Biyani To Consolidate Business In Three Verticals

The Future Group founder Kishore Biyani is looking to recast the group's flagship company Pantaloon Retail India Ltd in a move aimed at clarifying the structure, repaying debt and giving investors greater choice.

The group will consolidate the 22 group companies in three verticals- retail, logistics and financial services, which will be controlled by the promoters by a main holding company. All the three companies will be listed.

This move is likely to create a transparent structure and unlock the value of the various units. It will also allow the investors to invest in the vertical of their liking.

The company is also looking to raise $210 mn through the fresh issue of shares to domestic investors to help fund its plan to boost retail space by 5 mn sq. ft over the next two years and repay some debt. Pantaloon, whose key brands are Big Bazaar, Home Solutions, Food Bazaar and Central, currently has 9.7 mn sq. ft of retail space.

In the 2009 fiscal year, the company invested Rs 370 cr in its subsidiaries out of a total capital expenditure of Rs 1,300 cr.

Pantaloon raised Rs 300 cr in the last fiscal year through an issue of preferential warrants to promoters and Dharmyug Investments, owned by Bennett, Coleman & Co. Ltd.

Biyani’s plans for the financial services business include the general insurance venture with Generali Group and the PE fund Future Ventures.

He wants to build a non-banking financial services company that would provide supplier and retailer credit besides debt syndication for firms linked to his business. This would allow Future Group to partially own and fund these companies, he says. The non-banking arm will also help his companies raise debt to grow their business.

Future Ventures, the private equity fund that will be insulated from the current restructuring, has invested in Sula Wines, the second largest wine maker, Biba, a garment maker, Mother Earth, a retail chain that supplies organic food and Aadhaar, a JV with Godrej.

Biyani wants to streamline the current business, manage the value chain and move ahead to achieve a target of Rs25,000 crore revenue by 2012 with an 8-10% profit margin.

Future Learning and Development, which teaches skills to nearly 25,000 people annually primarily to absorb them into the retail chain, will offer such services to rivals as well. Similarly, Biyani plans to lease his warehouses, distribution network and inventory accounting services.

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