Bad time in retail – Kishore Biyani senses opportunity in restructuring

Future Group, faced with topline and bottomline pressures is thinking otherwise. The recent easing of FDI norms has prompted the company to undertake a major retructring exrcies to unlock the hidden value in its various formats.

Uptil now Future Group has 2 listed companies – Pantaloon Retail (value, lifestyle and home retail) and Future Capital (financial services). And as per CNBC TV18, Biyani wants to demerge Pantaloon Retail into four separate companies and then sale stake in different companies to raise funds, mainly to foreign players.

The four formats could be:
1. Value retail – which house Big Bazaar and Food Bazaar and contribute to 60% of total sales
2. Lifestyle retail – which may house Pantaloons, Home Town, Central, Brand Factory, Planet Sports among other formats.
3. Financial Services – which is already a listed entity and 75% stake is held by the promoters
4. Support Services – Currently loss making and houses Media channels, Branding, Leisure Entertainment, e-retailing, logistics, shopping malls.

The move may work well for the company as it may separate objectives and directions to different formats, which each charting its separate strategy for growth under separate vertical heads.

It may also work that Biyani may hive of certain of its loss-making, non-coherent businesses which does not add value to group’s performance.

But in times, where fund raising is difficult and capital flow dried up, consumer spending at a low, it would take time for the company to build up on its plans. Also, when other retailers downsizing its operations, and companies such as Reliance Retail consolidating its retail operations, it is certainly a move to look forward for.