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Pantaloon + Future Group Business Outlook

July 11, 2008


Central MallLast week we covered Vishal Retail’s Business Performance and outlook over the next 24 months. This week lets peek into India’s retailing giant- Pantaloon – Future Group. Pantaloon Retail is the listed entity of Kishore Biyani’s retail venture. Their are several subsidiaries and Joint Ventures, you may want to have a look at each of Pantaloon + Future Groups Business and Cross Holdings here.

Pantaloon’s growth has predominantly come from the significant conversion to organized retail from unorganized retail. While specialist retailers provide competition to Pantaloon’s verticals of food, fashion and general merchandise, the company benchmarks itself against fully-integrated players offering services across verticals and price points. Pantaloon believes size and scale will be the important differentiators for success.

Addition of Retail Space:
The company expects to double the cities under coverage to around 120 by FY2011E from around 55 at present. Expect the company to increase its total retail space to 20 mn sq. ft (standalone) in FY2011E from around 5 mn sq. ft in FY2007, a CAGR of 40%. The average lease rental in 2004 was Rs 20 / sft / month. It has shot up to Rs 45 / sft / month at the end of 2007. The occupational cost is around 8%. Future Logistics is expected to add up to 9mn sft of space for backend.

Loyalty Members Contribute ~50% to topline:
Panlaoon Retail's Loyalty Member Sales YoYHome Solutions Retail: [HSR]
Home Town, Furniture Bazaar, eZone, Electronics Bazaar and Collection I together constitute Home Solutions Retail. Hometown sales is expected to go upto 67% of HSR, followed by eZone at 18%, Collection I 7.5%, Furniture Bazaar 5.5% and Electronics Bazaar 3%.

Big Bazaar is likely to be spun off as an independent entity. However, it will be dependent on all its logistics and backend solutions with other group companies.

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