Why the Indian Media Sucks: Godrej Nature’s Basket

This post is about the ineptitude of Indian Media, and not about Godrej Nature’s Basket. I have used Godrej Nature’s Basket as an example basis the information available in the public domain and there is no intention whatsoever to present the company in a bad light.

Time and again, whenever I read the Indian Media reports, it makes me squirm. They are cringeworthy to the core. (I cannot see the Indian Media. I have no TV at home and I do not consume news in electronic format).

For all practical purposes, any news report can be taken and the incompetence of Indian Media will shine through. It just so happens that I have taken Godrej Nature’s Basket as an example.

Godrej Group has sold Godrej Nature’s Basket to Spencer’s in an all-cash deal worth Rs 300 Cr. Businesses are bought and sold, that is normal. However, what is not normal is the Indian Media’s behaviour to limit their coverage to the press releases. It sucks.

The So-Called Reporting of Indian Media

Godrej Group executive director Tanya Dubash said that to further unlock the “immense potential” of the Nature’s Basket brand and to reach greater heights, the group decided to pass on the torch.

Spencer’s Retail said this deal will enable it to access the western India market where it has no presence, making it a national player and strengthening its omnichannel capabilities.

I can continue with these press releases from both the companies, but that is not the purpose. There are ample enough earlier press releases going around which states that Godrej Nature’s Basket targeted a turnover of Rs 500 Cr by 2019 and eyed turnover of Rs 1000 Cr by 2020 and whatever.

That is the job of the corporate to advertise its own self. But why is Indian Media becoming a party to it?

The Reality of Godrej Nature’s Basket

As per Godrej Nature’s Basket report for the financial year ended 31st March 2017, total income was Rs. 309.90 Cr. It reported a loss of Rs. 95.39 Cr. The previous year, it reported a loss of Rs. 62.23 Cr. It was set up in 2005. I do not want to hazard a guess on how much loss it would have incurred in these 14 years; when in the last two years’ itself, it has made a loss of Rs. 150 Cr +.

Godrej Nature’s Basket operates 36 neighbourhood convenience stores in Mumbai, Pune and Bengaluru. It reported Rs. 338.28 crore sales for 2018-19. This means that per annum sales is not even Rs. 10 Cr, it is Rs. 9.4 Cr of sales/store/year. This includes online sales also. Wondering what omnichannel Spencer’s is referring to.

As per the 2016-17 P&L, cost of goods sold was 74% of the sales, meaning a margin of 26%. Along with other income, let us assume the margin to be at 30%.

With average store sales of Rs. 9.4 Cr, the store will make a margin of Rs. 2.82 Cr / year, which comes to Rs. 23.5 lacs / month. Majority of these Stores, if not all, will be in high-streets / malls paying average rentals of more than Rs. 100 / sq ft. These stores would be employing a minimum of 20 man-power, it will be even more considering security and house-keeping. It becomes crystal clear that Godrej Nature’s Basket is a loss-making proposition with no light at the end of the tunnel of 14 long years.

Spencer’s has said that Nature’s Basket is positioned as an aspirational brand like ours and hence fits our business. No wonder that they see synergy in two loss-making businesses – theirs and the new buying.

Summing Up

There is no issue with companies making losses. It is part and parcel of business. Just that, it would be of help if the Indian Media can look beyond the press releases and report the news for what it is. After all, the shareholders of Spencer’s read the Indian Media and they should be informed of the mess their company is getting into.

This is of course not limited to business reporting alone of brick and mortar companies. It is even more evident in the case of Indian start-ups, wherein the only news published is that of valuation and capital raised. Even for the incubators. The less said the better about political reporting. There is no other reporting as such in Indian Media.

Indian Media like to repeat that they are not considered credible for what they report. They say that people are losing trust in them. After the quality of their reporting, it is a surprise that they get to exist in the first place, and even prosper.

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