Chapter 1 A –INTRODUCTION

Industry highlights

The Indian retail industry has emerged as one of the most dynamic and fast-paced industries
due to the entry of several new players. The retail industry is undergoing a radical shift as
consumers are becoming more and more aware and interested in knowing what value they are
getting out of a purchase, then simply concerned with what to buy. This means it’s not enough
anymore to sell high-quality products with absolutely no information on the product
background or history. Therefore, in order to better satisfy customers and outsmart the global
competition, it’s imperative for your small or medium-sized retail business to embrace new
trends hitting the industry.

According to the latest survey by https://www.ibef.org/industry/retail-india.aspx, India is

expected to become the world’s third-largest consumer economy, reaching US$ 400 billion in
consumption by 2025. The jargon “Evolve-or-die“ will be adopted by most of the retailers as
a principal thumb rule because the size of modern retail in India is expected to double to Rs
171,800 crore (US$ 25.7 billion) from Rs 87,100 crore (US$ 13 billion) in three years driven
by omnichannel retail.

Total consumption expenditure is expected to reach nearly US$ 3,600 billion by 2020 from
US$ 1,824 billion in 2017. It accounts for over 10 per cent of the country’s Gross Domestic
Product (GDP) and around 8 per cent of the employment. India is the world’s fifth-largest
global destination in the retail space.

Drivers of the industry

Some of the factors responsible for the growth of organised retailing are as under:

1. Growth of middle class consumers:

In India the number of middle class consumer is growing rapidly. With rising consumer
demand and greater disposable income has given opportunity of retail industry to grow and
prosper.
Growing consumerism would be a key driver for organized retail in India. Rising incomes and
improvements in infrastructure are enlarging consumer markets and accelerating the
convergence (meeting) of consumer tastes.

2. Increase in the number of working women:

Today the urban women are literate and qualified. They have to maintain a balance between
home and work. The purchasing habit of the working women is different from the home maker.

They do not have sufficient time for leisure and they expect everything under one roof. They
prefer one-stop shopping Modern retail outlets therefore offers one store retailing.

3. Value for money:

Oganised retail deals in high volume and are able to enjoy economies of large scale production
and distribution. They eliminate intermediaries in distribution channel.

Organised retailers offer quality products at reasonable prices. Example: Big Bazaar and
Subhiksha. Opportunity for profit attracts more and more new business groups for entering in
to this sector.

4. Emerging rural market:

Today the rural market in India is facing stiff competition in retail sector also. The rural market
in India is fast emerging as the rural consumers are becoming quality conscious.

Thus due to huge potential in rural retailing organised retailers are developing new products
and strategies to satisfy and serve rural customers. In India, Retail industry is proving the
country’s largest source of employment after agriculture, which has the deepest penetration
into rural India.

5. Entry of corporate sector:

Large business tycoons such as Tata’s, Birla’s, and Reliance etc. have entered the retail sector.
They are in a position to provide quality products and entertainment.

As the corporate – the Piramals, the Tatas, the Rahejas, ITC, S.Kumar’s, RPG Enterprises, and
mega retailers- Crosswords, Shopper’s Stop, and Pantaloons race to revolutionize the retailing
sector.
6. Entry of foreign retailers:

Indian retail sector is catching the interest of foreign retailers. Due to liberalisation
multinationals have entered out country through joint ventures and franchising. This further is
responsible for boosting organised retailing.

7. Technological impact:

Technology is one of the dynamic factors responsible for the growth of organised retailing.
Introduction of computerization, electronic media and marketing information system have
changed the face of retailing. Organized retailing in India has a huge scope because of the vast
market and the growing consciousness of the consumer about product quality and services.

8. Rise in income:

Increase in the literacy level has resulted into growth of income among the population. Such
growth has taken place not only in the cities but also in towns and remote areas.

As a result the increase in income has led to increase in demand for better quality consumer
goods. Rising income levels and education have contributed to the evolution of new retail
structure.

9. Media explosion:

There has been an explosion in media due to satellite television and internet. Indian consumers
are exposed to the lifestyle of countries. Their expectations for quality products have risen and
they are demanding more choice and money value services and conveniences.

10. Rise of consumerism:

With the emergence of consumerism, the retailer faces a more knowledgeable and demanding
consumer. As the business exist to satisfy consumer needs, the growing consumer expectation
has forced the retail organizations to change their format of retail trade. Consumer demand,
convenience, comfort, time, location etc. are the important factors for the growth of organised
retailing in India.
Chapter 1 B – Company profile

Future Retail is the flagship company of Future Group, India’s retail pioneer catering to the
entire Indian consumption space. Through multiple retail formats, we connect a diverse and
passionate community of Indian buyers, sellers and businesses. The collective impact on
business is staggering: Over 500 million customers walk into our stores each year and choose
products and services supplied by over 30,000 small, medium and large entrepreneurs and
manufacturers from across India.

As on 12th February 2019,

Market capitalisation – 21224.73 crore

Market volume on NSE – 545370

On BSE - 16895

Products
Market share

SWOT Analysis

Strength

• Wide presence

• High brand equity

• Variety of products

• Everyday Low price

Weakness

• Stiff competition from global players

• Susceptible to foreign players

Opportunities

• Evolving customer preference

• Small organized retail

• Global expansion and tie ups with international brand

Threats

• Global players entering

• Low price products percieved as low quality

• No well defined government policies

Chapter 2 - DATA ANALYSIS

Balance sheet

Particulars Mar-18 Mar-17 Mar-16

12 mths 12 mths 12 mths
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 100.4 94.36 8.7
Total Share Capital 100.4 94.36 8.7
Reserves and Surplus 2,995.87 2,459.30 1,779.92
Total Reserves and Surplus 2,995.87 2,459.30 1,779.92
Total Shareholders Funds 3,096.27 2,553.66 1,788.62
Equity Share Application Money 0 0 0
Share Capital Suspense 0 0 85.57
NON-CURRENT LIABILITIES
Long Term Borrowings 223.33 0.81 154.2
Other Long Term Liabilities 118.5 144.16 134.2
Long Term Provisions 52.26 45.48 31.94
Total Non-Current Liabilities 394.09 190.45 320.34
CURRENT LIABILITIES
Short Term Borrowings 1,001.41 1,077.59 968.2
Trade Payables 3,424.23 2,779.99 2,208.72
Other Current Liabilities 274.51 330.17 207.54
Short Term Provisions 3.97 5.67 6.68
Total Current Liabilities 4,704.12 4,193.42 3,391.14
Total Capital And Liabilities 8,194.48 6,937.53 5,585.67
ASSETS
NON-CURRENT ASSETS
Tangible Assets 488.62 94.97 0
Intangible Assets 529.94 458.81 260.93
Capital Work-In-Progress 24.31 2.41 0
Intangible Assets Under
Development 9.27 9.44 0
Fixed Assets 1,052.14 565.63 260.93
Non-Current Investments 0.01 0 0
Long Term Loans And Advances 273.49 266.99 255.43
Other Non-Current Assets 132.97 83.53 0
Total Non-Current Assets 1,458.61 916.15 516.36
CURRENT ASSETS
Inventories 4,417.41 3,735.16 3,297.24
Trade Receivables 270.1 228.06 127.48
Cash And Cash Equivalents 183.23 156.04 91.36
Short Term Loans And Advances 1,306.50 1,440.42 1,548.21
OtherCurrentAssets 558.63 461.7 5.02
Total Current Assets 6,735.87 6,021.38 5,069.31
Total Assets 8,194.48 6,937.53 5,585.67

Profit and loss

Particulars Mar-18 Mar-17 Mar-16

12 mths 12 mths 12 mths

INCOME
Revenue From Operations [Gross] 19,540.53 17,591.75 7,138.80
Less: Excise/Sevice Tax/Other Levies 1,628.17 905.37 422.79
Revenue From Operations [Net] 17,912.36 16,686.38 6,716.01
Other Operating Revenues 565.61 388.71 128.95
Total Operating Revenues 18,477.97 17,075.09 6,844.96
Other Income 11.67 23.8 15.51
Total Revenue 18,489.64 17,098.89 6,860.47
EXPENSES
Purchase Of Stock-In Trade 14,422.55 13,212.92 5,254.86
Changes In Inventories Of FG,WIP And
Stock-In Trade -681.87 -378.57 -189.74
Employee Benefit Expenses 929.95 803.44 329.28
Finance Costs 175.38 204.23 49.75
Depreciation And Amortisation
Expenses 53.43 32.58 36.76
Other Expenses 2,975.02 2,856.01 1,365.01
Total Expenses 17,874.46 16,730.61 6,845.92

Profit/Loss Before Exceptional,

ExtraOrdinary Items And Tax 615.18 368.28 14.55
Exceptional Items -603.87 0 0
Profit/Loss Before Tax 11.31 368.28 14.55
Tax Expenses-Continued Operations
Profit/Loss After Tax And Before
ExtraOrdinary Items 11.31 368.28 14.55
Profit/Loss From Continuing
Operations 11.31 368.28 14.55
Profit/Loss For The Period 11.31 368.28 14.55
Ratios

Particulars Mar '18 Mar '17 Mar '16

Investment Valuation Ratios

Face Value 2 2 2

Operating Profit Per Share (Rs) 16.58 12.32 19.68

Net Operating Profit Per Share (Rs) 368.11 361.9 1,574.34

Profitability Ratios

Net Profit Margin(%) 0.06 2.15 0.21

EPS (Rs.) 0.23 7.81 0.66

P/E 2448.53 34.25 -

Return on capital employed (ROCE) 6.52 19.82 4.40

Liquidity And Solvency Ratios

Current Ratio 1.43 1.44 1.41

Quick Ratio 0.7 0.8 0.78

Debt Equity Ratio 0.42 0.42 0.54

Debt Coverage Ratios

Interest Cover 4.51 2.8 1.29

Debt Equity Ratio 0.4 0.42 0.63

Management Efficiency Ratios

Inventory Turnover Ratio 4.55 4.81 2.08

Debtors Turnover Ratio 74.18 96.05 107.02

Chapter 3 Conclusion

Chapter 4 Recommendation

• With more debt, FRETAIL can invest even more and earn more money, thus pushing
up its returns

• It must focus to expanding store of networks to compete with global players

• Loyalty, big data and analytics to play a critical role in customer stickiness

• Focus on enhancing ROE and ROCE.