Knowledge House, Shyam Nagar, O. Jogeshwari-Vikhroli Link Road, Jogeshwari (East), Mumbai - 400 060. Tel. No. : + 91 22 6644 2200 2 | NEW RETAIL What happens when the real & the virtual world are seamlessly integrated? What happens when technology integrates our suppliers, warehouses, stores and shopping baskets, allowing data to flow seamlessly across the value chain? What happens when data drives almost every decision on buying, merchandising, fulfillment & operations? What happens when technology platforms operate stores allowing rapid multiplication of store networks? What happens when mass advertising is replaced by one-on-one conversations with every customer? What happens when your world and our world becomes one? That’s is the future we are imagining, designing & creating. We call it the NEW RETAIL FUTURE RETAIL | ANNUAL REPORT 2016 -17 | 1 CORPORATE INFORMATION BOARD OF STATUTORY REGISTERED DIRECTORS AUDITORS OFFICE Knowledge House, Kishore Biyani NGS & CO. LLP Shyam Nagar, Chairman & Off. Jogeshwari-Vikhroli Link Managing Director CHIEF FINANCIAL Road, Jogeshwari (East), DIN: 00005740 OFFICER Mumbai - 400 060. Rakesh Biyani C. P. Toshniwal Tel. No. : + 91 22 6644 2200 Jt. Managing Director Fax No. : + 91 22 6644 2201 DIN: 00005806 DY. COMPANY CORPORATE Rajan Bharti Mittal SECRETARY Non-Executive Director Virendra Samani OFFICE 247 Park, ‘C’ Tower, DIN: 00028016 LBS Marg, Vikhroli (West), Gagan Singh SHARE TRANSFER Mumbai - 400 083 Independent Director AGENT Tel. No. : + 91 22 6119 0000 DIN: 01097014 Link Intime India Fax No. : + 91 22 6199 5019 Pvt. Ltd. Ravindra Dhariwal C-101, 247 Park, WEBSITE Independent Director LBS Marg, Vikhroli (West), www.futureretail.co.in DIN: 00003922 Mumbai - 400 083. Shailendra Bhandari Tel. No. : + 91 22 4918 6000 INVESTOR Independent Director Fax No. : + 91 22 4918 6060 www.linkintime.co.in EMAIL ID DIN: 00317334 Investorrelations@ futureretail.in Sridevi Badiga BANKERS Independent Director Allahabad Bank DIN: 02362997 Andhra Bank CORPORATE Axis Bank IDENTITY NUMBER Bank of Baroda L51909MH2007PLC268269 Bank of India Central Bank of India Corporation Bank Dena Bank IDBI Bank Punjab National Bank State Bank of India Union Bank of India UCO Bank Vijaya Bank 2 | NEW RETAIL CONTENTS 02 04 06 Corporate Snapshot National Information Footprint 08 12 14 Letter from Connecting Connecting The Chairman Customers Colleagues 16 22 27 Retail Brands Management Directors’ Discussion & Analysis Report 53 73 82 Corporate Business Independent Governance Report Responsibility Report Auditors’ Report 86 87 88 Balance Sheet Statement of Profit Statement of & Loss Changes in Equity 90 91 Statement of Notes to the Cash Flow Financial Statements FUTURE RETAIL | ANNUAL REPORT 2016 -17 | 3 SNAPSHOT Average ticket size & average OPERATIONAL HIGHLIGHTS FY 2016-2017 value per piece Customer Entry ~300 Million of merchandise Merchandise Units Sold ~1.2 Billion grew substantially, Average Ticket Size ` 1,155 helped 12% same Growth in Ticket Size ~11% Average Value Per Piece ` 143 store growth. Growth in Value Per Piece ~17.4% Same Store Sales Growth 12.0% New Operational Space 1.64 Million Sq. Ft. KEY RATIOS FY 2016-2017 Capital Employed ` 3,797 crore Equity ` 2,554 crore Net Debt / Equity Ratio# 0.34 ROE 15.5% ROCE 16.9% Inventory Days 80* Creditor Days 59* # For the purpose of this ratio OCDs have been considered as part of Equity * On Income from Operations 4 | NEW RETAIL A 3.4% expansion in EBIT through the FINANCIAL HIGHLIGHTS FY 2016-2017 year, coupled with Income from Operations ` 17,075 Crore inventory optimised Gross Margins 24.8% to 80 days in EBIT ` 573 Crore FY17, delivered a EBIT 3.4% PAT ` 368 Crore Return on Capital PAT 2.2% Employed of EPS ` 7.8 16.9%. QUARTERLY PERFORMANCE FUTURE RETAIL | ANNUAL REPORT 2016 -17 | 5 NATIONAL FOOTPRINT The diversity and heterogeneity of the Indian market makes many compare India with the whole of Europe. Building a national footprint for a retailer isn’t just about finding the right location and real estate to operate from, but also developing a deep understanding of the community, culture, preferences, highs and lows of consumption for every geography that it operates in. Over time, each store integrates with the people, society and communities it operates in. While Big Bazaar is present in almost every state of the country, the small store networks are built on a cluster model. The easyday network has a formidable presence in Haryana, Punjab, National Capital Region and western Uttar Pradesh. The newly merged Heritage network has a strong presence in Hyderabad, along with stores in Bengaluru and Chennai. Thus building a nation-wide, complimentary network that echoes the pulse of India. 6 | NEW RETAIL FUTURE RETAIL | ANNUAL REPORT 2016 -17 | 7 LETTER FROM THE CHAIRMAN Dear Stakeholders, on prime properties across have been working on 240 large and small town the objective of ‘Getting We are pleased to share in the country. The 235 More out of the Same,’ and with you the Annual Report Big Bazaar store network results are now showing of your Company for the is unparalled amongst up. The objective translates financial year 2016-17. This competitors and difficult to into earning more from our is the first full year of your replicate by another retailer existing base of customers, Company as a pure-play in India. getting higher throughput retailer operating large from our stores, earning format hypermartkets and While we continue to invest more from our stocks and neighbourhood stores. and leverage this advantage, eventually earning higher The Company posted total we are now building an returns from the capital income of ` 17,075 crore, even stronger moat that is employed in the business. a profit after tax of ` 368 built around our consumer A crucial enabler of this crore and earnings per data. During the year, ~300 strategy is pervasive use of share of ` 7.81. For this million customers walked data and technology to guide financial year, the return into our stores, generating business decisions and on capital employed was more than 143 million bills consumer engagements. 16.9%, backed by an overall and buying almost 1.2 billion Your Company today has same store sales growth units of merchandize. What access to consumer data of of 12% and the number however stands out is that almost 30 million customers of inventory days coming the average value realized who are members of our down to 80 days. per unit of merchandize loyalty programs. We are was ` 143, an annual growth Most people following now steadily moving them of ~17% and the average bill our Company would say to paid loyalty programs or value touching ` 1,155 a that the biggest moat the membership model. These growth of around 11%. organization has is its include Big Bazaar Profit national store network built Through the year, we Club, T24 mobile program Mobile Wallet with Loyalty Transaction Details Price Match - Customer Program Integration Assured of Lowest Price Future Pay Mobile Wallet ~1.2 Million Wallet uploads ~3 Lakh Users in excess of Price match ` 42 Crore transactions 8 | NEW RETAIL easyday Savings Club and the newly introduced campaigns for a wide chain, promotions and easyday Savings Club and range of products whose store operations. That will Future Pay mobile wallet. price go down on every allow all of us to focus only “Your Company These programs provide retweet, generated a huge on a few areas that demand today has access richer data on consumers, response from customers. innovation and human who in turn are also more Those who retweeted could creativity to win in the to consumer tightly integrated and pre-book the product and marketplace. committed to our retail buy at our stores. We now data of almost brands. Customers who allow customers to even 30 million come on these platforms pre-book checkout slots BRANDS & customers who not only have higher average online or on mobile for BUSINESSES billing size but also higher easier billing and many are members frequency of visits through stores now feature sit-down The year has been the year, translating into billing counters. heartening in more ways of our loyalty far higher annual spends than one. Big Bazaar further programs.” at our stores. Most of the More than tactical improved its ranking on customers on these paid advantages, widespread the The Economic Times- loyalty platforms visit us usage of data and Nielsen Most Trusted on an average 18 times in a technology is also changing Brand Study and gained year. the way we take decisions. 13 ranks to become the Today, around 6000 users 14th Most Trusted Brand These loyalty programs in the organization have in the country. The world’s are slowly allowing us to access to track around 2000 leading independent reduce our dependence on key performance indicators branded business valuation mass media advertising and to aid their decision and strategy consultants, moving on to conversations making. As we add more Brand Finance ranked your with customers through intelligence layers over our Company among the top these loyalty platforms and data, data will augment 50 most valuable brand social media. Social media decision makers and allow owners. and digital channels are full automation for almost also being used for our four out of five decisions While Big Bazaar ‘online to offline model.’ For taken by professionals strengthened its national example, a series of Twitter engaged in buying, supply brand presence, we are FUTURE RETAIL | ANNUAL REPORT 2016 -17 | 9 Online to Offline Every Retweet Brings Down The Price Book Online, Collect at Store Pre-Book Check Out Slots investing in its sister brand guarantee, in the event of focus on realizing growth for the fashion space, fbb any malfunctioning. During from within its existing “ The seven store to make it a long term, the forthcoming year, Koryo network, our next phase Foodhall network sustainable differentiator as a brand has a potential of network expansion will in the fashion space in to touch ` 200 crore size, be through neighbourhood continues to be the country.