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Billionaire conjures up Sam Walton with

$6 billion Indian chain
By Bloomberg | Apr 01, 2017, 01.16 PM IST Post a Com m ent

READ MORE ON | Radhakishan Damani | Future Retail Aditya Birla Fashion | Future Retail | Arvind Singhal |
Amazon.Com | Ajay Piramal Anil Ambani

By Saritha Rai and PR Sanjai

Radhakishan Damani may be Indias Sam Walton. Like the Wal-Mart founder, hes a self-
made billionaire from humble beginnings with a successful formula for retailing.

So successful that when Damanis 15-year-old company, Avenue Supermarts Ltd., went
public last week, the stock price more than doubled on the first day of trading in Mumbai,
valuing his direct familys interest at about $3.6 billion. The reason has much to do with
Damanis strategy of offering knockdown prices on everything from lentils to laundry powder
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 in multistory hypermarkets on Indias urban fringes.

By appealing to homemakers with cheap,

reliable staples and giving them ample
parking in convenient locations, Damani has
not only successfully countered the threat
from online retailers, but beat them on
earnings. Amazon.com Inc., the global giant
thats investing $5 billion in the Indian market,
and Flipkart Online Services Pvt., the biggest
Like Share 4M people like this. Sign Up to see w hat domestic e-commerce company, are yet to Damani and his direct family have financial interests in Avenue
your friends like.
Supermarts amounting to about 60 percent of the company.
make money in India, whereas Avenue
Supermarts said it had net profit after tax of
3.2 billion rupees ($49.3 million) in the year
Company Summary NSE BSE
ended March 2016.
Future Re 1.30 (4.49%)
The low-cost ethos that was embedded into
the Wal-Mart chain by Sam Walton has Tax planning:
How to complete all tax work before March 31
become the hallmark of Damani, whos
ingrained it into his Avenue Supermarts,
said Arvind Singhal, chairman of retail consultancy Technopak Advisors Pvt., which tracks
retail trends in India. Like Wal-Mart, Damani has stuck to a single format and peddled a
significant proportion of private-label goods from the very beginning.

Stag Profit
Avenue Supermarts shares jumped as high as 650 rupees before closing at 641.6 rupees
on their March 21 debut, compared with an initial public offering price of 299 rupees. The
share sale raised 18.7 billion rupees, attracted bids for 106 times the quantity available, and
was the best IPO performance in India in four years. The shares closed at 631.85 rupees in
Mumbai Thursday, valuing the company at 394 billion rupees ($6 billion).

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 For 61-year-old Damani, a former stockbroker who was raised in a one-room apartment in a
Mumbai tenement block, the listing catapulted Damanis wealth beyond that of Ajay Piramal,
Anil Ambani and Kapil Bhatia, according to the Bloomberg Billionaires Index. Damani and
his direct family have financial interests in Avenue Supermarts amounting to about 60
percent of the company.

Soft-spoken with a preference for white clothing, Damani eschews media attention. He
earned hundreds of millions of dollars from successful stock market investments that he used
to kick-start a bricks-and-mortar retailing business just when many merchandisers were
focusing on e-commerce. Damani wasnt available for an interview, an external
spokesperson for the company said.

Urban Sprawl
The retail chain, with its 129 D-Mart stores in more than 40 cities, is now more valuable than
local rivals Future Retail BSE 4.32 % , Aditya Birla Fashion and Trent Ltd. combined.

Most Most Most

Read Shared Commented Stores typically cater to bargain shoppers in the heartlands of Indias urban sprawl.
Importantly, the land is acquired before real estate prices in the area have surged, said Arun
BS-III impact: Rebates, freebies help 2-wheeler
makers clear inventory Kejriwal, director at KRIS, an investment advisory firm.
Bikes at the price of smartphones? Here's a list of
bikes you can buy in the BS-III discount sale We observe our customers and plan for them, said Neville Noronha, managing director and
Planning to buy a two-wheeler? Ride it today at chief executive officer at Avenue Supermarts, adding that D-Marts business model has
cheapest rate
evolved since its first store opened in 2002.
Petrol and diesel price cut by Rs 3.77 and Rs 2.91
per litre
It centers largely on everyday low prices -- a concept reminiscent of Wal-Mart Stores Inc., the
India swings to net power exporter as PM Narendra
Modi looks to block China Bentonville, Arkansas-based company started by Sam Walton in 1962. Avenues approach
More is also to procure merchandise at low prices and to avoid relying on sporadic promotions on
specific products, the Mumbai-based company said in a regulatory filing in September.

Unfancy Stores
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 D-Mart has unfancy stores, said Technopaks Singhal. If other retailers became counter-
intuitive and chased retail glamour by opening stores in malls, launching multiple formats and
going national, D-Mart has been intuitive by sticking to the very basics.

It doesnt hire high-profile executives, pay stratospheric salaries or overspend on marketing

and advertising -- all of which are hallmarks of Indian retailers, Singhal said.

Its not like Damani has stumbled on some magic formula -- he hasnt, Singhal said. These
should have been the basic rules for every retail business in India.

D-Mart outlets follow a simple design: wide aisles on white-tiled floors under fluorescent tube
lights. Elevators move shoppers and their trolleys between levels, with groceries and food
staples located below household goods and sports equipment, and textiles and soft
furnishings on the floor above.

No Time to Clean
D-Mart offers me the best prices, and the grains are very clean -- which is a big advantage
over other retail stores in the vicinity, said Varsha Nilesh Benke, a 35-year-old office worker,
while on a twice-monthly weekend shop at the Seawoods store, 35 kilometers (22 miles)
from downtown Mumbai. Since Im a working woman, I dont have time to clean grains.

Benke said shes happy to purchase apparel online, but prefers to see for herself the rice
and pulses she needs before buying. D-Mart also offers free gift-wrapping services, which
makes it convenient to buy a gift here, Benke added.

Retiree V.P. Sharma, who lives in Navi Mumbai, a satellite town east of the city, also says D-
Mart has a distinct advantage over online retailers. They show something on the net and
deliver something else, he said, while shopping at the same store. Also, the delivery at odd
hours, making e-commerce very inconvenient.

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 India hasnt yet reached its retail renaissance, Boston Consulting Group said in a March 21
report, in which it predicted the South Asian nation will become the worlds third-largest
consumer market by 2025. Domestic consumption will triple to $4 trillion by the middle of the
next decade as rising affluence drives consumer behavior and spending, including in nascent
agglomerations like the ones D-Mart is focusing on.

Damani may not have the size and scale of Wal-Mart, but certainly Damani is Sam Walton in
the making, said Kejriwal at KRIS.

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