Mumbai: The Future Group, which controls India’s largest listed retailer, is in alliance talks with foreign companies to boost its offering, chief executive Kishore Biyani said on Friday, but declined to comment on reports that French retailer Carrefour SA was one of them.
Consolidating businesses: Future Group chief executive Kishore Biyani. Hemant Mishra/Mint
Biyani said the group was looking for partnerships in electronics and food, and a collaboration with a foreign company would give it an edge in distribution and global supply chain.
“Sometimes, for some categories, we feel the need. If you look at global food or electronics, we require somebody; if you look at furniture...it helps, so it depends on categories,” he said in an interview. “Whatever we do, it will be within the parameters of the current regulations.”
Indian rules allow up to 51% foreign direct investment in single-brand retailers, but multiple-brand retailers such as Carrefour and Wal-Mart Stores Inc. cannot sell directly to consumers.
Wal-Mart has a cash-and-carry venture with India’s Bharti Enterprises Ltd, while Carrefour has said it plans to open its first cash-and-carry outlet in India early next year.
Local media has been speculating Carrefour is in talks with Future Group for a wholesale alliance. The group is raising $210 million (Rs1,012 crore) over the next eight weeks through sale of non-core assets, but Biyani has ruled out raising funds via share sale to institutions.
India’s retail industry is estimated at $350-400 billion, of which the organized sector has a share of 6-7% and is growing at 25-30% annually.
Pantaloon Retail (India) Ltd, which contributes 90% of the group’s revenue, expects its sales to rise 35-40% in the current year on a pickup in consumer spending and helped by expansion, Biyani said.
Pantaloon, which runs the Big Bazaar hypermarket and Food Bazaar, is seeing robust festive season demand with same-store sales—a key indicator of growth for retailers—leading the way, he said.
Future Group will add 3.5-4 million sq. ft of space in fiscal 2010 to its existing 12 million sq. ft, and expects group turnover to reach Rs40,000 crore.
“We are looking at bigger growth from addition of more space, increased productivity and more efficient sourcing,” Biyani said.
Pantaloon had posted sales growth of a quarter in the year ended March.
The company has abandoned plans to restructure by spinning off its businesses into separate entities, and will focus on consolidation of retail brands under the Pantaloon umbrella to bring in more efficiencies, Biyani said.
He said Pantaloon was expanding its high-margin own brands, or private labels, while the group had launched a forex business and was expanding its sports apparel.
“Private labels are a growing business. We will place big stress on it this year,” Biyani said, adding that the segment accounts for about three-fourths of Pantaloon’s sales.
Shares of Pantaloon Retail ended the day lower 1.3% at Rs327.70 on Friday on the Bombay Stock Exchange, while the benchmark index, Sensex, rose 0.2% to 16,741.30 points. The shares have risen by more than half this year, below the gain by the main index of 73%.