Restructuring of the Pantaloon / Future Group

Kishore Biyani, the pioneer of Indian retail has managed successfully sail through the Tide with his Garva Se Kaho Hum Kanjoos Hey e-mail and reporting a robust Quarterly result indicating a turnaround.

Restructuring into a pure retail play would improve its balance sheet and profitability by recouping investments, cutting exposure to loss making subsidiaries. Given Pantaloon’s market leadership and its scale we believe it is best placed to benefit from pick up in consumer spending, favorable macro environment and ride the immense structural growth potential that the ever growing Indian organized retail industry has to offer.

Pantaloon is now in a stronger position to corner prime real estate at lower rentals, negotiate better terms with vendors and attract talent and will help Pantaloon to maintain its superior margins by keeping its cost flat while its strong topline growth will help it by driving scale benefits. Future Group is now looking to drive profitability by developing efficiencies in the system. For this it has made significant investment in technology, processes and talent development.

At the end of Q2-FY2010, Pantaloon operates over 7mn sq ft in more than 40 cities under various formats. Area and Sales Breakdown are as follows

  • Big Bazaar occupies 58% of the Area contributing 50% of the sales
  • Food Bazaar occupies 14% and contributes 24% of the sales
  • Central Malls occupy 15% of total retail area and contribute 14% of sales
  • Lifestyle retail occupy 13% and contribute 12% of top-line.