Spencer’s Ltd, the hypermarket chain from the stable of RP-SG Group, is going to launch its maiden share sale to the public in the first week of August with a Rs 80-crore rights issue.
Priced at Rs 75, which includes a Rs 70 premium on a share of face value of Rs 5, the offering will be at a 17.7 per cent discount to the closing price on Thursday on the NSE, where the scrip closed at Rs 91.15, up Rs 2.20 or 2.47 per cent.
Shareholders will be offered two shares for every 15 held in the company. Spencer’s became a publicly listed company in January 2019 following a three-way split of CESC Ltd, the flagship of RP-SG Group.
The promoters’ holding in the company stands at 54.70 per cent. It became a part of the undivided RPG Group in 1989.
The main objective of the fund raising will be to meet the enhanced working capital requirement of the chain which operates 191 stores in 42 cities with a trading area of 14.60 lakh square foot. It also offers an online platform to customers in 17 cities.
Even as it started out as a food-focused retailer, the product mix of Spencer’s is in a flux with an emphasis on the non-food side of apparel and electronics. Proceeds of the issue will help the company to stock up on those items.
The issue comes a year after the acquisition of Natures Basket from Godrej at an enterprise value of Rs 300 crore.
A subsidiary of Spencer’s, it suffered a loss of Rs 69.31 crore on a turnover of Rs 268.67 crore.
Spencer’s also registered a loss of Rs 57.02 crore compared with a Rs 7.94- crore profit in 2018-19 even as total income rose to Rs 2,402.84 crore in 2019-20 from Rs 2,214.98 crore a year ago.
On a consolidated basis, total income was Rs 2,671.88 crore and profit after loss Rs 130.78 crore after accounting for losses from Natures Basket. However, the company held out hope that it was turning a corner.
“By the close of the financial year under review, the operating cost structure at Natures Basket had improved considerably and the company reached our desired negative working capital position,” chairman Sanjiv Goenka wrote to shareholders in Spencer’s annual report.