Radhakishan Damani, also famous as the ‘retail king of India’ and ‘warren buffet of India’ is the man behind the phenomenal success story of DMART. An investor, entrepreneur and India’s 7th richest man (with a market valuation of 14.3 Billion), he comes from a humble beginning and is one of the few self-made billionaires in the country. Born and brought up in Bikaner, Rajasthan, Mr Radhakishan was born to an Indian Marwari family in 1965. His background naturally led him to have an inclination towards business in general. He dropped out of his Bcom from ‘University of Mumbai’ midway to start his first business.
Investment Career and Early Life
Even though Damani started his career as a business trader in ball bearings, financial problems after the untimely death of his father, led him to the door of the Indian Stock Market. He had to close his business and join his brother, who himself was into the stockbroking exchange. He started observing, speculating and trading under the able mentorship of Chandrakant Sampat, who himself was an accomplished investor. It was Sampat only who inspired Mr Damani, into stepping inside the murky waters of the Indian Stock Exchange market. The 1980s and ’90s saw the rise of Damani as one of the leading stockbrokers of the Indian Stock Exchange. His investments in various stocks paid fruit, and soon he diversified into different other businesses.
Today Damani not only owns a major stake in ‘Avenue Supermarts’ which is the parent company of DMART but also partly owns other ventures like the tobacco firm VST industries, the famous alcoholic beverage producer, United Breweries and Blue Dart Logistics Services. His portfolio also includes a 156 room Radisson property at Alibag, a popular beach-front weekend getaway near Mumbai.
Radhakishan was famous for using the technique of short selling which was not such a common technique in that era. After the Harshad Mehta Scam, Damani was also accused by the stock exchange regulators for price hammering of the Indian stocks of various companies but was later given a clean chit by the committee. During this period, he was almost on the verge of bankruptcy. He then invested in long-term stocks, and some of his important investments paid off well in the long run. His most famous investments included ‘GE Capital Transportation Industries,’ ‘VST Industries,’ ‘Samtel Ltd,’ ‘Schlafhorst Eng (I),’ ‘Somany Ceramics,’ ‘Jay Shree Tea,’ ‘3M India,’ ‘Century Textile and Industries,’ ‘Trent,’ ‘VB Holdings,’ ‘TV Today Network,’ and ‘Jubilant FoodWorks Limited and so forth.
Mr Radhakishan likes to stay away from media and limelight and is also often called Mr White due to his preferred dressing style of simple white trousers and a white shirt.
Association with DMART
During the early 2000s, Mr Radhakishan forayed into the retail business. His previous experience in the retail and consumer segment before this venture was solely limited to investing and trading. This was when he started his career as an entrepreneur in retail. He purchased a franchisee of Apna Bazaar- a cooperative unit in Mumbai in partnership with Mr Damodar Mall, who later became the CEO of reliance retail business. 2 years later, Damani opened DMART.
DMART was the first retail venture of Mr Damani, which he started after quitting the stock market business. It was started by the Damani family to address the growing needs of the modern Indian family. He started small when he opened a retail store near the Hiranandani Apartments, Powai, a famous suburb of Mumbai in 2002. It has now grown to be the 3rd largest supermarket chain in India. He attributes the success of DMART to three main pillars of his company, which were its consumers, sellers, and employees. The IPO (Initial Public Offering) of DMART was announced in March 2017, in the name of its parent company, ‘Avenue Supermarts’. The opening of this public offering broke many records on the National Stock Exchange and directly shot Mr Radhakishan Damani into the list of top 20 billionaires of India. The company’s shares were sold at Rs 299 a piece at the IPO and surged as much as 106% after the listing at 604.4 on the Bombay Stock Exchange, making it not only the first retailer to list in a decade, but also perhaps the best IPO listing in the Indian corporate history at its time. After the stock closed on 22nd March 2017, the market capitalization value of DMART was estimated very close to ₹ 114,000 crores, which put it at the 65th Rank in the list of most valuable Indian firms. Currently, the firm stands at 33rd Rank amongst all the companies listed on the Bombay Stock Exchange, i.e. the Sensex.
DMART is majorly handled and managed by the Damani family themselves. Manjri Chandak, who is the daughter of Mr. Radhakishan Damani, is the director of DMART. The marketing and promotions of the company are managed by, the brother (Mr Gopikishan Damani) and wife of Mr Radhakishan.
The supermarket chain has over 193 stores in India (According to Dec. 2019) and majorly covers all the great states of India. Currently, it is present across 11 states and the NCR (National Capital Region) with the significant presence being in the states like Maharashtra, Gujarat and Andhra Pradesh.
The major parts under the DMART brand are D Mart, D Mart Minimax, D Mart Premia, all present under the Avenue Supermarts Ltd.
The mission of the company, as publicly claimed, is to provide the best possible value to their customers, so that every rupee spent on shopping with them by the customer, can give more value to the customer than anywhere else. A strong emphasis is on customer service, and all the employees are required to follow specific guidelines which follow the principles of ACT (Action, Care and Truth). Mr Damani, since his early days, has played on low margins and high volume and the same ideal philosophy is being followed by DMART as well. D-Mart ensures it doesn’t burn money by following two rules: a short supply chain and staying away from malls. It focusses on the quick turnover ratio (DMart has superior inventory cycle of 34 days, compared to Future Retail’s 120 days- Outlook Business), which lets it negotiate better deals with its suppliers and gain better margins from the supplier side.
The difference between other hypermarkets and DMART is that it is a no-frills supermarket, which likes to maintain less variety based at a slightly economical location and let the benefits pass to its customers in the form of discounts on everything they buy. According to a Business Outlook article, over FY15-19, DMart’s sales and profit have grown at a CAGR of 23.46% and 33.64% respectively. Its average sales/square feet of 32,719 is better than its domestic counterparts’ — Big Bazaar’s (14,514) and Reliance Retail’s (grocery sales of 25,751). Despite the massive discounts offered, its margins are higher than that of global players. The company’s Ebitda margin at 9% is better than Walmart’s (5.6%) and Tesco’s (2.3%). It is also better in comparison to domestic competitors, Spencer’s (0.08%) and Future Retail (4.5%).
The employees of the company are expected to believe in focused, motivated, enthusiastic, and individuals who share these values & lead by example, and integrity are considered to be the ideal employees of the organization.
Future of DMART
While DMART is only one of the most sought-after players in the offline retail consumer segment, it is also slowly gaining a foothold in the online market, to compete with the likes of BigBasket etc. to not let its market share being eroded by these companies. According to the current CEO and Managing Director of the firm Mr Neville Noronha, the company is targeting a PAT (Profits After Tax) margin of four to five per cent.
The aspirations are to gain a deeper foothold in the 11 states in which they are already present instead of spreading pan India at the same time. To achieve a stronger financial footing, in a first-ever move, Mr Damani was planning to sell around 5.2 per cent stake of his company, which was valued at 58.7 billion rupees or nearly $823 million. This will help him meet the minimum requirements, for a public float, which would be a deciding factor in the future of this rapidly growing supermarket chain.