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MINOR PROJECT FOR AMITY UNIVERSITY

AMITY UNIVERSITY ONLINE, NOIDA, UTTAR PRADESH

TITLE: A STUDY ON FINANCIAL RATIO ANALYSIS OF AVENUE

Project by:

Deepika Gyanchandani

Enrollment No:A9920123000529(el)

Specialization: Finance
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Analysis of Financial RATIO ANALYSIS of Avenue Supermarket Ltd . (DMART IN)

Project by:

Deepika Gyanchandani

Enrollment No: A9920123000529(el)

Specialization: Finance
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ABSTRACT

The objective of this project is to discuss and present the case of the DMart retail chain

background and its financial statement over the years and its success in India. The term financial

performance refers to the process of determining the growth aspect, strengths, weakness,

opportunities, and threats of the organization by establishing a relationship between the items in

the Balance sheet and the Profit and loss account. The case presents 5 years of Dmart industries'

available secondary data, and the main objective of the study is to find out the growth aspect of

the organization in the respective 5 years. The various tools like current ratios, liquidity ratios,

solvency ratios, and profitability ratios are used to arrive at the findings and to provide valuable

suggestions that help the organization to have a look into the growth aspects of the organization.

The study reveals that there was a gradual rise and fall in the growth of the company during the

study period and was satisfactory.

Keywords - D- Mart, financial statement, growth aspects, profit, and loss, rise and fall.

TABLE OF CONTENT
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S. No. : Particulars Page No

2 : OBJECTIVE 11

3 : LITERATURE REVIEW 11

4 : RESEARCH METHODOLOGY 13

5 : DATA ANALYSIS & INTERPRETATION 15

6 : RESULTS & DISCUSSIONS 17

7 : RECOMMENDATIONS & CONCLUSION 18

INTRODUCTION OF D – MART

A financial statement has the objective of providing information about a reporting entity's

financial activities and economic condition relevant to a wide variety of users for evaluating the

entity's management and making decisions. Dmart has delivered stable performance across

stakeholder metrics by focusing on financial fundamentals, high levels of patience, and strong

conviction.

D mart, one of India’s leading retail chains has become a household name, known for its

commitment to offering quality products at affordable prices. The story of Dmart is a tale of

humble beginnings, astute business strategies, and a relentless focus on customer satisfaction.

Founded by the legendary investor Radhakishan Damani in 2002, D MART has grown to become

a retail giant with a market cap of $31.42 Billion (December 2023), outshining its competitors in

the Indian retail market. This success story of Dmart is a testament to the vision, dedication, and

unwavering commitment of its founder, Mr. RD. Dmart offers a wide variety of stock home

utility products including food, toiletries, garments, kitchenware, bed and bath linen, and the list

goes on. As of March 2024, it has 365 stores across 12 states and Union territories in India, the

company launched its initial public offering (IPO) in March 2017 of Rs 1,870 Cr and got listed

on the National Stock Exchange. On its listing date of 22 March 2017, it became the 65 th most

valuable Indian.
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Characteristics of DMart's Business Model

Product-Mix

The company comprises everyday use products for its customers, which are categorized as Foods,
Non-foods, and General Merchandise & Apparel. The chain operates on a B2C (Business to
Consumer) model, where goods are directly sold from the manufacturer to the end-user. The
demand for these goods is ongoing as they suit the essential day-to-day needs, thereby creating
a requirement throughout the year. This eliminates the danger of high demand fluctuations and
provides consistency to the business.

Slotting Fees

It is a payment that's made by the manufacturer of products to the superstore to keep its products
on the shelf purchasable. Also called an entry fee for the products, which are held within the
supermarket. Being a supermarket chain, DMart also charges a 'Slotting Fee.' The store attracts
high volumes of consumers, making it a beautiful and opportunistic place for the manufacturers
to store their products. This attracts more and more manufacturers willing to place their products
within the store. A slotting fee indirectly reduces the product's purchasing price for the retailer,
thereby allowing it to supply the products at discounted prices, i.e., but the MRP (Maximum
Retail Price), hence attracting large buyers.

Own Property

Most of the property of the Dmart is owned by themselves. They ignore the rental system. If they
combat rent, then at that they are going for a future lease like 30 years approximately on. Owned
property gives profit and advantage in the future basis. D-mart mostly opens stores on the
outskirts of the town area. Like in Mumbai, stores are available in Andheri, Borivali, Malad,
Kandivali, Bhayandar, Mira Road, Virar, Vasai, Thane, Kalyan, and Dombivali. In Pune, D-mart
is documented and has many stores. If I'm not wrong, there are quite 6 stores just in Pune and
therefore the surrounding region.

Small to big
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RadhakishanDamani started small and expanded slowly. Starting on a coffee scale gave a favor
to Damani i.e., identifying the issues and rectifying them. In any case, the issues and plans of
Dmart start expanding. Dmart started earning take advantage of its initial stage.

Avoid credit.

Credit and delayed payments within the retail business are risky because they will badly impact

on your supplies and costs. Damani keeps far away from credit and pays before his suppliers

expect.

Quality

Dmart specializes in the standard of all the products and also, they specialize in affordability.

The rationale for why they begin growing is quality only. The non-branded products which

generally don’t have quality are being purchased by Dmart then quality is assured and sold in

Malls at affordable rates.

The price Product

The credit cycle of DMart, i.e., the time within which it returns the payment to the makers for

the products purchased from them is sort of different from retail operators. This enables the

corporation to avail huge money discounts from the makers, thereby cutting the acquisition worth

of the products.

Volume Sales
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Being a cheap retail merchant offers a foothold to DMart. Low worth ends up in the high sound

within the store resulting in high sales volume, thereby attracting a lot of and a lot of makers to

keep their merchandise in DMart. This is often a cycle created by DMart, that keeps the loop in

progress. Further, thanks to high volume sales, makers conjointly extend a volume discount,

reducing the worth. This supports the cheap business model and makes it stronger.

Regional product

India being a varied country has various regional products. DMart grabbed this chance by

stocking its stores with area-specific merchandise. Individuals across totally {different

completely different} states have distinctive lifestyle habits and thence result in slightly different

consumption habits. DMart pooled the favored native brands of a selected region in one place,

making it a very convenient for the consumers to avoid progressing to the native Kirana retailers.

This helps DMart to chop the competition from general Kirana stores gaining a lot of market

share.
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DMART RESULT HIGHLIGHTS

 Total revenue stood at Rs 12,393 Cr, Yoy growth of 19.9%.

 EBITDA of Rs 930 cr, YOY GROWTH OF 20.2 %

 The PAT stood at Rs 604 cr ; YoY growth of 19.6 %.

SWOT ANALYSIS OF DMART

STRENGTHS

Focus on the long-term:- Damani is an investor and thus the company has been focused entirely

on long-term gains. This has made the company maximize its return through a value-driven

pricing strategy.

The discount policy factor that differentiates DMART from competitors is its huge discount

policy. The retailer sells goods at flat discounts which competitors cannot match, and it helps

them to penetrate the market.

Slow scaling up:- DMART started on a very low-keynote and slowly took its time to ladder up.

This helps the company to gain a deeper understanding of its supply chain.

Clear price-based differentiate:--DMART captured the market through a clear-priced-based

differentiate and set the price significantly lower than the competitors.
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WEAKNESS

Focus on certain places: Quite unlike their competitors, who are present everywhere, DMart

has focused more on the Western States and has a very low presence in the South.

Sustainability of low pricing: The company has a zero-credit policy and thus vendors and

suppliers give them a much better price, which is how the company can afford the low prices that

the competitors cannot imagine.

OPPORTUNITIES

Technology: Technology has a lot to offer to retailers in terms of in-store experience and retailers

can use IoT, artificial intelligence, etc. to create value-adding services to their customers for

which a premium can be charged.

Personalization of services: Customers are looking for personalized services for which they're

willing to pay extra. Retailers should capitalize on this propensity to pay more and increase the

quality of their services.

THREATS

Online retailers: People in cities especially are highly lethargic about leaving their homestand

and prefer to shop online today. Companies like Amazon and Flipkart thus become major threats

to most retailers.

Online Start-ups: The hottest trend in India are online startups. Many of them are aggregators

who bring together the supplier and the customer cost-effectively.

OBJECTIVE OF THE STUDY

 TO know the company's financial position.

 To assess the earning capacity or the profitability of the firm.

 To assess the short-term as well as long-term solvency of the firm.

 To know the liquidity position of the firm.

 To study the growth aspects of DMart

 To offer suggestions that are based on study findings.

LITERATURE REVIEW

1. The author Vidyansh Chandra published an analysis article as a study on the CRM ways

of d-mart on 5 May 2020. In line with the author, d-mart has gained a profit of 56.10 crores for

the year ending 31 March 2019. This clarifies that they are aware of the way to have a decent

relationship with their customers and d-mart has truly understood the essence of CRM and what

power it holds.

2. Ranjith P Nair Rajesh2010 the authors in their analysis paper study however the service

quality of shops like D-mart and Apna Bazaar dissent the study focuses on the importance of

activity service quality despite its importance Indian retailers still don't have a reliable tool to

live service quality.

3. The author “SafalNiveshak” published a research article on “D-mart as Good Products

Great Value” on 31st August 2017. According to the writer D-mart has a great future ahead. It

will gain more profits in the future; it has consistently grown its store. As they focus on achieving
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a higher volume of business at the same time, it keeps operating costs low. This helps customers

lower prices consistently.

4. The author Avinash Pawar has published an analysis article on the strategy and success

of smart- the case of chain in India on 2019 d-mart strategy has marked distinction from nearly

every different Indian merchant. This is to make d-mart a lot of profitable than others. The

majority of consumers of D-mart square measure middle-income families and they like it for

worth money and offers discounts.

5. Adir Grip 2019 his article the author provides an in-depth study on the business model of

D-mart he describes the assorted factors that Walmart employs to confirm client satisfaction

which is the key to its success it additionally explains the revenue model that Walmart uses has

allowed them to surpass its competitors like reliance on door big bazaar jio-mart etc.

6. Anurag Sharma 2024 in his article updated on ETRETAIL FROM THE ECONOMIC

TIMES Shared about Dmart During the quarter (Q4) the supermarket chain has seen a continued

uptick in the contribution of merchandise and apparel. Its gross margin improvement in Q4 FY24

as compared to the same quarter of the previous fiscal reflects this mixed improvement.

RESEARCH METHODOLOGY

The research method used in the study is analytical research. It has to analyze the balance sheet

which is historical data derive conclusions from it.

NATURE OF DATA: The number of data used for the study in Secondary data is collected

from the five-year balance sheet for their analysis part.

DATA COLLECTION: The data needed for the study is being collected from the annual

REPORT of the company which is Secondary data.

DATA USED: The research relied entirely on secondary data for analysis and was collected

directly from the DMart website.

TOOLS ANS TECHNIQUES: Ratio analysis

RATIO ANALYSIS:- When we ascertain the monetary statements comprising the balance sheet

and profit or loss Account, they do not give all the knowledge associated with the monetary

operations of a firm, they’ll give some extraordinarily helpful info to the extent that the record,

Shows the monetary position on a selected date in terms of the structure of assets, liabilities, and

homeowners equity and profit or loss account shows the results of operation throughout the year.

So, the financial statements can give a summarized view of the firm. Therefore, to be told

concerning the firm the careful examination of valuable reports and statements through monetary

Analysis or ratios is needed.

MEANING AND DEFINITION Ratio analysis is one of the powerful techniques that is widely

used for decoding financial Statements. This method is a tool for assessing the monetary

soundness of the Business. The idea of Ratio analysis was introduced by Alexander Wall for the

first time in 1919. Ratios area unit Quantitative relationship between 2 or a lot of variables taken

from monetary statements.

Importance:-

As a tool of financial management ratios are of crucial significance. The importance of ratio

Analysis lies within the incontrovertible fact that it presents facts on a comparative basis and

permits the drawing of Inferences relating to the performance of a firm. Ratio analysis is relevant

in assessing the Performance of a firm in respect of the following aspects:

• Liquidity position

• Long term solvency

• Operating efficiency

• Overall profitability

The following are the limitations of the study.

1. The study has been carried out over the period of Five years and it is not sufficient enough to

analyze the entire aspect of the company

2. The study is based on secondary data. Hence, it may not provide accurate information.

3. There could be some fractional differences within the calculations.

DATA ANALYSIS AND INTERPRETATION

Mainly concentrating only on Profitability ratio and Liquidity ratio: -

TABLE
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YEAR SALES CURRE LIQUI NET

2020 24,738. 3.18 0.53 5.47 16.24 11.17 204.19

2023 41,996. 4.00 1.71 6.11 19.39 14.01 2.49

2024 49,722. 3.23 1.25 5.44 18.56 12.49 2.49

INTERPRETATION

1. The current ratio is the most important tool to measure short-term liability. As a general

rule, a current ratio of 2: 1 or more is considered satisfactory. The above table shows the

ratio range from 3.18 to 3.23.

2. The standard form of quick ratio is 1:1. The table shows a quick ratio range from 0.53

to 1.25 which means that the company has abundant resources to repay its debt instantly.
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The direct interpretation suggests that the company has $1.25 of current assets to settle

every $1 of its current liability.

3. The net profit ratio, which was 5.47 in 2020, gradually increased in 2023 to 6.11 and

decreased in 2024 which is 5.44 that means the company is doing good but needs to focus

on it.

4. From the above data in table ROA in 2020 the ratio of return on asset was 11.17 then

gradually increased in 2023 ROA was 14.01 and fell respectively in 2024 to 12.49

5. The ROCE return on working capital employed in the year 2020 was 16.24 and growth

in 2023 was 19.39 but in the year 2024 it decreased to 18.56

6. Asset turnover ratio is the ratio of a company's sales to its assets. It is an efficiency ratio

that tells how successfully the company is using its assets to generate revenue. In 2020 the

company had the highest asset turnover ratio of 204.19 but gradually it decreased in 2024

by 2.49.

RESULTS AND DISCUSSION

 The major reasons for consumers to visit the DMART are low prices, better value for the

money, and more offers and discounts.

 The majority of the customers of DMART are middle-income families and they prefer it

for price, value for money.

 All the functional and operating ratios and values for Dmart show a positive incremental

trend from 2020 to 2024.

 The return on working capital was good in the previous year 2023 but due to the pandemic

the stores were not as functional as before resulting in a reduction of rise in 2022, 2021, and 2020.

CONCLUSIONS

The financial analysis of Avenue Supermarket Ltd found that the company was more concerned

about the maximum utilization of assets and generating profit and the ratios were good in number

but a little weak at liquid assets that can be easily converted into cash.

The project has been very useful to me as I learned how to prepare financial ratio analysis. This

has improved my knowledge about financial statements, which is very useful in today's time.

This project of Ratio analysis is a brief knowledge about how to Analyse the financial

performance of any firm or enterprise.

Overall, the Company has a great future opportunity.

BIBLIOGRAPHY & REFERENCES

1 . Damodaran , A . (2020) .Investment valuation: Tools and determining the value of any asset.

John Wiley & Sons.

2 . Mishra, S.K. (2017). Financial Statement Analysis. Vikas Publishing House.

3. A Report on Strategy and Success of Dmart: The case of a retail chain in India by Avinash

Pawar on June 2019 https://www.researchgate.net/publication/340081826

4 M. Guruprasad (2018) Study on the consumer preference and Perception of Supermarket Chain

– Case of Dmart, “ International Journal of Innovative Science and Research Technology.

5. Saloni Chechani, Marketing, 2019-21A Study on “Impact of D-Mart on small grocery

retailer’s consumer perspective in Bhilwara Sri Balaji University, Pune, India.

6. Pranjal Kama(2020) Model of D-mart https://blog.finology.in/investing/business-model-

dmart

Websites

https://wap.business-standard.com/company/avenue-super-40942/financials-

balancesheet/2/Standalone

https://www.moneycontrol.com/financials/avenuesupermarts/balance-sheetVI/AS1

https://www.moneycontrol.com/financials/avenuesupermarts/profit-lossVI/AS19

https://en.m.wikipedia.org/wiki/DMart