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EQUITY - MARKET SCREENER

Spencers Retail Ltd
Industry :  Trading
BSE Code
ISIN Demat
Book Value()
542337
INE020801028
-0.8303039
NSE Symbol
P/E(TTM)
Mar.Cap( Cr.)
SPENCERS
0
818.4
EPS(TTM)
Face Value()
Div & Yield %
0
5
0
 

As on: Mar 29, 2024 03:26 AM

Dear Members,

The Board of Directors ("Board") takes great pleasure in presenting the Sixth Annual Report on the business and operations of the Company together with the Audited Financial Statements of the Company for the financial year ended March 31, 2023.

FINANCIAL HIGHLIGHTS

In compliance with the provisions of the Companies Act, 2013 ("Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended from time to time, the Company has prepared its standalone and consolidated financial statements as per Indian Accounting Standards (‘Ind AS') for the Financial Year 2022-23. The financial performance for the year ended March 31, 2023 is as follows:

(Rs. in Lakhs)

Particulars

Standalone Consolidated
2022-23 2021-22 2022-23 2021-22
Revenue from operations and other Income 2,21,015.64 2,06,710.74 2,48,516.15 2,37,654.67

Earnings before interest expenses, tax, depreciation and amortisation (EBITDA)

3,434.01 8,497.41 3,615.49 10,077.13
Finance costs 9,070.16 7,600.82 11,521.46 9,696.61
Depreciation and amortisation expense 9,687.32 9,353.05 13,172.84 12,575.00
Profit/(Loss) before tax (15,323.47) (8,456.46) (21,078.81) (12,194.48)
Tax expenses - - (39.13) (48.44)
Profit/(Loss) after tax (15,323.47) (8,456.46) (21,039.68) (12,146.04)
Other comprehensive income /(loss) (197.90) (315.90) (199.67) (316.41)

Total comprehensive income/(loss) for the year

(15,521.37) (8,772.36) (21,239.35)

(12,462.45)

The financial results and the results of operations, including major developments have been further discussed in detail in the Management Discussion and Analysis Report.

MANAGEMENT DISCUSSION AND ANALYSIS

In compliance with Regulation 34 of the SEBI Listing Regulations, a separate section on the Management Discussion and Analysis, which includes details review of operations, performance and future outlook of the Company, is annexed hereto forming part of this Report as Annexure-A.

DIVIDEND

In view of the accumulated losses, the Board of Directors of the Company do not recommend any dividend for the financial year ended on March 31, 2023.

Dividend Distribution Policy of the Company, as required under the SEBI Listing Regulations has been uploaded on the website of the Company and can be accessed at http://www.spencersretail.com/investor.

CORPORATE GOVERNANCE

The Company is committed to focus on long term value creation and protecting stakeholders' interest by applying proper care, skill and diligence to business decisions and adhere SEBI Listing Regulations and to follow and implement best practices in Corporate Governance in letter and spirit.

In compliance with Regulation 34 read with Schedule V of the SEBI Listing Regulations, a Report on Corporate Governance for the year under review is presented in a separate section as Annexure-B alongwith Additional Shareholders Information as Annexure-C to this Report.

A certificate from Mr. S.M Gupta of M/s. S.M.Gupta & Co., Company Secretaries, the Secretarial Auditors of the Company confirming the compliance with the conditions of Corporate Governance, as stipulated under the SEBI Listing Regulations, is annexed to the Corporate Governance report.

ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return as on March 31, 2023 is available on the website of the Company and can be accessed at http://www.spencersretail.com/investor.

DIRECTORS AND KEY MANAGERIAL PERSONNEL _KMP_

As a part of succession planning and since Mr. Shashwat Goenka is overseeing business operations of the Company, Dr. Sanjiv Goenka (DIN: 00074796) has decided to step down from the position of Chairman and Director of the Company with e_ect from close of business hours on May 22, 2023. Consequntly, the Board of Directors at its meeting held on May 22, 2023 has unanimously decided and approved the appointment of Mr. Shashwat Goenka as the Chairman of the Company w.e.f. May 23, 2023.

In terms of the provisions of Section 152 of the Act read with Article 100 of the Articles of Association of the Company, Mr. Shashwat Goenka (DIN: 03486121), Director of the Company, will retire by rotation at the ensuing AGM and, being eligible, o_ers himself for re-appointment. The Board of Directors on the recommendation of Nomination and Remuneration Committee (NRC) has recommended his re-appointment.

Presently, the Company has four Independent Directors i.e. Mr. Utsav Parekh, Mr. Pratip Chaudhuri, Ms. Rekha Sethi and Mr. Debanjan Mandal.

Mr. Utsav Parekh (DIN: 00027642), Ms. Rekha Sethi (DIN: 06809515) and Mr. Pratip Chaudhuri (DIN: 00915201) were appointed as Independent Directors of the Company, not liable to retire by rotation, for a period of five years, with e_ect from November 14, 2018 to November 13, 2023.

The Nomination and Remuneration Committee (NRC) of the Company had evaluated performance(s) of Mr. Utsav Parekh, Ms. Rekha Sethi and Mr. Pratip Chaudhuri and found it to be satisfactory and in view of their performance(s) and based on the recommendation of NRC, the Board has recommended to the members of the Company at the forthcoming Annual General Meeting of the Company, the re-appointment of Mr. Utsav Parekh, Ms. Rekha Sethi and Mr. Pratip Chaudhuri as Independent Directors of the Company, not liable to retire by rotation, for a second term of five consecutive years, with e_ect from November 14, 2023 to November 13, 2028.

In the opinion of the Board, all the directors as well as the directors proposed to be re-appointed possess the requisite qualifications, experience and expertise and hold high standards of integrity. All the Independent Directors are exempt from the requirement of passing the proficiency test. The Company has received necessary disclosures/declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence prescribed under the Act and the SEBI Listing Regulations. In terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, Independent Directors of the Company have registered their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate A_airs.

The list of key skills, expertise and core competencies of the Board is provided in the Report on Corporate Governance forming part of this report. During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees received by them.

Changes In Key Managerial Personnel (KMP)

During the year under review, Mr. Devendra Chawla resigned from the post of CEO & Managing Director of the Company w.e.f. January 20, 2023 and Mr. Anuj Singh (DIN: 09547776) has been appointed as the Chief Executive Officer and Managing Director and also as KMP of the Company w.e.f. March 22, 2023 by the members of the Company vide Special Resolution passed through Postal Ballot on May 12, 2023.

Mr. Rama Kant, Company Secretary of the Company resigned from the Company and was relieved from the services w.e.f October 10, 2022 (closing of the business hours) and Mr. Vikash Kumar Agarwal (ACS: 19583) was appointed as the Company Secretary & Compliance Officer and also as KMP of the Company with e_ect from February 14, 2023.

NUMBER OF MEETINGS OF BOARD OF DIRECTORS

During the year under review, five Board meetings were held, the details of which are given in the Corporate Governance Report which forms part of this Report.

SHARE CAPITAL

During the year under review there has been no change in the authorised, issued, subscribed and paid up equity share capital of the Company.

The equity shares of the Company are continued to be listed on BSE Limited (‘BSE') and on National Stock Exchange of India

Limited (‘NSE'). The Company has paid the requisite listing fees to the Stock Exchanges for the financial year 2023-24.

PUBLIC DEPOSITS

During the year under review, the Company has not accepted any deposits from Public / Members under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 and as such no amount of principal or interest was outstanding as on the date of the Balance sheet.

STATUTORY AUDITORS AND AUDITORS' REPORT

As per the requirement of sections 139(2) of the Act, M/s. S.R. Batliboi & Co. LLP, Chartered Accountants (Firm Registration No. 301003E/E300005), were appointed as the Statutory Auditors of the Company for a term of five consecutive years at the third Annual General Meeting of the Company held on August 3, 2020.

The Auditors' Report on the Financial Statements of the Company for the year under review does not contain any qualifications, adverse or disclaimer remarks. No fraud has been reported by the Auditors to the Audit Committee of the Company or to the Board. The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT

The Board had appointed Mr. S.M Gupta of M/s. S. M. Gupta & Co., Company Secretaries, as the Secretarial Auditor of your Company to conduct Secretarial Audit of the Company for the financial year 2022-23.

Secretarial audit of secretarial and related records of the Company were conducted by the aforesaid Secretarial Auditor and a copy of the Secretarial Audit Report is annexed to this Report as Annexure-D. Secretarial Audit Report of Natures Basket Limited, the material unlisted subsidiary of the Company, is also attached to the Report as Annexure-D1. None of the above Secretarial Audit Reports contain any qualifications, reservations, adverse remarks or disclaimers.

SECRETARIAL STANDARDS

During the year under review, the Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and notified by the Ministry of Corporate A_airs, Govt. of India, relating to Meetings of the Board of Directors and General Meeting(s).

RELATED PARTY TRANSACTIONS

All contracts / arrangements / transactions entered into by the Company with related parties during the financial year were in in accordance with the provisions of the Companies Act, 2013 and the SEBI Listing Regulations. All such contracts or arrangements were executed in the ordinary course of business and at an arm's length basis and approved by the Audit Committee. During the year, the Company had not entered into any contract / arrangement / transaction with related parties having potential conflict with the interests of the Company and which could be considered materially significant. Hence, the disclosure of Related Party Transactions (RPT) (in Form AOC-2) as required under Section 134(3)(h) of the Act is not applicable to the Company for the financial year 2022-23.

The Policy on materiality of RPT and on dealing with RPT as approved by the Board is available on the Company's website and can be accessed at http://www.spencersretail.com/investor.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the financial year under review, the Company has complied with the provisions of Section 186 of the Act, with respect to loans given, investments made and guarantee/comfort provided etc. and details thereof are given in the notes to the financial statements.

COMMITTEES OF THE BOARD

The Board has constituted following statutory Committees according to their respective roles and defined scope:

1) Audit Committee,

2) Nomination and Remuneration Committee,

3) Stakeholders' Relationship Committee,

4) Corporate Social Responsibility Committee and

5) Risk Management Committee

Details of the composition, terms of reference and number of meetings held for respective committees are given in the Report on Corporate Governance.

The various Committees of the Board focus on specific areas and make informed decisions in accordance with the relevant regulatory requirements and terms of reference.

CODE OF CONDUCT

The Company has adopted a Code of Conduct for its Directors and senior management personnel and the same can be accessed at: http://www.spencersretail.com/investor.

All Directors and senior management personnel have a_rmed the compliance with the Code of Conduct and Ethics for Directors and Senior Management.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) and 134(5) of the Act, your Directors, to the best of their knowledge and belief, confirm that: a) in the preparation of the accounts for the financial year ended March 31, 2023, the applicable Indian accounting standards have been followed along with proper explanation relating to material departures, if any; b) appropriate accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for the period; c) proper and sufficient care has been taken for the maintenance of accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and during the year under review, neither the statutory auditors nor the secretarial auditors reported to the Audit Committee of the Board, any instances of fraud committed against the Company by its officers or employees. d) the annual account have been prepared on a going concern basis; e) internal financial controls laid down by the directors have been followed by the Company and that such internal financial controls were adequate and operating effectively and; f) proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

BOARD EVALUATION

In order to ensure that the Board and Board Committees of the Board are functioning effectively and to comply with the statutory requirements, the annual performance evaluation of the Board, Board Committees of the Board and Individual directors were conducted during the year. The evaluation was carried out based on the criterion and framework approved by the NRC. A detailed disclosure on the parameters and the process of Board evaluation as well as the outcome has been provided in the Report on Corporate Governance.

INDEPENDENT DIRECTORS MEETING

The Independent Directors of your Company met on February 14, 2023, without the attendance of Non-Independent Directors and members of the management. The Independent Directors reviewed the performance of Non-Independent Directors, the Committees of the Board and the Board as a whole alongwith the performance of the Chairman of the

Company and assessed the quality, quantity and timeliness of flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

CRITERIA ON BOARD DIVERSITY AND DIRECTOR ATTRIBUTES AND REMUNERATION POLICY FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

The Company recognises the importance of a diverse Board in its success and believe that a truly diverse Board will leverage differences in thought, perspective, industry experience, knowledge and skills including expertise in financial, global business, leadership, technology, and other domains, will ensure that Company retains its competitive advantage.

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Part D of Schedule II to the SEBI Listing Regulations, NRC is authorised / empowered for determining qualification, positive attributes and independence of a Director. Additional details on Board diversity are available in the Corporate Governance that forms part of this Report. The NRC is also empowered for recommending to the Board, a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. The Company has devised inter-alia the Remuneration Policy and the same can be accessed on the Company's website at http://www.spencersretail.com/investor.

RISK MANAGEMENT

Your Board has formed a Risk Management Committee to frame, implement and monitor the risk management plan of the Company. The Committee has been entrusted with the responsibility to assist the Board in a) overseeing, monitor and review the risk management plan and ensuring its effectiveness. b) ensuring that all material Strategic and Commercial including Cybersecurity, Safety and Operations, Compliance, Control and Financial risks have been identified and assessed and c) ensuring that all adequate risk mitigations are in place, to address these risks. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

CORPORATE SOCIAL RESPONSIBILITY

In accordance with Section 135 of the Act and the Rules made thereunder, the Company has formulated a Corporate Social Responsibility Policy, a brief outline of which along with the required disclosures are annexed as Annexure-E as a part of this Report. No amount was required to be spent by the Company on CSR activities during the financial year as the Company had incurred continuous losses in the past.

The aforesaid CSR Policy has also been uploaded on the Company's website and may be accessed at http://www.spencersretail.com/investor.

VIGIL MECHANISM / WHISTLEBLOWER POLICY

Pursuant to the guidelines laid down under Section 177 of the Act, and the Rules made thereunder read with the SEBI Listing Regulations, the Company has a Whistleblower Policy (Vigil Mechanism) in place for reporting any actual or potential concerns pertaining to any instances of irregularity, unethical practice and / or misconduct. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chairman of the Audit Committee of the Company through Company Secretary, for redressal of any irregularity, unethical practice and/or misconduct. No person has been denied access to the Chairman of the Audit Committee and there was no such reporting during the financial year 2022-23.

The policy has been disclosed on the Company's website and can be accessed at http://www.spencersretail.com/investor.

ANTI SEXUAL HARASSMENT POLICY

The Company is committed to provide a safe and conducive work environment to all its employees and associates and has zero tolerance towards sexual harassment at work place. The Company has a policy on Prevention of Sexual Harassment at Workplace in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Adequate workshops and awareness programmes against sexual harassment are conducted across the organisation. The Company has constituted an Internal Committee(s) (ICs) to redress and resolve any complaints arising under the Prevention of Sexual Harassment Act (POSH), Training / awareness programmes are conducted throughout the year to create sensitivity towards ensuring respectable workplace.

Details of complaints received / disposed during the Financial Year 2022-23 are provided in the Report on Corporate Governance. Further there was no complaint pending as on March 31, 2023.

SUBSIDIARIES

As on March 31, 2023, the Company has two wholly-owned subsidiaries, Natures Basket Limited (NBL) and Omnipresent Retail India Private Limited (ORIPL). NBL Limited is the material Subsidiary of the Company.

In terms of the provisions of Regulation 24(1) of the SEBI Listing Regulations, appointment of Independent Director of the Company on the Board of material Subsidiaries is not applicable to NBL. The Company has formulated a Policy for determining Material Subsidiaries. The Policy is available on the Company's website and can be accessed at http://www.spencersretail.com/investor.

The Company has prepared consolidated financial statements for the Company and its Subsidiaries in the form and manner which is in compliance with the applicable Indian Accounting Standards and the SEBI Listing Regulations and the same has been audited by M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, the Statutory Auditors of the Company.

The consolidated financial statements for the financial year 2022-23 forms a part of the Annual Report and shall be laid before the Members of the Company at the ensuing AGM while laying its standalone financial statements. Further, the Auditors Reports of Subsidiaries do not contain any qualifications, remarks or disclaimer. Pursuant to the provisions of Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the Financial Statements of the Company's Subsidiaries in Form AOC-1 is attached to the consolidated Financial Statements of the Company.

Furthermore, pursuant to the provisions of Section 136 of the Act, the Standalone Financial Statements of the Company, Consolidated Financial Statements along with relevant documents and separate Audited Financials Statements in respect of subsidiaries are available on the website of the Company and can be accessed at http://www.spencersretail.com/investor. Shareholders desirous of obtaining the Audited Financials Statements of the Company's Subsidiaries may obtain by requesting the same.

COST RECORDS

The provisions of Section 148 of the Act pertaining to cost audit and maintenance of cost records are not applicable to the Company.

EMPLOYEE STOCK OPTION

Your Company has formulated Spencer's Retail Limited Employee Stock Option Plan 2019 (‘ESOP Scheme') for benefit of its employees as per applicable regulations of Securities and Exchange Board of India as amended from time to time and the said schemes are in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as applicable. The purpose of above ESOP Scheme is to provide the employees with an additional incentive in the form of options to receive the equity shares of the Company at a future date.

The Company aims to reward employees of the Company for their continuous hard work, dedication and support through ESOP. The main objective of the ESOP Scheme is to recognise employees who are performing well, a certain minimum opportunity to gain from your Company's performance thereby acting as a retention tool and to attract best talent available in the market.

1,20,000 options were granted under the Employee Stock Option (ESOP), 2019 Scheme and is being implemented through a trust viz. Spencer's Employee Benefit Trust ("Trust") in accordance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and involves the secondary market acquisition of the Company's equity shares by the Trust through the Stock Exchanges.

Details with respect to employee stock options under the ESOP Scheme as on March 31, 2023 are provided in the table below:

Particulars

Number of Equity Shares / Options
1. Total number of options outstanding at the beginning of the year 90,000
2. Total number of options granted under ESOP Scheme during the Year NIL
3. Options vested during the year 30,000
77

 

Particulars

Number of Equity Shares / Options
4. Options exercised during the year NIL
5. Options lapsed or forfeited during the year 1,20,000
6. Total number of options outstanding at the end of the year 0

The total number of options outstanding at the end of the year was Nil as Mr. Devendra Chawla, who was granted the aforementioned options has resigned from the Company w.e.f. January 20, 2023 and he has not exercised the said options within 2 months of his resignation. Hence, as per the terms and conditions of the said ESOP Scheme, the options granted as well as vested has lapsed.

A certificate from Mr. S.M Gupta of M/s. S.M Gupta & Co, Secretarial Auditors of the Company, with respect to the implementation of the Company's Employee Stock Option Scheme(s), would be kept at the ensuing Annual General Meeting of the Company for inspection of the Members.

AWARDS AND RECOGNITIONS

The Company has been a proud recipient of numerous awards and recognitions during the year 2022-23. The significant ones among them are listed hereunder: Certified as "Great place to Work" 4th Year in a Row.

Spice Icon Award 2022.

Golden Spoon Award: Images Most Admired Food & Grocery Retailer of the Year Supermarket Chain – National. Innovative Retail Concept of the Year – Launch of Spencer's Value Market.

Retailer of the Year – Food & Grocery - Spencer's Retail Limited. The Human Side of Things for Apprenticeship Project Implementation.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments, affecting the financial position of the Company that have occurred between the close of the financial year ended on March 31, 2023 and the date of this Board's Report.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY ANY REGULATORS, COURTS AND TRIBUNALS

No significant and material order have been passed by any Regulator(s), Court(s) and Tribunal(s) impacting the going concern status and the Company's operations in future.

CORPORATE INSOLVENCY RESOLUTION PROCESS INITIATED UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 _IBC_

There are no proceedings, initiated by any Financial Creditor or Operational Creditor or by the Company, under the Insolvency and Bankruptcy Code, 2016 as amended, before National Company Law Tribunal or other courts during the financial year 2022-2023.

CHANGE IN THE NATURE OF BUSINESS

During the year under review, there was no change in the nature of the business of the Company.

INTERNAL FINANCIAL CONTROL _IFC_ AND THEIR ADEQUACY

The Company maintains adequate internal control systems, policies and procedures for ensuring orderly and efficient conduct of the business, including adherence to the Company's policies, safeguard of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures in all areas of its operations. The services of internal and external auditors are sought from time to time. The Company believes that it has sound internal control systems commensurate with the nature and size of its business. The Company continuously upgrades these systems in line with best-in-class practices.

The reports and deviations are regularly discussed with the Management and actions are taken, whenever necessary. The Audit Committee of the Board periodically reviews the adequacy of the internal control systems.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under sub-section (3)(m) of Section 134 of the Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed hereto and forms part of this Report (Annexure-F).

PARTICULARS OF EMPLOYEES

As required under the provisions of Section 197 of the Act and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, particulars of the concerned employees forms a part of this Report. However, as per the provisions of Section 136(1) of the Act, the Annual Report and Accounts are being sent to all the members of the Company excluding the aforesaid information. The said statement is also available for inspection by the shareholders at the Registered Office of the Company during business hours on working days of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company through email at spencers.secretarial@rpsg.in. The same will be replied by the Company suitably.

None of the employees listed in the said Annexure are related to any Director of the Company.

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed hereto and forms part of this Report (Annexure-G).

INDUSTRIAL RELATIONS

Industrial relations in the Company continued to be cordial during the year. A detailed section on the Company's Human Resource initiatives is forming part of the Management Discussion & Analysis annexed to this Report.

GREEN INITIATIVES

Pursuant to the relevant circulars issued by Ministry of Corporate Affairs (MCA), Government of India and Securities & Exchange Board of India (SEBI), Notice of the sixth AGM and the Annual Report of the Company for the year 2022-23, are being sent to the Members only by email.

The Company supports the ‘Green Initiative' undertaken by the MCA, enabling electronic delivery of documents including Annual Report etc. to Members at their e-mail address already registered with the Depository Participants ("DPs") and Registrar and Transfer Agent ("RTA"). Additionally, the Company conducts various meetings by means of electronic mode in order to ensure the reduction of carbon footprint.

In view of the above, shareholders who have not yet registered their email addresses are requested to register the same with their DPs/ the Company's RTA for receiving all communications, including Annual Report, Notices, Circulars etc. from the Company electronically.

ACKNOWLEDGEMENTS

Your Directors wishes to place on record their appreciation for the valuable services rendered by the employees of the Company, across levels. The Directors would also like to express their appreciation to the bankers, the regulatory authorities, the trade suppliers, the customers, the financial institutions and the shareholders for their continued support and co-operation.

On behalf of the Board of Directors
Dr. Sanjiv Goenka
Place: Kolkata Chairman
Date: May 22, 2023 (DIN 00074796)

Management

Discussion and Analysis

(Annexure ‘A' to the Board's Report)

Spencer's Retail Limited (‘Spencer's' or ‘SRL' or ‘The Company'), a multi-format modern trade retailer in India, is part of the RP-Sanjiv Goenka Group (referred to as ‘RPSG Group' or ‘the Group'). The Company and its subsidiaries engage in various categories of retail business, including staples, fast-moving consumer goods (FMCG), and non-food items such as fashion, general merchandise, personal care, home essentials, electrical and electronics. The FMCG category comprises food items such as processed food, beverages, fruits and vegetables, fish and meat. SRL is known for its unique brand image among its customers, backed by its specialty section that includes Spencer's gourmet, patisserie, wine, and liquor. Additionally, the Company has taken a significant step forward by introducing a new set of ‘value market' store format, which cater specifically to consumers who are value-conscious. With the latest edition of the value market stores along with the wholly-owned subsidiary Natures Basket Limited (‘Natures Basket' or ‘NBL'), Spencer's is now catering to various consumer classes i.e., the premium / gourmet segment, the aspirational, and the value-conscious. Along with Omnipresent Retail India Private Limited (ORIPL), the Company's e-commerce division, Spencer's has completely adopted the modern retailer business model to integrate seamless service to its customers, both offline and online, and foster inclusive business growth in the industry.

Global Economic Overview

The global economy showed exceptional resilience, as evidenced by robust labour markets, substantial household consumption and business investments. The year 2022 brought along some tough winds, impacting the global economy's overall growth run. But despite all the challenges, it could not derail the economy from its growth trajectory and even showed optimism in the latter half of the year. According to the International Monetary Fund's World Economic Outlook, published in April 2023, the global economy grew by 3.4% in 2022. Governments across the globe, responding to the challenges encountered by the world economy, implemented tighter monetary policies and structural reforms. They increased government spending to stimulate economic activities and improve the economy's outlook. Thus, helping create a more stable and prosperous global economic environment.

After the Covid-19 pandemic, the world economy saw a rapid recovery in economic activity, which was soon overshadowed by rising inflationary pressures that persisted through the first half of 2022. According to IMF World Economic Outlook, April 2023, the estimated real GDP growth figures for the advanced economy are 2.7% in 2022 and 1.3% in 2023. The estimated figures for emerging economies are anticipated to be 4.0% for 2022 and 3.9% for 2023. But with stricter monetary and financial policies onboard, the global economy has gradually started to witness subdued inflationary risks from 2022 onwards. According to IMF, global inflation is estimated to decline from 8.7% in 2022 to 7.0% in 2023, and to 4.9% by 2024. This forecast indicates the positive impact of the policies implemented to counter the rising inflationary pressures and reflects the overall stability of the global economy.

(Source: https://www.imf.org/en/Publications/WEO/Issues/2023/04/11/world-economic-outlook-april-2023)

OUTLOOK

The year 2022 saw price volatility and inflation as the prime cause of concern globally for the economy and policymakers alike. Looking ahead into 2023, we anticipate the economic outlook to maintain a moderate stance, much like 2022, with an estimation of 2.8% growth. In this challenging external environment, contractionary monetary policies will likely continue to be implemented, while fiscal policies are expected to alleviate cost-of-living pressures, in line with the adhered monetary policies.

ECONOMIC GROWTH TREND _REGION-WISE % CHANGE_

Indian Economic Overview

Indian economy has distinguished itself as the fastest-growing entity among major economies. In the first half of 2022-23, the country achieved a robust growth of 9.7% according to the Monthly Economic Review, November 2022 by the Department of Economic Affairs. A sharp rebound of economic activities, especially the private sector consumption and increased Government thrust on uplifting infrastructure, helped India sustain to steady growth momentum.

In the first quarter of 2022-23, persistent inflationary pressure compelled the Reserve Bank of India (RBI) to recalibrate its monetary policies. As a result, the Indian economy has started to experience the easing of the inflationary grip while the inflation stood moderate during the third quarter. This transformation in the economy is aiding the demand scenario in the domestic market and enabling the country's economic wheel to roll in a geared momentum.

The adoption of calibrated monetary policies aimed at controlling inflation, coupled with steady growth in service activity, boosted demand and increased consumption. Due to the higher inflationary pressure on food prices, retail inflation saw a three-month high in January 2023. Previously retail inflation was led by a 12-month low in December 2022 at 5.72%, which went beyond the 6% tolerance band in January 2023.

(Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1894932 https://www.imf.org/en/Publications/WEO/Issues/2023/01/31/world-economic-outlook-update-january-2023 https://www.thehindu.com/business/Economy/expecting-slowdown-in-indian-economy-to-61-in-2023-from-68-in-2022-says-imf/article66452776.ece https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=55178 https://www.hindustantimes.com/india-news/retail-inflation-shoots-up-to-3-month-high-of-6-5-in-jan-as-food-prices-bite-101676312602815.html https://indianexpress.com/article/business/economy/core-inflation-continues-to-be-sticky-elevated-rbi-governor-8408576/ https://www.hindustantimes.com/business/iip-growth-declines-to-4-3-in-december-2022-nso-data-101676281033398.html https://eaindustry.nic.in/eight_core_infra/eight_infra.pdf Monthly Economic Review, November 2022 by Department of Economic Affairs)

OUTLOOK

International Monetary Fund (IMF) has maintained its growth projection of 6.8% for India during the current fiscal year. However, owing to the external headwinds, the figure might decline to 6.1% in 2023 and is anticipated to move up to 6.8% in 2024. With increased Government spending announced in union Budget 2023-24 and a rise in private consumption and investment, economic activity will further boost demand. Despite the ongoing growth momentum, the Indian economy remains exposed to the impact of global spillovers, which could potentially disrupt the trend. Therefore, while remaining cautiously optimistic, it is essential to maintain vigilance and prudence in the near future.

Indian Economy: A Snapshot

Indian Retail Industry

The retail industry has become one of the most dynamic and rapidly growing sectors in India, currently ranking as the third largest contributor to India's GDP, accounting for ~10%. With an expected valuation of uS$ 2 trillion by 2032, the retail industry is poised for growth. It functions around four formats: exclusive branded retail shops, multi-branded retail shops, convergence retail outlets and e-retailers. The Indian retail sector is a diverse competitive landscape, with a range of players, including departmental stores, hypermarkets, supermarkets, cash and carry stores, and specialty stores. In-store retailing remains the dominant channel in the market, but E-retailers are also gaining popularity, driven in part by a shift in demographic preferences for online shopping experiences over traditional offline methods. This trend has led the industry to undergo operational transformations, and players are rapidly adopting new technologies to shape the industry's future. As a result, many retail brands are transitioning towards a OMNI Channel model to remain competitive in the changing retail landscape.

The retail business in India is witnessing opportunities owing to the robust recovery in the domestic consumption pattern. The urban Indian consumer's purchasing power is increasing along with the branded goods in categories like apparel, cosmetics, footwear, watches, beverages, food, and even jewellery are gradually evolving into business and leisure that are well-liked by the urban Indian consumer. Changing consumer preferences coupled with emerging trends like ‘seamless' retail, next-gen stores, personalisation, the rise of new ecosystems, and emerging revenue models are likely to shape the retail landscape in India. Recognising these trends and responding to them proactively and in an agile manner will ultimately enable retailers to create a winning strategy for the future.

OUTLOOK

The retail industry will be marked by a transitional development phase, driven by the shift in consumer preferences towards online shopping experiences. Retail players are responding to this trend by creating seamless retail experiences that are fully integrated across all channels, rather than distinguishing between offline and online consumption channels.

The traffic generation from e-commerce is disrupting the retail space. Technological advancement has significantly transformed supply chain, production, and retail sales, developing customer insight is vital for retail organisations – whether for service customisation or presence across multiple channels. According to Bain & Company research, the e-retail division is anticipated to increase to uS$ 150-170 Billion by 2027 with a 25-30% annual growth rate. Also, the market penetration by e-commerce is anticipated to grow to 9-10% five years down the line.

SPENCER'S TAKE

Spencer's has established itself as a multi-format modern retailer in India's organised retail market. With both large format stores in Spencer's and small format stores in both Spencer's & Natures Basket along with the new value market stores, the Company strives to effectively cater to customer demands.

The Company's large format stores account for 85% of total sales, small format stores (including Natures Basket) account for 15% of total sales. Going ahead, the Company's ‘OMNI-Channel' business model is expected to play a major role in driving growth in the Indian retail industry. The accelerated shift to online sales with people decreasingly bifurcating between online and offline shopping channels, retailers were agile in shifting to digital platforms to sell their products and develop capabilities to meet the increasing demand for door-step deliveries.

At Spencer's, a capable digital team contributes significantly to the Company's online sales. The Company's mobile app and website enable a seamless customer shopping experience. It continues to strengthen its ‘OMNI-Channel' distribution along with its brick-and-mortar stores. The Company also cater to its customers through phone and ordering to enhance its ‘Out-Of-Store' channel. This enabled Spencer's to stay resilient amid challenges, facilitating a revenue growth of 6.6 % in 2022-23. At Spencer's, the Company's digital team plays a vital role in scaling its online sales. Spencer's ensure both its website and mobile app are continually improved and updated for a better experience. Spencer's is committed to grow and strengthen its ‘OMNI-Channel' distribution strategy. This includes its online and brick-and-mortar stores.

Indian Retail Market Size

Indian Retail Sector: Opportunities and Challenges

OPPORTUNITIES

Changing Consumer Preferences

Today's consumer landscape shows a growing preference for one-stop-shop destinations, from food and fashion to daily grocery requirements. More and more consumers are now seeking comprehensive solutions under a single roof. Modern retailers aim to offer their customers a personalised and seamless shopping experience. They prioritise providing a high-quality journey that requires minimal manual intervention. Additionally, many retail chains offer loyalty points, membership discounts, and other enticing offers to attract and retain customers. These factors have contributed to expanding the customer base and increasing preference for organised retail in India.

SPENCER'S TAKE

We, at Spencer's, keep ourselves updated according to the dynamic consumer preferences. We are a one-stop destination with differentiated offerings and private brands catering to the customers' requirements. Spencer's provides a good in-store experience, backed by ambient, well-lit stores, standardised, scientific store design. This ensures higher cross-selling, benchmarking methods, pricing competitiveness, exceptional tailored offers, and short queue waiting times.

Under-penetrated Market

The Indian organised retail segment is an under-penetrated space and accounts for a lower share percentage compared to developed and emerging countries. This indicates the tremendous untapped potential in the segment. Over the last decade, evolving consumption patterns have led to increasing demand from Tier - II & III cities, and due to incremental urbanisation, the same demand traction has also been witnessed from Tier IV cities.

SPENCER'S TAKE

Spencer's is leveraging its wide presence in the Indian markets. The Company is opening stores in existing clusters by deepening presence in the relevant market, keeping its profitability and sustainable growth aspects in mind. This makes the Company poised to tap potential opportunities due to rising industry demand. The recent value market stores launched by the Company owing to the incremental demand from regions, is the latest endeavour to tap the under-penetrated market.

‘OMNI-Channel' Model

Breaking down boundaries between communication channels and providing a single integrated brand experience across multiple touch points necessitate transitioning from a multi-channel environment to an ‘OMNI-Channel' ecosystem. An ‘OMNI-Channel' business model is imperative to meet consumers' potential needs. Convenience store merchants have access to the necessary skills and resources to manage and operate this retail channel effectively. By being closer to their customers and catering to diverse needs, they are well-positioned to provide increased convenience. The implementation of an ‘OMNI-Channel' strategy, combined with expanded store penetration, will result in faster product delivery and shorter turn-around times, ultimately enhancing the efficiency of the overall business model.

SPENCER'S TAKE

Spencer's strengthen itself to become a fully-integrated ‘OMNI-Channel' retailer and for this purpose, the Company chose a hyper-local strategy. Contacting clients directly and with contactless delivery via its ‘Out-of-Store' channels to capitalise on e-commerce. Introduction of new brands, goods, markets, and servicing in other locations are other factors further providing expansion prospects to the Company.

Demographical Advantage

In India, Spencer's Retail Limited benefits from favourable demographic trends. The number of middle-class customers is steadily increasing, and nuclear households are predicted to reach 74% by 2025. Nuclear households spend 30% more per capita than combined families. This growth is driven by a young working population with a median age of 24, expanding metropolitan nuclear families, a rising number of working women, and opportunities in the service sector. These demographic advantages position Spencer's Retail Limited to tap into the growing demand and succeed in the dynamic Indian retail industry.

SPENCER'S TAKE

The Company is expanding its footprints with a cluster-based approach so that serving the customers can be addressed proximity based. This will provide the customers to avail Spencer's services with greater ease and increase the footfall in the stores. Concentrating stores in a cluster can lead to economies of scale for the Company in terms of procurement, inventory management, and marketing expenses. ultimately, this will maximise the potential of a specific geographic area by creating a concentration of complementary stores.

Urbanisation in the Retail Sector

Rise in urbanisation makes more people concentrated in one location. This, in turn, makes it increasingly easier to attract and serve more and more customers in a single retail chain today.

SPENCER'S TAKE

Owing to the incremental demand outside from the established store concentration areas, Spencer's has launched its new format of value market stores to efficiently cater the demand and generate maximum outcome from the newer opportunities. These stores particularly concentrate on urbanised areas to tap the opportunities within the value-conscious customer segment.

Atomic Family

Over time, the joint family structure has evolved to adapt to the changing times and has taken a new form of atomic or nuclear families. Today, with both partners working, purchasing power of families is also rising. However, there is also a growing ‘lack of time' for day-to-day activities like grocery shopping. This is why the whole concept of organised retail, which provides a one-stop retail solution under a single roof, is becoming popular each day.

SPENCER'S TAKE

Spencer's has been one of the early entrants in the organised retail space. The Company provides its customers with various retail solutions under a single roof for both food and non-food items. The Company's position as a frontrunner in the industry gives it an edge.

Employment Opportunities Generated by Spencer's

Today's retail marketing is the largest job-generating industry. Employment in the retail industry is provided to skilled, semi-skilled and unskilled persons who contribute to the country's socio-economic development. Spencer's new stores/outlets are providing newer employment opportunities for the community, thus contributing to the economic growth of society and promoting betterment.

High Costs of Real Estate Properties Real estate prices in Indian cities are increasing heavily. The lease or rent of the property is one of the major areas of expenditure. A high lease rental reduces the profitability of a project. It is difficult to find suitable properties in central locations for retail.

CHALLENGES Competitive Pricing There is a price war between different retail organisations, with everyone providing goods at low cost and offering various promotional schemes. In such a case, retaining one's customers and expecting loyalty from old ones is difficult. The Dominance of the Unorganised Sector The very first challenge faced by the organised retail industry in India is competition from the unorganised sector. Traditional retailing has been established in India for centuries. It is a low-cost structure, mostly owner- operated, has negligible real estate and labour costs with little or no taxes to pay. Customer familiarity that runs from generation to generation is one big advantage for the unorganised sector.

Indian Organised Retail Industry

The Indian retail industry is primarily divided into two subcategories Viz. traditional retail and organised retail. Traditional retail is the predominant form of retail while organised retail is a comparatively less penetrated option in India. In recent times, there has been a notable shift in consumer preference towards a ‘one-stop shopping destination-kind of experience', which only organised retail can offer. The evolving demographic landscape further amplifies this change.

In recent times, the retail segment in India has witnessed exponential growth primarily driven by the incremental domestic consumption, increased household income, innovative financing, and the convenience of digital payment. According to a report jointly published by the real estate consultant ANAROCK and Retailers Association of India, the top 7 cities in India (Bengaluru, Chennai, Hyderabad, Kolkata, MMR, National capital region (NCR), and Pune) have added over 2.6 Million sq. ft. of mall space in 2022 – 27% higher than 2021. From the revenue part, the organised retail to witness 17-22% growth, backed by the demand revival and increased penetration whereas the operating margin of the brick-and-mortar retail is expected to expand by 14-16%. The notable fact is that the brick-and-mortar segment encapsulates the 68% share in the retail market.

With the perception of the Indian retail sector transforming, retailers continue altering their store models to meet the diverse customer demands across markets and geographies. Owing to the rapid and widespread urbanisation in the Tier II & Tier III cities, organised retail outlets are now becoming increasingly popular as a destination for modern retailers. This enables the industry to grasp a greater market share among the population while penetrating into underserved geographies with untapped opportunities.

Despite greater penetration of organised retail in the Indian market, the headroom for growth is exceptionally vast. On a comparative note, the penetration of organised retail in India is only 11.1% while it is 85% in uSA.

OUTLOOK

The Indian organised retail sector demonstrates a positive outlook, driven by policy reforms and the growing trend of urbanisation. This industry's expansion is fuelled by a consumption boom, resulting in greater disposable income, a focus on hygiene, evolving lifestyles, and easy borrowing and usage of ‘Buy Now & Pay Later' models. Thereby, contributing significantly to India's robust and rising consumer culture. Moreover, secure and hassle-free financial transactions enhance consumer trust and encourage greater utilisation of e-commerce platforms and services. With retail activities gradually returning to pre-pandemic levels and demand resurging, several international brands operating in the Retail and F&B sectors are expressing interest in the Indian retail landscape. This trend is expected to drive further growth across these sectors in the future.

(Source: https://wealthdesk.in/blog/what-is-ondc-and-how-will-it-impact-indias-retail-market/ https://retail.economictimes.indiatimes.com/files/cp/1294/cdoc-1661333692-ECOM_july_7_5in%20x%208in_Correction.pdf)

SPENCER'S TAKE

Spencer's caters to ~72% segment of India's overall organised retail market, comprising Food and Grocery, Apparels, General Merchandise, Consumer Durables, Mobile and IT, Furniture and Household items and Footwear. With only ~5% market penetration, the Grocery industry offers significant growth potential for modern trade. Spencer's is poised to benefit from these potentials given its capabilities, market understanding and diversified offerings.

(Source: CRISIL Research)

Spencer's is well-versed in current industry trends, and the Company's experience allows it to continually analyse its stores and drive efficiency, extend its consumer base, and launch new stores. Further, the Company has expanded its reach by launching a new value market stores. During the year, the Company launched 10 new value market stores, totalling 1.45 lac sq ft. As part of its ongoing action plan, the Company is focussed on a hybrid brick & mortar store model and ‘OMNI-Channel' distribution.

Indian E-Commerce Industry Overview

The Indian e-commerce industry is witnessing a progressive momentum owing to the increased penetration of mobile phones coupled with lower data carrier charges. The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the uS to become the second-largest e-commerce market in the world by 2034. During the COVID-19 pandemic, the e-commerce sector witnessed a consumer demand surge, which sustained even after the situation improved. The widespread penetration of the internet and smartphones and the rapid adoption and maturation of digital transactions has further propelled the industry's growth. As a result, the e-commerce industry has been able to capture a significant market share within a relatively brief period. The e-commerce market is expected to touch $350 Billion in GMV (Gross Merchandise Value) by 2030. Technology-enabled innovations like digital payments, hyper-local logistics, analytics-driven customer engagement and digital advertisements will likely support the growth in the sector. India is also planning to introduce Open Network for Digital Commerce (ONDC). ONDC will enable e-commerce platforms to synchronise search results on all the e-commerce platforms and display products and services from every platform. This will further boost business for MSMEs (Micro, Small and Medium Enterprises) and help fuel India's e-commerce growth. The growth in the sector will further encourage employment, increase revenues from export, increase tax collection by exchequers, and provide better products and services to customers in the long term. According to NASSCOM, the Indian e-commerce sector is anticipated to be worth uS$ 200 Billion by 2030 as a result of increased analytics, transactions, and internet penetration. Indian e-retail industry is projected to exceed 300-350 Million shoppers, propelling the online Gross Merchandise Value (GMV) to uS$ 100-120 Billion by 2025. According to Bernstein report, India's e-commerce market is expected to reach ~uS$133 Billion by 2025 while the penetration is going to be double in next 5 years. The e-commerce industry is gradually penetrating in Tier 2 & 3 cities. By 2025, the direct-to-customer (D2C) e-commerce market is anticipated to reach a worth of Rs. 100 Billion, a 32-times growth over 2023. Around 53% of the consumers are from non-metros and 80% of Indian consumers prefer to shop from smartphones. Considering these penetrations to go deep in future as well, the e-commerce industry in the country is yet to witness its optimal growth.

OUTLOOK

The fast-paced internet and smartphone penetration are among the key enablers of e-commerce in the country, at present. The total number of internet subscribers reached 836.86 Million in June 2022 while the smartphone base is expected to reach 1 Billion by 2026. This is in line with the forecast of India's digital sector reaching uS$ 1 Trillion in internet Gross Merchandise Value (GMV) by 2030. Rapid technology upgradation and adoption on a wide scale are transforming the retail industry. India's e-commerce sector has thereon opened up various segments of commerce ranging from business-to-business (B2B), direct-to-consumer (D2C), consumer-to-consumer (C2C) and consumer-to-business (C2B). Major segments such as D2C and B2B have experienced immense growth in recent years. India's D2C market is expected to reach uS$ 60 Billion by 2026-27. The overall e-commerce market is benefiting from the boom in high-speed internet and smartphone penetration along with the rise in income. With this,the e-commerce sector is expected to reach uS$ 350 Billion by 2030, and experience 21.5% growth in 2022 by touching uS$ 74.8 Billion.

SPENCER'S TAKE

We began our journey as an ‘OMNI-Channel' player, serving clients through our shops, e-commerce websites, and mobile application. We have enhanced our online platform to provide seamless service delivery to our customers. Capitalising on the opportunities that were boosted during the COVID-19 pandemic, we started pushing our efforts towards our e-commerce subsidiary ORIPL (Omnipresent Retail India Private Limited). In 2022-23, ORIPL registered its first-ever positive Operating Profit with a Gross Merchandise Value (GMV) of Rs. 302 Crores.

Growth Of the Indian E-Commerce Market (2022-2030)

Growth Drivers of the E-Commerce Industry in India

ADVANCEMENTS IN TECHNOLOGY ADOPTION

The number of internet users in India is expected to grow to ~1 Billion by 2025 with 33% of them (330 Million) becoming online shoppers. The growing use of smartphones and access to the internet via broadband, 4G, and 5G is predicted to increase the number of online consumers. As a result, the e-commerce customer base is likely to grow in the near term.

SPENCER'S TAKE

Spencer aims to leverage the OMNI-Channel network to reach customers directly. The Company has invested heavily in multiple aspects to improve its customer experience. For instance, the Company has enabled a touchscreen-driven point-of-sale system to scan the available products quicker. Furthermore, contactless door-step deliveries, paperless e-invoices, and digital payments through third-party payment processors are all available to Spencer's customers.

SHOPPING EXPERIENCE

E-commerce ‘humanises' the online shopping experience for users. It allows customers to shop at their own ease with their preferences. The digital platforms have options like sorting and filtering, which provide customers with a speedy shopping experience while meeting their real-life expectations and requirements.

SPENCER'S TAKE

Spencer's has always strived to deliver an enhanced shopping experience by offering a diverse product selection and a positive in-store experience. The Company includes a bilingual call centre with professionals that handle client comments and questions from all locations. Customers can contact the Company via various channels, including a toll-free number, email, website, social media platforms. As a result, the Company guarantees to reach a larger audience, assists them with their questions and feedback, and provides them with a better purchasing experience every time. This backend assistance has greatly aided the Company's ability to communicate with customers effectively.

Company Overview

Spencer's Retail Limited is an Indian multi-format contemporary retailer owned by the RP Sanjiv Goenka Group. Headquartered in Kolkata, the Company, is among the leading players in the FMCG space, with food and non-food items, including Fashion, Staples, General Merchandise, Personal Care, Home Essentials, Electrical & Electronics and many more. The Company's speciality sections are Gourmet, Patisserie and Wine and Liquor. As an established player, Spencer's enjoys a healthy brand recall across its segments. With a presence in over 44 Indian cities, Spencer's operates 186 Stores in India, including 35 Natures Basket Stores. The Company operates in three retail formats; small-format stores with store sizes ranging up to 5000 sq. ft, catering to the daily and weekly top-up shopping needs of consumers; large-format stores with store sizes over 5000 sq. ft. and value market stores with average store sizes between 5,000-24,000 sq. ft.

Operational Overview

During 2022-23, the Company's revenue from operations stood at Rs. 2452 Crores with a sustainable gross margin of 20.1%. This growth was mainly driven by the food and non-food category mix (General Merchandise & Apparel), where the non-food mix touched its highest figures in the previous three years to surpass the pre-COVID-19 pandemic levels. During 2022-23, the Company's e-commerce business ORIPL also turned Operating Profit positive for the first time with a GMV of Rs. 302 Crores. The growth was mainly attributed to the consumer preference shift in the shopping medium. The Company also launched new ‘Value Market Store' format to capture the incremental demand from Tier III and Tier IV cities due to increased urbanisation and demographic shift. These stores focus more on value-conscious customers and will have a larger share of Spencer's private brands going ahead.

Financial Review

Particulars

Standalone for the Year ended

Consolidated for the Year ended

March 31 March 31
2022-23 2021-22 2022-23 2021-22
Turnover (Figures In Rs. Crores) 2210.16 2067.11 2485.16 2376.55
Return On Equity (%) (150.48%) (32.91%) N.A* (196.36%)
Net Asset Value Per Share (Rs.) 11.30 28.51 (16.69) 6.86
Earnings Per Share (Rs.) (17.00) (9.38) (23.34) (13.48)

*As the net-worth is negative as on March 31, 2023.

DETAILS OFS IGNIFICANT RATIOC HANGES

Financial Results

2022-23

2021-22

% Change

Reason for Change

Interest Coverage Ratio

(1.98)

(0.41)

387%

Operating Profit Margin (%)

(2.87%)

(0.43%)

570%

Net Profit Margin (%)

(7.03%)

(4.23%)

66%

Increase in losses in current year
Earnings Per Share (Basic) (%)

(17.00)

(9.38)

81%

Return on Net Worth (%)

(150.48%)

(32.91%)

357%

Increase in borrowings during the year and
Debt Equity Ratio

4.32

1.14

278%

lower networth due to losses incurred in
current year.
Lower closing outstanding debtors and higher
Debtors Turnover (Days)

3.79

5.26

(28%)

revenue during the year.
Lower average inventory and higher revenue
Inventory Turnover (Days)

38.31

42.42

(10%)

during the year.
Current Ratio

0.43

0.51

(16%)

Consolidated

Financial Results

2022-23

2021-22

% Change

Reason for Change

Interest Coverage Ratio (2.42)

(0.87)

177%
Operating Profit Margin (%) (3.90%)

(1.09%)

259%
Earnings Per Share (Basic) (%) (23.34%)

(13.48%)

73%

Increase in losses in current year

Return on Net Worth (%) (139.83%)

(196.36%)

(171%)
Net Profit Margin (%) (8.58%)

(5.28%)

62%
Debt Equity Ratio (3.60)

5.83

(162%)

Increase in borrowings during the year and lower

networth due to losses incurred in current year.

Debtors Turnover (Days) 3.45

4.48

(23%)
Inventory Turnover (Days) 39.06

41.89

(7%)
Current Ratio 0.42

0.50

(16%)

Risk Management

Risk, at its core, involves the potential occurrence of adverse events. The way Spencer's approaches risk management is the primary factor determining the Company's ability to identify, evaluate, and effectively mitigate risks. This entails properly assessing risks, using appropriate risk metrics, and ultimately succeeding in managing them. By prioritising risk management, Spencer's can safeguard its operations and ensure its long-term success. Each key risk type demands a specific set of skills and its philosophical approach. Spencer's risk management framework has policies and procedures to identify, evaluate, mitigate, and report risks. The Risk Management Committee, overseen by the Board, identifies and evaluates threats using digital tools and draws mitigation strategies accordingly.

Risk

Description

Mitigation

I nventory Risk

This risk of loss due to the unavailability of inventory leading to customer dissatisfaction and reduction in customer loyalty. Store operations and supply chain teams regularly monitor inventory levels to ensure adequate stock availability Flexible inventory procedure enables real-time inventory reporting Analyses of essential data points to forecast inventory levels allows timely reordering and maintenance of an adequate stock level

I nflationary Risk

The risk of loss due to the sudden change in prices because of unforeseen conditions and procurement of products and fall in demand because of high prices. Regular analyses of inventory to promptly clear stock Prompt clearance of stock through several in-store offers, coupons, and customised discounts.

Competitive Risk

The risk of loss to the Company arising from intense competition in the retail store chain industry owing to differentiated products and new entrants of varying sizes and store formats. Sustain brand visibility and differentiation through private brand campaigns and other strategic initiatives. Implement strategies and campaigns to retain and acquire customers, wherein Spencer's acquired Natures Basket for product range expansion and widened customer base and reach. Specialty segments, including Spencer's Gourmet, Patisserie, Wine and Liquor, and recently launched ‘Epicuisine', provide the Company with a much-needed differentiation.

Supply Chain Risk

The risk of potential loss to the Company due to supply-side delays caused by interruptions in logistics and distribution networks. Distribution centres and third-party supply chain management for logistical support help the Company mitigate this risk. Working closely with suppliers and maintaining cordial relations with them helps mitigate this risk.

Quality Risk

The risk of loss of trust and customer confidence due to ineffective product quality and services. Trained service team to patiently deal with customers' issues and complaints, helps the Company ensure speedy and effective customer redressal. Regular and rigorous quality and safety checks by quality team helps the Company ensure all quality standards are followed.

Human Resource Management

At Spencer's, people are regarded as the most vital assets for ensuring business continuity. The Company recognises the importance of balancing personal growth and professional development by providing a safe, conducive, and productive work environment. Spencer's highly values its skilled and professional management team, viewing it as a key driver for growth and success. To further improve business efficiency, devise prudent strategies, set up robust systems, and become agile and dynamic to suit evolving industry requirements, Spencer's relies on its experienced and talented employee pool. The Company provides regular skill and personnel development training to improve efficiency and keep employee morale high. The Company believes in providing equal opportunity to employers and believes in nurturing diversity at workplace while ensuring equitable remuneration for all. The Company hires people from all walks of life, across geographies. Being a non-discriminatory employer that promotes value diversity at workplace, it hires people with disabilities for roles that are friendly to their working condition as well. Therefore, the Company remains dedicated to fostering a positive and healthy work environment. With this, the Company strongly focuses on employee training and development. Spencer's provides functional training and customer-first training programmes

– ‘Parichay', aimed at preparing its people for customer interaction. It also provides further career development opportunities to the employees through its initiative ‘utthaan'. Creating an inclusive and supportive work environment at Spencer's is one of its focus areas. Within this, employees are empowered in a way that encourages positive behaviour, resulting in improved performance and value addition for customers. Therefore, evaluation and recognition of top talents are undertaken through the Company's R&R events such as ‘umang' and ‘utsav'. It believes that a motivated and happy workforce, aligned with the organisational objects can propel the Company to the next orbit of its growth. Spencer's has been recognised as ‘Great Place to Work' for the fourth year. As of March 31, 2023, the Company's consolidated talent pool stood at 5,462, including women accounting for about 23% of the total workforce. Spencer's lays a great focus on women's empowerment, encouraging female employees to participate in numerous training programmes, such as ‘Saheli' and ‘Naari Shakti,' to nurture their growth and development. Furthermore, the Company also employs individuals that would have successfully National Apprenticeship Promotion Scheme (NAPS) training.

Spencer's Retail Limited, inaugurates its first all-women stores in the Eastern & Southern India region, totally operated and managed by women employees at Mahamayatala in Kolkata,

Habsiguda in Hyderabad and Royapettah in Chennai. The store team has 10 - 13 female employees comprising of store operations team, riders, and security staff. The entire team is committed to provide best-in-class shopping experience to our customers. This team represents today's aspiring women of modern India who want to upgrade their skills and act as breadwinners for their families. We, at Spencer's, have always empowered women employees to come ahead and take lead roles and partner in the business. All women store is yet another milestone achieved which showcases our diverse and inclusive culture prevailing in the organisation. More than 22% of our employee workforce is fearless women employees who not only manage their own homes but also manage Spencer's stores effortlessly every single day.

I nternal Control System and Adequacy

Spencer's has implemented a comprehensive internal control framework to ensure the protection of the Company in line with the size and intricacy of its financial reporting and other operational data. The Company ensures all its processes are compliant to established policies, procedures and statutory requirements. The Company has developed well-documented guidelines, procedures for authorisation and approvals, including regular audits. The internal audit system encompasses all financial and operational controls across all divisions, functions, and departments. The internal audit team regularly reviews the organisation's various functions and identifies opportunities for improvement. The Company believes in conducting business ethically and responsibly. To integrate the value system as an integral aspect of operations, Spencer's conducts regular knowledge sharing and training sessions, as well as provides e-learning courses to enhance awareness of the Code of Conduct and the Company's essential policies. This approach ensures that employees remain up-to-date and well-informed, enabling them to uphold the Company's values and principles in their day-to-day activities.

Cautionary Statement

The statements in the Management Discussion and Analysis section describing the Company's objectives, projections, estimates and prediction may be considered as forward-looking statements. All statements that address expectations or projections about the future, including, but not limited to; statements about the Company's strategy for growth, product development, market positioning, expenditures and financial results, are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company's actual results, performance or achievement may thus differ materially from those projected in such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of any subsequent developments, information or events. To avoid duplication and repetition, certain heads of information required to be disclosed in the Management Discussion and Analysis have been included in the Board's Report.