Debt ridden Future Group cuts costs

Friday, 16 December 2011

Kishore Biyani’s debt ridden Future Group has begun cutting costs by ceasing to hire new staff and cutting down on travel. Going a step ahead, the group has also become strict about use of office stationery, ACs and power and lighting in the head office in Mumbai as well as across all its stores. Apart from cutting down on the housekeeping staff, even the coffee machines are removed and subsidised canteen food has been stopped. On the operations front, it’s trying to reduce inventory to cut the carrying costs and supply chain costs.

The Future Group, which owns Big Bazaar and Pantaloon, has also seen key executives quit, which is considered to be a prelude to the belt-tightening within the group. The major exits included Mahesh Shah, head of sourcing of Home Town, Manoj Kumar, CEO of the electronics division eZone, and Mayur Toshniwal, CEO of the telecom division.

Pantaloon Retail, the listed flagship of the Future Group, reported a second consecutive quarterly drop in net profit in July-September. Net profits went down by 36.34 per cent to Rs 15.05 crores. Its same-store sales growth was 6.53 per cent in lifestyle retail, 3.64 per cent in value retail and 1.26 per cent in home retail. Pantaloon Retail has a debt of Rs 4,200 crores and its debt-equity ratio has already reached the previous slowdown level of 1.33. Given the current situation in retail industry, most retailers are cutting costs to maintain operating profits to continue to reinvest in their businesses.

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