Top

Pantaloon / Future Group – Restructuring for Growth + Big Plans

November 19, 2009


pantaloon's central mallThe Pioneers and largest Retail chain of India – Pantaloon Retail is recalibrating its business strategy to ride the second large wave of retail boom in India. Mr. Biyani believes that market dynamics in the current environment are working in the company’s favour.

The objective of this exercise is to create different entities or pure play investment vehicles with their independent risk-rewards offering, excerpts from the management meet are as follows,

  • Reorganize Pantaloon Retail India Ltd as a pure play retail company
  • Reduce PRIL’s stake and financial obligations towards its finance subsidiaries Future Capital Holdings and Insurance subsidiaries
  • Unlocking shareholder value in non-retail business operations
  • Future group is benefiting from improved consumer sentiment, low competition, lower rental costs and lower input costs. [Recall Mr. Biyani’s famous e-mail – Garv Sey Khao Hum Kanjoos Hey ? They got on their toes very early during global meltdown and steps taken like rental re-negotiations, supply chain, procurement, and rationalization of suppliers etc are paying off now]
  • Direct results of the above exercise in the past – increased store productivity, margins, inventory levels, working capital, full price sales and ultimately in improved return ratios and cash flows
  • Future Group’s Home Town and Furniture Bazaar are the largest formats in home furnishing vertical. Plans to launch 12 month EMI scheme to ride the realty boom of first time home buyers. This initiative is apart from the aggressive launch of Future Privilege Card.
  • In the tug of war between Kellogs and other cereal manufacturer, Future Brands will launch its own private label to cater to this segment. Future Brands earns 3% royalty. PRIL’s stake in Future Brands will be transferred to a promoter company for some monetary consideration.
  • Future Group will not enter the cash and carry business at present.

Future Group has grown beyond expectations and it is the best approach to restructure businesses now, to pursue independent growth. Hopefully current shareholders will be given stake in hived of entities proportionately. Got any suggestions for Mr. Biyani ?

Comments

Comments are closed.


Bottom