Future Group to sell none-core business

Thursday, 22 September 2011

The Future Group, which runs the country’s largest listed retailer Pantaloon Retail, plans to divest stakes in non-core businesses in the next six to 12 months. The group has already undertaken the valuation of its businesses such as insurance, financial services, logistics, media and textile mills, where it plans to sell stakes. The total valuation is about Rs 5,000 crores.

According to company sources, even if the group divests in insurance and financial services that would garner a big chunk as the group’s stake in these ventures are worth Rs 2,000 to Rs 2,500 crores. As it starts divesting its stake in non-retail businesses, Future hopes to bring down the debt levels to Rs 1,500 crores and look for inorganic growth. Experts say, Pantaloon could find it difficult to manage its total debt of around Rs 4,200 crores and a debt-equity ratio of 1.3:1. Markets are bad and liquidity is tight. Pantaloon’s performance in the fourth quarter of 2010-11 was below analysts’ expectations. Pantaloon posted a consolidated turnover of Rs 12,211 crores for the financial year 2010-11 and net profit went up to Rs 144.55 crores from Rs 73.21 crores in the previous year. Meanwhile the group is already in talks with some global private equity giants such as KKR and JP Morgan to sell its stake in its financial services arm Future Capital, which offers financial services to consumers and wholesale businesses. Future Group has a joint venture with Italy’s Generali for life and non-life ventures, where the former holds 74 per cent. Also, if FDI opens up, they will ink out strategic partnerships and raise equity in retail ventures.

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