Samara Capital and Amazon have invested Rs 275 crore into their Indian joint venture Witzig Advisory Services that owns and operates the food and grocery retail chain More. Witzig, in turn, has invested the amount into More Retail with both the transactions undertaken through rights issue, as per latest regulatory filings made by both the companies.
The filings to the Registrar of Companies also reveals that More Retail has reduced its net losses from Rs 499 crore in FY19 to Rs 175 crore in FY20, while its revenue is up by 10% at Rs 4824 crore in 2019-20 as compared to Rs 4384 crore the year before. However, the company said the figures are not comparable as the company has adopted INDAS 116 from April 2019.
In fact, Samara and Amazon have invested in Witzig through a mix of ‘Class A’ shares which have voting rights and ‘Class B’ shares which have differential voting rights (DVR). This was the original structure through which Amazon had invested in Witzig in 2019 after the latter had acquired More from Aditya Birla Group for around Rs 4180 crore in 2018.
Samara Alternative Investment Fund holds 51% stake in Witzig and two Amazon entities -- Coda Holdings Singapore and Coda Holdings 3 LLC – the balance 49%. But of the 49%, Amazon’s voting rights is at 17% since it is through Class A shares while the rest 32% through Class B shares having no voting rights.
This structure was adopted to ensure Amazon's voting rights in Witzig is less than 26% to comply with Indian e-commerce regulations so that More can be a seller in the marketplace.
More Retail said its accumulated losses were Rs 8105 crore against equity share capital of Rs 7,666 crore as of March, 2020. “Basis the projections prepared by the company, the management believes that the net current liabilities of Rs 331.45 crore will be bridged mainly through additional funding by the holding company (Witzig) and internal accruals,” it said in the filing.
Business intelligence platform AltInfo founder Mohit Yadav said the plan for More seems to be to become financially sustainable sooner than later. “This is evidenced from the fact that while the topline has grown by 10%, net loss has been decreased by a whopping 65%,” he said.
More Retail in the filings said it undertook a substantial expansion in FY20, adding 58 supermarkets and one hypermarket. The company operates 623 supermarkets, 22 hypermarkets and was amongst top four organized food and grocery retailers in India.
In the filings, More Retail said it expects the Covid challenges to continue. “The customer is changing the way he/she shops. There is a significant share of orders moving to online platforms, and the company is making sure to fulfill all the customer’s requirements,” it said.
In fact, the More stores are one of the prime sellers in Amazon’s expansion of food and grocery retail in the Indian ecommerce marketplace. The company also said the hypermarkets suffered a loss of sales and margins impacted due to its inability to sell lifestyle categories of products during lockdown and since some of the stores were shut.