The Dmart Way:
Most of the Dmart stores are company owned
They save big on rent
DMart has low rental cost of less than 0.2% of its revenue
Where as Rental costs typically account for 3% to 8% of total expenses of its peer group retailers
Frugal operating system
Most of the Dmart stores are company owned
They save big on rent
DMart has low rental cost of less than 0.2% of its revenue
Where as Rental costs typically account for 3% to 8% of total expenses of its peer group retailers
Frugal operating system
Dmart uses cluster approach to open new stores which reduces distribution cost
Most of the Dmart stores are at outskirts of cities where one gets easy highway connectivity
This helps in logistics & transportation
People from neighbouring villages can take advantage of location
Most of the Dmart stores are at outskirts of cities where one gets easy highway connectivity
This helps in logistics & transportation
People from neighbouring villages can take advantage of location
Dmart gets huge land parcel at city's outskirts at very low rates compared to city areas
Dmart pays to its vendor within 2-3 days whereas other retailers pays after 15-30-40 days which earns Dmart add. 2%-3% discounts on its products
Dmart pays to its vendor within 2-3 days whereas other retailers pays after 15-30-40 days which earns Dmart add. 2%-3% discounts on its products
In the past, Aditya Birla Retail exited Mumbai/Jaipur by shutting its More supermarkets
Reliance Retail closed approx 100 Reliance Fresh stores
Future Group shut all its KBFP stores in Bengaluru
RPG owned Spencer Retail also closed >200 stores
Whereas for Dmart it is very low
Reliance Retail closed approx 100 Reliance Fresh stores
Future Group shut all its KBFP stores in Bengaluru
RPG owned Spencer Retail also closed >200 stores
Whereas for Dmart it is very low
Game changer points from Dmart:
Owned property which allows them to save big on rent
Stores near highway, connectivity which allows nearby small cities/villages to take advantage of shopping
Payment time is less which allows them to earn additional discounts while buying
Owned property which allows them to save big on rent
Stores near highway, connectivity which allows nearby small cities/villages to take advantage of shopping
Payment time is less which allows them to earn additional discounts while buying
Owned Model is proved bad for
most of the retail businesses but
Dmart made it its moat, where property price inflation &
zero rent helped Dmart
Another good thing is
Payments (Huge thing in India
to get Timely & Quick payments compared to peers)
most of the retail businesses but
Dmart made it its moat, where property price inflation &
zero rent helped Dmart
Another good thing is
Payments (Huge thing in India
to get Timely & Quick payments compared to peers)
RKD bought big land parcels when no one is buying at city
outskirts which earned him big money on property price inflation
Dmart Business Model helped
him earned profits through business
Later, Listing of Dmart
(Avenue Supermarts) helped him
earned through stock market as
well
outskirts which earned him big money on property price inflation
Dmart Business Model helped
him earned profits through business
Later, Listing of Dmart
(Avenue Supermarts) helped him
earned through stock market as
well
During the time of listing RKD
held 85% of Dmart at Mcap of 19000 Cr
(Low Public Float)
Max promoter limit 75%
(10% of 19000 Cr = 1900 Cr)
RKD exited surplus 10% stake which earned him approx 8000 Cr which is almost 50% of IPO Mcap (Gain of almost additional 6000 Cr)
held 85% of Dmart at Mcap of 19000 Cr
(Low Public Float)
Max promoter limit 75%
(10% of 19000 Cr = 1900 Cr)
RKD exited surplus 10% stake which earned him approx 8000 Cr which is almost 50% of IPO Mcap (Gain of almost additional 6000 Cr)
Reminds me of the iconic scene from "Guru" movie:
Where Abhishek Bachchan (Dhirubhai Ambani) was allowed to defend for 5 mins & he completed the speech in 4:30 mins
(30 seconds profit)
Same goes here,
RKD Magic:
Land ✔
Business ✔
IPO (Stock Market) ✔
Surplus 10% stake ✔✔
Where Abhishek Bachchan (Dhirubhai Ambani) was allowed to defend for 5 mins & he completed the speech in 4:30 mins
(30 seconds profit)
Same goes here,
RKD Magic:
Land ✔
Business ✔
IPO (Stock Market) ✔
Surplus 10% stake ✔✔
