General Economic Backdrop and Industry Outlook
India is one of the fastest growing major economies of the world and is set to be the worlds third largest economy by 2027 with a GDP surpassing $5 trillion. This accelerated growth is on the back of Indias robust democracy, favorable demographics and growing private consumption.
India has the largest youth population in the world, with around 60% of the population below age 35. Women are increasingly getting integrated into the formal workforce giving them greater control over personal and household financial and consumption decision making. India is expected to witness significant upward mobility in income classes, translating to increased levels of consumption. By 2035 over 43% of the countrys population is expected to live in urban areas. This consistent trend towards urbanisation indicates a shifting of preferences away from rural life to the accessibility and convenience of cities. Increasing affordability, coinciding with higher urbanisation levels is expected to fundamentally alter the consumption basket over the coming decade. This shift is expected to positively impact the consumption of lifestyle and fashion products. Monthly per-capita consumption of India as of 2023 is H3,773 for rural and H6,459 for urban population1.
Indias digital payment infrastructure, exemplified by the Unified Payments Interface (UPI), is increasingly catching the eye of global markets, bolstered by efforts to facilitate smooth cross-border transactions. Moreover, with projections indicating that India will have approximately 1 billion internet users, 900 million smartphone users, and 350 million online shoppers by FY27, the landscape for e-commerce is poised for significant expansion. This surge in digital engagement underscores the growing significance of Indias technological ecosystem, with UPI emerging as a cornerstone of its digital infrastructure. Furthermore, the nations rapid digital adoption rate further emphasises its potential to emerge as a powerhouse in the global digital economy.
1
Household consumption survey 2022-232
Indian Retail Industry Analysis, IBEF3
Analyst reportsRetail sector
The Indian retail industry is continuing its turnaround momentum with every segment of retail recording strong growth rates. It is projected to expand to $4.5 trillion by the end of the decade, driven by sociodemographic and economic factors such as urbanisation, income growth, rise in nuclear families and a shift from the unorganised to the organised segment.
The sector is also emerging as one of the largest sectors in the economy contributing to over 10% of GDP and 8%2 to employment. Indias high growth potential compared to global peers has made it a highly favorable investment destination.
Fashion and lifestyle market
Indias apparel market is estimated at H6.5 Lakh Crore3 in 2024, nearly 40% of this is represented by organised players. In recent years, private brands have increasingly emerged as the rising stars of retail and e-commerce. Retailer owned brands, typically offer shoppers value for money with potential to develop into self-sustaining propositions. There is also a growing emphasis on enriching the customer experience. Window displays, in-store ambience, coordinated product displays, lighting, music and communication help build brand presence and awareness.
Food and grocery retail
Indias grocery retail market remains vastly unorganised and complex comprising an estimated 12 million retail outlets, and over a million wholesalers and distributors of large FMCG companies delivering goods of daily use to the end consumers. Food and grocery market in India represents nearly 65% of the total retail market estimated at H76 Lakh Crore1.
The revenues of modern trade retailers, including that of select online-led players are growing. Nevertheless, given the overall growth rate of the underlying market, the share of traditional trade is expected to remain very substantial for the foreseeable future. Another trend that we see in this space is the growing consolidation of the national modern trade players. In fact, there are very few players with significant multi-state presence and material growth ambitions.
Playbook spotlights
The Trent business model has increasingly evolved to deliver desirable customer propositions. The emphasis on own brands and credible quality, nimble responsiveness to emerging consumer preferences, coupled with relative price stability contributes to our distinctive market positioning in the lifestyle space.
We are culturally wired to encourage creativity aimed at delivering compelling offerings. Strong product disciplines across the value chain are a defining feature of our playbook. This includes ownership of product design & curation, focus on speed of concept to market and consistency of offer across channels.
Consistently introducing on-trend offerings with a compelling value proposition, coupled with control of our consumer touch points differentiates our brands. Customers subconsciously attach more value to full-priced offerings and correlate full price to a strong brand. Consequently, we stay away from discounting and also avoid active marketing spends. We instead focus on being accessible and building a critical mass of presence to drive awareness. This model facilitates a strong organic connect with our customers while at the same time affording better economics.
We seek to actively own and curate the consumer image of our brands. In many ways Trent is quintessentially direct-to-consumer as we adopt direct distribution and eschew third party channels & intermediation of any kind. We adopt a deeply integrated approach to our stores and digital channels. Consequently, we command best-in-class, full priced revenues, consistency of proposition across channels, as well as industry leading online return rates.
This playbook affords us differentiated disciplines, allowing complete ownership over multiple parts of our value chain from sourcing and production facilities to retailing. On the other hand, this approach has also meant a more calibrated playout of scale.
As we have gained critical mass with our fashion brands, we now see a growing flywheel of market traction allowing us to accelerategrowth.
Trent has evolved into a platform that allows us to originate, incubate and scale a portfolio of growth engines. This, by adopting a deeply differentiated approach to customer facing aspects of brands and at the same time a deeply integrated approach with respect to systems, processes and infrastructure as we seek to address increasingly diverse market opportunities.
Over time, we seek to build out a compelling and future-fit portfolio of lifestyle brands with each commanding a distinctive consumer image and addressing a substantial market opportunity. As part of this agenda, we are strengthening our core to drive efficiencies, enhancing our product proposition in select categories and driving premiumisation by way of desirable products, convenience and experience.
In our food business, we are seeking to offer a curated selection of merchandise with a growing proportion of own-branded offerings. We seek to further differentiate by delivering market leading value, together with credible product quality and a better shopping experience in terms of proximity and store layout.
Increasingly, our Star food business with tight footprint stores, sharp pricing and focus on fresh is a model that is witnessing resilient customer traction. The performance of Star stores operating under this model is encouraging and we continue to evolve our property portfolio to align with this proposition.
Business Highlights
Fashion and Lifestyle
Trent is a house of brands aimed at offering lifestyle propositions relevant for every day with an emphasis on freshness, credible quality, relevance and value. The intent is to deliver growing desirability by being completely in tune with the times. We ended the year with 811 stores across 178 cities. Each brand seeks to address a unique customer need, catering to individual styles and aspirations across lifestyle categories including fashion, beauty, lingerie and footwear.
The Westside business model focuses on elevation of our overall customer proposition with on-trend fashion, aspirational brand experience and convenient access across store and digital channels. Zudio, on the other hand, focuses entirely on exclusive branded offerings, curated in-house and in-line with the latest fashion trends at irresistible prices. Utsa is our answer to the discerning and aspiring woman who seeks curated ethnic wear and accessories at accessible locations. Samoh, the newest entrant in the Trent portfolio of fashion and lifestyle, aims to provide a compelling touch of luxury and sophistication to its customers as they shop for their special moments.
Westside, one of Trents leading lifestyle concepts contributes significantly to its revenues. It is a destination brand that caters to a discerning and diverse audience of fashion across men, women, kids, innerwear, beauty & personal care, footwear and home. The business has progressively evolved into a unique model with aspirational & exclusive retail brands coupled with offerings that are customer pull-led. As of March 2024, Westside had 232 stores across 91 cities with additional online reach across India exclusively through Westside.com, Tata CliQ and Tata Neu.
Westsides business model allows active ownership across the value chain with respect to key aspects of design, branding, sourcing, logistics, pricing, display, promotion and selling. This enables quick conversion from concept to products in stores, delivering latest fashion trends through a portfolio of exclusive retail brands. This approach from various perspectives, including from a ‘return on capital employed context, has been more balanced and sustainable than business models which retail third-party brands. Over 80% of merchandise is near-shored from within India, thus ensuring increased agility and transparency of the supply chain.
During FY24, Westside focused on key initiatives including:
- Emphasis on freshness & on-trend fashion coupled with efficiency of supply chain
- Deepening customer connect and community building through exclusive ‘Wesness programme initiatives across select stores
- Scaling and leveraging the annual subscription-based customer engagement programme - WestStyleClub
- Accelerating reach coupled with focus on high-quality store footprint with prominent street presence
- Seamless proposition across store & digital channels; doubling down on the online channel
- Leveraging social media to grow reach and actively appeal to a younger audience
Business Highlights
Exciting fashion brands
Westside offers a portfolio of exclusive fashion brands. Our teams, from design to customer service, continually work to understand customers unique fashion tastes and seek to provide products in a fast and agile manner. Our retail brands are spread across customer lifestyles and price tiers to ensure that distinct customer segments are addressed with relevant propositions. Exciting campaigns through brand videos and social media engagement further support our brands in communicating their unique identities.
The association of fashion with beauty is relatively seamless with our audience. As our beauty and personal care offering under the umbrella of StudioWest continues to grow, we are enthusiastic about building this business further as a destination category by providing our customers with differentiated, high-quality and yet attractively priced products.
Highly prominent & contemporary lifestyle store experience:
We increasingly seek to grow a portfolio of prominent stores that have significant street presence in marquee locations with a minimum footprint of c.20,000 sq ft. Striking visual merchandising across channels, vibrant shopping ambience and convenience are all important aspects in shaping customer perception of the brand. The total investment in a new Westside store leased and operated by the Company is in the region of H8-9 Crore across capex, deposits and inventory.
Property selection is a critical building block that has a significant impact on store level economics. This process entails a rigorous set of reviews utilising multiple key criteria to identify promising locations. Our in-house property team is supported by a well-defined set of processes for analysing potential markets & catchments to identify and capitalise on expansion opportunities.
As we pursue a sustainable store expansion agenda, we also conduct active store optimisation programme which involves identifying brand diluting stores and consolidating or upgrading them with newer stores in more attractive micro-markets. Store portfolio review for brand congruence and consequential consolidation and enhancement initiatives remains an integral component of our strategy. We believe that our stores in addition to being a venue to sell our products also give us a direct connection to our customers. In FY24 we added 30 new stores and consolidated 12 stores. While store expansion is a key growth lever for us, maintaining the quality and physical aesthetics of stores and ensuring consistent customer experience is equally important to us at Westside.
Our customers
Our customers are at the heart of everything that we do. We recognise that customer engagement is a combination of personalised communication as well as engaging social media content. We aim to build an exclusive community of loyal members. Customer centricity is moving with our audience, anticipating their shifts and engaging with relevance.
Through our social media engagements and events we collaborate with leading fashion bloggers, vloggers, influencers and organise popular fashion & youth events to reinforce our brand messages to a wider audience. Our customers are our biggest influencers and advocates.
At Westside, we have carried out curated events across our target audiences and strengthened our community engagement. Some of them being, member exclusive and in-store Wesness events to treat our top loyal members, music events in collaboration with NCPA for our modern customers and music tours and college fests with Gen Z artists for our contemporary customers. Our annual subscription programme, WestStyleClub welcomed over 2.84 million subscribers to the club in FY24. We continue to see strong engagement levels with our community of customers contributing to a growing trend of subscriptions, renewals and spends per visit. Westside follows a comprehensive approach towards customer listening. Customer insights gathered across touchpoints help provide strategic and operational feeds for product, brand, customer service and communication.
WestStyleClub members (Lakhs)
Integrated value chain
An integrated value chain with a strong inventory management discipline brought about by our warehouse ecosystems, technology stack and strong relationships with our supply partners enables us to deliver the latest fashion every week. Our product quality and sustainability teams partner with independent inspection and verification firms to evaluate suppliers compliance with applicable laws and our code of ethics. We are committed to investments in scaling and upgrading our supply chain network with a view to enabling sustainable long-term business growth.
Integrated stores and online presence
At Westside we continue to emphasise the seamless access of our stores and follow our customers across channels. The intent is to facilitate access and experience of our brands basis individual preferences and convenience.
We reach a growing online audience through Westside.com, Tata CliQ and Tata Neu. Our customers continue to increasingly leverage the convenience of digital access with the online channel and contribute to around 5% of Westside revenues in FY24. We adopt an omnichannel model seamlessly sourced from our integrated pool of inventory across select stores and distribution centres. We look forward to growing this channel significantly in the years ahead in order to allow Westside access to a very large and diverse audience.
Zudio has evolved into a rapidly growing concept that appeals to all with a deep commitment to being accessible across facets – fashion, reach and lifestyle. Everything about Zudio is anchored around accessibility and compelling offering. Zudio offers function and fashion at irresistible prices for women, men and children. The exclusive offerings are curated in-house and made available at very sharp price points. As of March 2024, Zudio had 545 stores across 164 cities, including stores co-located with Star.
Striking fashion – sharp prices
Zudio offerings are constantly refreshed with an aim to provide new and refreshed merchandise to customers on every visit. Apart from ensuring differentiated fashion and experience for customers, active control of the value chain is integral to evolving a sustainable business model for this concept. Pitched at a younger audience, we recognise it is critical to be fashion forward and closely synchronised with evolving trends. The emphasis is on minimising lead times and landing fresh collections in stores as quickly as possible. Merchandise is almost entirely sourced from within India as a matter of choice, affording access, speed
& flexibility.
Growing footprint
During the year, Zudio added 203 new stores to its portfolio and consolidated 10 stores. With a store footprint of c.10,000 sq ft, the concept affords expansion across numerous micro-markets. The capital employed for a new Zudio store is in the region of H3-4 Crore including capex, deposits and inventory.
Key Performance Metrics (Fashion & Lifestyle)1
1 Includes all fashion and lifestyle concepts (Westside, Zudio, Utsa, Samoh and Misbu)
2 Our portfolio like-for-like growth was in excess of 10% in FY24
3 Increase in shrinkage is primarily attributed to significant volume growth Previous years have been restated
Going forward
Accessible |
Fashion forward |
Experiential stores |
Proximate presence |
Integrated supply chain |
Resilient and scalable model |
Food
In our food business, we are aiming to set ourselves apart by furnishing unparalleled value, coupled with credible product quality, and optimising the shopping experience through proximity and store layout enhancements.
Star
Star stores are primarily operated by Trent Hypermarket Private Limited (THPL) - a 50:50 JV between Trent Ltd. & Tesco Plc UK. The portfolio comprises hypermarket and supermarket stores focusing on categories like food and groceries, home care, apparel, home d?cor, health and beauty products. The current portfolio consists of 66 Star stores across THPL and Fiora Hypermarket Ltd. (FHL), a subsidiary of the Company, concentrated in 10 cities. The Star business is increasingly anchored on a store proposition offering a curated range of fresh produce, groceries, exclusive brands, FMCG products and home care in a footprint of 18,000 – 24,000 sq ft. In most stores we operate a Zudio proposition (pursuant to an inter se arrangement between the Company and the Star business) alongside that allows the location to be more of a shopping destination. The stores are designed to make offerings easier to locate and drive price perception while optimising space.
THPL delivered total income of H2,167.10 Crore in FY24 vis ? vis H1,798.26 Crore in FY23, a growth of 21% on the back of multiple initiatives pursued. The Star business registered strong consumer traction metrics driven by growing footfalls. The number of invoices on a like-for-like basis grew over 27%. Also, revenues registered a growth of 27% in LFL performance. During the year, the Company strengthened its focus on its fresh business by improving sourcing, store & supply chain infrastructure to provide customers with the best quality of fruits & vegetables at the lowest price.
THPL loss before exceptional items and tax in FY24 is H96.55 Crore as compared to H96.32 Crore in FY23.
Price proposition
In this space, we continue to believe that in addition to delivering an exciting offering it is critical to establish a reputation for a very compelling price proposition for value conscious customers. This is significant as we seek to attract and retain a critical mass of customers in each of our micro-markets and enhance the shopping basket size. This focus on price proposition has led us to have a consistent process of ensuring that our prices are comparable vis-?-vis other food retailers. At the same time, in order to recoup margins and deliver sustainability, we are emphasising process efficiency across the board.
Offerings
The focus is on providing a reasonably priced range of hygienic products of high quality comprising of farm produce, a compelling non-vegetarian range and bakery. Maintaining high levels of availability is another key lever that ensures customer delight. Over time, the Star offer has evolved into a distinct proposition famous for ‘Fresh Foods. We have a network of over 1000 farmers and source more than 80% of our vegetables and more than 70% of our fruits directly from farmers. We are also among the few retailers in the country to serve our customers a wide range of fresh meats and sea food. We believe that exclusive brands are key to a sustainable business model. In a competitive food & grocery market, we seek to set ourselves apart with superior quality and competitively priced exclusive brands. In this context, we have continued to expand our exclusive range in defined categories at affordable prices and great quality (acknowledged by customers in our Net Promotor Scores), benchmarked with leading brands. Our exclusive retail brands in FMCG vertical comprised 14.8% share amongst FMCG categories at the end of FY24. Our exclusive FMCG retail brands span about 660 SKUs and have continued to witness encouraging offtake in FY24. As with fresh foods, majority of the staples are directly sourced from millers. During the year, we launched ‘SMARTLE, our own brand in the general merchandise category. In several subcategories, our brands rank one or two in terms of sales and hence compete effectively with leading brands in our stores.
Our exclusive retail brand offerings include:
- Klia: Cleaning-aids and home care products
- Fabsta: Packaged food and beverages
- Skye: Personal care products
- Smartle: General merchandise (cookware, dining, storage, home utility, bath ware, home furnishing, toys, stationery, small appliances and backpacks)
- Star: Branded staples and fresh products
Clustered expansion and online presence
Star has adopted a calibrated approach to expansion in the recent years. We have continued to pursue a clustered approach with stores primarily in the states of Maharashtra, Karnataka and Telangana with an aim of creating local scale and being closer to customers.
This allows us to achieve (a) better understanding of local needs and preferences, (b) cost efficiency due to economies of scale, and (c) increased brand visibility.
Increasingly, our Star food business with tight footprint stores, sharp pricing and focus on fresh & own brands is a model that is witnessing resilient customer traction. The performance of Star stores operating under this model is encouraging and we continue to evolve our property portfolio to align with this proposition.
Starquik – the online grocery portal is continuing to witness encouraging customer traction in the micro-markets addressed. The business is integrated for sourcing from the store network, bringing omni-channel convenience for the customer. This has allowed the business to leverage the capabilities and infrastructure across channels. The intent is to scale up the omni-channel operations over time for enhanced customer convenience and reach.
Going forward
Curated range and best value |
Food & grocery anchored on "fresh" |
Unbeatable prices |
Credible quality |
Own branded offer in key categories |
Clustered presence in select cities |
Omni-channel model |
Key Subsidiaries & Alliances
We focus on bringing high quality fashion to Indian consumers, aligning with our broader vision of offering premium experiences and products in the retail sector with our key subsidiaries and alliances.
Zara and Massimo Dutti
The Company has two separate associations with the Inditex group of Spain with a shareholding of 51% (Inditex): 49% (Trent) one entity to operate Zara stores and the other for Massimo Dutti stores in India. The entities essentially facilitate distribution of Zara & Massimo Dutti products in India through their respective stores. The entity for Zara currently operates 23 stores across 12 cities. During the year under review, the Zara entity recorded revenues of H2,769 Crore. The incremental store openings for Zara continues to be calibrated with focus on presence only in very high-quality retail spaces. The entity for Massimo Dutti operates 3 stores and recorded revenues of H101 Crore in FY24. As discussed in shareholder meetings and earlier reports, the said entities are obliged to source merchandise only from the Inditex Group. Also, the choice of product & related specifications are at latters discretion.
Further, the entities are dependent on the Inditex group for permissions to use the said brands in India subject to its terms & specifications.
Including in the context of brand ownership and the arrangements for merchandise supply (with the majority partner entirely controlling these core customer propositions and the terms thereto), the Company views its related commitments as a financial investment. Consequently, it may be appropriate not to consider these commitments as long-term strategic investments integral to our retail operations. The operating activities of these entities is essentially limited only to the distribution of Zara and Massimo Dutti products in India and consequently it has implications for the economic value attributable to the said businesses. Overall, given the nature of the arrangements including with respect to sourcing of merchandise, use of the brands, operational control with the majority partner as well as shareholding, it may be appropriate to take cognisance of the related uncertainties & risks involved in the valuation of theassociated economics.
Booker India Limited (BIL)
BIL was acquired by the Company in FY20. BIL operates 4 cash and carry stores under the Booker Wholesale banner. Booker Wholesale operates on a footprint ranging between 15,000-20,000 sq ft and focuses on categories and assortments relevant to small businesses. BILs trading assortment includes products in categories across staples, processed foods, confectionery, personal care, home care, soft drinks, dairy etc. The concept serves kirana stores, traders, wholesalers, small businesses, hotels, restaurants and caterers. Booker stores operate in catchments with large trader and kirana store presence. BIL has been consolidating and realigning the store portfolio, refraining from deeply discounted/negative gross margin trade (on the back of certain wholesale online platforms) and pivoting towards an own branded range in multiple categories. In FY24, BIL registered consolidated revenues of H478.01 Crore and loss before exceptional items and tax of H47.64 Crore (51% of this is attributable to the Company, given the shareholding).
Fiora Business Support Services Limited (FBSSL)
FBSSL is a wholly owned subsidiary of the Company. It reported a total revenue of H166.91 Crore and total comprehensive income of H6.15 Crore for FY24. It is engaged in providing business support and outsourcing services relating to accounting, merchandising, human resources, payroll, sourcing, warehousing, distribution etc. to Trent & associated businesses.
Trent MAS Fashion Private Limited (TMF)
Trent MAS Fashion Private Limited (TMF) has been incorporated as a 50:50 Joint Venture between the Company and MAS Amity Pte. Ltd. for undertaking the business of design, development and manufacture of apparel and apparel related products including but not limited to intimate wear as listed in the Joint Venture
Agreement dated 20th January 2023 wherein the parties will use their respective skills, expertise and resources. This venture is in early stages of development and given the domain expertise of both the JV partners, we expect this business to progressively contribute value to our customers.
Other key subsidiaries
Fiora Hypermarket Limited (FHL), a wholly owned subsidiary of BIL, primarily operates a few of the Star stores in the context of the applicable regulations with respect to FDI in Multi Brand Retail Trading. FHL envisages a phased expansion of Star stores in select regions. In FY24, FHL reported a total income of H192.33 Crore and loss before exceptional items and tax of H3.60 Crore. Fiora Online Limited (FOL), a wholly owned subsidiary of BIL, operates the Starquik online platform. In FY24, it reported a total income of H133.97 Crore and loss before exceptional items and tax of H11.05 Crore.
Financial Performance
Following are the financial highlights of the Company for the year ended 31st March 2024, on a standalone basis:
Income
The Company has reported total income of H12,277.49 Crore (H8126.89 Crore in FY23) a growth of 51% on the back of store expansions.
Cost of goods sold
Cost of goods sold during the year was H6,540.68 Crore (H4,215.60 Crore in FY23). Cost of goods sold as a percentage to net sales is 55.58% in FY24 (55.49% in FY23). The gross margin profile remained constant and steady for all our concepts.
Employee benefit expense
The employee benefit expense during the year was H937.93 Crore (H580.08 Crore in FY23). The increase is primarily attributable to headcount additions in line with the business growth.
Finance Cost
Finance Cost for the year was H309.37 Crore (H357.23 Crore in FY23), including interest related to lease liabilities.
Depreciation and amortisation expense
Depreciation and amortisation expense during the year was H638.52 Crore (H463.21 Crore in FY23), including depreciation related to right of use assets.
Other expenses
Other expenses during the year was H2,521.02 Crore (H1800.26 Crore in FY23), as percentage to net sales is 21.42% for FY24 (23.69% in FY23). Reduction in percentage spend is attributable to operating leverage.
Profit before tax & exceptional item
Profit before tax & exceptional item for the year was H1,329.97 Crore (H710.51 Crore in FY23), growth of 87% year on year.
Financial highlights of the Company for the year ended 31st March 2024, on a Consolidated basis:
The Company has reported total income of H12,664.38 Crore a growth of 49% over H8,502.94 Crore in FY23. Total Expense of H11,443.19 Crore (H8,031.28 Crore in FY23), Profit before tax & exceptional item of H1,221.19 Crore compared with H471.66 Crore in FY23.
Other relevant operating metrics have been discussed as part of the commentary for each of the concepts.
Summary Financial Performance
(H Crore)
| Standalone | Consolidated | |||
| 2023-24 | 2022-23 | 2023-24 | 2022-23 | |
| Total Income | 12,277.49 | 8,126.89 | 12,664.38 | 8,502.94 |
| Total Expense | 10,947.52 | 7,416.38 | 11,443.19 | 8,031.28 |
| Profit before tax & exc. Item | 1,329.97 | 710.51 | 1,221.19 | 471.66 |
| Exceptional Item | 543.35 | - | 576.07 | (3.00) |
| Share of Associates & Joint-Venture | - | - | 123.57 | 83.41 |
| Profit before tax | 1,873.32 | 710.51 | 1,920.83 | 552.07 |
| Tax | 437.50 | 155.94 | 443.37 | 158.44 |
| Profit after tax | 1,435.82 | 554.57 | 1,477.46 | 393.63 |
Exceptional Item:
The Companys business model requires it to enter into a substantial number of lease contracts, primarily for its store operations. Given the evolving business strategy with respect to the Companys store portfolio that involves periodic store consolidation/closures, and the nature of the underlying contractual and economic obligations, the Company has reassessed the estimates of measurement and recognition of the right of use assets (including related security deposits) and corresponding lease liabilities under
IND AS 116. In the above context, the Company has also reassessed the estimates with respect to the useful life of the leasehold improvements of such contracts. a) In the standalone financial results, this has resulted in an exceptional gain for the quarter amounting to H543.35 Crore (including H16.04 Crore for related security deposit), tax impact thereon is H136.75 Crore (Net of tax H406.60 Crore). EPS of H40.39 for the year will be H28.95 without exceptional gain. Further, right of use assets and lease liabilities have consequentially been reduced by H2,719.73 Crore and H3,247.04 Crore respectively. b) In the consolidated financial results, this has resulted in an exceptional gain for the quarter amounting to H576.07 Crore (including H16.60 Crore for related security deposit), tax impact thereon is H137.28 Crore (Net of tax H438.79 Crore). EPS without exceptional gain (net of tax) would be H29.48. Further, right of use assets and lease liabilities have consequentially been reduced by H2,816.08 Crore and H3,375.55 Crore respectively.
*FY21 onwards include Zudio stores co-located with Star
*Includes stores operated by Trent Hypermarket Pvt. Ltd.
Operating RoCE# improved to 33% in FY24 from 22% in the previous year on the back of improved profitability and capital utilisation efficiencies
Internal Controls and Adequacy
The Company has a defined system of internal controls for financial reporting of transactions and compliance with relevant laws and regulations commensurate with its size and nature of its business. The Company also has a well-defined process for ongoing management reporting and periodic review of businesses using the Balanced Score Card process to ensure alignment with strategic objectives.
There is an active internal audit function carried out partly by the internal resources and the balance activity outsourced to external specialist firms. As part of the efforts to evaluate effectiveness of internal control systems, the internal audit department reviews control measures on a periodic basis and recommends improvements, wherever appropriate. The internal audit department is staffed by qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as adequacy and effectiveness of the internal control measures. Based on their recommendations, the Company has implemented several control measures both in operational and accounting related areas, apart from security related measures.
The Company has put in place a well-defined risk and controls matrix for periodic review of effectiveness of internal financial controls across processes through an active inhouse controls team supplemented with an independent review by an external audit firm. The Company reviews control measures and implements continuous improvements, wherever appropriate. The outcome of review findings are tracked and reviewed periodically by the Audit Committee. The key areas of control review include segregation of duty, authorisations and approvals, monitoring and review, confirmations and reconciliations etc.
#
Operating RoCE excluding IndAS 116 impactsFinancial Performance
Employees
Continuing our fantastic run of last year, FY24 has been a year of excellent growth and expansion for Trent.
We were able to fulfil the commitment we made to ourselves in terms of talent acquisition, development and retention. Our talent numbers stand at 25,000 plus and what is remarkable is that we continue to excel at employee experience in spite of the growth spike in our employee base. Our GPTW R EES Pulse Survey in FY24 results are a testimony to that where, 90% of our employees responded that Trent is a great place to work. With increased focus on learning and talent development initiatives, we have set benchmarks that have been recognised within and outside.
As of 31st March 2024, we had a staff strength of 25,277 (including Westside, Zudio, Misbu, Samoh and corporate staff), 2,715 at Star and 1,283 at subsidiaries including Booker India Ltd., Fiora Business Support Services Ltd., THPL Support Services Limited, Nahar Retail Trading Services Ltd., Fiora Hypermarket Ltd., and Fiora Online Ltd. with an overall total of 29,275 employees across key concepts/entities.
Key Financial Ratio
| Ratio | 2023-24 | 2022-23 | Comments |
| Net Sales/Average Debtor | 213.93 | 318.15 | Debtors are not material in the context of our business model |
| Cost of goods sold/Average Stock | 4.51 | 3.90 | Optimal and efficient management of inventory coupled with overall growth is reflected in the improvement seen in Inventory turnover |
| PBIT/Interest* | 5.37 | 3.00 | PBIT for FY24 is before exceptional item of H543.35 Crore. Improvement in ratio is reflective of the growth and scale efficiencies |
| Current assets/Current liabilities | 2.68 | 2.63 | Working capital continues to be in line with the business scale at an optimum level |
| Debt/Equity | 0.39 | 1.40 | Debt value includes Ind AS 116 lease liabilities. Reassessment of Ind As impact in FY24, has resulted in reduction of lease liability & hence improvement in ratio |
| Operating profit/Net Sales | 9.86% | 6.87% | Operating profits is reflective of the growth and scale efficiencies |
| PAT/Net Sales | 8.75% | 7.30% | Net profit for FY24 excludes exceptional gain ofH406.6 Crore (Net of tax) |
| PAT/Equity | 27.35% | 19.12% | Net profit for FY24 excludes exceptional gain ofH406.6 Crore (Net of tax) |
FY23 metrics regrouped for comparability as appropriate
*Interest includes interest on borrowing and interest on lease liabilities
Outlook
In the last few years, the Trent business platform has emerged stronger having navigated through challenges of the pandemic. On the back of sustained focus on our brands & customer experience and strong expansion of the store network, the growth momentum for the business has sustained.
We see strong growth opportunities. Our key strategic initiatives are aimed at accelerating the differentiation of our propositions. We are focused on refining our model to consistently deliver the right combination of quality, price and an elevated customer experience. We continue to emphasise own brands, responsiveness to emerging consumer preferences and reaching our customers directly. Supported by an integrated platform comprising supply chain, technology stack and support services, Trents growing operating leverage would continue to drive performance and results. Acceleration of our reach across geographies, an entirely integrated store and online proposition and digitisation of all aspects of our model are key strategic priorities.
The intent going forward is to continue scaling up our presence and in doing so, focus on the following:
Brands & Product proposition
- Anchor our exclusive brands on differentiated products, sharp pricing, lifestyle experience and wide reach
- Expand the current footprint of 10 million sq ft across the country with unique brands such as Westside, Zudio, Star, Utsa and Misbu to address multiple customer segments and value positioning
- Adopt a sharply differentiated approach in customer facing aspects of our brands and yet significantly integrated with respect to the backend
Supply chain
- Scale up our supply chain to support growing business focused on delivering freshness consistently
- Continued emphasis on strong inventory related disciplines, sustained delivery of world class retail availability levels and freshness of offer & effective controls across concepts
Customer experience
- Actively monitor existing stores and refresh the portfolio through multiple initiatives including absorption/refurbishment of brand diluting stores
- Adopt seamless integration of our store and online propositions
Direct-to-customer
- Expand concepts across attractive micro-markets with enhanced digital reach
- Deliver highly differentiated and brand enhancing store portfolio with benchmark standards
- Accelerate pursuit of a sustainable online business model and digital connect including by leveraging our association with Tata Neu
Viable model
- Concentrate resources on substantially growing our concepts - especially Westside, Zudio, Samoh, Utsa and Star
- Emphasis on sustainable store level profitability and investment in select market opportunities
Risk Management
Assessment of Key Market Risks
The framework identifies internal and external risks faced by the Company including strategic, compliance, financial, operational, competition, ESG, information and cyber security risks.
| Key Risk | Description | Mitigation Plan |
| Business environment risk: adapting to market & trends | Being on-trend is the centrepiece of our business. Any inability in adapting to market fashion trends and reacting to changes in consumer expectations is an inherent risk we face. Growing competition and attractiveness of the industry along with innovation in technology further pose challenges to the business on various fronts. Curating the retail space, offerings and display while keeping in mind the micro-markets, demographics and needs/convenience of the consumers adds to the complexities involved and significantly impacts delivered margins. | - We continuously monitor the market and interact with the customers to understand their needs |
| - We undertake several initiatives to help us with spotting emerging fashion trends. Our continuous focus on building product design capabilities allows us to keep the product portfolio refreshed | ||
| - We strive to identify and incubate growth drivers/enablers to deliver business results | ||
| - Tailoring the space management algorithms in cognisance of regional/local variations | ||
| - Focus on margins, cost efficiencies, quality, compliance to drive sustainable business while meeting evolving consumer expectations | ||
| Customer Acquisition, Retention and Experience | Customer acquisition refers to attracting new customers. Customer retention is focused on developing better relationships with existing customers with the goal of increasing loyalty and driving repeat purchases. Customer experience represents a summation of how customers feel about our brand, the experience they have with our products, our stores and their interactions with the Company at every point of their journey. Customer retention is critical because the cost of acquiring new customers is much higher than retaining existing customers. Customer experience influences customer retention. | - Customer interactions and inputs are routinely reviewed and actioned upon |
| - Listening posts are used to capture customers feedback and inputs on an ongoing basis | ||
| - Store upgrade, rigorous training of store staff and continuous digital improvements has been a primary focus of the Company to help enhance the customer experience and engagement at various touchpoints in the store and online | ||
| Data risk: Information and cybersecurity | Increased reliance on digital systems raises the importance of cyber security Possible impacts include loss of customer data, business interruptions, potential fines/reputational damage, etc. | - Our business and IT systems are continually upgraded to mitigate the cyber security and data protection risk. Also, we are ISO 27001 certified which ensures that Information Security management system controls are in place and enforced. The Company continues to align itself with the emerging and evolving requirements under the DPDP Act and IT Act |
| - Robust business continuity plans ensure that all systems necessary to manage operations are active and functional | ||
| - A regular independent third-party assessment of data and cybersecurity enables us to strengthen and enhance our IT systems and network environment | ||
| Digital and Technology risk: E-commerce, social media and business operations | Digital advancements and associated technology plays an important role in managing the portfolio of growing businesses efficiently and effectively. Customers are increasingly looking at e-commerce as a convenient channel for shopping. Brands are required to fulfil this expectation with the promise of offering a frictionless purchase journey adopting digital interventions. Difficulty in adopting relevant digital landscape and technology can pose a risk to our growth agenda. | - We actively pursue initiatives to strengthen digital and technological capability and scalability of the business. An omni-channel focussed approach integrating our online and physical stores is a step in this direction |
| - Adoption of contemporary platforms, digital tools and technology with a focus on enhanced customer experience and process effectiveness remains a focus area | ||
| Talent risk: Capabilities and succession planning | Increased competitive intensity coupled with the sectors opportunities has created dissonance in the talent demand and supply. Most organisations are revisiting capability and capacity requirement for newer business avenues. Emergence of start-ups and PE/IPO-led funding of new ventures has created deep pockets for select entities. Almost all the industries are confronted with talent attrition. Cost of talent is also on the rise. | - We recognise that the primary way to mitigate the risk of attrition and to attract fresh talent is to foster a healthy workplace culture and provide colleagues with development opportunities. We adopt a multi-pronged approach (triad of Education, Exposure and Experience) to identify critical roles & build succession plans |
| - We provide a fair and equal working environment with Tata Code of Conduct as our cultural anchor. Respect, dignity and ethical conduct are the cornerstones of our organisation culture. We also adopt appropriate communication and feedback platforms, including external surveys like GPTW and Leadership in Business Ethics to allow continuous improvement and succession planning, along with continuous investment in learning and development initiatives for our colleagues. | ||
| Scalability risk | Limited availability of quality real estate coupled with high rentals and nonadherence to committed schedules by developers pose significant challenges to deployment of strategic plans relating to expansion. Rapid expansion also entails scalability risks in areas of sourcing and supply chain capabilities. | - Rigorous property selection process through multiple filters applied on store quality and economics enables us to expand sustainably. Continuous monitoring of key performance indicators on upcoming projects helps us retain visibility on delivery of store locations |
| - Increasing focus on agile and dependable sourcing, cost efficiencies and quality & compliance focus across the supply chain and backend readiness are integral initiatives given our growth plans | ||
| ESG risk | ESG exposures comprise of environmental, social and governance related risks and challenges. We have emphasised and adopted pragmatic practices to address ESG related objectives. Nevertheless, we recognise that this is an ongoing journey and involves a range of risks that warrant to be mitigated. | - Initiatives under the sustainability agenda have been identified for mitigating environment impact and have been integrated with our strategy |
| - We adopt the Tata Code of Conduct which facilitates a fair working environment and appropriate behaviour by employees. We also work closely with our vendors to ensure they remain compliant with the code of conduct while ensuring regulatory and social compliance and respect for human rights at their premises | ||
| - We seek responsible business conduct and concurrently address ESG objectives as enshrined under the National Guidelines for Responsible Business Conduct (NGRBC) and have also included details whereof in our BRSR report which is a part of this Annual Report | ||
| Partnership risk: JVs and associates | We have multiple alliances including with Tesco PLC, Inditex and MAS Group. These alliances may entail certain risks including with respect to continuity. The associations with Inditex are dependent on the majority partner for permissions to use the said brands in India subject to its terms & specifications. Also, the entire control over core customer propositions is with Inditex for that JV. | - We have sought to build on the respective relationships and leverage the learnings across concepts to the extent possible/relevant |
| - In the case of our associations with Inditex, we continue to view the said commitments primarily as a financial investment and are cognisant of related operating and strategic uncertainties including with respect to continuity given the nature of the arrangements | ||
| Reputation risk | Our products and brands need to comply with quality standards and product regulations to ensure there is no material product liability claims and lawsuits for infringement. Non-adherence to the local laws or international laws; unethical or irresponsible behaviour at our locations and by any vendor would result in a negative impact on the Companys reputation. We need to also be vigilant for cyber-attacks or potential data leakage and impact of social media virality. | - We carry out regular assessments of product quality and safety. Regulatory compliance by vendors/SMETA annual audit is part of vendor onboarding and continuous review |
| - Proactive approach is taken to mitigate cyber risks with focus on training, monitoring and regular communication | ||
| - Public Relations management with accurate, transparent, timely, and reliable communication to prevent reputational risk and mitigate consequences is key to manage this risk |
Opportunities and Threats:
Opportunities relating to market, customers etc have been articulated on page numbers 62 and 63 of this Annual Report. The threats and risks to our business along with steps taken to mitigate them are articulated on page number 95.
Cautionary Statement
Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the markets in which the Company operates, changes in the Government regulations, tax laws, other statutes and other incidental factors.
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