Future Group goes overseas with joint venture for Oman market
Mumbai: Kishore Biyani-led Future Group announced on Tuesday an equal joint venture (JV) with Omani business house Khimji Ramdas to sell its apparels and foods in the Gulf nation.
Future Retail Ltd operates fbb apparel stores in India, while Future Consumer Ltd sells foods and beverages.
The Rs150 crore JV will be called KR Future Fashion Llc. Future Group will put in Rs75 crore through its various listed entities, including Future Lifestyle and Fashion Ltd and Future Consumer Ltd.
This is Future Group’s first attempt to tap international markets. “We wanted to start with a market that has a large Indian diaspora,” Future Group founder and chief executive Biyani said at a press conference.
“We will be branding the stores fbb as Indians living in GCC (Gulf Cooperation Council Countries) have a base in India and know the brands,” Future Retail chief operating officer Rajesh Seth said.
The JV is looking for space for fbb stores in Muscat, where most retail stores are in the city’s malls, said Sachin Malhotra, chief operating officer, lifestyle group, Khimji Ramdas. “The first store should be operational by the first quarter of next (calendar) year.”
Future Group aims to target the diaspora with fbb’s low-priced private labels with mass appeal. “Imagine selling kids’ apparel starting at Rs99, we have already done that in India. In Oman, we can start with even Rs85, Rs90,” he said.
Biyani said he is partly inspired by British apparel retailer Primark UK in cheaply priced mass fashion.
Fbb stores in Oman will be 15,000-20,000 sq. ft in size, Seth said, bigger than the local fbb stores.
Biyani said that “50-75 (fbb) stores can be absorbed” by the Omani market. “We have decided this is the format for Oman”, adding his more premium apparel and FMCG (fast-moving consumer goods) retail formats such as Central and Big Bazaar can also be scaled up in Oman. All fbb apparel will exported from India, he said.
“Oman is close by and my sense is that our lead time is going to be one week”, Seth said. “Right from the manufacturers to the port and from the port to Oman and to their network destinations should take 48 hours,” he said adding the company plans to keep higher inventory since the fbb network will rely entirely on stock from India.
Future Group is also looking to use Khimji Ramdas’ network of supermarkets and distribution network to sell its private label food and beverage products. These will include sauces and chutneys brand Sangi’s kitchen, flour brand Desi Atta Company, salty snacks brand Tasty Treat and beverage brand Sunkist in the country, he said. These brands are part of Future Consumer Ltd.
Future Group does not intend to build its own network of physical stores for consumer products and will rely on Khimji’s existing network instead.
“These are products that will appeal to an Indian diaspora,” Ashwin Rajan, head of business development at Future Consumer, said. “We will focus mostly on (exporting) food and FMCG where we have a large degree of differentiation and where we’re doing new stuff. HPC (home and personal care) is something that is still evolving,” he said.
Shares of Future Retail Ltd closed 1.06% lower at Rs321.30 and those of Future Consumer rose 1.09% to Rs32.35 at close of trade, while the benchmark BSE Sensex ended 0.86% higher at 30,582.60 points.