Amazon and private equity firm Samara Capital are investing heavily in grocery retail chain More Retail, which received over INR 387 crore in capital infusion last fiscal year. This͏͏ funding͏͏ supports͏͏ the͏͏ retailer’s͏͏ expansion͏͏ into͏͏ new͏͏ markets͏͏ and͏͏ positions͏͏ it͏͏ as͏͏ a͏͏ fulfilment͏͏ hub͏͏ for͏͏ Amazon’s͏͏ grocery͏͏ business,͏͏ including͏͏ its͏͏ Fresh͏͏ and͏͏ quick͏͏ commerce͏͏ initiatives.
Ongoing͏͏ Capital͏͏ Infusion:
According͏͏ to͏͏ the͏͏ latest͏͏ filings͏͏ with͏͏ the͏͏ Registrar͏͏ of͏͏ Companies,͏͏ funding͏͏ is͏͏ ongoing͏͏ in͏͏ the͏͏ current͏͏ fiscal͏͏ year,͏͏ with͏͏ the͏͏ promoters͏͏ injecting͏͏ INR͏͏ 145͏͏ crore,͏͏ following͏͏ the͏͏ completion͏͏ of͏͏ the͏͏ last͏͏ round͏͏ on͏͏ Wednesday.͏͏ In͏͏ 2022-23,͏͏ the͏͏ promoters͏͏ contributed͏͏ INR͏͏ 300͏͏ crore͏͏ to͏͏ More͏͏ Retail,͏͏ while͏͏ in͏͏ 2021-22,͏͏ they͏͏ provided͏͏ INR͏͏ 400͏͏ crore,͏͏ as͏͏ per͏͏ filings͏͏ obtained͏͏ from͏͏ business͏͏ intelligence͏͏ firm͏͏ AltInfo.
Strategic͏͏ Cost-Cutting͏͏ Measures:
More͏͏ Retail͏͏ is͏͏ working͏͏ to͏͏ reduce͏͏ losses͏͏ by͏͏ closing͏͏ unprofitable͏͏ stores͏͏ since͏͏ last͏͏ fiscal͏͏ year͏͏ and͏͏ aims͏͏ to͏͏ achieve͏͏ break-even͏͏ by͏͏ the͏͏ third͏͏ quarter͏͏ of͏͏ this͏͏ fiscal,͏͏ the͏͏ company͏͏ stated.͏͏ It͏͏ also͏͏ noted͏͏ that͏͏ its͏͏ Amazon͏͏ business͏͏ is͏͏ growing͏͏ by͏͏ over͏͏ 60%.
Continue͏͏ Exploring:͏͏ Amazon Fresh͏͏ set͏͏ to͏͏ expand͏͏ to͏͏ over͏͏ 130͏͏ cities͏͏ across͏͏ India
In͏͏ response͏͏ to͏͏ an͏͏ email͏͏ sent͏͏ to͏͏ More͏͏ Retail͏͏ Managing͏͏ Director͏͏ Vinod͏͏ Nambiar,͏͏ the͏͏ company͏͏ stated͏͏ that͏͏ the͏͏ equity͏͏ infusion͏͏ is͏͏ being͏͏ utilised͏͏ to͏͏ meet͏͏ increased͏͏ working͏͏ capital͏͏ needs͏͏ due͏͏ to͏͏ business͏͏ growth,͏͏ invest͏͏ in͏͏ enhancing͏͏ stock͏͏ availability͏͏ across͏͏ stores,͏͏ and͏͏ support͏͏ over͏͏ 10,000͏͏ stock-keeping͏͏ units͏͏ for͏͏ online͏͏ consumers.
Omni-Channel͏͏ Strategy:
The͏͏ funding͏͏ for͏͏ the͏͏ current͏͏ year͏͏ is͏͏ aimed͏͏ at͏͏ supporting͏͏ the͏͏ increased͏͏ demand͏͏ across͏͏ both͏͏ online͏͏ and͏͏ offline͏͏ channels,͏͏ the͏͏ company͏͏ stated.͏͏ More͏͏ Retail͏͏ has͏͏ enabled͏͏ omni-channel͏͏ operations͏͏ in͏͏ over͏͏ 280͏͏ stores͏͏ in͏͏ the͏͏ past͏͏ two͏͏ years͏͏ and͏͏ optimised͏͏ its͏͏ omni-store͏͏ capex͏͏ model͏͏ to͏͏ facilitate͏͏ rapid͏͏ and͏͏ cost-effective͏͏ store͏͏ openings.͏͏ “Our͏͏ plan͏͏ is͏͏ to͏͏ open͏͏ around͏͏ 100͏͏ stores͏͏ in͏͏ the͏͏ next͏͏ 3-4͏͏ quarters,”͏͏ it͏͏ added.
More͏͏ Retail͏͏ operates͏͏ a͏͏ chain͏͏ of͏͏ hypermarkets͏͏ and͏͏ supermarkets͏͏ across͏͏ India,͏͏ comprising͏͏ 777͏͏ stores.͏͏ The͏͏ company͏͏ stated͏͏ that͏͏ with͏͏ More͏͏ now͏͏ present͏͏ in͏͏ 300͏͏ towns,͏͏ it͏͏ is͏͏ introducing͏͏ Amazon͏͏ Fresh͏͏ to͏͏ previously͏͏ underserved͏͏ areas͏͏ of͏͏ the͏͏ country.
Samara͏͏ and͏͏ Amazon͏͏ acquired͏͏ the͏͏ More͏͏ Retail͏͏ business͏͏ from͏͏ the͏͏ Aditya͏͏ Birla͏͏ Group͏͏ in͏͏ 2019.
“Despite͏͏ raising͏͏ over͏͏ INR͏͏ 800͏͏ crore͏͏ in͏͏ the͏͏ past͏͏ two͏͏ fiscal͏͏ years,͏͏ More͏͏ Retail͏͏ struggles͏͏ to͏͏ achieve͏͏ significant͏͏ market͏͏ share͏͏ and͏͏ continues͏͏ to͏͏ operate͏͏ at͏͏ a͏͏ loss.͏͏ The͏͏ recent͏͏ fundraising͏͏ this͏͏ fiscal͏͏ appears͏͏ inadequate͏͏ to͏͏ resolve͏͏ core͏͏ issues.͏͏ Without͏͏ a͏͏ fundamental͏͏ strategy͏͏ overhaul͏͏ focusing͏͏ on͏͏ top-line͏͏ growth,͏͏ cost-cutting͏͏ measures͏͏ alone͏͏ are͏͏ unlikely͏͏ to͏͏ reverse͏͏ the͏͏ company’s͏͏ fortunes,”͏͏ said͏͏ Mohit͏͏ Yadav,͏͏ founder͏͏ of͏͏ AltInfo.
Financial͏͏ Performance:
In͏͏ 2022-23,͏͏ More͏͏ Retail͏͏ reported͏͏ net͏͏ losses͏͏ of͏͏ INR͏͏ 550͏͏ crore,͏͏ with͏͏ revenue͏͏ reaching͏͏ INR͏͏ 4,507͏͏ crore.
The͏͏ company͏͏ indicated͏͏ that͏͏ closing͏͏ unprofitable͏͏ stores͏͏ in͏͏ the͏͏ last͏͏ fiscal͏͏ year͏͏ led͏͏ to͏͏ a͏͏ “significant͏͏ reduction”͏͏ in͏͏ losses͏͏ during͏͏ the͏͏ second͏͏ half͏͏ compared͏͏ to͏͏ the͏͏ first͏͏ half.͏͏ This͏͏ was͏͏ the͏͏ case͏͏ even͏͏ though͏͏ net͏͏ losses͏͏ at͏͏ the͏͏ company͏͏ level͏͏ were͏͏ “largely͏͏ flat”͏͏ in͏͏ FY24.͏͏ Furthermore,͏͏ it͏͏ noted͏͏ that͏͏ operating͏͏ EBITDA͏͏ losses͏͏ dropped͏͏ by͏͏ over͏͏ 60%,͏͏ or͏͏ more͏͏ than͏͏ INR͏͏ 100͏͏ crore,͏͏ in͏͏ the͏͏ second͏͏ half͏͏ of͏͏ the͏͏ last͏͏ fiscal͏͏ year͏͏ compared͏͏ to͏͏ the͏͏ first͏͏ half.
“This͏͏ has͏͏ further͏͏ improved͏͏ in͏͏ the͏͏ current͏͏ year,͏͏ with͏͏ approximately͏͏ a͏͏ 40%͏͏ reduction͏͏ in͏͏ operating͏͏ EBITDA͏͏ loss͏͏ in͏͏ Q1͏͏ FY25͏͏ compared͏͏ to͏͏ Q4͏͏ FY24.͏͏ Q2͏͏ FY25͏͏ is͏͏ showing͏͏ even͏͏ better͏͏ trends,͏͏ and͏͏ we͏͏ are͏͏ on͏͏ track͏͏ to͏͏ achieve͏͏ break-even͏͏ in͏͏ Q3͏͏ of͏͏ this͏͏ year.͏͏ As͏͏ a͏͏ result͏͏ of͏͏ our͏͏ strategic͏͏ decision͏͏ to͏͏ close͏͏ unprofitable͏͏ stores,͏͏ our͏͏ overall͏͏ revenue͏͏ saw͏͏ an͏͏ 8%͏͏ decline͏͏ (FY24͏͏ vs.͏͏ FY23).͏͏ However,͏͏ the͏͏ revenue͏͏ from͏͏ the͏͏ live͏͏ store͏͏ networks͏͏ in͏͏ FY24͏͏ remained͏͏ flat͏͏ compared͏͏ to͏͏ FY23,”͏͏ the͏͏ company͏͏ stated.
