Spencer's is ripe for listing: Sanjiv Goenka

For the last six months, Spencer's has been EBITDA positive

The RP-Sanjiv Goenka Group, owner of the retail store chain, Spencer's Retail, is focusing on bringing the company out of red; first by turning EBITDA positive and then improving its bottomline, a move which will speed up listing of this entity on the country's bourses.

Sanjiv Goenka, the group's chairman said that for the last six months, Spencer's has been EBITDA (earnings before interest, tax, depreciation and amortisation) positive while its earnings per square foot of floor space have increased to Rs 1,741 against the previous near Rs. 1,500.

"Hopefully this trend (of positive EBITDA) will continue. Spencer's is ripe for listing", he said.

Since a long time, the group has been considering an IPO (initial public offering) to take forward Spencer's growth path. However, recurring losses over the years has been preventing the group from making this move.

During the 2015-16 fiscal year, although Spencer's posted a near 12 per cent increase in its topline at Rs. 1865 crore, it suffered a Rs. 142 crore loss, primarily on account of rising purchase of traded goods and raw materials. The net loss during the 2014-15 fiscal year stood at Rs. 152 crore. However, its EBITDA showed a recovering trend.

During 2015-16, Spencer's EBITDA stood at a negative Rs. 53 crore; down by 21 per cent when compared to the negative Rs. 67 crore EBITDA in the year-ago period.

Some years ago, the group undertook a restructuring programme to turn around the loss making Spencer's which included culling unprofitable stores, exit from geographies like Mumbai, internal restructuring of the core management team and cost cutting.

During 2011-12, Spencer's total stores count stood at 182 which declined to 126 during the 2014-15 fiscal year and further dipped to 118 in 2015-16.

Currently, it has 120 stores across 35 cities in the country with 1.1 million square foot store space and plans to open 50-60 Hypermarket format stores in the coming four years.

Apart from managerial restructuring of the company and focussed approach to increase large-format stores only, Spencer's is now counting on its private labels which will help the firm post profits from the current loss making situation.

Over the years, Spencer's had introduced private brands in the stores which positively impacted its bottomline.

Labels like Smart Choice and Tasty Wonders were introduced in the foods section while Spencer's Finest was introduced in the gourmet section. Additionally, Clean Home and Maroon took over the home products portfolio and the Care and Essentials brand stepped in to gain consumer attention in the personal care range.

Recently, after introducing apparel private labels - Island Monks and Asankhya, the company is launching a third private label to pull up apparel sales from Spencer's stores.

As per Goenka, apparel business assures higher margins than foods categories which will help the marginalise losses from the group's retail division.

The company has recruited a team in Gurgaon in Haryana to take forward the new private label.

Company sources said that the private label will be made available in Spencer's outlets only in the initial stages and based on the response, can be made available in fashion and garment outlets.

"Apart from food, the apparel business will become the next big thing", Goenka said.

While the foods business contributes 80 per cent to its topline, the apparels division accounts for only five per cent of the overall sales.

CESC plans Rs 600 crore investment in renewables

CESC, the power generation and distribution arm of the RP-Sanjiv Goenka group has planned an investment of Rs. 600 crore in Gujarat and Andhra Pradesh to up wind energy generation from the current 130 MW to 207 MW.

The MW addition is likely to be completed in the coming 4-5 weeks.

So far, the group has invested Rs. 1,400 crore in the renewable sector with solar projects in Gujarat and Tamil Nadu and wind energy projects in Rajasthan, Gujarat and Madhya Pradesh.

In the third quarter of the current fiscal year, CESC posted a five per cent increase in its net profit at Rs. 152 crore as compared to Rs. 145 crore in the similar quarter of the last fiscal year. Its net sales in the October-December period of 2016-17 grew by three per cent at Rs. 1574 crore as against the earning of Rs. 1527 crore in the similar period of 2015-16.