so much. Now my queries, sir. I point from the balance sheet. We have total 154 stores across -- out of which is 36 stores are of Nature Basket. See, my question is whether -- how many stores are owned by us, including the Nature Basket and how many are leasehold properties. Because if it is owned, like Dmart, it holds a lot of owned. So because then we don't have all that hassle later on. So also we should -- hold, I mean investing in ownership. So that is my -- of this, okay. How many months or years it takes for a store to become viable. Sir, we have about according to balance sheet, 4,882 employees. What is the attrition level and the average age of the employees and plus -- whether all are working every day in the stores or alternate days. So whether it has come to -- and whether all of them are vaccinated with the booster dose. I was just looking at the Gift Studio. Gift Studio in the balance sheet and very beautiful pictures on the Gift Studio in. So what is my question is whether we have such a Gift Studio in Mumbai? Otherwise, I'll ask you to give me -- show me a virtual picture of the [indiscernible] because if it is in Mumbai, I will definitely go and see this myself like. And also, I would like to know that Spencer Malls, I don't see much in Mumbai. Earlier there was, but now I don't see. So Mumbai is a key stake like business center, financial capital, of course, the property is very costly. That is because 10 people were also telling they happen to take Dadar [indiscernible] life. And the rent is high, but they have sort of become viable. They were telling that is the power of the city of Bombay. Now I would like to say is whether any technical problems you have in supply chain. And that is why we are more on the online. I'm very happy we are more on online because that means our millenniums are taking a lot of support from the online. Next last one is the future road map [indiscernible] speakers, I think, so I support all the resolutions. I wish you very good luck and very good health. So that I can see you as a big and big conglomerate really like Ratan Tata those days. So you are in that sort of making. So of course, FSL has really made my mind a real different thinking because that software and all that, how you change it around in FSL because I go every day that every year to that meeting, and it could not change even though the ICICI ventures were holding and all, but you have done great. And when you took [indiscernible] I said, this is the electricity person, how power and all, how in the software and all, but you have done it -- so that's only I can see. And I wish you all the luck may our company Spencer, along with the Nature Basket grow strength to strength and also our Gift Studio. With this, thank you very much. May God bless you and see virtual -- physically. Thanks a lot. Now Mr.[indiscernible]

I'm also a shareholder of the prestigious company. So I would like to my maiden speech to you. Sir, respected Chairman, sir, very distinguished members of the Board and my fellow shareholders. Good morning to you all. My name is [indiscernible]. At the outset, I thank management and company secretary for sending me such a beautiful balance sheet, full of pictures and information. Though our -- we are in the loss, but still our loss is very much less compared to last year. Sir when the dividend will be declared...

I think we have last [indiscernible] Mr. [ Ashish Kumar Padak ]

Am I audible fair?

Yes, Mr. [ Padak ].

Yes. Very good afternoon, respected Chairman, MD, CFO, Board of Directors, Company Secretary, fellow members joining at Fifth AGM of Spencer's Retail Limited. Thanks to Company Secretary, Rama Kant, Mr. Rama Kant for sending me the notice and annual report very well in advance and allowed to me to speak. Very well [indiscernible] secretarial department service, I have successfully casted for all the resolutions mentioned in the notice by remote e-voting. At first my congratulations to my company's management teams for achieving successful financial performance, financial year '21, '22. While the country rolled up with pandemic lockdown, social distancing norms and lower footfalls at stores. And many, many restrictions by the order of health department. Still my company achieved stand-alone revenue, INR 2,067 crore against INR 200 crore, INR 116 crores. EBITDA INR 85 crores against INR 47 crores and comprehensive loss reduced to INR 88 crores against INR 129 crores. Consolidated performance, also very nice. And also our company stand-alone sales mixed with GMV mentioned INR 329 crores, excellent financial year '21, '22. Sir, my view is just that all the by company management teams quite positive initiative taken for the future business developments mentioned in the annual report, but in respect to negative working capital mentioned INR 46.2 crores as debt mentioned INR 360.90 crores and increased borrowing stand-alone basis, INR 128 crores. Sir what positive steps my company management team taken because the Board consists of 50% independent directors and good promoter holding beyond 50%. Sir, my second view is that non-food mix grew 185 basis points. Sales of return, general merchandise and apparel portfolio helped enhance positive pace in respect to business development. SOR touches to 11% for April and general merchandise and high margin on non-food category. My view is that my company management team should continue us in priority nonfood items. This is my second view. And in view in respect to rationalization of stores, my company's management team should draw attention large-format stores which cost optimizations, solar rooftop and with various digital tools, where food and non-food items both available according to the customers' demands with sufficient inventories. While we mentioned large format store shared 83% revenue where small format stores contribute 17% in total revenue. This is my second view. Page #19 it mentioned my companies has private brands, general merchandise 3, staples, FMCG 3, apparel 1 and Natures Basket Private 3 bands. My view is that my company's management team draw attention for own brand recognization so that we cannot be dependable on MNC's FMCG's products. Already, they have own potential distribution network and supply chain and low margin with their products. This is my third view. Next, my company's management team should draw attention distributions in omnichannel, e-commerce develop, chatbots, mentioned in the annual report, business on mobile app and set up warehouse by digital tools, as a location for logistic costs very low so that my company not dependable on every year store rationalization, which will be cost effective and delivery between 10 to 15 minutes. Many players are doing this after order booking. Also enhance out-of-store business C2 -- D2C physical and draw attention for every store's profitability with cost optimization and nonprofitable stores may be reduced. My view is that at present, FRL stores are -- it not in operation. So a big business to be grasped. So a big back-end space is generated. This is my view, which I'd like to share. And what proper nourishment my company management team for business developments, Natures Baskets and ORIPL because this is our 100% subsidiary, and we also set up 4 stores Natures Baskets. So this is my third view. And sir, set up a large format stores at Saregama India near Dum Dum, unique, near to airport. And one of the recognized FRL store at Dum Dum Nager Bazar, Diamond Plaza close to operation, where Music World was utilized by Natures Basket. So my view that back-end place to be utilized in our stores and operation because Dum Dum area is a very, very big market. This is my view. I like to share sir. But not in the list, any future add food park in our business articles and also liquor business portfolio, where a Hyderabad-based huge tax exercise department notes for alcohol aggregations [indiscernible] delivery with the help of AI and investment INR 200 crores. In a media report I have noted this point because finally, my company associated with modern trade, so ultimately, my company gets enhanced respect in coming financial year. This is my view. And sir, finally add our music vertical caravan in our non-food items. This is my final view. Nothing to say more, expected financial -- enhanced financial performance, our Kolkata-based company. I'm proud to be a member of Spencer's Retail Limited. Thanking you sir.

[ Ms. Lilly Pradhan ]. Ms. Pradhan?

I think we lost.

Okay. Mr. Om Prakash Kejriwal.

Thank you, sir, once again. Sir, Spencer's iconic brand of Calcutta. [Foreign Language]

Mr. Hardik Jain. Mr. Jain is not there. [ Ms. Ashesh Patel ]?

She has not joined, sir.

[ Ms. Krishnan PS ]?

Not joined, sir.

Ms. Sweksha Jain?

She has also not joined, sir.

Mr. Mahesh Kumar [ Bhuvanath ]?

Good morning, sir. [Foreign Language] There is some problem happening in all the meetings today. All meeting, this is happening from the NITL side...

I think we lost sir.

Okay. So I will now respond to the questions. Mrs. Mascarenhas has talked about various things, very good suggestions. As a matter of rule, we don't have own stores. All our stores are leased stores. All Natures Basket stores in Mumbai, all 35 of them have Gift Studio as part of the store. We don't have a separate store or outlet to Gift Studio, which is stand-alone. All our associates work every day. The average age is 28 years. Attrition rate is about 81%. The attempt to increase the lawn food mix is strong. It's very important. It's something that we are focusing on. It is increasing regularly. And this is something that we are focusing on to improve further over the coming year. Online, yes, it's a fine balance between increasing online sales, but with online sales, you have increased losses. So it's a little bit of a balance. You have to increase it, but balance it with the bottom line. Mr. Kejriwal talked about revenue being stagnant. In COVID year in a situation where you are plagued by the pandemic, we had a large part of our working days impacted because of either non-operation of stores or limited hours of operation. People were not venturing out, and they were not coming out to shop. We were reducing their consumption. We were reducing what they were consuming. So it's all been impacted, and it happened more in the regions in which we operate. So let me assure you that the attempt to increase sales is real. And naturally, when you don't have increase in sales rather in certain regions, a reduction in sales, you have losses. So it's a natural corollary. But having said that, the losses were lower than the previous year. Mrs. Mascarenhas also talked about no Spencer's in Mumbai. No, we will not have. Natures Basket is the brand with which we will go in Mumbai. So that's -- as far as we are concerned, it's all part of the same company. Thank you all for your support and guidance. And I can assure you that we will continue to make every effort to get the company into profits. The voting results will be announced within 2 working days from the conclusion of the meeting. It will be displayed on the notice board and the registered office of the company and will also be posted on the company's website and on the website of NSDL. Thank you all for attending the meeting. Stay safe, stay well. I declare the meeting closed. Thank you.

Thank you, Chairman.