D-MART.pptx

Seminar report for partial fulfillment of mba finance post graduate programme

1. D-Mart- Largest retail chain in India PRESENTED BY- TANVI ROLL NO.-27642106331

2. INTRODUCTION: D-Mart is owned and operated by Avenue Supermarts Ltd. (ASL) – a company founded by Mr. Radhakishan Damani on May 15,2002. 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 are highly appreciated by its customers. The brands D-Mart Premia, D-Mart, Dutch Harbor, D-Mart Minimax, D-Homes, etc are brands owned by Avenue Supermarts Limited. As on FY 2022 D-mart is currently operating 284 stores across India. Avenue Supermarts Limited launched its IPO in year 2017 which closed at Rs.299 and current share price as on October 15,2022 is Rs.4298.05

3. Radhakishan Damani Mr. Radhakishan Damani is an ace Indian Investor and a self made Billionaire. He was a stock market broker and operated a franchise of Apna Bazaar. Unconvinced by its business model, he started DMart after setting up its first store in 2002 .

4. 8 strategies through which D-mart is operated : Strong Fundamentals Slotting fees Strong control on OpEx Partner with the Partner Sporadic spike v/s Sustained Success Organic Expansion Go-local- High Inventory Turnover Ratio Audience Suited for Brick&Mortar

5. STRONG FUNDAMENTALS : A stock market investor has an edge over others in understanding value of business. Opening d-mart was a big strategic decision for Mr. Damani . In year 1999 Mr. Damani took franchise of Apna Bazaar but he was unable to understand their business model so he dropped it. Mr. Damani went to US and studied business model of Walmart. Mr. Damani invested in stocks by studying company’s – P/E Ratio EBITDA Net Margin Return on Capital Employed and Year on Year Growth and clearly knew if these aspects are controlled a successful business is sure.

6. SLOTTING FEES: Manufacturer -Please d-mart sell my soap D-mart - OK I will sell your product quickly but you have to give me SLOTTING FEES

7. What is slotting fees? A slotting fee — sometimes referred to as a shelving fee, or slotting allowance — is a cost that manufacturers pay to place their products on retail shelves. Slotting fees is that fees charged from a manufacturer who wants his product to be seen at eye level on shelf of store. In retail business a shelf space is costly thing and any store can charge a rental amount as slotting fees so that people can eventually buy what they see first.

8. D-mart after getting slotting fees which is a lumpsum amount will decrease the price of that product significantly from MRP of that product and would be able to quickly sell the soaps of that manufacturer.

9. Strong Control on OpEx : What is OpEx ? OpEx or Operating Expenditure is the expenditure incurred on running the co. How d-mart control’s this expenditure? 1 . By keeping low key interior - You will never see any d-mart store inside a mall or any fancy d-mart store you will be only able to see discounted products and huge crowd purchasing it. 2 . More products in less space- D-mart efficiently utilizes it’s space by keeping more products in less space. 3. Less billing counters and less Manpower . 4 . Low maintenance interior.

10. Partner with the partner: Build strong relationships with partner so that purchase price can be kept to minimum. Usually d-mart asks for two types of discounts from it’s suppliers : 1.) CASH DISCOUNT Discount received at time of cash payment for purchase. 2.) VOLUME DISCOUNT There is always difference between price of 1 kg product and price of 1000 kg product as d-mart purchases in bulk quantity from it’s suppliers it asks for volume discount. D-mart keeps its credit cycle short. It pays off its creditors in 7-10 days thus maintaining good relations with them. D-mart directly purchases from supplier thus eliminating the middleman. Their main aim is to provide GOOD PRODUCT AT GREAT VALUE.

11. Sporadic v/s sustained success Sporadic success Sporadic means occurring at few intervals that is not happening in a continuous manner. E.g.- Big bazar another retail company offers discounts but only occasionally like Diwali, Republic day, Christmas etc. and so its sales are also boosted occasionally only. Sustained success Sustained means stability. E.g.- D-mart offers daily discounts and thus maintains it’s sales on a daily basis. Low prices are real edge of d-mart which increases footfall at stores ultimately increasing sales .

12. Who is d-mart’s customer? Customer whose budget is low but has enough time i.e. middle income persons.

13. Organic Expansion: Mr. Damani grew his business very slowly and steadily without any haste. Firstly , he decided to control entire supply chain and control the profitability. This is result that till date d-mart has never made loss and not even a single store has been shut down. 80% of d-mart’s stores are self owned and rest 20% are even taken at lease of 15-20 years. D-mart stores are mostly opened in sub-urban areas in tier 2 and tier 3 cities where real estate prices are low. As d-mart owns it’s stores it does not have to pay rent and has saved itself from a huge cash outflow of company.

14. How was d-mart able to purchase each and every store?

15. High inventory turnover with local items: India being a diverse country has various regional specific goods. D-Mart grabbed this opportunity by stocking its stores with area-specific products. D-Mart pooled the popular local brands of a particular region in one place, making it more convenient for the buyers to avoid going to the local general shops.

16. Audience suited for brick and mortar: E-commerce devastated local market badly and many small business’s were shut down as people tend to order online. D-mart secured it’s brick and mortar strategy. D-mart operated itself in such manner and for those audience who is habitual to visiting stores to buy groceries. D-mart mainly suited for Middle class and lower middle class who still not purchase their groceries online. That customer goes to d-mart who wants to buy excellent product at low cost. Thus d-mart operates majority of business in brick and mortar .

17. COMPARISON BETWEEN D-MART AND BIG BAZAAR SHARE PRICE- Rs. 4838.05(As on 16.10.2022) SHARE PRICE- Rs.3.60(As on 16.10.2022)

18. Conclusion: Mr. Radhakishan Damani himself is a great personality, he is a man who understands business model’s very well and has strong fundamental knowledge of business’s which he got from investing in stock markets. D-Mart’s case study creates awareness about the techniques and strategies it uses especially for cost efficiency and higher sales. Discounting is a superpower that turned D-Mart into a legend. T he Indian middle class is the most underrated customer segment in the market , while most businesses focus on selling to the cash rich audience, the disposable income of the middle class even today is a billion dollar market that is just waiting to be tapped. D-mart since its inception has never shut out even a single store and continues to generate profits.