Biyani plans to cut 18 deals reduce debt

Tuesday, 27 March 2012

Debt ridden, Future Group, India’s largest retailer, is planning as many as 18 divestment and fund-raising transactions simultaneously to get rid of its debt. This includes inducting a strategic partner in its flagship Big Bazaar stores. The group is looking to pare its near Rs 7,800 crores debt to bounce back with a bang. The group had to suffer on the back of heavy borrowings to launch new ventures and execute rapid expansion plans that got negatively affected by economic slowdown and low consumer demand. The situation led to sharp rise in interest costs, dragging down profits in the first half of the current fiscal.

After appointing a committee to study the debt situation and suggest measures to cut down the same, group’s latest financial restructuring blueprint involves merging of the eZone electronics retail chain with a Noida-based services company as well as bringing in financial and strategic partners for HomeTown, its furniture retail chain. Both these transactions are expected to reduce the debt of Pantaloon Retail, the parent company, by around Rs 600-700 crores. Future Logistics, a group firm that manages logistics for the group as well as other companies, is looking to raise Rs 800-1,000 crores from private equity funds. In addition, the group plans to raise Rs 2,500-3,000 crores by selling a minority stake in Future Value Retail, the company that owns Big Bazaar hypermarkets and Food Bazaar supermarkets, to a strategic investor.

During the first half of the financial year ending June 2012, the group’s profit from the core retail business, including Pantaloon Retail and Future Value Retail reduced to Rs 47 crores from Rs 90 crores over the year-ago period. Pantaloon Retail’s turnover increased marginally to Rs 5,816 crores during the same period, up from Rs 5,353 crores.

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