D Mart to add 60% more store space

D Mart, the food and grocery chain owned by stock market investor R K Damani, is looking to add over 60 per cent more space in the next three years.

The chain, the third-largest retailer after the Future Group and Reliance Retail, has 3.4 million square feet of retail space now and is looking to add 2.1million sq ft by FY20, the company said in its draft red herring prospectus (DRHP) for the public issue.

On Thursday, Avenue Supermarts, it’s operating company, filed the DRHP for a ~1,870-crore public issue with the Securities and Exchange Board of India (Sebi). Promoters own about 91 per cent stake in the company and the rest is owned by employees and others.

Navil Noronha is the chief executive officer and managing director of the chain, while Ramakant Baheti is chief financial officer.

The 14 year old D Mart runs 112 stores in 41 cities in Maharashtra, Gujarat, Telangana, Karnataka, among others. It opened 21 stores in FY16, highest ever in its history.

The company said it plans to use ~366 crore or 19 per cent of its IPO proceeds towards construction of new stores and for purchase of fit outs.

The company, which owns most of its stores unlike others, plans to build 900,000 sq ft of new stores and plans to use ~178.6 crore towards this and ~187.9 crore towards purchasing of fit outs.

The company has grown its footprint by 55 per cent from 2.14 million sq ft in FY14 to 3.3 million FY16, it said. It also plans to use ~1,080 crore from IPO funds towards repayment and pre-payment.

D Mart has a debt of ~1,500 crore as on August 31. It said it has to repay a term loan of ~200 crore to HSBC from IPO funds and has an outstanding amount of ~800 crore by way of nonconvertible debentures (NCDs).

D Mart has grown its topline at a compounded annual growth rate (CAGR) of 40.28 per cent from ~2,222.4 crore in FY12 to ~8,606.1 crore in FY16. The chain has grown its profits at a CAGR of 51.85 per cent from ~60.4 crore in FY12 to ~321 crore in FY16, it said.

Many chains such as Aditya Birla Retail, Spencer’s Retail and Raheja-owned Hypercity, which all started after 2006 or started expanding after that, are yet to make profits at the entity level.

D Mart also posted the best like-for-like growth numbers in the industry. It has posted a like-for-like growth of 22.49 per cent in FY16. Its sale per sq ft has grown at 16 per cent CAGR from ~15, 324 in FY12 to ~2,8136 in FY 2016.