Future Group's retail business to merge with Bharti Retail

Combine to create one of India’s largest retail networks.

May 04, 2015 05:10 pm | Updated 09:03 pm IST - Mumbai

Future Group operates over 17 million square feet of retail space in different formats and categories across 166 Indian cities. File photo: K. Ananthan

Future Group operates over 17 million square feet of retail space in different formats and categories across 166 Indian cities. File photo: K. Ananthan

The Board of Directors of Kishore Biyani-owned Future Retail approved the consolidation and realignment of its retail operations with Bharti Retail Ltd.

To streamline the operations resulting from the consolidation, the respective boards of directors propose to demerge the retail business of Future Retail to Bharti Retail and to demerge the infrastructure business of Bharti Retail to Future Retail, a company statement said.

After the demerger becomes effective, the business will be operated through two distinct entities. The first, to be known as Future Retail , will host the retail operations of both entities while the second, to be known as Future Enterprises , will host the infrastructure, investments and assets of both the companies.

The proposed consolidation and realignment will be carried out by a Composite Scheme of Arrangement. As per the scheme, the equity share capital of BRL will be reduced to 4,34,78,261 fully paid up equity shares of face value of Rs 2 each. Existing holders of the optionally convertible debentures (OCDs) of Bharti Retail totalling Rs 250 crore will hold OCDs in BRL and FRL totalling the same amount. The equity shares of BRL issued to shareholders of FRL following the demerger will be listed on the stock exchanges subjected to permissions and approvals of the relevant authorities.

“Bharti Retail’s strengths and network complement perfectly with that of Future Retail,” Kishore Biyani, Founder & Group CEO, Future Group, said in a statement. “It will bring us closer to millions of consumers and provide new opportunities for our supply partners. The operational efficiencies that can be derived from the merger will create significant value for our shareholders.”

This process would combine the operations of both companies and create a company with 570 retail stores in 243 stores with operational space of over 18.5 million square feet. It will operate 203 Big Bazaar and ‘easyday’ hypermarkets, 197 Food Bazaar and ‘easyday’ supermarkets, and 171 other stores comprising Home Town, eZone, FBB and Foodhall.

The consolidation would lead to a larger network to distribute Future Group brands in the fashion and FMCG categories and result in better sourcing terms from consolidation of buying functions across all categories. Also, there will be a significant reduction in interest cost as overall debt will be around Rs 1,000 crore.

“The partnership offers compelling synergies in terms of reach, efficiency and experience to build a truly world-class retail network to serve the Indian consumer,” Rajan Bharti Mittal, Vice Chairman, Bharti Enterprises said in a statement. “Retail is emerging as the next big growth engine for India and we will be well positioned to be a major player in this growth story.”

“With the FDI in multi-brand retail still not a reality, a consolidation amongst the Indian players has long been on the anvil,” Rachna Nath, Leader – Retail, PwC India said. “This transaction gives both players synergy and scale both in terms of geographical access and supply chain to manage the back-end.”

PTI adds:

Future Retail jumps 12%

Shares of Future Retail climbed 12 per cent on Monday to settle at Rs 129.65 on BSE after surging 18.4 per cent to Rs 137.

On NSE, it climbed 11.84 per cent to close the day at Rs 129.40.

The company’s market capitalisation went up Rs 542.59 crore to hit Rs 5,034.59 crore.

On the volume front, 18.16 lakh shares were traded at BSE and over 93 lakh shares changed hands at NSE during the day.

Stock of Future Lifestyle Fashions rose 6.08 per cent to end at Rs 81.95.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.