Avenue Supermarts Ltd Management Discussions.


The year under review was one of the most challenging one in recent history, characterised by volatility and instability. The outbreak of the novel coronavirus and the consequent pandemic- induced lockdown caused trade disruptions on a large scale.

The Indian economy was also affected by this crisis as it recorded a de-growth of 10.4% during the first nine months of FY 2020-21, compared to a growth rate of 4.4% in the same period the previous year (Source: Ministry of Statistics & Programme Implementation Government of India). Consumer sentiment remained muted due to macroeconomic factors such as slowdown in industrial growth, consequent reduction in per capita income and discretionary spend driven largely by the disruptions due to the pandemic across the country.

India had taken proactive measures to ensure the containment of the virus to attain economic normalcy. Significant economic support was provided by the Government and lockdown restrictions had been lifted in the second half of the year. Recovery was underway in many sectors of the economy. However, the country is currently facing a second wave of new infections and mortalities. This second wave of the virus towards the end of FY 2020-21 has again led to full or partial lockdowns across several states.


There are significant challenges in the short to medium term as the country races to mitigate the second wave of infections and increase the speed of vaccinating the large populace.

The long-term growth factors of the economy such as favourable demography, stable geo-political environment, and increased urbanisation remain intact and are projected to drive the India growth story in the long term.


The pandemic has significantly impacted several retail businesses in the country. The industry has seen several store closures due to lower footfalls and lean demand. Growth for the next few years will continue to be dependent on the progress of the pandemic in the country and the speed with which the population of the country is vaccinated.

The overall retail industry is estimated to have de-grown by 10-13% in FY 2020-21 and within this the organised brick and mortar industry is estimated to have de-grown by 19-22% (Source: Crisil Ratings).

E-Commerce has seen significant acceleration during FY 2020-21. Consumers preferred to stay home and increased their adoption of shopping from E-Commerce platforms during the pandemic. The industry is estimated to have grown by 9-12% during FY 2020-21. Some of these habits are likely to sustain in the long run and benefit the E-Commerce industry. Within E-Retail, Food & Grocery segment has seen significantly strong growth in FY 2020-21. (Source: Crisil Ratings)


Avenue Super marts Limited (DMart) is a national super market chain, with a focus on value-retailing. We offer a wide range of products with a focus on the Foods, Non-Foods (FMCG) and General Merchandise & Apparel product categories. Since launching our first store in 2002 in Mumbai, Maharashtra, we have grown to 234 stores with a retail business area of 8.82 million sq. ft. spread across Maharashtra (74 stores), Gujarat (42), Telangana (27), Karnataka (21), Andhra Pradesh (21), Madhya Pradesh (14), Tamil Nadu (12), Rajasthan (8), Chhattisgarh (5), Punjab (7), Daman (1), and NCR (2). We remain focussed on our strategy of offering our customers good quality products at great value, based on the Everyday Low Cost/Everyday Low Price (EDLC/EDLP) principle.

Our store offerings provide our customers with a distinctive shopping experience, comprising of a wide range of everyday value retail products sold in a modern ambience and with the feel of a large retail mall. We believe our endeavor to facilitate one-stop shop convenience for our customers’ everyday shopping needs, along with our competitive pricing due to our local market knowledge, careful product assortment and supply chain efficiencies, has helped us achieve steady growth.

Key Performance Indicators

Over the years we have seen steady growth in the number of stores and consequently our retail business area.

Financial Year No. of Stores Retail business area
(in mn sq. ft.)
FY21 234* 8.8
FY20 214 7.8
FY19 176 5.9
FY18 155 4.9
FY17 131 4.1

*22 New Stores were added in FY 2020-21 and two of our older stores were converted in fulfillment center for Avenue E-Commerce Limited

Our operations are ably supported by a network of distribution centres and packing centres. As of March 31, 2021 we had 39 distribution centres and 7 packing centres.

Our total number of bill cuts have declined during the year. Our total number of bill cuts, was 15.2 crores in FY 2020-21 as compared to 20.1 crores during FY 2019-20.

Our annualised revenue from sales per retail business area sq. ft. (#) was Rs.27,306 in FY 2020-21 and Rs. 32,879 in FY 2019-20.

# Annualised revenue from sales calculated based on 365 days in a year (on standalone basis) divided by retail business area at the end of the financial year.

Financial Performance

(Rs. in cr)

Standalone Consolidated
Particulars FY21 FY20 Increase / (Decrease)% FY21 FY20 Increase / (Decrease)%
Net Sales/Income from Operations 23,787.20 24,675.01 -3.6% 24,143.06 24,870.20 -2.92%
Other Income 208.90 63.33 229.86% 196.21 59.99 227.07%
Finance Cost 34.48 62.76 -45.06% 41.65 69.12 -39.74%
Profit Before tax 1544.79 1,782.89 -13.35% 1,483.45 1,744.77 -14.98%
Profit After Tax 1165.31 1,349.89 -13.67% 1,099.43 1,300.98 -15.49%
EPS - Basic (in Rs.) 17.99 21.49 -16.29% 16.97 20.71 -18.06%
EPS - Diluted (in Rs.) 17.86 21.33 -16.27% 16.85 20.55 -18.00%

Key Financial Ratios

Particulars FY21 FY20
Operating Profit Margin (%) 6.58% 7.46%
Net Profit Margin (%) 4.86% 5.46%
Interest Coverage Ratio* 45.80 23.15
Debtors Turnover 261.72 243.47
Inventory Turnover (Based on sales) 11.67 14.16
Current Ratio 3.70 3.18
Debt Equity Ratio 0.02 0.03
Return on Net Worth* 9.94% 16.14%


1. Change in Interest Coverage ratio is due to a decrease in finance cost. 2. Change in Return on Net Worth is due to lower earnings.

Human Capital

Our employees are critical to our business. We internally assess our employees to periodically identify competency gaps and use development inputs (such as skill upgradation training) to address these gaps. We have implemented staff training policies and assessment procedures and intend to continue placing emphasis on attracting and retaining motivated employees.

We plan to continue investing in training programmes and other resources that enhance our employees’ skills and productivity. We will continue to help our employees develop understanding of our customer-oriented corporate culture and service quality standards to enable them to continue to meet our customers’ changing needs and preferences.

At the end of FY 2020-21, we had a total of 10,175 permanent employees and 36,869 employees hired on contractual basis.

Information Technology (IT)

Our deep understanding of local needs and our ability to adapt quickly to changing consumer preferences has helped our performance driven growth. Our robust IT systems have significantly aided this growth by simplifying complex processes throughout our operations.

Our IT systems are equipped with an array of data management tools specific to our business needs and support key aspects of our business. IT has enabled our cash management systems, in-store systems, logistics systems, human resources, project management, maintenance, and other administrative functions. This implementation has contributed positively towards minimising product shortage, pilferage, out of stock situations etc., and has increased overall operational efficiency.

Internal Control Systems and their Adequacy

We have put in place internal control systems and a structured internal audit process vested with the task of safeguarding the assets of the organisation and ensuring reliability and accuracy of the accounting and other operational data. The internal audit department reports to the Audit Committee of the Board of Directors.

Similarly, we maintain a system of monthly review of the business as a key operational control, wherein the performance of units is reviewed and corrective action is initiated. We also have in place a capital expenditure control system for authorising spend on new assets and projects. Accountability is established for implementing the projects on time and within the approved budget.

The Audit Committee and the Senior Management Team are regularly apprised of the internal audit findings and regular updates are provided of the action taken on the internal audit reports. The Audit Committee reviews the quarterly, half yearly and the annual financial statements of the Company. A detailed note on the functioning of the Audit Committee and of the other committees of the Board forms part of the section on corporate governance in the Annual Report.

During the year, we carried out a detailed review of internal financial controls. The findings were satisfactory and suggestions for improvement have been taken up for implementation. Policy guidelines and Standard Operating Procedures (SOPs) continue to be updated where required, to keep pace with business requirements.

Risks and Concerns

The Board of Directors review the Company’s business risks and formulate strategies to mitigate those risks. The Senior Management team, led by the Managing Director, is responsible for proactively managing risks with appropriate mitigation measures and ensuring their implementation thereof.

Below are some of the key risks and concerns in our business:

The outbreak of COVID-19 could materially and adversely affect our business, financial condition, and results of operations

If we are unable to continue to offer daily low prices pursuant to our EDLC/EDLP pricing strategy, we risk losing our distinct advantage and a substantial portion of our customers, which will adversely affect our business, financial condition, and results of operations

Availability of commercially viable real estate properties at suitable locations for our new stores, timely execution of sale deeds/leave and license registrations and getting regulatory approvals for these properties

Our ability to attract, hire, train and retain skilled employees

Our inability to maintain an optimal level of inventory in our stores may impact our operations adversely

Our continued understanding and prediction of consumers’ changing needs and preferences and timely customising of our offerings

Effective management of our store expansion and operations in newer locations/cities/states

Impact of COVID-19

During the last quarter of FY 2019-20, COVID-19 spread globally and in India, and impacted business operations of the Company. Some normalcy was restored as infections reduced and therefore lockdown restrictions were lifted in the country during the second half of the year.

However, towards the end of FY 2020-21, a much stronger second wave of the pandemic with significantly higher infections has been witnessed across the country. The enforcements from authorities at local levels this time are much stricter. Enforcements vary from complete or partial lockdown in several cities and towns, to restricted hours of operations, to store closures on certain days of the week. Several of our stores have also been restricted to sell non-essential products on certain days of the week or for continuous periods. As the country continues to grapple with this situation, we frequently expect such restrictions throughout the country during the year.

The complete extent to which COVID-19 further impacts our business will depend on future developments, which are highly uncertain and cannot be predicted. At the same time, our business continues to rapidly adopt new guidelines announced by the Central Government, State Governments and the local authorities that enables shopping with adequate social distancing and other safety measures.

During FY 2020-21, our business operations faced several challenges including:

a) Temporary store closure for operations due to local restrictions

b) Significantly reduced footfall at operational stores

c) Sale of only essential items and temporary stoppage of sale of non-essential items (garments and general merchandise) for extended periods

d) Reduced employee attendance due to local transport restrictions

e) Temporary stoppage of all our construction activities for extended periods

f) Disruption in our Supply Chain due to restricted manpower, transportation and material unavailability for extended periods


Statements in this Annual Report, particularly those which relate to the Management Discussion and Analysis, describing the Company’s objectives, projections, estimates and expectations, may constitute ‘forward-looking statements’ within the meaning of applicable laws and regulations. Actual results may materially differ from those expressed or implied.