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Tuesday, 27 September 2011 |
Another signal of a slowdown and the repercussions of it are
already being felt by giants like the Future Group. The group’s retail arm Pantaloon Retail is once again under alarming debt of Rs 4, 200 crores. After facing a similar situation in June 2009, the company is once again at 1.3:1 debt-equity ratio at the end of June 2011.
The reasons are obviously speculated to be the recessionary phase, further delays in a final call on the foreign direct investment in the retail sector and increasing interest rates. Though the 51 per cent FDI in retail has been recommended by the inter-ministerial panel, a final nod from the cabinet is awaited and the group is banking upon it since it can then sell stakes to international retailers to ease out the burden.
According to analysts, if the Indian economy remains stable and grows at the current level, there is no fear but it also depends upon the consumer sentiment. If consumer reduce buying, Pantaloon could further face issues with increasing unsold stocks. Though Pantaloon plans to sell stake in Future Capital Holdings, none of its competitors are reeling under so much debt burden, so they definitely have a reason to worry. |
