REI SIX TEN RETAIL LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR`S REPORT
Dear Members,
Your Directors have pleasure in presenting the Fifth Board Report together
with the audited statement of accounts of the Company for the financial
year ended 31st March, 2012.
Financial Results:
The financial performance of the Company for the year under review is
summarized below:
(Rs. in Lakhs)
Particulars 2011-2012 2010-2011
Revenue From Operations/Sales (Net) 61,405.12 71,649.95
Other Income 6.90 4.79
Total Income 61,412.02 71,654.74
Profit before Depreciation, Interest,
Amortisation & Tax (PBDIAT) 902.93 5,267.49
Less: Interest 12.87 7.38
Profit before Depreciation & Tax (PBDT) 890.06 5,260.11
Less: Depreciation 771.32 771.19
Profit before Tax (PBT) 118.74 4,488.92
Less:
Current Taxation 76.63 1,560.00
Deferred Tax (36.19) (26.72)
Prior Period Tax Payment 46.42 51.65
Profit after Tax (PAT) 31.88 2,904.00
Allotment of Equity Shares on conversion of Fully Convertible Debentures:
During the year under review, 13,95,002 equity shares were allotted on 26th
April, 2011 at a price of Rs.193.55 per share having face value of Rs.2/-
each on conversion of 27,00,000 Fully Convertible Debentures which have
been listed in Bombay Stock Exchange Limited and National Stock Exchange of
India Limited. We have already informed you about detail of allotment in
our earlier Board Report.
Financial Highlights:
During the year under review the company has entered the consolidation
phase and is closely monitoring the performance of its Master Franchisee /
Franchisee. The company achieved a sales/turnover of Rs.61,405.13 Lakhs.
Though there is a slight decline in the turnover from Rs.71,649.95 lakhs
the company is quite satisfied with the performance of its franchisees
thereby providing the right platform for the future of the company.
Likewise the company has encouraged the franchisees by providing some
attractive schemes that have resulted in a decline in the profits of the
company. The company has a profit after tax of Rs. 31.88 Lacs down from
Rs.2904.00 lakhs in the previous year. The company has also commenced our
value stores which has a relatively low margin.
Hence, though the profit after tax of the company has reduced during the
year, your directors believe that the company has developed a strong enough
platform that will stand the company in good stead in the future.
Dividend:
In View of the overall economic condition, there is a need for the
consolidation for the Company, hence your directors are unable to recommend
any dividend to the shareholders for the financial year 2011-2012.
Management Discussion and Analysis:
A report on management discussion and analysis is annexed hereto and forms
part of this report.
Corporate Governance:
The Company has put in place the norms of Corporate Governance in
compliance with the provisions of Clause 49 of the listing agreement. A
report on Corporate Governance as stipulated under clause 49 of the Listing
Agreement with the Stock Exchanges forms part of the Annual Report. A
certificate to that effect has been obtained from statutory auditors of the
Company and is annexed to this report.
Environmental Aspects and Social Responsibility:
The Company is committed to improve all aspects of environment. We pay full
attention to promote, improve and maintain our responsibility to the
society for better socio economic condition.
Directors:
Shri K. D. Ghosh and Dr. ING N.K. Gupta, Directors of the Company, retire
by rotation and being eligible offer themselves for reappointment. A brief
resume of the Director seeking re-appointment, their expertise etc. is
given in the notice to the ensuing Annual General Meeting.
Remuneration to Managing Director:
Company has taken approval of the Members of the Company in the last annual
General meeting of the Company to pay remuneration of Rs. 1,20,00,000 per
annum (CTC)(inclusive of all perquisite) to Shri Sandip Jhunjhunwala,
Managing Director of the Company. The Company has filled all the necessary
forms with Ministry of Corporate affairs.
However during the year under review, Company is having inadequate profits,
therefore the Company has paid Rs. 9,00,000 as remuneration to Shri Sandip
Jhunjhunwala, which is in compliance to the provisions of Schedule XIII of
the Companies Act.
Auditors:
The statutory auditors of the Company M/s PK. Lilha & Co., Chartered
Accountants, Kolkata, retire at the conclusion of ensuing Annual General
Meeting and being eligible, offer themselves for re-appointment. In terms
of Section 224A of the Companies Act, 1956, their appointment needs to be
approved by the members of the Company and their remuneration has to be
fixed.
Auditors Report:
The Notes on Accounts referred to the Auditors` Report are self explanatory
and do not call for any further comments. Director`s Responsibility
Statement:
Pursuant to the requirement under Section 217(2AA) of the Companies Act,
1956, with respect to Directors` Responsibility Statement, it is hereby
confirmed that:
* In preparation of the annual accounts for the financial year ended 31st
March, 2012, the applicable accounting standards read with requirement set
out under revised Schedule VI to the Companies Act,1956, have been followed
along with the proper explanations relating to the material departures, if
any.
* The Directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the financial results of the
Company as at 31st March, 2012.
* The Directors had taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding assets of the Company and for
preventing and detecting the fraud and other irregularities.
* The Directors have prepared the annual accounts for the financial year
ended 31st March, 2012 on a going concern basis.
Public Deposits:
The Company has neither invited nor accepted any Public Deposits during the
year under review. Particulars of Employees:
Particulars of employees as required to be furnished pursuant to Section
217(2A) of the Companies Act, 1956, read with the Companies (Particulars of
Employees) Rules, 1975 as amended, form part of this report. However, as
per the provision of Section 219(1)(b)(iv) of the Companies Act,1956, the
reports and accounts are being sent to all the shareholders of the Company
excluding the statement of particulars of employees. Statement of
particulars of employees and other documents, if any, which are not annexed
to this Report, will be open for inspection for the shareholders at
registered office of the Company during working hours for a period of 21
days before the date of annual general meeting. Also any shareholder
interested in obtaining a copy may write to the Company Secretary for the
same.
Conservation of Energy & Technology Absorption and Foreign Exchange
Earnings and Outgo:
As the Company being in retail sector, the provisions regarding giving
details of conservation of energy is not applicable.
However there is no expenditure on Research & Development, Technology
absorption, adoption & innovation during the current financial year.
Your Company being concentrating on the domestic consumption market and do
not have any exports initiatives to report to the members.
Foreign Exchange Earnings and Outgo:
Total foreign exchange earned and outgo:
Amount (Rs. In Lakhs)
Foreign exchange earned Nil
Foreign exchange outgo 4.52
Net foreign exchange Outgo 4.52
Acknowledgment:
The Board wishes to place on record their sincere appreciation to all
consumers, bankers, vendors and other stakeholders for their continued
support during the year under review. Your Directors are quite optimistic
for support to be extended by all in the years to come.
For and on behalf of the Board
Sd/-
Sandip Jhunjhunwala
Chairman
Place : Kolkata
Date : 30th May, 2012
MANAGEMENT DISCUSSION & ANALYSIS
Business Environment:
Retail Industry is one of sunrise sectors in India with huge growth
potential. However, in spite of the recent developments in retailing and
its immense contribution to the economy, retailing continues to be the
least evolved industries and the growth of organised retailing in India has
been much slower as compared to rest of the world.
It is one of the pillars of the economy of the Country and accounts for 14
to 15% of its GDP but highly fragmented. India is one of the fastest
growing retail markets in the world having a population of 1.20 billion.
Large Retailers in developed countries view it an opportunity to invest in
Indian retail industry while government has prohibited Foreign Direct
Investment (FDI) in multi brand retailing. FDI is only allowed on single
brand retailing.
Cash and Carry wholesale trading in India by Foreign retailers is one of
the ways to reach the retail consumers through local retailers. Metro AG is
first among world retailers to enter into retail sector in India through
Cash and Carry business.
India has been ranked fifth largest market as retail destination for
foreign investment and second most attractive market in the World. This has
been backed by the wide acceptance of India as the second fastest growing
economy and the fourth largest economy in PPP terms after USA, China &
Japan.
Growth & Evolution of Retail Industry:
The retail industry in India is currently growing at a great pace and is
expected to go up to US$ 833 billion by the year 2013. It is further
expected to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As
the country has got a high growth rate, the consumer spending has also gone
up and is also expected to go up further in the future. In the last four
years, the consumer spending in India climbed up to 75%. As a result, the
Indian retail industry is expected to grow further in the years to come.
In recent years, preference of consumers particularly young people`s
preference has changed drastically and they have more attraction to branded
goods. Big Corporate houses has entered into retail and making huge
investment to make their presence in Indian retail sector. It lays down
strong foundation for organised retail trade and also able to generate job
opportunities in the sector to reduce unemployment in the Country.
Entry of foreign retail players will make the retail sector more vibrant as
they have strong supply chain and will also generate huge job
opportunities.
Among other things Internet revolution is making Indian Consumer more
accessible to the growing influences of domestic and foreign retail chains.
Indian food & grocery sector:
The Indian food and grocery retail sector is in the transformation mode for
various reasons like strong macro-economic fundamentals and the changing
socio-economic scene. Very fast changing trends in food and eating habits
of consumers have contributed immensely to the growth of `Western` format
typologies such as convenience stores, departmental stores, supermarkets,
specialty stores and hypermarkets. The ever changing consumer`s
psychographic variables like activities, interests, opinions, values and
lifestyles have also completely changed the formats namely convenience
stores, supermarkets and hypermarkets etc. are the crystal clear
reflections of tectonic shifts in demographic and psychographic changes of
consumers.
Indian food and grocery Sector have ample opportunities to grow with a
great pace due to high population of the Country. Food and Grocery sector
constitutes about 14% of the organised retailing in India. Ironically,
organised retail sector is meager 2% of total retail sector in India.
Indian food retail sector is main driving force for the retail industry
growing at the rate of 30%. Food accounts for the largest share of consumer
spending. Food and food products account for about 50% of the value of
final private consumption. In the next few years, the food and grocery
retail sector is expected to multiply five times.
Key Growth Drivers:
Retailing in India has witnessed tremendous growth in the last few years
but it has not yet realized its potential.
With Changing needs and lifestyle of Indian Consumers, food consumption
patterns are rapidly evolving. Higher disposable incomes have resulted in
greater spending and consumption among consumers. Change in consumer
demand, influenced by increased awareness level about national and
international brands led to growth of retail industry. There are various
factors for growth of retail industry but some of the key growth drivers
are as under:
Increasing Urbanisation:
The urban population comprises 28% of the aggregate Indian population,
growing at 2.77% and is expected to rise to 40% by the year 2020 (Source:
Vision 2020 document), with much of the growth concentrated in or around 60
to 70 large Indian cities with over one million population each. Young
generation of rural or sub-rural areas are more attracted towards Tier-I
and Tier-II Cities and moving to these cities for employment which are
changing demographic statistics of Country. After liberalisation of
economy, income level of middle class of the country has increased which
led to ubranisation of the country and paves the way to retail growth.
Brand Consciousness:
As income level of young generation of middle class has improved, they are
conscious of branded goods and quality products. Advertising plays an
important role to influence people particularly young generation which
rises Consumerism towards branded and quality products.
With the largest young generation population in the world - over 890
million people below 45 years of age, India is indeed a resplendent market.
Its 300 million odd middle class, the "Real" consumers, catches the eye of
the world. As the economy grows so does India`s middle class.
Young Population:
With the largest young generation population in the world - over 890
million people below 45 years of age, India is indeed a resplendent market.
Its 300 million odd middle class, the "Real" consumers, catches the eye of
the world. As the economy grows so does India`s middle class.
Aspiration of elegant Lifestyle:
During the last few years in India, nuclear family as a percentage of total
household population has increased as per capita consumption increases.
Now, men and women of nuclear families have less time to spare on cooking
food at home which led to consume fast foods from organised retail outlets.
With rise in income level, consumers are willing to spend more for
themselves. Increased use of Plastic Money:
Internet revolution provided platform for use of plastic money i.e., credit
cards. Frequent use of credit cards boosted the retail industry as young
generation thinks that buy today and pay later.
REI Six Ten`s Business Strategy:
Indian Retail sector has been segregated as organised and unorganized. Most
of them are unorganized which creates enough space for larger market share
to be grasped by retailers. Retailers who wish to tap the larger share in
the market have to understand consumer preferences. Growing need of
convenience of consumers has boosted India retail sector. Our Company is
mainly engaged in grocery, fruits & Vegetables trade selling through its
franchised stores. Worldwide, grocery retail is considered the most price-
sensitive sector. Consumers, especially in developing markets, spend more
on groceries than anything else.
REI Six Ten Retail Limited is putting more emphasis on consumer
Convenience. Apart from consumer convenience, company is looking forward to
strengthen effective supply chain management and use of innovative ideas to
reduce cost and time. Fruits and vegetables are perishable in nature and
require lot of attention to reduce wastages which can be eradicated by
strengthening Supply Chain Management.
The Company has made their presence into Food & Grocery sector under its
brand "6TEN" offering great value for money on daily need products. We are
working towards revamping our business to obtain strategic advantages at
various levels - market, cost, knowledge and customer.
REI Six Ten Retail Limited is striving to set with differentiating
strategies - value for money, shopping experience, variety, quality,
discounts and advanced systems and technology in the back-end, change in
the equilibrium with manufacturers and a thorough understanding of the
consumer behaviour.
The corner stones of Company`s operations are availability, accessibility,
affordability, quality, reliability and novelty.
We have greater emphasis on new model designed in the financial year 2010-
11 as value store to tap larger share of retail market. Value Store
signifies a tie up between the Company and Small Shopkeepers in the
neighbourhood locality to buy food and grocery items from Master Franchisee
of the Company on cash basis and sells the same under the brand "6TEN".
6TEN is a chain of small neighbourhood convenience stores on franchises and
value stores catering to the daily needs of the consumers.
Apart from consumer relationship management, company is also striving to
strengthen supplier relationship management. Supplier relationship
management is the part of the supply chain management, which deals with all
aspects of the business relationship between companies and their suppliers.
It is a comprehensive approach to managing an enterprise`s interactions
with the organizations that supply the goods and services it uses. The goal
of supplier relationship management is to streamline and make more
effective the processes between an enterprise and its suppliers just as
customer relationship management is intended to streamline and make more
effective the processes between an enterprise and its customers.
Supplier Relationship Management includes both business practices and
software and is part of the information flow component of supply chain
management.
REI Six Ten is one of the few zero debt companies operating in its space
and has developed a strong and scalable business model. |