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Shopper’s Stop says it’ll sustain growth in Q4

Shopper’s Stop hopes to touch double-digit like-to-like sales growth by Q4FY10 and is positive that it will maintain this momentum. A majority of retailers are witnessing improved footfalls

Shopper’s Stop Ltd has said that it is confident on sustaining its growth achieved during the third quarter of FY10 over the next quarter. It also hopes that its like-for-like sales will grow into double digits in Q4FY10.

“We are confident that we can sustain the same numbers in the next quarter also. In Q4FY10, we hope to see an increase in like-to-like sales growth which has almost touched double digits in Q3FY10. We will definitely be able to maintain earnings before interest, taxes, depreciation, and amortisation (EBITDA) between 7%-8.5%,” said Govind Shrikhande, president and chief executive officer of Shopper’s Stop.

During the third quarter to end-December, the retailer reported a net profit of Rs13.60 crore compared to a net loss of Rs3.10 crore in the same period a year ago. Its total revenues during the third quarter also rose to Rs421.10 crore on increase in average selling price and space additions.

During Q3FY10, the company registered EBITDA of Rs30.20 crore, a growth of 210% on a year- on-year basis, due to the combination of lowered operating costs, steady profit margins and increase in sales. 

For the past four years, the company claims that the third quarter has always reported good sales numbers due to the marriage and festival season. “This time also, our sales are up by 15% on a quarter-on-quarter basis,” said Mr Shrikhande.

Shopper’s Stop also reduced its electricity consumption by 14%. The company shifted to Tata Power from Reliance Infrastructure, which helped it to reduce electricity costs. It has also cut down on advertising. Last year, it had to spend around Rs14 crore on a logo change. The company has also cut down usage of office space by 15%.

A majority of retailers are witnessing improved footfalls and better conversion on the back of improved consumer sentiment. Like-to-like sales have seen strong growth for some large retailers. However, Shopper’s Stop’s like-to-like sales have been under pressure for the past two quarters.

“We expect the company’s top-line to grow by 19% in FY10 and operating margin to be at about 6.5%-6.8% in FY11. Shopper’s Stop has been able to turn around its operations over the past two quarters and is expected to deliver steady performance going forward,” said KR Choksey Shares and Securities Pvt Ltd, in a report.

Profitability of many retailers is likely to sustain due to the revival in fashion retailing and rebound in home retailing sales, which are poised to improve on account of revival in the real-estate sector. Expansion plans are back on track, at a slower pace and at strategic locations.

Shopper’s Stop has been able to hold the top-line steady, despite decline in conversion ratio and muted customer entry. However, the key concern still is de-growth in like-to-like sales for stores, indicating low brand loyalty, KR Choksey added.

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    Steel price should stabilise at current levels: SAIL

    SAIL had raised prices of flat products by Rs500 per tonne and does not see any further rise in steel prices

    Steel Authority of India Ltd (SAIL) on Thursday said that steel prices should stabilise at current levels after hikes in recent months, reports PTI.

    "Prices have been raised and we don't see any further rise in steel prices," SAIL’s chairman and managing director SK Roongta said on the sidelines of an international conference on the refractory industry.

    On 2nd February, SAIL had raised prices of flat products by Rs500 per tonne.

    Recently, Tata Steel's managing director, HM Nerurkar, had also indicated that steel prices were likely to stay stable till March. "Prices of long products had risen sharply in December after which there was some correction and we don't see prices going up again," he said.

    Meanwhile, Mr Roongta said that SAIL's 50:50 joint venture with Tata Steel, S&T Mining, had been shortlisted by Coal India Ltd.

    "Coal India had invited an Expression of Interest and our joint venture, S&T Mining, has been short listed," Mr Roongta said.

    SAIL and Tata Steel had formed the joint venture in 2008 with an aim to scout for and develop coal mines to secure a key energy source for their existing and planned steel capacities.

    When asked about International Coal Ventures, the special purpose vehicle formed by several state-run units to acquire coal properties abroad, Mr Roongta said that it had made little progress till date.

    However, he said, SAIL had not yet made any decision to exit the venture.

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    Israeli court bars Sun Pharma from hiking stake in Taro

    The Supreme Court of Israel has ruled that Sun Pharmaceutical Industries may not exercise a warrant to purchase additional Taro shares while a previously-ordered temporary injunction remains in effect

    Israeli drug company Taro Pharmaceutical, which is fighting a takeover battle with Mumbai-based Sun Pharmaceutical Industries Ltd (Sun Pharma), on Thursday said that the Supreme Court of Israel has debarred the Indian company from acquiring further stake in Taro, reports PTI.

    "The Supreme Court of the State of Israel has ruled that Sun Pharmaceutical Industries may not exercise a warrant to purchase additional Taro shares while a previously-ordered temporary injunction remains in effect," Taro Pharmaceutical said in a statement.

    Sun Pharma is the single-largest shareholder in Taro with 36% stake and it has been trying to take control of the company ever since their $454-million merger deal of 2007 was unilaterally terminated by the Israeli company a year later. After this, both companies had filed cases against each other and the matter is pending in the Supreme Court.

    Sun Pharma had launched an open offer for acquiring additional shares of Taro in 2008. The open offer was challenged in the Supreme Court, which prohibited the Mumbai-based company from closing the offer until the court gave a ruling in other cases related to takeover.

    Taro said that in December 2009, Sun attempted to exercise a warrant to purchase approximately 3.7 million additional Taro shares at a price of $6 per share.

    Taro alleged that the purchase of share through warrants was violation of the court order, which is to maintain the status quo.

    Sun asked the apex court to rule that the temporary injunction does not prohibit the exercise of the warrant, which was not accepted by the court.

    "In its decision, the Supreme Court ruled that the purpose of the temporary injunction is to maintain the status quo until a judgment on the appeal is rendered and prohibited Sun from exercising the warrant," Taro said.

    Taro voluntarily agreed to grant an appropriate extension to the term of the warrant in the event that the court decides the appeal after expiration of the warrant, it added.

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