V2 Retail Ltd:Annual Report 2023-24 Analysis

V2 Retail Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History #

V2 Retail Ltd. was incorporated in 2006 and started its retail operations in 2008.

Headquarters Location #

The company’s headquarters are located in New Delhi, India.

Company Vision and Mission #

• Vision: To be a leading value-for-money retailer in India, providing a wide range of quality products at affordable prices.

Key Milestones in Their Growth Journey #

• 2008: Started retail operations with its first store.
• Expanded its store network across Tier II and Tier III cities in India.
• Focused on offering a diverse range of products, including apparel, footwear, accessories, and home & kitchen items.

Stock Exchange Listing Details and Market Capitalization #

V2 Retail Ltd. is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

Recent Financial Performance Highlights #

• Recent financial data is available from the company’s official filings on the BSE and NSE websites. This will provide specifics like revenue, profit/loss, and growth rates.

Management Team and Leadership Structure #

• RC Agarwal: Chairman & Managing Director.

Any Notable Awards or Recognitions #

• V2 Retail has received awards and recognition for its performance in the retail sector, including “Images Most Admired Retailer of the Year: Value Retail” in 2016.

Their Products #

Complete Product Portfolio with Categories #

V2 Retail offers a wide range of products, primarily focusing on value retail. Key product categories include:

• Apparel: Men’s wear, women’s wear, and kids’ wear
• Footwear: Men’s, women’s and kids’ footwear
• Accessories: Bags, belts, wallets, and jewelry
• Home & Kitchen: Home furnishings, kitchenware, and small appliances
• General Merchandise: Toys, stationery, and personal care products

Flagship or Signature Product Lines #

V2 Retail doesn’t have specific “flagship” product lines in the conventional sense. Its strength lies in offering a broad assortment of value-priced items within its core categories.

Recent Product Launches or R&D Initiatives #

• V2 Retail is focused on continuously updating its product offerings to keep up with the latest fashion trends and customer preferences.

Primary Customers #

Geographic Markets (Domestic vs. International) #

V2 Retail’s operations are primarily focused on the domestic market in India.

Major Client Segments #

V2 Retail’s target audience is primarily middle-class and lower-middle-class consumers residing in Tier II and Tier III cities in India.

Distribution Network and Sales Channels #

• V2 Retail operates through its own chain of retail stores located across India.

Major Competitors #

Direct Competitors in India #

• Vishal Mega Mart
• Easyday (Reliance Retail)
• D-Mart
• Big Bazaar (Future Retail)

How they differentiate from competitors #

• Focus on Tier II and Tier III Cities: They focus on the smaller towns of India, where they claim less competition, thus giving them an advantage over competitors, who usually concentrate on Metros and Tier I towns.

Future Outlook #

Expansion Plans or Growth Strategy #

• V2 Retail has plans to continue expanding its store network, primarily in Tier II and Tier III cities in India.
• The company is focused on strengthening its sourcing and supply chain capabilities.

Industry Trends Affecting Their Business #

• Growth of Organized Retail: The increasing penetration of organized retail in smaller cities and towns is a significant opportunity.
• E-commerce Growth: While V2 Retail is primarily brick-and-mortar, the growth of e-commerce influences consumer behavior and necessitates a strong online presence.

V2 Retail Limited - Financial Analysis (FY 2023-24) #

Revenue and Profitability #

• Standalone Revenue: ₹1164.72 crore (FY 2023-24), up 38.86% from ₹838.8 crore (FY 2022-23).
• Standalone EBITDA: ₹142.00 crore (FY 2023-24), up 79.75% from ₹79 crore (FY 2022-23). EBITDA margin improved to 12.2% (FY24) from 9.4% (FY23).
• Standalone PBT: ₹31.50 crore profit (FY 2023-24), turnaround from ₹14.49 crore loss (FY 2022-23). PBT margin: 2.70% (FY24) vs -1.73% (FY23).
• Standalone PAT: ₹27.29 crore profit (FY 2023-24), compared to ₹14.48 crore loss (FY 2022-23). PAT margin: 2.34% (FY24) vs -1.73% (FY23). Basic EPS: ₹7.89 (FY24) vs -₹4.21 (FY23).
• Consolidated Revenue: ₹1164.99 crore (FY 2023-24), up 38.87% from ₹838.93 crore (FY 2022-23).
• Consolidated PAT: ₹27.62 crore profit (FY 2023-24), significant improvement from ₹14.49 crore loss (FY 2022-23). Consolidated Basic EPS: ₹8.04 (FY24) vs -₹4.21 (FY23).

Market Position #

V2 Retail focuses on affordable fashion in Tier-II and Tier-III cities, targeting the neo-middle class. Average product realization: ₹263. Average net billing per customer: ₹797 (FY24).

Products and Services #

V2 Retail offers apparel and lifestyle products for men, women, and children.

• Product Mix:
  • Men’s Wear: Includes upper, lower, occasion wear, winter wear, sportswear, formal, and casual.
  • Ladies’ Wear: Ethnic wear, upper, lower, occasion wear, winter wear, sportswear.
  • Kids’ Wear: For boys, girls, infants, including winter wear.
  • Lifestyle Products: Deodorants, wallets, sunglasses, ladies’ purses, etc.

Geographic Distribution #

As of March 31, 2024, V2 Retail operated 117 stores across 17 states and more than 100 cities. Total retail area: 12.54 lakh sq. ft. (FY24) from 10.83 lakh sq. ft. (FY23). 23 new stores opened, and 9 stores closed during FY 2023-24.

• Regional Store Mix (Approximate):
  • East: Largest segment.
  • North: Second largest segment.
  • South & West: Smaller presence.
• Regional Space Mix (Approximate):
  • East: Dominant in terms of space.
  • North: Significant space.
  • South & West: Comparatively less space.

Capex and ROIC #

• Capex (Standalone): Purchase of PPE and ROU assets: ₹3,698.50 lakhs (FY24). Additions to PPE: ₹319.08 lakhs. Additions to CWIP: ₹36.44 lakhs. Additions to ROU assets: ₹12,328.39 lakhs.
• Capex (Consolidated): Purchase of PPE and ROU assets: ₹3,783.77 lakhs (FY24). Additions to PPE: ₹432.43 lakhs. Additions to CWIP: ₹36.44 lakhs. Additions to ROU assets: ₹13,002.09 lakhs.

Operational Efficiency #

• Inventory (days of sale): 113 days (FY24) from 107 days (FY23).
• Sales per sq. ft. (₹ per month): ₹854 (FY24) from ₹651 (FY23).
• Same Store Sales Growth (SSSG): 31% (FY24), consistent with 31% (FY23).
• Average Product Realization: ₹263 (FY2024).
• Average Net Billing per Customer: ₹797.

Detailed Analysis #

Risk Assessment: V2 Retail Limited (FY 2023-24) #

Strategic Risks #

Economic and Market Conditions #

• Analysis:
  • Severity: Medium
  • Likelihood: Medium
  • Trend: Stable
  • Value retail is sensitive to discretionary spending, which can be impacted by economic slowdowns or high inflation affecting the target Tier-II/III city demographic.
• Mitigation Strategies & Control Effectiveness:
  • Multi-format click-and-mortar model
  • Product mix and pricing policy adjustments
  • Focus on value fashion at affordable prices
  • Control effectiveness appears moderate given responsiveness to market changes.
• Potential Financial Impact:
  • Fluctuations in sales volume
  • Pressure on margins if input costs rise without the ability to pass them on.
• Quantitative Metrics:
  • Revenue growth (Standalone) of 39% to ₹1164.8 cr in FY24
  • Same Store Sales Growth (SSSG) at 31% for FY24

Changing Consumer Preferences & Fashion Trends #

• Analysis:
  • Severity: High
  • Likelihood: High
  • Trend: Increasing
  • Failure to adapt can lead to inventory obsolescence and loss of market share.
• Mitigation Strategies & Control Effectiveness:
  • Investment in an in-house product development team (25 individuals)
  • Market research
  • Streamlined monitoring processes
  • Differentiated designs
  • Vertical integration and focus on private labels (target to increase share)
  • Control effectiveness is developing with the new in-house design team.
• Potential Financial Impact:
  • Inventory write-downs
  • Reduced sales
  • Margin erosion if discounts are needed to clear old stock.
• Quantitative Metrics:
  • Inventory holding days increased slightly to 113 days in FY24 from 107 in FY23 (Standalone)

Competitive Landscape #

• Analysis:
  • Severity: Medium-High
  • Likelihood: High
  • Trend: Increasing
  • The value retail segment is competitive, with organized and unorganized players.
  • International players entering the market and e-commerce growth intensify competition.
• Mitigation Strategies & Control Effectiveness:
  • Focus on Tier-II/III cities (117 stores across 17 states)
  • Affordable pricing
  • Product development
  • Enhancing customer experience
  • Store expansion (15 net new stores in FY24)
  • Effectiveness relies on successful execution of these strategies.
• Potential Financial Impact:
  • Pressure on pricing and margins
  • Increased marketing spends
  • Potential market share loss.
• Quantitative Metrics:
  • Sales per sq. ft. (Standalone) increased to ₹854/month in FY24 from ₹651/month in FY23

Geographic Concentration #

• Analysis:
  • Severity: Medium
  • Likelihood: Low-Medium
  • Trend: Decreasing with expansion
  • Over-concentration in specific regions could pose risks if those areas face localized economic downturns.
• Mitigation Strategies & Control Effectiveness:
  • Expansion strategy targets diverse geographies, with 117 stores across 17 states and over 100 cities.
  • FY24 saw store spread increasing.
  • Control effectiveness is demonstrated by successful expansion and diversified store presence.
• Potential Financial Impact:
  • Regional slowdowns could disproportionately affect revenue if concentration is high.
• Quantitative Metrics:
  • Regional store mix (FY24): North 64%, East 31%, South 3%, West 2%.
  • Regional space mix (FY24): North 66%, East 30%, South 2%, West 2%.

Operational Risks #

Inventory Management (including Shrinkage & Obsolescence) #

• Analysis:
  • Severity: High
  • Likelihood: Medium
  • Trend: Stable
  • Risks include obsolescence due to fashion changes and shrinkage (shoplifting, pilferage, errors).
• Mitigation Strategies & Control Effectiveness:
  • Cyclical physical counts
  • Monitoring shrinkage levels
  • Processes for identifying slow-moving/obsolete inventory and determining NRV
  • Investments in warehouse management technologies
  • Control effectiveness is moderate; while processes are in place, inventory holding days have slightly increased, and it remains a Key Audit Matter for statutory auditors.
• Potential Financial Impact:
  • Write-downs of inventory (Provision for inventory obsolescence made in FY24)
  • Lost sales due to stock-outs
  • Impact on gross margins.
• Quantitative Metrics:
  • Inventory holding days (Standalone): 113 (FY24) vs 107 (FY23).
  • Provision against inventory (Consolidated P&L adjustment): ₹1,005.68 lakhs (FY24).

Property, Plant & Equipment (PPE) Management and Lease Accounting #

• Analysis:
  • Severity: Medium
  • Likelihood: Medium
  • Trend: Increasing concern
  • The statutory auditor issued a qualified opinion on both standalone and consolidated financial statements due to pending reconciliation of PPE physical verification with the fixed asset register. This indicates a material weakness in internal financial controls over financial reporting for PPE.
• Mitigation Strategies & Control Effectiveness:
  • The company has a phased program for PPE verification, but reconciliation is pending.
  • Control effectiveness for PPE is weak, as highlighted by the qualified audit opinion and qualified IFC report.

Financial Analysis of V2 Retail Limited (FY 2023-24) #

Long-Term Strategic Goals and Progress #

V2 Retail Limited aims to become the premier value retailer in India, offering the best fashion at affordable prices. Key strategic pillars include:

• Market Penetration and Expansion: Increase market share by catering to a wider customer base, particularly in Tier-II and Tier-III cities. In FY 2023-24, the store count increased to 117 (from 102 in FY23), expanding total retail space to 12.54 lakh sq. ft. (from 10.83 lakh sq. ft.). This involved opening 23 new stores and closing 9 underperforming ones.
• Product Development and Vertical Integration: Develop in-house design capabilities with a 25-member product development team. This aims to create unique designs, reduce reliance on vendors, and enhance control over the product portfolio. V2 Smart Manufacturing Private Limited supports this vertical integration strategy.
• Customer Satisfaction and Experience: Enhance customer satisfaction through personalized experiences, feedback mechanisms, and a seamless shopping journey, both in-store and via an omni-channel presence.
• Technological Advancement: Integrate channels for an omni-channel experience, utilizing advanced analytics, automation, and AI for personalized recommendations and operational efficiency (e.g., warehouse management). The core business runs on SAP Hana ERP.
• Operational Efficiency and Cost Optimization: Optimize supply chains, negotiate partner contracts, and leverage technology to control operating costs and improve margins. Focus on providing “value fashion.”
• Private Labels: Focus on margin-accretive private labels and increase their share in revenue.

Progress in FY24 is evidenced by strong revenue growth, a return to profitability, expansion of the physical store network, and initial steps in building in-house design capabilities.

Competitive Advantages and Market Positioning #

V2 Retail is positioned as a “go-to destination in retail shopping” for the entire family, focusing on “value and variety” by selling good quality, fashionable apparel and lifestyle products at affordable prices. Its target demographic is the “neo middle class group of population living in Tier 2 and Tier 3 cities.”

Key competitive advantages include:

• First-Mover Advantage: Established presence in several Tier-II and Tier-III cities, which often have lower competition.
• Cost Management: Operating in Tier-II/III cities allows for moderated rent and employee costs.
• Value Proposition: An average product realization of ₹263 and average net billing per customer of ₹797 in FY24 reinforces its positioning as an affordable fashion retailer.
• Promoter Experience: The Chairman & Managing Director, Mr. Ram Chandra Agarwal, has over 30 years of entrepreneurial experience in the sector.
• Product Portfolio: A wide range of products across men’s, women’s, and kids’ wear and lifestyle items.
• Operational Efficiencies (Developing):
  • Centralised Procurement & Quality Check: Aims for better negotiation and consistent quality through a wide network of vendors.
  • Supply Chain: A distribution center capable of catering to 15 lakh sq. ft. of retail space.
  • Technology Backbone: SAP Hana ERP and proprietary POS tools support operations.
  • In-house Design (Emerging): A developing capability aimed at differentiation and quicker market response.

Innovation Initiatives #

Innovation at V2 Retail appears primarily focused on product development and technological integration.

• Product Development: Establishment of a 25-member in-house product development team to create unique, trend-setting apparel and accessories.
• Technological Investments:
  • Investments in “cutting-edge technologies” to create a “seamless omni-channel experience,” leveraging “advanced analytics, automation, and artificial intelligence” for personalized recommendations.
  • Core operational technology includes SAP Hana ERP and a proprietary point-of-sale (POS) tool.
  • Investment in warehouse management technologies to improve supply chain effectiveness.

ESG Framework Analysis #

Environmental Metrics and Targets #

Energy Conservation #

The Company acknowledges energy conservation as vital and has taken steps for policy formulation. Efforts were made for optimum electricity utilization. (Directors’ Report, Annexure II)

Alternate Energy Sources #

No specific steps taken by the Company for utilizing alternate sources of energy were reported. (Directors’ Report, Annexure II)

Capital Investment in Energy Conservation Equipment #

No capital was invested in energy conservation equipment during the reporting period. (Directors’ Report, Annexure II)

Technology Absorption #

The Company is implementing updated software and other technology in its operations. No specific benefits like product improvement, cost reduction, or import substitution were detailed as derived from these efforts. No imported technology was reported in the last three years. No expenditure was incurred on Research and Development. (Directors’ Report, Annexure II)

Foreign Exchange #

The Company is not involved in the export of goods. Foreign exchange outgo was Nil for travel, consultancy, license fees, raw materials, finished goods, capital goods, and other categories. Foreign exchange earnings were Nil. (Directors’ Report, Annexure II)

Social Responsibility Programs #

Corporate Social Responsibility (CSR) #

CSR is an integral part of business activities. A CSR policy is adopted and available on the Company’s website. The annual report on CSR activities is provided in Annexure III to the Directors’ Report. The CSR Committee met twice during the year (May 25, 2023, and August 12, 2023). Its functions include formulating and recommending CSR policy, recommending expenditure, and monitoring the CSR policy. (Directors’ Report, Corporate Governance Report)

Human Resources #

The workforce is treated as a precious asset with just and fair HR practices and employee-friendly policies. The Company believes its competitive advantage lies in its people and promotes a diverse and inclusive culture. It provides opportunities for professional growth and training to enhance skills, empowering employees to adopt technological interventions and improve customer value propositions. Total employee strength was 3338 as on March 31, 2024. (Management Discussion and Analysis)

Employee Stock Option Scheme (ESOP) #

The Company has a V2R-Employee Stock Option Scheme 2016. During the year, 2,00,000 shares were allotted to Mr. Manshu Tandon (CEO) under ESOP. As of March 31, 2024, 2,25,000 options were outstanding at the beginning of the year, no new options were granted, 25,000 options lapsed, and 2,00,000 options were exercised. No options were outstanding or exercisable at the end of the year. (Directors’ Report)

Prevention of Sexual Harassment at Workplace #

The Company is committed to a safe work environment with zero tolerance towards sexual harassment. A policy against sexual harassment is established. No cases of sexual harassment were reported during the year under review. (Directors’ Report, Corporate Governance Report)

Industrial Relations #

The Company maintained healthy, cordial, and harmonious industrial relations at all levels. (Directors’ Report)

Governance Structure and Effectiveness #

Board Composition #

As of March 31, 2024, the Board had six members: three Executive Directors (including Chairman & Managing Director) and three Independent Directors (including one Woman Director). The composition is in conformity with Regulation 17 of SEBI Listing Regulations and Sections 149 & 152 of the Companies Act, 2013. All Independent Directors meet the independence criteria and are registered in the databank of Independent Directors. (Directors’ Report, Corporate Governance Report)

Board Meetings #

Four Board meetings were held during FY 2023-24 (May 25, 2023; August 12, 2023; November 09, 2023; February 10, 2024). The maximum time gap between meetings was less than 120 days. (Corporate Governance Report)

Committees of the Board #

Audit Committee #

Comprises four Directors (three Independent). Met 4 times. Chaired by Mrs. Archana Surendra Yadav. Oversees financial reporting, auditor recommendations, internal controls. (Corporate Information, Directors’ Report, Corporate Governance Report)

Nomination and Remuneration Committee #

Comprises three Independent Directors. Met 2 times. Chaired by Dr. Arun Kumar Roopanwal. Recommends Director nominations, evaluates performance, formulates remuneration policy. (Corporate Information, Directors’ Report, Corporate Governance Report)

Stakeholders Relationship Committee #

Comprises four Directors (two Independent, two Executive). Met 1 time. Chaired by Dr. Arun Kumar Roopanwal. Deals with stakeholder relations and investor grievances. (Corporate Information, Directors’ Report, Corporate Governance Report)

Risk Management Committee #

Comprises four members (two Independent Directors, one Executive Director, CEO). Met 3 times. Chaired by Mr. Arun Kumar Roopanwal. Monitors risk management plan, formulates risk policy. (Corporate Information, Directors’ Report, Corporate Governance Report)

Corporate Social Responsibility Committee #

Comprises four Directors (two Independent, two Executive). Met 2 times. Chaired by Mrs. Archana Surendra Yadav. Formulates and monitors CSR policy. (Corporate Information, Directors’ Report, Corporate Governance Report)

ESOP Committee #

Comprises three Executive Directors. Chaired by Mr. Ram Chandra Agarwal. Oversees allotment of equity shares under ESOP. (Corporate Governance Report)

Internal Control Systems #

Adequate internal controls commensurate with size and operations. Robust processes for IFC effectiveness. In-house internal audit department conducts audits across locations. M/s SMAM & CO., Chartered Accountants, appointed as Internal Auditors for FY 2024-25. Audit Committee reviews findings. (Directors’ Report, Management Discussion and Analysis)

Whistle-Blower Policy/Vigil Mechanism #

Established mechanism for reporting unethical behavior or fraud. Employees can approach Chief Ethics Counsellor / Audit Committee Chairman. No person denied access to Audit Committee Chairman. Policy available on website. No complaints received under this policy during FY 2023-24. (Directors’ Report, Corporate Governance Report)

Remuneration Policy #

Aims to attract, retain, and motivate qualified personnel. Balances fixed and incentive pay. Policy available on website. (Directors’ Report, Corporate Governance Report)

Related Party Transactions #

All transactions were at arm’s length. Audit Committee granted omnibus approval for repetitive transactions, reviewed quarterly. No material contracts or arrangements with related parties were entered into during the year under review, that were not at arm’s length or not in the ordinary course of business. Policy available on website. AOC-2 appended as Annexure IV. (Directors’ Report, Corporate Governance Report)

Performance Evaluation #

Formal mechanism for evaluating Board, Committees, and individual Directors. Recommendations discussed at Independent Directors’ meeting, NRC, and Board meeting. (Directors’ Report, Corporate Governance Report)

Auditors #

Statutory Auditors #

Singhi & Co. (Qualified opinion on Standalone and Consolidated Financials regarding physical verification reconciliation of PPE. Management believes resultant treatment will not be material. Emphasis of Matter on advertising advance to BCCL.)

Secretarial Auditors #

Sunpreet & Co. (Secretarial Audit Report for V2 Retail Ltd did not contain qualifications. Report for V2 Smart Manufacturing Private Limited noted non-appointment of KMP as per Sec 203 and non-compliance with Sec 134(1) for financial statement signing.)

Internal Auditors #

SMAM & Co. (appointed for FY 2024-25)

Code of Conduct #

In place for Board members and senior management. All affirmed compliance for FY 2023-24. (Corporate Governance Report)

CEO/CFO Certification #

Provided as per regulations, confirming fairness of financial statements and internal controls. (Corporate Governance Report)

Sustainability Investments and ROI #

Investment in Technology #

The Company is implementing updated software and technology in operations (Directors’ Report, Annexure II), and has made substantial investments to integrate channels for an omni-channel experience, leveraging advanced analytics, automation, and AI (Forging Ahead section). Specific ROI for these investments is not detailed.

Investment in In-house Design #

Invested in an in-house product development team of 25 individuals to create unique designs, aiming for greater control over product portfolio and swift reaction to market trends. This is presented as a strategic change to enhance brand value and drive profitability. (Forging Ahead section)

Regulatory Compliance and Future Preparations #

Compliance with Laws #

The Company states compliance with Secretarial Standards (SS-1 and SS-2). (Directors’ Report). The Corporate Governance report states compliance with mandatory requirements of SEBI Listing Regulations (Regulations 17 to 27, Schedule V, Regulation 46). Secretarial Audit report (for V2 Retail Ltd) confirms compliance with applicable laws and adequate systems.

Directors’ Responsibility Statement #

Confirms preparation of financial statements in compliance with accounting standards and laws, maintenance of accounting records, and adequacy of internal financial controls and compliance systems. (Directors’ Report)

Frauds Reported by Auditor #

No frauds reported by the auditor under section 143(12) reportable to Central Government. (Directors’ Report)

Significant Orders #

No material orders passed by regulators/courts/tribunals impacting going concern status. (Directors’ Report)

Audit Trail #

Statutory Auditor’s Report (Standalone and Consolidated) notes that the audit trail feature in the accounting software (SAP) was not enabled at the application level to log direct data changes in the Holding Company. For other accounting software maintained by a third party, inability to comment on audit trail features. (Independent Auditor’s Report - Standalone and Consolidated)

Future Preparations #

The “Forging Ahead” section outlines a focus on product development, customer satisfaction, technological advancements, and seamless integration, aiming to become the premier value retailer. Emphasis on vertical integration and in-house design capabilities to build sustained competitive advantage. These indicate preparations for future growth and operational efficiency, which can have indirect ESG implications. No specific future ESG regulatory preparations are detailed.

Forward Outlook: V2 Retail Limited (FY 2023-24) #

Management Guidance and Assumptions #

V2 Retail Limited aims for “exponential growth” following consolidation. Management’s guidance relies on these assumptions:

• Market Positioning: Becoming the “premier value retailer in India” by offering affordable fashion, focusing on Tier-II and Tier-III cities.
• Product Innovation: In-house product development (25-person team) to create unique, trend-setting products.
• Customer Centricity: Deep understanding of customer needs via feedback to drive loyalty.
• Technological Leverage: Investments in omni-channel integration, advanced analytics, automation, and AI for personalization and efficiency.
• Vertical Integration & Cost Efficiency: Vertical integration (V2 Smart Manufacturing), optimized supply chains, and cost-saving measures for competitive advantage and improved margins.
• Store Network Expansion: Expanding the physical store network in existing clusters and Tier-II/III cities.
• Economic Resilience: Continued growth of the Indian economy and retail sector.

Market Growth Forecasts #

The Company’s outlook is influenced by positive forecasts for the Indian retail market:

• Overall Retail Sector: Projected CAGR exceeding 13% by 2027.
• Value Fashion Segment: “Promising segment” appealing to a wider customer base.
• Tier-II and Tier-III Cities: Identified as leading fashion consumption hubs.
• Demographic Drivers: Young population, urbanization, growing middle class, rising incomes, and fashion consciousness fuel demand.

Planned Strategic Initiatives #

The Company has outlined these strategic initiatives to achieve growth:

• Product Development and Assortment Enhancement: Investment in in-house design and diverse product assortment.
• Customer Satisfaction and Experience: Robust feedback mechanisms and personalized experiences.
• Technological Investments and Integration: Omni-channel experience, advanced analytics, automation, and AI.
• Vertical Integration and Supply Chain Optimization: Strengthening in-house design, leveraging manufacturing subsidiary, and optimizing supply chains.
• Store Expansion and Rationalization: Expanding in Tier-II/III cities and rationalizing stores.
• Focus on Private Labels: Increasing the share of private labels.
• Cost Management: Efficiency improvements and cost optimization.
• Inventory Management: Efficient inventory management.

Capital Expenditure Plans #

Ongoing and planned investments in:

• New store openings
• Warehouse management technologies
• Technological integration
• Property, Plant, and Equipment (PPE)

Efficiency Improvement Targets #

Focused on these areas:

• Supply Chain Effectiveness: Investing in warehouse management technologies.
• Cost Optimization: Negotiating contracts and moderating costs.
• Store Profitability: Improving profitability per store and rationalizing underperforming stores.
• Inventory Management: Targeting optimal inventory levels.
• Same-Store Sales Growth (SSSG): Focusing on achieving growth.
• Margin Enhancement: Increasing private label share and better cost absorption.

Potential Challenges and Opportunities #

Opportunities: #

• Favorable Demographics
• Untapped Tier-II/III Markets
• Value Fashion Demand
• Private Label Growth
• E-commerce and Social Media Influence
• Technological Advancements
• Government Initiatives

Potential Challenges (Risks & Uncertainties): #

• Economic and Market Risks
• Intense Competition
• Changing Consumer Preferences
• Inventory Risk (Shrinkage)
• Employee Retention
• Technology Risks
• Liquidity and Cash Conversion
• Geographic Concentration Risk
• Auditor’s Qualified Opinion (Standalone & Consolidated)
• Emphasis of Matter (Standalone & Consolidated - Auditor’s Report)
• Internal Controls (Auditor’s Report - Annexure A - CARO, Standalone)