Finlatics Market Experience Program

Research Insight - 1

Sector: Retail

Presented By:
Sourav Mohanty
Jagdish Seth School of Management
 OVERVIEW

D-Mart is a one-stop supermarket chain that aims to offer customers a wide range
of basic home and personal products under one roof. Each D-Mart store stocks
home utility products - including food, toiletries, beauty products, garments,
kitchenware, bed and bath linen, home appliances and more - available at
competitive prices that our customers appreciate. Company’s core objective is to
offer customers good products at great value.
D-Mart was started by Mr. Radhakishan Damani and his family to address the
growing needs of the Indian family. From the launch of its first store in Powai in
2002, D-Mart today has a well-established presence in 214 locations across
Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana,
Chhattisgarh, NCR, Tamil Nadu, Punjab, and Rajasthan. D-mart mission to be the
lowest priced retailer in the regions it operates, its business continues to grow with
new locations planned in more cities.
The supermarket chain of D-Mart stores is owned and operated by Avenue
Supermarts Ltd. (ASL). The company has its headquarters in Mumbai.
 Growing Numbers of D-Mart

D-Mart has consistently growing presence across India. In year 2002-03, D-Mart had only 2
stores in India were in Maharashtra. But now, it has 176 stores across India. D-Mart is the
only company which has expanded its stores in large number in very less year.
Shareholding Pattern of Avenue Supermart Ltd

Mr. Radhakishan Damani holds 34.30% of holding in Avenue supermart while his family
and other promoters hold 40.69% of shareholding.
 Mr. Radhakishan Damani was born in karad a
small town in Maharashtra and raised in a
single room apartment in Mumbai. He studied
commerce at the University of Mumbai but
dropped out after one year. After the death
of his father who worked on Dalal Street,
Damani left his ball bearing business and
became a stock market broker and investor.
He made profits by short- selling stocks that
were inflated by illegal means by Harshad
Mehta in the1990s. Damani was reportedly
the largest individual shareholder of HDFC
Bank after it went public in 1995.
In 1999, he operated a franchise of Apna Bazaar, a cooperative department store, in
Nerul, but was "unconvinced" by its business model. He quit stock market in 2000 to
start his own hypermarket chain, D-Mart, setting up the first store in Powai in 2002. The
chain had 25 stores in 2010, post-which the company grew rapidly and went public in
2017.

Board of Directors
 Strengths
• Focus on the long-term: Damani, D Mart’s founder is an investor and hence the
company has concentrated solely on long-term profits. This has resulted in the
company optimizing its returns through a pricing approach driven by demand.
• Slow scaling: D Mart began on a very low keynote and gradually took its time to
raise the ladder upwards. This gave the company greater leverage and deeper
knowledge of its supply chain, as well as allowing them to better handle the
bottom line.
• Customer-Centered Management Approach: D Mart has a very strong
workplace policy in place and is very open in its interactions with the
employees. They do have a strong relationship with vendors and
manufacturers and are satisfied with stakeholders.
• Discount policy: One aspect that sets D Mart apart from his rival is
its massive strategy of discounting. The store is selling vital items at a flat discount price
that most rivals are unable to match, and this has helped them reach the market.
• Clear distinction based on price: D Mart never adopted the trends set by other
rival retail companies but believed in setting their own trends. Through a simple
price-based distinction they dominated the market and sold their products at
much lower prices than rivals.

Weaknesses
• Focus on other places: D Mart has concentrated mainly on the Western States and
has a very small presence in the South, quite unlike its rivals, who are present
everywhere. That has prevented them from gaining popularity in the market.
• Slow growth: Nearly 16 years ago, D Mart established much before the retail boom
set a fire in India. However, owing mainly to its long-term outlook, it has not been
able to dominate the market, even as many of the later entrants.
• Low pricing sustainability: The company has a zero-credit policy and so
manufacturers and suppliers offer them a much better deal which is how the
business can afford the low prices that the rivals cannot imagine.
• No frills: D Mart follows a No-frills strategy wherever possible the emphasis is on
cutting costs. Their services are central and most upmarket stores lack the frills.
The clients who come here are essentially looking at the low prices of the items on
sale. Therefore, the longevity of this differentiator is uncertain.
 Opportunities
• Technology: Technology has a lot to contribute to retailers in terms of in-store
experiences and retailers can use IoT, artificial intelligence, etc. to create value-
adding services for their customers for which they can charge a premium.
• Service personalization: Consumers are searching for customized services they
are willing to pay extra for. Retailers should expand on this willingness to pay
more and boost the quality of services they offer.
• New Developing Markets: New developing markets and mall culture can be the
biggest opportunity for the company.
• South of India: D-Mart can also open stores in the south and areas where no store
is there.

Threats
• People in large cities, in general, are particularly lethargic about leaving their
homes and often tend to shop online. So, companies such as Amazon and Flipkart
are now big threats to most retailers.
• Online start-ups are the hottest trend in India. Many of these are aggregators that
cost-effectively put the manufacturer and the consumer together. These
companies are the emerging threats more so because in the aggregation industry
many new brands are emerging mainly due to lower entry barriers.
• Global competitors.
• Competition among Best Price & Reliance Retail.
• Unorganized retail is also a big threat.
• Government Policies and regulations related to the retail sector.
• International Players who are willing to open stores in India.
Key Financials
Competitive Analysis

Particulars

Market Capitalization Rs 152622.19 688.31

(cr.)

P/E 117.39 8.41

Book Value 171.90 93.74

EPS 20.09 1.79

Revenue Growth 24.32% 9.13%

Operating Profit Growth 30.31% 24.58%

Net profit margin 5.23 2.58%

ROE 11.74% 21.45%

ROCE 15.98% 18.96%

Conclusion & Future – Outlook:
D-Mart is the largest supermarket of India and has mission to provide best value to their
customer, so they get more value for money than they get anywhere else. D-Mart provide
products in cheap price and in best quality, this makes the consumers more attractive
towards company. As, D-Mart works in essential commodities, So in COVID 19 times, the
company’s financials is not much impacted. D-Mart has future strategy to expand its stores in
eastern part of country. Therefore, D-Mart many growth opportunities and has bright future.