The IPO will allow Samara Capital an opportunity to dilute its 51% stake in the holding company of More Retail, Witzig Advisory Services. Samara Capital owns the stake through Samara Alternate Investment Fund. The balance 49% in Witzig is owned by Amazon through two entities – Coda Holdings Singapore and Coda Holdings LLC.
A Samara Capital spokesperson said it’s a long term investment in More Retail and the company is not in a rush to exit its stake beyond what is required to be diluted in the IPO. He said the promoters have yet to decide on how much stake dilution will be made in the IPO.
The promoters last month infused Rs 100 crore into Witzig Advisory Services, which in turn invested the same amount in More Retail, as per latest regulatory filings made to the Registrar of Companies (RoC).
More Retail has seen four senior executives putting in their papers recently – CEO of hypermarket business Mohit Kampani, CEO of supermarket Sashi Gumma, chief operating officer of hypermarket Gurpreet Sandhu and chief supply chain officer Satish Karunakuran. Kampani is serving his notice period.
A More Retail spokesperson said the exits were regular attrition as in any business and that the company has been attracting talent as well. He said More Retail has been growing its store footprint at a fast pace, having doubled the number of hypermarkets and adding 50% more supermarkets in the past three and a half years since the acquisition by Samara Capital.
“The shareholders are committed to the business and shall continue to support the growth and expansion through capital infusion,” he said.
More Retail currently operates 881 supermarkets and 42 hypermarkets. It plans to set up about 100 new stores, including ten hypermarkets, in this financial year.
Mohit Yadav, founder of business intelligence firm AltInfo, said More Retail’s position seems severely overleveraged on the basis of 2020-21 financials, especially in light of its peers such as DMart who have built a competitive moat around managing excellent cash flows and best-in-industry inventory turnover.
He said the company’s debt ratio stands at 0.6 and unless the financial situation improves, the recent infusion of Rs 100 crore capital is only a short-term solution. More Retail’s 2021-22 financials are still not filed to RoC.
As per RoC filings, More Retail clocked sales of Rs 4,763 crore in 2020-21 while net losses reduced to Rs 78 crore from Rs 175 crore in the year before.
A More Retail spokesperson said retail is a tough business and while the company has debt, it’s not overleveraged. He refused to share the latest financials except that revenue was about Rs 5,000 crore in 2021-22. He also said that all its suppliers are paid on a regular basis and there has been no case of rent default.
More Retail derives more than 25% of its sales through e-commerce, including the Amazon platform, and is testing marketing its own app in Bengaluru.
