Shankara Building Products is not keen on undertaking expansion in the near term and the number of its retail stores has remained constant for quite some time at 134 stores. Also, the company is planning to close down six stores spread over 21,300-sq.ft (mainly in Gujarat) in Rajkot, Surat, Vadodara, Nizamabad, etc. This is because the management does not see Gujarat as its strategic focus. The company is taking these drastic steps as it has seen revenue de-growth and margin compression in recent times. Going ahead, Shankara aims to focus on its core retail business that is a superior margin one with higher return on equity.
The company has also proposed a sale of partial assets (including land, building & equipment) at the Chegunta unit (Hyderabad) for Rs 69.1 crore to APL Apollo Tubes. Upon completion of this proposed transaction, Shankara will be left with assets worth Rs 40 crore in Taurus. This transaction will help the company to release substantial some for its working capital needs. In addition, part of the proceeds from the transaction will be utilised towards debt reduction.
Shankara is a leading organized retailer of home improvement and building products in India, operating under the brand name ‘Shankara Buildpro’. The company sells over 30,000 products needed in the entire home construction and renovation lifecycle. The company’s customers include ustomers include home owners as well as professional customers like architects, interior designers, contractors, developers, plumbers, electricians, tile layers, masons, carpenters, painters etc. as well as small enterprises.