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FDI in retail – at a standstill
The Committee of Secretaries had approved FDI in multi brand retail in late July, setting the stage for
cabinet approval, with some details around the accompanying riders
Since then, no real progress is visible and press commentary has suggested that the issue may get
pushed back to FY13. Recent commentary from the government has also signaled delays
However, there have been indications that the government may increase the FDI limit in single brand
retail from the current 51%.
Single brand retail is not as controversial as multi brand retail and could see quicker progress. That
said, the incremental impact of this on the sector would be limited
DIPP may ease norms for cash & carry firms (BS)
Under a previous guideline, cash & carry firms could not have more than 25% of their sales from group
companies. This created problems for foreign retailers’ Indian tie-ups
DIPP is reportedly planning to relax the definition of ‘group company’ to exclude minority stakes, which
would exclude tie-ups like Bharti Walmart from the 25% restriction
Issues emerge at Lilliput (ET)
Controversy has emerged at children’s garments retailer Lilliput as the Board of Directors have
reportedly rejected the company’s financial statements for FY11
Subsequently, four Independent Directors and the statutory auditors have reportedly resigned
Disputes have emerged between the private equity investors and promoters
Press comments are already comparing the situation to Subiksha, which had gone bankrupt with a
number of private equity investors on board. If Lilliput goes into distress, it would be the fourth such
case in the organised retail sector in the last few years following Vishal Retail, Subiksha and Koutons
Gitanjali Gems plans to invest Rs1.5bn in a new format (ET)
Gitanjali plans to invest 1.5 billion rupees to set up 50 stores under its new multi-brand jewellery
format 'Jewel Souk‘
The company will retail jewellery brands, fashion jewellery products and watches at Jewel Souk
The company is looking to invest ~Rs30m/store and is targeting revenues of Rs50-120m/store in the
first year
Metro expands in North India (IndiaRetailing, BS)
Metro Cash & Carry has marked its entry into North India with a store in Ludhiana, Punjab
The Ludhiana center was opened with an investment of ~Rs600m. It is spread over four acres, has
selling space of ~60,000 sq ft and offers an assortment of over 10,000 articles.
This is Metro’s seventh Cash & Carry centre in India and Ludhiana is its fifth city
The company is targeting 5% of its global revenue from India by 2015
Flipkart using offline advertising to get new customers (BS)
Flipkart has launched a new television advertising campaign addressing potential customer
apprehensions and highlighting its range of products
The non-ticketing/financial services driven e-commerce market in India is ~Rs36bn. Through this
campaign, Flipkart is attempting to attract traditional retail customers to online shopping.
CookieMan planning to scale up in India (FranchiseIndia)
CookieMan is planning to scale up its India store base to 200 by 2013 against 42 now
The company may pilot high street stores besides its existing mall and airport locations
Sector
We expect same store growth to remain muted, broadly similar
to/slower than 1Q, along with mixed margin performance
Things to watch out for will be the impact of inflation on growth and
margins, profitability trends, store growth progress, performance
divergence between formats and festive season outlook
Titan
We expect revenue growth to continue to be led by the jewellery
business. However, the 35%+ YoY increase in gold prices will likely
cause jewellery volume growth to be muted.
Whilst we expect flat YoY margins in jewellery as the margin
improvement seen from 2QFY11 annualises, watches margins were
unusually high in 2QFY11 at 21% and are unlikely to be repeated
Things to watch: segment margins, impact of gold and diamond price
volatility, progress in eyewear, festive season outlook
Shoppers Stop
We expect growth rates to be similar to 1Q with strong sale period
revenues offsetting an otherwise soft trading period
Margins should be flat YoY with higher sale period revenues this year
Things to watch: product price inflation and excise impact, same
store growth, progress in Hypercity and festive outlook
Jubilant Foods
We expect same store growth to moderate somewhat but still remain
25%+ while space growth will add to the topline
Margins should be down sequentially but still up YoY
Things to watch: food inflation and price hikes, wage inflation, store
growth guidance, festive season outlook
Pantaloon
We expect the margin improvement seen in recent quarters to sustain,
driving 90bps YoY increase in Ebitda margin. However, growth will
remain muted as same store sales growth remains soft.
Things to watch: Ebitda margins, same store sales growth and
inflation, Ex-HSRIL performance, E-Zone hive off, progress on
restructuring, store openings, garment price hikes and demand
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
FDI in retail – at a standstill
The Committee of Secretaries had approved FDI in multi brand retail in late July, setting the stage for
cabinet approval, with some details around the accompanying riders
Since then, no real progress is visible and press commentary has suggested that the issue may get
pushed back to FY13. Recent commentary from the government has also signaled delays
However, there have been indications that the government may increase the FDI limit in single brand
retail from the current 51%.
Single brand retail is not as controversial as multi brand retail and could see quicker progress. That
said, the incremental impact of this on the sector would be limited
DIPP may ease norms for cash & carry firms (BS)
Under a previous guideline, cash & carry firms could not have more than 25% of their sales from group
companies. This created problems for foreign retailers’ Indian tie-ups
DIPP is reportedly planning to relax the definition of ‘group company’ to exclude minority stakes, which
would exclude tie-ups like Bharti Walmart from the 25% restriction
Issues emerge at Lilliput (ET)
Controversy has emerged at children’s garments retailer Lilliput as the Board of Directors have
reportedly rejected the company’s financial statements for FY11
Subsequently, four Independent Directors and the statutory auditors have reportedly resigned
Disputes have emerged between the private equity investors and promoters
Press comments are already comparing the situation to Subiksha, which had gone bankrupt with a
number of private equity investors on board. If Lilliput goes into distress, it would be the fourth such
case in the organised retail sector in the last few years following Vishal Retail, Subiksha and Koutons
Gitanjali Gems plans to invest Rs1.5bn in a new format (ET)
Gitanjali plans to invest 1.5 billion rupees to set up 50 stores under its new multi-brand jewellery
format 'Jewel Souk‘
The company will retail jewellery brands, fashion jewellery products and watches at Jewel Souk
The company is looking to invest ~Rs30m/store and is targeting revenues of Rs50-120m/store in the
first year
Metro expands in North India (IndiaRetailing, BS)
Metro Cash & Carry has marked its entry into North India with a store in Ludhiana, Punjab
The Ludhiana center was opened with an investment of ~Rs600m. It is spread over four acres, has
selling space of ~60,000 sq ft and offers an assortment of over 10,000 articles.
This is Metro’s seventh Cash & Carry centre in India and Ludhiana is its fifth city
The company is targeting 5% of its global revenue from India by 2015
Flipkart using offline advertising to get new customers (BS)
Flipkart has launched a new television advertising campaign addressing potential customer
apprehensions and highlighting its range of products
The non-ticketing/financial services driven e-commerce market in India is ~Rs36bn. Through this
campaign, Flipkart is attempting to attract traditional retail customers to online shopping.
CookieMan planning to scale up in India (FranchiseIndia)
CookieMan is planning to scale up its India store base to 200 by 2013 against 42 now
The company may pilot high street stores besides its existing mall and airport locations
Sector
We expect same store growth to remain muted, broadly similar
to/slower than 1Q, along with mixed margin performance
Things to watch out for will be the impact of inflation on growth and
margins, profitability trends, store growth progress, performance
divergence between formats and festive season outlook
Titan
We expect revenue growth to continue to be led by the jewellery
business. However, the 35%+ YoY increase in gold prices will likely
cause jewellery volume growth to be muted.
Whilst we expect flat YoY margins in jewellery as the margin
improvement seen from 2QFY11 annualises, watches margins were
unusually high in 2QFY11 at 21% and are unlikely to be repeated
Things to watch: segment margins, impact of gold and diamond price
volatility, progress in eyewear, festive season outlook
Shoppers Stop
We expect growth rates to be similar to 1Q with strong sale period
revenues offsetting an otherwise soft trading period
Margins should be flat YoY with higher sale period revenues this year
Things to watch: product price inflation and excise impact, same
store growth, progress in Hypercity and festive outlook
Jubilant Foods
We expect same store growth to moderate somewhat but still remain
25%+ while space growth will add to the topline
Margins should be down sequentially but still up YoY
Things to watch: food inflation and price hikes, wage inflation, store
growth guidance, festive season outlook
Pantaloon
We expect the margin improvement seen in recent quarters to sustain,
driving 90bps YoY increase in Ebitda margin. However, growth will
remain muted as same store sales growth remains soft.
Things to watch: Ebitda margins, same store sales growth and
inflation, Ex-HSRIL performance, E-Zone hive off, progress on
restructuring, store openings, garment price hikes and demand
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