Vishal Mega Mart subsidiary, Airplaza Retail Holdings Private Limited, has been fined Rs 1.00 lakh by the Additional District Magistrate court in Ghaziabad for violating food safety standards. The penalty resulted from a food safety inspection conducted in February 2023, where a sampled product, 'First Crop Vermicelli', was found non-compliant with the provisions of the Food Safety and Standards Act, 2006.

Inspection and Penalty Details

The Food Safety Officer inspected the subsidiary's store on February 7, 2023, collecting samples of various food products. Analysis revealed that the 'First Crop Vermicelli' did not meet the required standards set by the Food Safety and Standards Act, 2006. Consequently, a complaint was filed before the Additional District Magistrate in Ghaziabad, resulting in the Rs 1.00 lakh penalty.

Company's Response

Vishal Mega Mart Limited, in a regulatory filing, stated that the financial impact is limited to the extent of the penalty imposed. The company emphasized that there is no material impact on its operations or other activities due to this order.

Recovery and Next Steps

The company has announced its intention to recover the penalty amount from the third-party manufacturer responsible for the non-compliant product. This approach aligns with common industry practices where retailers often seek compensation from suppliers for quality-related issues.

Airplaza Retail Holdings Private Limited is currently reviewing the court order and evaluating its next steps. This could potentially include an appeal against the penalty or implementing stricter quality control measures to prevent similar incidents in the future.

Implications for Food Safety Compliance

This incident highlights the importance of maintaining stringent quality control measures throughout the supply chain in the retail sector. It also underscores the active role of food safety authorities in enforcing compliance with established standards to ensure consumer safety.

As the retail industry faces increasing scrutiny over food safety, companies like Vishal Mega Mart and its subsidiaries may need to enhance their quality assurance processes and supplier vetting procedures to mitigate such risks in the future.

Vishal Mega Mart , a leading retail player in India, has announced robust financial results for the first quarter, while management predicts a flat gross margin for the full year.

Financial Highlights

• Revenue from operations surged by 21.00% year-over-year to ₹31,403.00 million
• Gross profit increased by 21.60% to ₹8,913.00 million, maintaining a gross profit margin of 28.40%
• Adjusted EBITDA (pre-INDAS 116 and pre-ESOP charges) grew by 33.70% to ₹3,244.00 million, with margin expanding to 10.30%
• Profit After Tax (PAT) saw a significant jump of 37.20% to ₹2,061.00 million

Operational Performance

Vishal Mega Mart demonstrated strong operational metrics during the quarter:

• Same-Store Sales Growth (SSSG) of 10.50% (Adjusted SSSG of 11.40%)
• Addition of 23 gross new stores, expanding the company's retail footprint
• Total store count reached 717 across 472 cities, covering a retail area of approximately 12.40 million square feet
• Loyal customer base grew to about 151 million

Management Commentary

Mr. Gunender Kapur, Managing Director and Chief Executive Officer, commented on the results: "We continued to deliver a strong performance in both revenue and profitability and demonstrated the strength of our purpose-led strategy of making aspirations affordable for consumers across geographies in India."

He added, "Growth was mainly driven by continued strength of our own brands portfolio, strong footfall and store additions. We expanded our presence in South India (Karnataka, Kerala, among others) and opened new stores in Gujarat and Maharashtra."

Gross Margin Outlook

During a conference call update, Vishal Mega Mart's management forecasted that the company's gross margin will remain flat for the full year. This projection comes despite the strong growth in Q1, suggesting potential challenges or strategic decisions that may impact margins in the coming quarters.

Category-wise Performance

The revenue contribution by category was:

The company's own brands continued to perform well, contributing 75.80% to the overall revenue for the quarter.

Digital Initiatives

Vishal Mega Mart's quick commerce initiative has shown promising growth:

• Extended to 670 stores across 445 cities
• Registered user base increased to 9.80 million

Looking Ahead

While the company has demonstrated strong growth in Q1, the management's forecast of a flat gross margin for the full year suggests a cautious outlook. Investors and analysts will likely keep a close eye on how Vishal Mega Mart navigates potential challenges while maintaining its growth trajectory in the coming quarters.

The company remains focused on its strategy of offering affordable and aspirational products, backed by cost efficiency and strong execution to create lasting stakeholder value.