Spencer’s Retail plans maiden rights issue, to raise Rs 80 crore

Spencer’s Retail, a RP-Sanjiv Goenka Group company, is planning its first ever rights issue of Rs 80 crore.

The company will offer existing shareholder rights to purchase shares of Rs 5 value at Rs 75 each that is, at a premium of Rs 70 per share, in the ratio of 2 rights share for ever 15 shares held as on the record date, July 29.

Around 1.06 crore shares will be issued.

The funds raised from the issue are expected to be used for expansion and enhanced working capital requirements, an official said.

Spencer’s Retail's market capitalisation stood at Rs 590 crore on March 31.

The rights issue will open on August 4 and close on August 18, a notification said.

The company operates 191 retail stores (including Nature's Basket, which it acquired last fiscal) of various formats in 42 cities across a trading area of 14.60 lakh sq ft. It has deepened its presence through brick-and-mortar stores in North, East, West and South India, along with an online presence in 17 Indian cities, the company said in its annual report.

Outlook

Spencer’s reported a net loss of Rs 57 crore and a total income of Rs 2,403 crore, on a standalone basis in FY20. The business remained EBITDA-positive, with around 4.6 per cent margins.

The company’s net consolidated debt stood at Rs 191.5 crore, which it said “was comfortable with timely repayments”, given its consolidated turnover of around Rs 2,640 crore.

In its performance overview, Spencer’s has maintained that during FY21, it plans to expand its presence in existing clusters. This will also help the company leverage its back-end capabilities and optimise marketing costs. It will also focus on increasing its non-food business revenues.

“Our principal business strengthening initiative during FY20 was the acquisition of Nature's Basket. This gave us an entry into Mumbai and the western part of India, opening up a significant growth region for us,” Sanjiv Goenka, Chairman said in his shareholders address.

During the year, Spencer’s focused on transforming Nature's Basket business model and integrated the acquired company (and respective owned brands) into Spencer’s ecosystem. This also led to “rationalising some unviable Nature’s Basket stores”.

“By the close of the financial year under review, the operating cost structure at Nature’s Basket had improved considerably and the company reached our desired negative working capital position,” Goenka said.