Avenue Supermarts runs a clean audit record and a cash-generating store network, but the cash rarely reaches shareholders: cumulative operating cash flow covers only 63% of EBITDA over ten years, free cash flow has turned negative, and no dividend has ever been paid. The balance sheet carries a ₹1,488 crore investment in a loss-making e-commerce subsidiary that has never been impaired, and the company has disclosed a ₹5.08 crore loan to another subsidiary while seeking approval to sell goods to related parties up to ₹3,500 crore each year.
Key findings
- Operating cash flow lags EBITDA, free cash flow is negative, and no dividend has ever been paid
Major- Cumulative CFO of ₹16,870 crore covers only 63% of cumulative EBITDA of ₹26,771 crore over ten years. Free cash flow was negative ₹646 crore in FY26 and negative ₹954 crore in FY25, as lease cash outflows rose from ₹99.76 crore in FY20 to ₹314.27 crore in FY26. The Group has not paid any dividend since incorporation. - A loss-making e-commerce subsidiary carries a ₹1,488 crore unimpaired investment, flagged as a key audit matter
Major- The standalone carrying value of the investment in Avenue E-Commerce Limited (AEL) rose from ₹367.76 crore in FY21 to ₹1,488.11 crore in FY26, despite AEL reporting continued losses since commencing business ten years ago. The auditor identified impairment of this investment as a Key Audit Matter in FY2020-21, FY2021-22, and FY2025-26, and tested consolidated goodwill of ₹78.27 crore for impairment in FY2019-20, FY2020-21, and FY2025-26, with no impairment recognised in any of those years. - A loan to a subsidiary was disclosed while RPT limits were renewed
Major- In FY26, the Company disclosed a loan of ₹5.08 crore to subsidiary Reflect Healthcare and Retail Private Limited, outstanding as at 31 March 2026. The FY26 AGM notice seeks shareholder approval for material RPTs including sale of goods up to ₹3,500 crore, a limit that was also approved at the FY25 AGM and was ₹2,900 crore at the FY22, FY23, and FY24 AGMs. - Promoter voting power is absolute at \~75% with zero pledge, while public institutional dissent against board resolutions is persistent
Minor- Promoter and promoter group shareholding stood at 74.48% as of the latest filing, with zero pledge. At the 2023 AGM, public institutional shareholders voted 25.76% against the re-appointment of Mr. Ramakant Baheti and 26.09% against the re-appointment of Mr. Elvin Machado as Whole-time Directors. At the 2022 AGM, 32.57% of public institutional votes were cast against the re-appointment of Mrs. Manjri Chandak as Director. - Disputed tax demands are individually small and at early appeal stages, with two land-title disputes unresolved
Minor- The consolidated group's contingent liabilities for claims not acknowledged as debts included ₹431.97 crore for indirect tax matters as at 31 March 2026. Avenue Supermarts received GST demand orders totalling ₹87.72 crore in tax for FY2018-19 to FY2021-22 between April and September 2024, while subsidiary Align Retail Trades received GST demands of ₹40.82 crore in tax for FY2020-21 and FY2021-22 on 14 October 2024. Freehold land at Bhamti Nagar, Nagpur valued at ₹10.65 crore is subject to a pending writ petition by Nagpur Improvement Trust. - A single SEBI penalty of ₹3 lakh for delayed insider-trading disclosure was upheld, with small municipal and food-safety penalties thereafter
Minor- SEBI imposed a penalty of ₹3,00,000 on 31 July 2020 for delayed insider-trading disclosure by an employee; the Securities Appellate Tribunal upheld the penalty on 11 January 2022. Between October 2023 and September 2024, the Company received at least ten municipal or regulatory penalties ranging from ₹5,000 to ₹1,22,445 for matters including plastic packaging violations, cleanliness deficiencies, and expired e-way bills. - Clean audit opinions across all years, with a minor books-of-account exception at one subsidiary in FY2022-23
Clean- S R B C & Co LLP issued unqualified audit opinions on the standalone and consolidated financial statements for every year from FY20 through FY26. In FY2022-23, the consolidated auditor's report noted that for one subsidiary the daily back-up of books of account was not kept for 2 days; the consolidated opinion remained unqualified. CARO clauses confirm no benami property proceedings, no wilful defaulter declaration, and no fraud reported under Section 143(12) in every year from FY20 through FY26.
What to watch
- Shareholder vote on FY26 AGM resolutions for material RPTs with AEL. The notice, issued with the FY2025-26 Annual Report, seeks approval for sale of goods up to ₹3,500 crore, equity investment up to ₹500 crore, and management services and personnel deputation from FY28 to FY32; the meeting date was not specified in the report.
- Repayment of the ₹5.08 crore loan to Reflect Healthcare and Retail Private Limited. The loan is repayable on demand and no amounts had fallen due during FY26.
- Re-appointment of Mr. Bhaskaran N as Whole-time Director. The resolution, for a term from 17 October 2026 to 31 May 2028, is to be voted on at the ensuing AGM per the FY2025-26 Annual Report.
- Reclassification of Mr. Vijay Shankar Chandak from Promoter Group to Public category. Stock exchange approval was pending as of the FY2025-26 Annual Report.
- Appeals against GST demand orders totalling over ₹128 crore in tax. The demands were received between April 2024 and October 2024, as stated in the respective announcements dated 24 April 2024, 23 September 2024, 24 September 2024, and 14 October 2024.
Bottom line: This is a disclosed and audited record with absolute promoter control and a store network that generates cash, but the cash is absorbed by leases, capex, and a decade-long funding commitment to a loss-making e-commerce subsidiary that has never returned capital. The ₹1,488 crore unimpaired investment in that subsidiary and a ₹5.08 crore loan to another subsidiary sit inside a governance structure where public institutional dissent has been persistent but powerless. Watch the RPT vote, the loan repayment, and any sign of an impairment trigger on the AEL exposure.