If there has been one big beneficiary of the intermittent lockdowns across the country, it would probably be India’s shining star in the Retail Industry, D’Mart owned by Mr. Radhakrishna Damani. The retail chain which started 15 years back as a neighbourhood grocery store has become one of the valued possessions for shareholders catapulting Mr. Damani to the elite club of 100 billionaires in the world, for a person who grew up in a single-room house in Mumbai in the 60s and 70s.He is ranked 70th in the Bloomberg Billionaires Index with a net worth of USD 22.5 billion or Rs. 1.45 lakh crores. The company has been a darling of the bourses, gaining 50% of its current script value of Rs. 4,242 since Jan. ‘21. On the other hand, Mr. Damani and D’Mart have set new standards for retailing in India, combining international best practices along with a hyper-sensitive model which caters to the neighbourhood around the store.
What’s significantly different with D’Mart over its peers such as Reliance Mart or the Future Group’s Big Bazaar is right from the start, the company invested in its own real estate to leverage from the land value in the mid- to long term. The company essentially pays as interest to bank to own the property, somewhat similar to what it would have otherwise paid as rent to a landlord. Over time, the property not only becomes an asset for the company in its books, but also becomes a useful leverage to hedge future financial obligations from Vendors, Debtors and Banks. With almost no external funding through the start-up hyped Angel Investors or Venture Capital / Private Equity Funds, Mr. Damani, a shrewd businessmen has profitably and skilfully grown the company over the years. The media shy Founder and his CEO for a long time Neville Noronha are not seen on the front pages of business magazines or delivering lectures at seminars or webinars, rather quietly running the business with a tight leash on the operations, delivering a stellar quarterly result as well as upping Customer Experience at the alleys and cash counters.
With 246 stores, including the newly opened 1 lakh sft store at Faridabad, Haryana in the NCR Region, the company has presence only in a handful of states – Maharashtra, Gujarat, Andhra, Telangana, MP, Chattisgarh, Punjab, Rajasthan, Tamil Nadu and Karnataka. The company reported a Gross turnover of Rs. 7,650 Crores or Rs. 1 Crore per day (on an average) during the JAS quarter, when most of the states lifted lockdown in a phased manner and household consumption slowly but surely increased. D’Mart, which caters to the aspirational middle class offers large parking lots outside its stores, for 2-wheelers as well as Cars and hired transport vehicles, so its end user consumers as well as shopkeepers who stock and resell the products have an ease of ingress and egress. The company reported a profit of Rs. 115 Crores in Q1, an increase of 132% from the same period last year when most of its stores were shut due to the first ever lockdown that India witnessed since Mar. ‘20 onwards. Q2FY2021 was a lot better than the same period last year even as India and Indians (consumers) got themselves adjusted to current trends of intermittent lockdowns, partial opening hours and limited availability of brands.
What’s interesting is how d’Mart has overcome tough profit margins amidst a price scrambling by FMCG Brands and most importantly, how the company has stood up against the e-commerce platforms which offer door delivery, shorter turnaround times and of course, incredible discounts. Though D’Mart has an online offering, it is more famous for its store experience where shoppers fill the large trolleys to the brim, wait patiently at the cash counters during peak hours and walk away with a smile seeing the “savings” on the bill. That’s what makes them keep coming back, more of the privilege to see some real savings, rather than for anything else.
