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Big + Food Bazaar = Future Value Retail – New Entity

March 17, 2009


In April-08, we had written about Kishore Biyani’s plan to spin off Value Retail format Big Bazaar into a separate company. Biyani also took the approval of shareholders and is all set to unveil a new Value Format. However, the name that they are likely to choose is Future Value Retail which will comprise Big Bazaar and Food Bazaar chains.

According to latest quarterly results, both of these formats[Big + Food Bazaar] together contribute 55% of Pantaloon Retail India Ltd [PRIL] top line. Currently, Big Bazaar has 109 stores and Food Bazaar 152 stores.

Why they need to be spun off into a new entity ?
The new entity will be India’s largest Value Retailer and it can entail the Pantaloon group to command a premium while raising more money for expansion. The goal here is to make this entity the supply chain back end for all the Future Group Formats. What is in for current shareholders of PRIL ? PRIL will become the holding company in proportion to its existing stake, which is 100% in both Big + Food Bazaar.

It is reported in the press that French retailer Carrefour may take a stake in Future Value Retail which will bring in the required cash as well as expertise to build and run economies of scale supply chain so essential to make a difference in the Indian retail scape. However, we feel it is Kishore Biyani’s decade of experience with Indian vendors and suppliers that will equally help thcompany since Western models cannot be replicated directly in India.

What will happen to FutureBazaar.Com – eCommerce entity ?
PRIL has raised unknown amount in April-08 from Sherpalo Ventures and Kleiner Perkins by diluting 15% stake. Will this also be transferred to Future Value Retail or will it continue to function as an independent entity and later become the center for its online / mobile shopping ?

Update on 18/03/2008:
We have received confirmation from PRIL that FutureBazaar.Com will function as an independent entity.

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