5/5 Ashish m. 1 year ago on Google
Awesome
Megamart
Some
Facts
about
Vishal
Megamart:
At
a
time
when
organised
retail
was
in
its
infancy
in
India,
Bhatia
spotted
a
gem.
Firstly,
the
brand
was
not
built
on
high
streets:
Its
200
stores
were
dotted
across
small
towns.
Secondly,
the
consumption
story
of
the
Indian
middle-class
had
just
started
to
take
off,
and
the
combination
of
rising
aspirations
and
purchasing
power
was
a
right
fit
for
any
retailer.
Thirdly,
the
product
mix
of
the
stores
was
interesting:
While
50
percent
consisted
of
apparel,
the
other
half
was
merchandise
and
FMCG
products.
“It
was
a
big
opportunity
for
us,”
he
recounts.
With
opportunity,
though,
come
challenges.
And
in
the
case
of
Vishal
Mega
Mart,
the
odds
were
heavily
stacked
against
the
new
owners
in
2010.
“It
was
on
the
verge
of
collapse,”
says
Bhatia.
The
biggest
problem
was
the
deep
financial
mess
the
company
was
in,
thanks
to
aggressive
expansion
on
the
back
of
short-term
debt.
Poor
execution
and
under-performance
made
matters
worse.
“We
had
to
rebuild,
reimagine,
reorganise
every
aspect
of
the
business,”
Bhatia
says.
The
first
major
step
in
turning
around
the
company
was
rationalising
store
count.
A
combination
of
poor
location,
bad
economics
and
under-utilisation
of
resources
had
made
most
of
the
stores
almost
redundant.
“From
200
stores,
the
number
was
shrunk
to
100,”
Bhatia
says.
The
new
owners
had
to
get
rid
of
the
legacy
business
and
its
issues.
A
new
management
team,
led
by
Gunender
Kapur,
a
former
Unilever
honcho,
was
put
in
place;
compliance
issues
were
fixed;
the
entire
apparel
strategy
was
streamlined;
product
sourcing,
assortment
and
display
were
optimised;
and
distribution
centres
were
made
more
efficient.
“It
was
challenging,
but
we
succeeded,”
adds
Bhatia.
Vishal
Mega
Mart's
incredible
comeback
In
the
next
few
years,
Vishal
was
back
on
its
feet.
Revenue
grew
at
a
healthy
compound
annual
growth
rate
(CAGR)
of
24
percent
during
the
three
years
through
FY18,
according
to
a
report
by
Crisil,
which
adds
that
cash
accrual
has
increased
steadily
over
the
years.
For
FY17,
the
company
had
posted
revenues
of
₹1,341
crore,
with
estimated
profits
of
more
than
₹150
crore
for
FY18
against
₹33
crore
in
FY16.
“Vishal
operates
in
the
value
retail
segment
and
is
best
positioned
to
benefit
from
the
healthy
business
prospects
of
the
organised
retail
segment,”
says
the
report,
released
in
August
2018.
The
ratings
agency
is
bullish
on
Vishal
Mega
Mart’s
future
as
well.
India’s
growing
middle-class
with
increasing
disposable
income
and
a
burgeoning
young
population
with
increased
brand
consciousness
are
expected
to
help
the
organised
retail
industry,
particularly
the
value
retail
format,
register
a
healthy
CAGR
over
the
medium-term,
Crisil
says.
In
another
ratings
release
this
February,
Crisil
put
the
provisional
revenue
of
Vishal
for
2018
at
₹2,252
crore.
Adjusted
profit
after
tax
stood
at
₹100
crore
as
against
a
loss
of
₹44
crore
for
2017.
In
2018,
when
Partners
Group
and
Kedaara
Capital
bought
the
company,
the
turnaround
stumped
many,
although
the
new
owners
were
not
surprised.
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