Business
Future Group's retail business to merge with Bharti Retail
New Delhi/Gurgaon, May 4
Kishore
Biyani-promoted Future Retail Ltd. on Monday said its board has
approved the consolidation and realignment of its retail operations with
Bharti Retail Ltd.
"The board of directors of Future Retail Ltd,
the flagship company of Future Group, and the board of directors of
Bharti Retail Limited at their respective meetings held today (Monday)
have approved a partnership between the companies," Future Retail said
in a statement.
"To streamline the operations resulting from this
consolidation, the board of directors of Future Retail and Bharti
Retail have proposed a demerger of the retail business of Future Retail
to Bharti Retail and a demerger of the infrastructure business of
Bharti Retail to Future Retail," it added.
The first entity,
proposed to be known as Future Retail Ltd. post the completion of the
demerger, will host the retail operations of both the entities, while
the second, proposed to be known as Future Enterprises Ltd., will host
the infrastructure, investments and assets of both the companies, the
statement said.
After the consolidation, the shareholders of Bharti Retail and Future Retail would be shareholders in each of the entities.
The
combined entity will have over 570 retail stores in 243 cities with
operational retail space of over 18.5 million square feet.
Future
Group operates over 17 million square feet of retail space in different
formats and categories across 166 Indian cities, while Bharti Retail
currently operates a network of over 200 Easyday stores in multiple
formats across 114 cities with a strong presence in key markets like
Punjab, Haryana, National Capital Region, western Uttar Pradesh,
Uttarakhand and Bengaluru.
The combined entity 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.
"Bharti Retail's strengths and network compliment
perfectly with that of Future Retail. It will bring us closer to
millions of consumers and provide new opportunities for our supply
partners," said Future Group founder and CEO Biyani in the statement.
Bharti
Enterprises vice chairman Rajan Bharti Mittal said: "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. 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."
At
a press conference later on Monday, Mittal said it will take 6-8
months to get registered at SEBI, stock exchange and other such bodies.
"We're
setting up an integration committee composed of eight members, four
from each of the companies, to realise the merger," he said.
Biyani said the combined entity will have a total turnover of Rs.15,000 crore.
"The retail entity will have a debt of Rs.1,200 crore and the infra entity will have a debt of Rs.3,500 crore," he said.
"Earlier, one company with infrastructure, investment, pure retail was not showing its full glory.
"I
believe this consolidation wil be Ebitda (Earnings before interest,
taxes, depreciation, and amortization) positive from day one," he
added.
Future Retail's stock closed on Monday at Rs.128.85 per
share, up 12.06 percent, or 13.95 points, over its previous close on the
Bombay Stock Exchange.