Kishore Biyani is hoping to regain investors’ confidence in
Pantaloon Retail by firming up plans to raise Rs 2,500 to Rs 4,000 crores through stake sale in non-core businesses. These include consumer finance, insurance, textile mills, logistics and JVs in mobile retailing and office supplies. These funds will repay the Rs 3,400 crores debt on the balance sheet of the listed entity which has lately received a drubbing on the bourses. The group’s overall debt stands at Rs 4,800 crores across retail businesses, including its financial services business. The group aimed at exposing the Indian consumer to New Age shopping at modern formats such as Big Bazaar and Food Bazaar. They resorted to aggressive expansion and tie-ups on too many fronts which called for huge short-term borrowings. But the economic slump in 2009 led to a sharp credit squeeze in the market putting enormous pressure on the retailer’s working capital requirements. Loans at high interest rates saw Pantaloon’s debt soaring from Rs 600 crores in 2006 to Rs 2,900 crores in 2009. Moreover, Pantaloon’s market capitalization dropped by 51 per cent in three years.
As a corrective step, the group consolidated various businesses and exited several like property management, real estate, brand development and IT. It’s now focusing on four large formats, Pantaloons, Central, Big Bazaar and Food Bazaar. Retail forms the core business activity at Future Group and most of its businesses in the consumption space are built around retail. Future Group’s retail network touches the lives of more than 200 million Indians in 73 cities and 65 rural locations across the country. The group currently operates around 1,000 stores spread over 16 million sq. ft. of retail space. Present in the value and lifestyle segments, the group’s retail formats cater to almost the entire consumption expenditure of a wide cross-section of Indian consumers.