A major consolidation is underway in India’s fragmented retail industry. On Monday the Aditya Birla conglomerate announced it would acquire a controlling stake in Pantaloon Retail’s chain of clothing stores. As part of the deal, Pantaloons Retail will hive off its apparel chain into a separate unit. Then Aditya Birla Nuvo will infuse Rs1,600 crore into the new entity through a subscription of debentures. Once the separation process is complete, those debentures will become equity. Aditya Birla Nuvo will also make an open offer for at least 25% of the resulting unit. That will give it at a stake of at least 50.01% in the retail chain, and make it a subsidiary.
Monday’s deal will help Pantaloon Retail cut debt worth some Rs1,600 crore. Investors welcomed the move, and shares of Pantaloon shot up 9.25% on the BSE to187.75 on a day the Sensex climbed 0.76%.
Switching to other news, the troubles of India’s telecom industry may have just become sharper. On Monday Norwegian firm Telenor announced it was writing down $681 million in what remains of its Indian assets. Telenor said the decision came because the new proposals for re-auctioning 2G spectrum make it nearly impossible for it to participate. Telenor’s Indian joint venture, Uninor, was among the companies that lost key spectrum licenses in a February Supreme Court decision. SigveBrekke, the managing director of Uninor, has said the proposal for a re-auction for spectrum was effectively a price setting balloon.
And finally, Indian markets rose on Monday, with the Sensex touching its highest point in more than a week. The index rose 131 points to 17,319. And rival Nifty climbed 39 to 5,248.