In the 15 years since it opened its first outlet in Mumbai, Nature’s Basket has brought imported meats and cheeses, exotic vegetables, free-range eggs, artisanal breads, and organic staples to well-heeled, urban Indians and expats. It has been quick to latch on to fads such as cold-pressed juices and gluten-free foods.

Now, a year and a half into new ownership, the gourmet retail chain finally has a chance to make some profit too.

After failing to make Nature’s Basket profitable since 2005, its erstwhile parent, Godrej Industries, chose to sell it to supermarket chain Spencer’s Retail for an enterprise value of Rs 300 crore Rs 300 crore Business Standard Spencer's Retail to fully buy out Nature's Basket in Rs 300-cr deal Read more ($40 million) in May 2019. It was akin to a garage sale, considering Nature’s Basket’s revenue in the year ended March 2019 was around Rs 340 crore ($46 million). In the same period, its net loss was nearly Rs 80 crore ($11 million).

At the time, Spencer’s, owned by Kolkata-based conglomerate RP-Sanjiv Goenka Group, looked like it had bitten off more than it could chew. Eighteen months on, things look a lot different.

Nature’s Basket’s Ebitda Ebitda Ebitda Earnings before interest, taxes, depreciation, and amortisation. margins have improved consistently since the acquisition. From negative 24.3% in the quarter ended September 2019 (from 5 July to 30 September) to 8.2% in the three months ended September 2020. Its net loss narrowed from Rs 37 crore ($5 million) to Rs 5 crore ($670,000) in the same period.

To make this possible, Spencer’s cut costs and shut three loss-making Nature’s Basket stores in Mumbai, while adding one in Kolkata. Nature’s Basket now has 31 outlets—including in Pune and Bengaluru—compared with 33 when it became a part of Spencer’s in July 2019.

“There is a stronger focus on unit economics now,” says a former executive of Nature’s Basket who was with the chain till recently. “They think, if I can get half a percentage point more margin, how do I do it?” The executive did not want to be named since they did not want to publicly comment on their former employer.

Not out of the woods

In the year ended March 2020, Nature’s Basket’s revenue rose 6% to Rs 461 crore ($62 million), and its net loss increased 26% to Rs 99 crore ($13 million).

Besides taking advantage of the sourcing benefits that come with being part of a larger retail chain, Nature’s Basket has also tweaked and standardised its stores’ layout. For instance, chances are the fresh produce section would greet you when you visit a Nature’s Basket store now, which may not necessarily have been the case earlier.


Seetharaman G

Starting out as a business journalist in 2008, Seetharaman has written about energy, climate change, retail, banking, and technology. He has worked with Business Today, a fortnightly, and the Sunday edition of The Economic Times.

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