DARE - Because Entrepreneurs Do

V Mart Retail is engaged in hyper market stores with an average area of 10,000 to 15,000 sq. ft. through an impressive chain of 63 fully integrated stores in 49 different cities spread of more than the area of over 4,000,00 sq.ft. We have ten exclusive women western wear outlets, called V Galzs & we are planning to touch 100 marks, which will take total retail area to over 10 lakh sq. ft. in tier II and tier III cities by the end of fiscal year 2011. We started our journey with a mission to offer quality garments to the common man. With the eyes on quality of the product, we have now become the household name in most of the families. Shopping at V Mart is an experience that actually amazes the first timers. It’s not just the reasonable pricing that attracts our shoppers but also the brilliance that is displayed in the designs conforming to the latest trends.

Lalit Agarwal

I thank my designers for their understanding of fashion demands of all age groups. Our quality standards are strictly maintained at all levels right from the sourcing of raw materials to the final finish of a garment. It is this quality commitment that has enabled V Mart to produce successful brands such as Charcol, Jwhite, Jinxx, Grrovy Kids, Cruxx, Fellow, Kool, Needle, Sword, Appache and Quasi under it’s private label category. Today, in addition to garments, we have in-house products like FMCG and general merchandise. Once a customer leaves our store they are bound to come back to us as h/she gets a product that exceeds their expectation.

It was difficult to initially think on the lines of starting a retail chain because of heavy investment required. To pool in money, private investors, friends and relatives were assured of  commission on sales, interest , margin percentage, and such things. By commission sale we mean on per-piece or on total sales. We agreed to share the revenues generated from the profit of the business. The basic thing is that we never left any opportunity to collect any funds coming our way . Whichever option was feasible and practically possible, we have done it. New investors were hesitant to invest in our business and to convince them and to get the funding we offered them commission on sales too. Additional funding was still required, because retail was in boom and there was a huge opportunity in the market. To grow further with new stores, we needed additional funds and it was hard to raise from the existing financial arrangement. Hence, we started discussions with banks, but there was the challenge of providing collateral security to get the loan sanctioned. We had submitted inventory and fixed assets as part of the collateral. Challenges were met by some means and or the other and growth was supported by necessary funds. Initially, suppliers were not ready to supply goods on credit. It was also a big challenge to ensure best product with good quality from reputed vendors . Our merchandising team managed to convince the vendors touting our vision and expansion plans. Our market reputation too helped us.

Lot of organized players started entering the market and competition became intense day by day. We needed to get sharper and sharper to stay and create a space in the market. To meet the competition we had to grow simultaneously because unless and until we achieved optimum volumes in sales we would not able to source products at reasonable prices and that would hurt the business. This led us to think once again on various funding options which included debt, PE, IPO, mergers and loans from small investors. But there were huge challenges in all the above mentioned options. Because of the scale of our operations and size of the company. But our model and our passion for the business did not allow us to rest for a single moment. We kept on evolving the options and opportunities until we found private equity investors.

Retail grew at a rapid pace between 2002-07. During this period, V Mart was also growing at a CAGR of 40 per cent. The number of stores were increasing for which we needed more investment in terms of assets, merchandise, manpower and so on. We decided that the capital investment should not be the hindrance for our growth so we searched out for the best viable options in the year 2007. Private equity investors was the best option for us to support our expansion plans. We worked with SBI Capital and eventually landed Aditya Birla as a PE investor.

Organized retail is just six per cent of the Indian Retail. It has a huge potential to grow in future which is well known to all the investors. Limited options of funding are available in India because retail operate on rental models and there is very limited scope of buying properties. So the financial institutions/banks find it difficult to finance.
Every policy has its pros and cons. FDI policy in India limits investing options for a retailer like us. For V Mart too it limited the options of funding. Foreign money in any case is welcomed by Indian retail industry and similarly by us. The costing of other options like FDI policy from the investment point of view is needed.