RP-Sanjiv Goenka Group’s FMCG business is expected to break-even by March 2020, an official said on Friday.
Responding to a shareholder’s question on “when will the demerged units be profitable” at the CESC (Calcutta Electric Supply Corporation)’s Annual General Meeting, Group’s Chairman Sanjiv Goenka said: “Spencer’s is already almost there (to become profitable).
“For FMCG, it will take some time. It is a peculiar situation. The more you grow, at one stage, your losses increase and after a certain point of time, it starts getting into profit. I think the inflection point (break even) will come somewhere around March 2020 or thereabout and till then, there will be losses at that company (FMCG).”
Notably, the group’s flagship company CESC’s board had approved a restructuring plan to demerge the large businesses into four separate entities — power generation, power distribution, retail and other businesses.
According to its latest Annual Report, it has obtained the necessary clearance from the Securities and Exchange Board of India (SEBI) and stock exchanges. After that, a draft Restructuring Scheme was submitted to the Natonal Company Law Tribunal (NCLT), Kolkata Bench, in September 2017.
In March 2018, the NCLT passed an order sanctioning the scheme with a direction that the part of the scheme providing for demerger of CESC’s generation undertaking shall be effective upon obtaining approval of the West Bengal Electricity Regulatory Commission (WBERC) on the Power Purchase Agreement between CESC and the generation undertaking proposed to be demerged.
“Your Company made an application in April 2018, seeking WBERC’s approval. At the time of writing this letter, the approval is awaited,” the report said.
Goenka also said the group’s multi-format retailer has reached profit-before-tax (PBT) level in the first six months of the current fiscal.
“Spencer’s for the first six months actually got to a PBT break-even… This is a very strong step forward,” he told shareholders.
Asked about timeline for “demerged companies to be listed”, he said, it is pending with the stock exchanges.
He said the company would set up electric vehicles charging stations and the first one is already “ready”.
Goenka said all the group companies are contributing to its corporate social responsibility fund and the group is planning to set up an educational institution for which it is looking for land.