KOCHI: The Lulu Group’s foray into the shopping mall business in India, which began with the launch of the Lulu Kochi Mall in 2013, continues to operate in the Red.

Lulu shopping mall business operating under two entities, Lulu International Shopping Malls Pvt Ltd (LISMPL) and Lulu India Shopping Malls Pvt Ltd (Lulu India) has reported a net loss of Rs130.2 crore for the financial year 2023-24 (FY24).

Loss declines

However, the performance in FY24 has improved compared with the previous year when the group incurred a much larger net loss of Rs205.8 crore.

More encouragingly, the operating income has increased substantially during FY24 having grown to Rs4,384.8 crore from Rs3,243.4 crore in the previous year, representing a jump of more than 35 per cent.

Speaking to businessbenchmark.news, a financial analyst noted that interest expenses may have weighed heavily on the company’s finances due to the significant size of the loans on its books.

Loans close to Rs4,000cr

As per the loan details released by ICRA rating agency, the group has total loans to the tune of Rs3,957.5 crore with the term loans alone amounting to Rs3,148.90 crore as of March 31, 2024.

While the working capital loans are at Rs788.60 crore, non-funded working capital facilities are to the tune of Rs20 crore.

Expansion spree

Following the success of the Kochi mall, the company expanded its operations by constructing a similar format shopping mall in Thiruvananthapuram, which started operations from December 2021 and a shopping mall in Bengaluru that started operations from October 2021.

It has expanded its portfolio by taking on lease the existing Manjeera Mall in Hyderabad in September 2023.

Furthermore, the company developed multiple retail hypermarkets in cities such as Coimbatore, Thriprayar, Bengaluru, Palakad, Calicut, Lucknow, etc thereafter.

Large capex plans

The company has large capex plans of Rs500-550 crore in FY2025 and Rs600-650 crore in FY2026 towards new hypermarkets and malls, to be largely debt-funded.

With ramp-up in operations and expected addition of new hypermarkets, the company’s revenue is projected to improve further by 30-35 per cent in FY2025, and operating margins are likely to be in the range of 15-16 per cent, according to the rating agency.

Promoter support

The promoter, Yusuf Ali, is said to have provided a financial guarantee or collateral in the form of fixed deposits worth Rs1,000 crore to secure the company’s borrowing.

“In exchange for this security, the company has taken a Loan Against Bank’s Own Deposit (LABOD) of Rs980 crore from its current lenders,” the agency noted.

Promoted by Yusuff Ali MA and Ashraf Ali (elder brother of Yusuff Ali), Lulu International Shopping Malls Pvt Ltd (LISMPL) was incorporated in 2004 to construct and run shopping malls, hypermarkets, amusement centres, hotels and similar activities in India.