‘Consumption patterns are changing rapidly’

DV Ram Kumar, vice president-Food & Agri, Spencer’s Retail Ltd, spoke with Moneylife on the issues facing the food retail business and his company’s growth plans

Pallabika Ganguly (ML): Is inflation going to rise in the coming months?
DV Ram Kumar (DV):
Since the past four to five months, inflation has been settling down. But it is a fact that inflation is going to remain. This is not only due to the mismatch in the supply-demand scenario, but also due to the rapid change in the consumption pattern of consumers. The consumption pattern is changing rapidly in India—particularly in rural areas and Tier II & Tier III cities.

ML: What kind of changes do you see in food consumption patterns?
Customers are upgrading very rapidly. We are noticing changes in eating patterns in every three to six months. People are getting more exposed (to various foods) and their awareness levels are changing. Aspiration levels and consumption habits are changing. Consumers are looking for fast food (like pizzas and burgers) and also for healthy products (with less cooking oil). As an industry, if we do not prepare for such kind of changes, we will suddenly have to find a way to meet the new requirements of customers. In the next four years, we will have to face a different set of customers with different needs. We are on our toes to understand these changes, introduce new products and keep up with customers.

ML: Is poor infrastructure leading to wastage?
Productivity and wastage are the two major issues in the fast moving consumer goods (FMCG) segment. There is huge wastage in dry commodities as well as fresh products. This is mainly due to lack of infrastructure. Products like wheat and pulses are rotting despite the money invested in logistics. There is a lack of warehouses and cold chains in the country. Distribution is not happening in an equitable way. That is why some areas in India have a surplus and the others suffer a shortage. 

We need to address this factor. Annual wastage in perishable goods is almost 38%-40% and in dry commodities at least 21% gets wasted annually due to lack of storage (facilities).

ML: India is facing an acute water-shortage problem. What will be its impact on the FMCG sector?
We need sustainable agriculture. We must soon get into drip irrigation and adopt other kinds of technologies for agriculture which use minimal water. Drip irrigation has been around for a long time, but the utilisation of the technology has been minimal. Equipment (for drip irrigation) is available only in a few pockets in Maharashtra and Punjab, and equipment costs have to come down.

We as corporate houses have a big role to play in spreading awareness about such technologies. We have to take steps to educate farmers, explain to them the benefits of the technology and also spread awareness that using these technologies will boost production. {break}

ML: How did Spencer’s perform during this financial year?
The FMCG sector went through some stress during the slowdown. But going forward, we foresee good growth in this sector. At Spencer’s, we have done a lot of innovation, particularly in value engineering. We worked on inefficiencies to cut down costs. We vigorously optimised freight costs, tightened operational expenses, cut down on rents and power bills (our Mumbai stores shifted from Reliance Infrastructure Ltd to Tata Power), we closed down a few distribution centres and unnecessary warehouses. Overall , we reduced inefficiencies by 8% to 10%.

We closely looked at our efficiency parameters—this helped us to produce decent results. This is not a one-time job. We need to be on our toes to keep a tight grip on inefficiencies. Now consumption is coming back. On a month-on-month bases, we are seeing 6%-7% increase in consumption. We hope to see double-digit growth in same-store sales growth.

ML: The Union Budget has proposed 10% service tax on rented properties. How much will this proposal affect retailers?
It is a challenge. We need to represent our views and find a way to get relief on the same; in the current scenario, the industry is not ready to take this kind of enhancement (in taxes). (The service tax of) 10% is a big number, because in the first place, we are struggling to meet revenue targets versus our expenses.

ML: Can you elaborate on your expansion plans?
We are looking at expansion, but I cannot give you a number. Expansion will happen responsibly. We are situated across India—Delhi, Bengaluru, Chennai, Hyderabad and Kolkata. We are going to add more stores in these places. We are not looking at opening standalone stores in new places.

We are also planning to add more exclusive standalone non-vegetarian food item stores (under the brand) Spencer’s Fish & Meat. We are (still) at the pilot stage. We have launched three standalone stores in Kolkata. It is a complex category which needs proper back-end facilities. We will expand these stores to other cities where we are already present. We are looking at opening such stores in Bengaluru, Chennai and Hyderabad.


Sector performance: March quarter gainers and losers

We bring you an analysis of the major sectoral leaders and laggards for the March quarter

The Sensex has only marginally risen from its December quarter closing (17,465) to end up at 17,528 for the March quarter. However, for the past few weeks, the index has been chugging ahead at a fast pace. Some sectors were at the forefront of this rally while others have missed it altogether.

19 out of the 29 Moneylife sectoral indices have ended the March quarter in positive territory. Leading the pack is the cement sector, which has surged 17% over the December quarter closing. The acceleration in construction and infrastructure-related activity has resulted in strong demand for cement products.

Cement prices have shot up, giving a fillip to the top-lines of cement companies.
The consumer durables sector has also witnessed a sharp rally, rising 14% over this period. Higher disposable incomes through payment of arrears of the Sixth Pay Commission and NREGA payouts have boosted demand for consumer durables even in the rural sector.

Farm & farm inputs and non-ferrous metals indices have risen 12% each. In order to improve farmers’ conditions, agricultural inputs were relieved of the tax burden in the recent Budget.

Rounding up the top five is the auto components sector index, which rose 9% during this period. Automobile companies witnessed a spike in sales of passenger cars and two-wheelers that hugely benefited component manufacturers.

Among the laggards, the sugar index has witnessed a dramatic turnaround from last year’s rally, falling 24% over the past three months. A crash in sugar prices has spelt trouble for sugar companies. Many investors who bought sugar stocks near the peak of its record surge may be left licking their wounds.

The real-estate sector index has lost 13% of its value while the steel index has also tanked 8%. While property prices have slowly inched upwards, demand has not yet shown strength. With interest rates set to rise, the situation may turn worse. Steel manufacturers have had to contend with margin pressures following a surge in prices of iron ore, the main raw material in steel production.

Energy and oil & gas sector indices have also taken a beating, falling 6% and 4% respectively over this period.


HDFC Bank held responsible for illegal fund transfer

Consumer forum orders bank to compensate customer, says it did not follow RBI guidelines on online fund transfers

In a significant ruling, the District Consumer Complaints Redressal Forum has held HDFC Bank responsible for unauthorised fund transfer in an Internet banking transaction, reports PTI.

In an order dated 25th March, the Forum directed the Bank to pay a customer the whole amount which had been transferred from his HDFC Bank account without his authorisation. The Forum, headed by MG Rahatgaokar, held that the Bank had failed to implement the guidelines issued by the Reserve Bank of India (RBI), for Net banking facility.

Nikhil Phutane, the complainant, has an account with HDFC's Santa Cruz (a Mumbai suburb) branch. Qatar National Bank, where he works, transferred Rs4,60,000 to his account in October 2008. However, Mr Phutane found out in November that his bank balance was zero.

The entire amount had been transferred—through net banking—to the account of a person called Dinesh Shukla, at Lucknow. According to Mr Phutane, he never authorised HDFC Bank to add Mr Shukla's name to the list of "third party beneficiaries" on his online account.

A police complaint was lodged, and Mr Shukla and four others, including two Nigerian nationals, were arrested, and Rs70,500 was recovered from them.

Mr Phutane demanded that the Bank return him the rest of the amount, as he was not at fault.

Since HDFC Bank refused to pay him the balance amount, he filed a complaint before the Forum. The Bank argued before the Forum that either Mr Phutane had inadvertently revealed his transaction password to someone, or the computer used by him had a virus.

It also argued that after the request for fund transfer was received from his online account, an SMS was transmitted and an email was sent to Mr Phutane, for confirming the request. Since no reply came (from Mr Phutane), the funds were transferred.

But the Forum held that Bank failed to prove that such an alert had been sent. Further, it held that simply because Mr Phutane failed to respond to the mail, the Bank should not have proceeded with the transfer.

The Bank had failed to implement the "National Electronic Fund Transfer (NEFT) guidelines, issued by the RBI," the Forum held, asking it to pay Mr Phutane the balance amount. In addition, the Forum also asked the Bank to pay Rs35,000 to him, on account of "mental agony" faced by Mr Phutane, and legal expenses.



Rupesh Kumar Singh

6 years ago


Some unauthorized transaction has been done from my saving account and regarding the same i have logged the complain at customer care.
complaint no are 69274 , 71726 , Del1228774. 4-5 wrong payment are done at IDEA Cellular.

Till the date i have not received any resolution for the same as from customer care i have informed that in 2 weeks money will be refunded in my account but it's Appx 2 months,
I am still waiting but this is the limit of my patience. i am unable to understate what kind of service HDFC is providing. 2 month back pending issue is not resolved. No reply for the same.

Please clarify if you can not resolve the issue and deposit my amount please give me in written, so that i will move to next level like consumer court.

K B Patil

7 years ago

Currently, ICICI Bank is showing an ad on TV where the bank employees are seen pampering customers to any extent. In one ad, an elderly lady enters the bank to credit a cheque sent by her son from USA. The lady is chatty and the bank's employee is shown to be extremely indulgent and patient even when all the others have left. I think a poll should be taken as to how many customers of that bank share this exaggerated opinion. All the new private banks share a common ancestry with Shylock, the mechant of Venice.

In my experience, the service orientation of these banks is quite poor. Any deficiency on their part is denied straightaway. For instance, weekly SMS alerts on the balance held. Sometimes I have not received this SMS and when I point this out to the bank, they plainly say that the SMS was sent and that I have to check with my service provider.

Narendra Doshi

7 years ago

Bank should do due checks BEFORE concluding that the client is on the wrong.
Branch officials seem NOT to use their powers for satisfactorily solving the issues but ONLY want to show the rules.
What checks/systems are there by the Bank's main/head office to be AWARE of such instances occuring , may be quite frequently, at the branch level?

m k sujitkumar

7 years ago

i hope that the above decision will help the consumer community & BRING some sense to the arrogant officials of such banks.
such banks should be made to give copies of rules every year to the customer

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)