With losses declining sharply in FY17, Tata Group-owned Infiniti Retail, which owns the electronics and white goods retail chain Croma, is hoping to break even both at the operating level and at the net profit level in FY18. The company managed to reduce its loss to Rs 57.09 crore in FY17 compared to a loss of Rs 195.64 in FY16. Avijit Mitra, executive director and chief executive officer, Infiniti Retail, told FE’s Jharna Mazumdar that while the company has no immediate plans to float an initial public offer in the near future, it will consider it in the next few years, as profits grow. It is also set to launch smaller format stores under the Gadgets of Desire brand. Excerpts from the interview:
How was the business post GST implementation?
Initially, soon after the implementation of GST there was a bit of a problem with no fresh stocks coming into the stores, but things settled down within the next couple of months. In FY18, we have witnessed same-store-sales growth of 13% while revenue has grown 20%. We hope to break even at the operating level as well as at the PAT level in FY18. The good thing is that although people check online, but for big ticket purchases, they come to the store to see the product. This is where we worked on how to win customers as they walk in to the stores. We make them understand that our prices and products are equally competitive and after-sales-services are very efficient. The company has also made considerable progress in improving its performance by taking advantage of the new consumer behaviour with its omni-channel strategy offering the benefits of both online and offline shopping experience.
Have discounts reduced compared to last year?
It is hard to specify if discounts have dropped as it depends on the product. While in some products it may have gone down while in others the discounts may be higher. But there is a shift in trend in terms of product availability, as brands like One Plus and Xiaomi, which used to have specific tie-ups only with the online players, now also have tie-ups with Croma in the offline space
We have tie-up with brands like Hitachi TV exclusive to us and also with the Middle East consumer electronic manufacturer Super General. These exclusive tie-ups and competitive pricing, compared to peers, have helped us improve our sales. Initially there was an impact on our sales with e-commerce players offering aggressive discounts, but now we know how to deal with it and our business has settled down.
What are your expansion and investment plans for 2018-19?
For the last few years, we have been adding around 10 to 12 stores annually, but in FY19 we plan to open around 20 stores of around 10,000 sq ft each. At present, the company has 111 stores operational in the country compared to 97 stores in FY17. We are also experimenting with a new format ranging between 1,500-2,000 sq ft known as Gadgets of Desire, and the store will have products like mobiles, accessories, games, music, among others. Sales of gaming devices and video games are growing fast. Earlier, we used to sell 50 to 100 gaming devices a month but now it has increased to 800 to 1,000 a month. Further, there will be a catalog available in the Gadgets of Desire store and customers can order big ticket items from it. Zip store almost a similar format will be restricted to airports only.
Are you looking to pare debt going ahead?
In FY17 we had debt of around Rs 550 crore, down by 5% year-on-year. We are now cash positive at the store level and don’t intend to raise debt any further. Neither are we planning to reduce it as we are comfortable with this level. We want to focus on expansion at the moment rather than reducing debt. The expansion of stores will be done through our cash flow in the existing stores and internal accruals.