Future Consumer Enterprises Ltd (FCEL), a wholly owned arm of Kishore Biyani-promoted investment and business management company Future Ventures India Ltd, is planning to buy the convenience store chain under Pantaloon Retail. However, financial details of the proposed transaction remain under wraps.
Pantaloon Retail had transferred its value retail format business to its wholly owned subsidiary Future Value Retail two years ago. Pantaloon also houses the hypermarket and food store chain Big Bazaar and Food Bazaar, among other retail formats.
Separate media reports stated that Future Value Retail was in talks to sell stake in KB Fairprice, a chain of convenience stores under Future Value Retail. One of the names, which had been doing the rounds, was Japan’s Lawson, a part of Mitsubishi Corp.
This proposed deal, however, came unstuck and as per The Economic Times report, the deal, which was tied to prior sale of strategic stake in sourcing and manufacturing business, had been called off. Since FDI in multi-brand retail is not allowed as per the existing FDI norms, Lawson could not have picked stake in any of the retail formats of Pantaloon Retail upfront.
In a fresh disclosure to the stock exchange, Future Ventures said it was putting in Rs 120 crore ($21 million) afresh in its subsidiary, Future Consumer, through subscription of equity shares and fresh issue of zero per cent optionally fully convertible debentures of FCEL. Out of this, Rs 2 crore had been invested through equity shares.
It also added that Future Consumer had plans to deploy the proceeds, arising out of the issue of securities, towards acquisition of chains of shops under the convenience store format, from Future Value Retail. It did not name the store format but said it operates a chain of over 180 convenience stores across Delhi, Maharashtra and Karnataka.
This deal will help it promote its brands and products, and spread its footprint to explore newer opportunities.
Future Consumer, which ended FY12 with revenues of Rs 107.69 crore compared to Rs 81.32 crore for the year ended March 31, 2011, is engaged in product development, designing, branding and distribution of fast moving consumer goods (FMCG). It offers its products under various brand names such as Tasty Treat, Clean Mate, Care Mate, Premium Harvest and Fresh and Pure, SACH, Disney and Ektaa. Currently, the firm markets its products through Future Group’s stores.
Future Ventures, a public-listed investment-cum-operational firm, has stakes in various privately held firms of the Future Group as well as other firms.
In June this year, the firm invested an undisclosed amount in another subsidiary called Indus-League Clothing Ltd.
Earlier this year, the country’s largest retail firm Pantaloon Retail (India) Ltd said that it would spin out its apparel retail business as a separate listed firm and sell a majority stake in the venture to Aditya Birla Nuvo, one of the largest branded fashion apparel players in the country. The AV Birla Group firm would invest at least Rs 800 crore in a two-tiered transaction. The deal was part of the plans to deleverage the balance sheet of the firm.
(Edited by Sanghamitra Mandal)