Chairman's Message

Dear Shareholders,

FY 2015-16 was another fantastic year for the e-commerce industry in the US, as consumers increasingly used multiple devices for online shopping.

In 2015, the web accounted for nearly 40% of the US retail sales growth, underscoring the ever growing impact of the web in the country’s retail landscape. According to the US Commerce Department, shoppers in the US spent US$ 341.7 billion on retail purchases on the web in 2015, up 14.6% from 2014; a rate that's nearly five times as fast as the 3.1% growth in store sales.

Exponential opportunities in the digital platform, coupled with our efforts to consistently strengthen our business model, have led to robust growth in profitability and margins. During FY 2015-16, we registered a revenue of ₹721 Crores, compared to ₹347 Crores in FY 2014-15. Simultaneously, our EBIDTA grew to ₹47 Crores in FY 2015-16, against ₹9 Crores in 2014-15; and net profit escalated to ₹41.51 Crores in FY 2015-16 vis-à-vis ₹5.96 Crores in FY 2014-15. Our earnings per share increased to ₹28.18 in FY 2015-16 against ₹4.05 in FY 2014-15. The Board of Directors have recommended a dividend of ₹2 per share subject to shareholder’s approval at the AGM.

We continue to maintain the sales momentum, driven by large opportunities available in the US e-commerce market, and the increasing need for key sellers, such as us. We witnessed tremendous market traction as we brought scale and operational excellence to gift a truly differentiated retail experience to discerning customers. We remain firmly focused on delighting our customers as we continue to innovate and raise the bar in terms of selection, service and the experience.

123Stores
During FY 2015-16, our deliveries grew by 155% Y-o-Y to 19,69,233 orders from the 7,72,981 orders in FY 2014-15. We have successfully automated the supply chain, leading to a scalable and sustainable business model. The result is that despite growing volumes and operational complexity, we have retained high customer ratings.

We have also expanded our product catalogue; we are now partnering with over 1,600 suppliers and selling more than 500,000 unique products to various markets. Our inventory at warehouses was ₹55.30 crores (as on 31 March 2016); largely this inventory comprises fast moving items.

Technology edge
Technology plays a pivotal role in our business. We have a robust technology architecture that allows us to offer a huge selection of products, catering to a wider customer cross-section. Besides, we can easily handle a large volume of orders by leveraging our robust technology architecture, efficient supply chain and deep relationships with our suppliers. Customers benefit from a better price point and greater range of products. This, in turn, increases the traffic and reinforces the cycle.

Geared for the next level
Going forward, our strategic priorities comprise the following:

  • Scale up our operations by adding new products and enhance reach.
  • Expand to cover more US marketplaces, so that our distribution network reaches 100% of the US online shoppers.
  • Elevate customer centricity through consistent customer engagements.
  • Improve supplier processes, efficiencies and quality through regular inputs and training.

We look forward to making significant strides in FY 2016-17; as we continue to strengthen the 123Stores brand. Overall, we are very enthusiastic about our long-term growth. On behalf of my colleagues on the Board, and the entire senior leadership, I thank our dedicated team, whose expertise and commitment drive the levers of our progress.

I am also grateful to our bankers, partners, customers and shareholders for their continued support and encouragement, as we pursue our growth strategy in the coming years.

Warm regards,

Arvind Kajaria
Managing Director
27 May 2016

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