Shoppers Stop warns of sharp fall in same-store sales

“We are seeing a slowdown in sales. In the quarter ended September, the sales growth was 12%. Overall, for the year-end it would be 6-7%," ShoppersStop managing director Govind Shrikhande said

Retail chain ShoppersStop  said it expects the same-store sales to fall sharply to 6-7% by the fiscal end from a high 12% due to unfavourable conditions, and warned that the overall growth of the retail industry will halve next year.

"We are seeing a slowdown in the like-to-like sales growth. That is due to a combination of slowdown in the economy, indecisiveness in the manufacturing sector, and the rupee fall. We are seeing a slowdown in sales. In the quarter ended September, the sales growth was 12%. Overall, for the year-end it would be 6-7%," ShoppersStop managing director Govind Shrikhande said.

Same-store sales refers to the differential in revenue generated by a retail chain's existing outlets over a certain period of time compared to same period in the previous year which is helpful to investors/analysts. He added the retail industry that was growing at 20%, would grow at 10% over the next 12 months. The company announced the launch of its 49th ShoppersStop store.

It plans to take the number to 66 within the next two years. It will invest up to Rs400 crore to expand presence by opening new stores across formats in the next three years. The firm currently operates departmental stores under the ShoppersStop brand, and the Hypercity hypermarkets apart from several speciality format stores such as HomeStop, Crossword Book Store, Mothercare, Estee Lauder and Clinique. The company is likely to reduce its apparel prices for the private labels by 5 percent due to the softening cotton prices, he said but warned that the non-apparel prices are likely to go up by 10-15% due to the rupee fall.

"Next year, apparel demand should be better than what we are seeing this year. This year the price increased from 15-18 percent which hit the volumes. Volume revival will happen (from next year). The non-apparel will start showing the trend apparel was showing this year. All brands of watches, because of dollar rupee equation, are likely to go up by 10-15 percent," he said. Non-apparel segments contribute to 42% of ShoppersStop's revenue and the imported segment is above 30%, he added.

In the late afternoon, Shoppers Stop was trading at around Rs264.30 per share on the Bombay Stock Exchange, 0.32% down from the previous close.
 

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NHAI to launch Rs 10,000-cr tax-free bonds issue on 28th December

The NHAI official said that the interest (coupon) rate of the bonds issue will be between 8% and 8.5%, while refusing to disclose the exact number

Unfazed by uncertainty in the capital markets, the National Highways Authority of India (NHAI) will launch its first ever tax-free bonds issue of Rs 10,000 crore on 28 December 2011. The issue will close on 30 December 2011, a senior Road Transport Ministry official said. The official further said the interest (coupon) rate of the bonds issue will be between 8% and 8.5%, while refusing to disclose the exact number.

"A formal announcement will be made tomorrow by road transport minister CP Joshi and you should wait for that," the official said, adding that the money raised from it will be used to partly finance various National Highways projects under different government schemes. Some money will also be used for viability gap funding for BOT (build-operate-transfer) road contracts, the official added.

As per the prospectus filed by NHAI with the market regulator Sebi, the bonds will have two maturity periods of 10 and 15 years, and would get listed on the Bombay Stock Exchange and the National Stock Exchange.

In this year's Budget, the government had allowed NHAI to raise Rs10,000 crore from the tax-free bonds, an instrument never used by it earlier. Till now, it used to raise funds through issue of 54EC bonds, under which subscribers can claim exemption of capital gains tax.

Citing the provisions of Income Tax rules, the NHAI prospectus has, however, clarified that only the interest earned on the new bonds will be tax-free, not the actual investments. Moreover, investors will be liable to pay capital gains tax as applicable, it further said.

According to the NHAI prospectus, the bonds issue will worsen its debt to capital ratio from 0.11 to 0.29 if it raises Rs10,000 crore from the markets. The debt to capital ratio reflects the financing strengths of a firm, higher the ratio, the more debt company has compared to its equity. As on 30 June 2011, the NHAI's total debt (including secured loans) stood at Rs6,636.21 crore.

The bond issue has got AAA (stable) rating from the three agencies -- Crisil, CARE and Fitch. SBI Caps, ICICI Securities, Kotal Mahindra Capital and AK Capital Services have been appointed as the lead managers by the NHAI for the bonds issue.

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RIL arbitration notice: Oil ministry seeks time till 31st January to reply

The oil ministry reportedly wants to consult the law ministry on the arbitration notice and appointment of arbitrators and accordingly sought an extension of the deadline

New Delhi: The oil ministry has sought an extension of over one month in the deadline to respond to the arbitration notice issued by Reliance Industries (RIL) against proposed penal action for a fall in KG-D6 gas output. Reports PTI.

The oil ministry on Wednesday wrote to RIL seeking time till 31st January to respond to the arbitration notice, sources privy to the development said.

RIL had in the 24th November arbitration notice termed the ministry’s move to limit the amount of expenditure the company can recoup from its flagging KG-D6 fields in proportion to the gas production as illegal and outside the Production Sharing Contract (PSC).

As per the dispute resolution mechanism set out in the PSC, the government had one month’s time to respond to the notice and appoint arbitrators. RIL and the government have the right to appoint one arbitrator each. A third neutral adjudicator was to be appointed by the two arbitrators.

RIL would have got the right to appoint an arbitrator on behalf of the government if no response was made within the one month timeframe.

Sources said the oil ministry wants to consult the law ministry on the arbitration notice and appointment of arbitrators and accordingly sought an extension of the deadline.

The ministry was moving toward restricting cost-recovery—now at 100%—in proportion to gas output from the KG-D6 fields.

RIL has built facilities to handle 80 million metric standard cubic metres per day (mmscmd) of gas production, but the fields are producing less than half of that due to a fall in reservoir pressure and water ingress.

As per the 2006 Field Development Plan, where capital expenditure in Dhirubhai-1 and 3 fields was hiked to $8.8 billion from $2.47 billion previously, RIL was to produce 61.88 mmscmd gas from 22 wells by April this year and 80 mmscmd from 31 wells by 2012.

RIL stopped drilling in D 1&D 3 after the last four of the 22 wells drilled in the fields yielded non-commercially exploitable volumes and decided to do more studies.

However, oil minister S Jaipal Reddy last week insisted in Parliament that all 31 wells outlined in the development plan must be drilled by March, 2012, blaming the production decline on the failure to do so.

At the same time, he also admitted that four wells in D 1&D 3 had stopped producing because of water incursion and sand deposits and one of the six wells in the MA field of the same block has been shut because of water incursion.

Sources said based on the opinion of the Solicitor General of India (SGI), the ministry wants to “disallow expenditure incurred in constructing production/processing facilities at the D 1 & D 3 fields in the KG-D6 block that are currently under-utilised/have excess capacity because of falling output”.

Production Sharing Contracts (PSC) allow operators to recover 100% of their exploration and production costs and do not link cost-recovery to output.

RIL had envisaged a gas output of 80 mmscmd from KG-D6 by 2012 through an investment of $8.8 billion.

However, current output is about half of the target and RIL has so far invested only $5.8 billion.

The latest figures show gas production from the Dhirubhai 1 and 3 fields in the Krishna-Godavari Basin in the Bay of Bengal falling to a fresh low of 32.94 mmscmd, down from the 54 mmscmd peak hit in March 2010, before well pressure dropped and water incursion began.

According to the Reliance development plan approved by the authorities, output should have reached 61.88 mmscmd this month. Associated gas production from the MA oil field in the same licence area was 6.86 mmscmd, for a combined total of 39.8 mmscmd, versus the expected 70.39 mmscmd.

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