Mumbai: Two decades after he founded what’s now Future Group, one-time garment supplier Kishore Biyani is recasting flagship Pantaloon Retail (India) Ltd, the country’s largest shopping chain by market value, in a move aimed at clarifying the structure, repaying debt and giving investors greater choice.
Strategic move: Kishore Biyani, managing director of Pantaloon. Hemant Mishra/Mint
Biyani, managing director of Pantaloon, will consolidate the 22 companies in the group into three verticals—retail, logistics and financial services—which in turn will be controlled by the promoters through a main holding company.
“This is my dream structure,” Biyani told Mint at his corporate office in south Mumbai where the wall facing him is lined with photographs of his icons such as Sam Walton, Mother Teresa, Rahul Bajaj and N.R. Narayana Murthy. One of the frames holds a mirror, in which Biyani can see himself reflected back.
Biyani’s move is expected to unlock the value of the various units and potentially lead to the induction of a strategic partner in some of the verticals, helping him raise funds needed for expansion. Investors can pick the vertical of their liking and the businesses will have to support themselves, rather than be funded by Pantaloon Retail.
“This will create a transparent structure,” Biyani said. “Lawyers and chartered accountants are working on” the process so that there will be “no tax implications”.
Biyani, who runs the firm with his brother and cousins, is also working on two proposals to sell shares in the company.
One involves a strategic initiative with French retail giant Carrefour Group for back-end operations similar to what Wal-Mart Stores Inc. has with Sunil Mittal’s Bharti Group and the second is a financial proposal from Bain Capital Llc, one of the world’s largest private equity funds, to put in more cash.
Growth channels: A Big Bazaar store in Noida, Uttar Pradesh. Pantaloon, which owns the brand, plans to add 5 million sq. ft of retail space over two years to the 9.7 million sq. ft it already has across the country. Harikrishna Katragadda/Mint
The move comes amid analyst calls for greater transparency. Pantaloon needs to enhance its disclosure levels with respect to consolidated financials, funding plans and investments in subsidiaries, Jamshed Dadabhoy and Aditya Mathur, analysts with Citigroup Global Markets India Pvt. Ltd, wrote in an 18 August report.
“All the three companies will be listed,” Biyani said. The listing of “the main holding company will be decided later”.
The new structure will also improve operational efficiency, he said.
The Pantaloon management knows that it needs to improve inventory management by reducing stock, Dadabhoy and Mathur had written in the same report.