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New ventures and rapid expansion of existing businesses made the group borrow heavily but consumer slowdown and low returns from the financial services ventures have hit it hard. Interest costs have risen substantially, dragging down profits in the first half of the current fiscal. In the past, smaller retail chains such as Subhiksha and Vishal Retail have gone under because of inability to service creditors. But Biyani said he was not losing any sleep over the group's debt level. "We have many jewels that can be encashed to reduce our debt burden," he said. According to the Future Group chairman, more than a third of the group's Rs 7,800-crore debt resides in Future Capital, a non-banking finance company. Pantaloon Retail, the group's flagship listed entity, has a debt of Rs 2,500 crore and its wholly owned arm Future Value Retail has borrowings of Rs 2,500 crore more. The group's financial restructuring blueprint involves merging the eZone electronics retail chain with a Noida-based services company as well as bringing in financial and strategic partners for HomeTown, its furniture retail chain. Rules Preventing Fund-Raising

Future Group

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Page 1: Future Group

New ventures and rapid expansion of existing businesses made the group borrow heavily but consumer slowdown and low returns from the financial services ventures have hit it hard. Interest costs have risen substantially, dragging down profits in the first half of the current fiscal.

In the past, smaller retail chains such as Subhiksha and Vishal Retail have gone under because of inability to service creditors. But Biyani said he was not losing any sleep over the group's debt level. "We have many jewels that can be encashed to reduce our debt burden," he said.

According to the Future Group chairman, more than a third of the group's Rs 7,800-crore debt resides in Future Capital, a non-banking finance company. Pantaloon Retail, the group's flagship listed entity, has a debt of Rs 2,500 crore and its wholly owned arm Future Value Retail has borrowings of Rs 2,500 crore more.

The group's financial restructuring blueprint involves merging the eZone electronics retail chain with a Noida-based services company as well as bringing in financial and strategic partners for HomeTown, its furniture retail chain.

Rules Preventing Fund-Raising

Both these transactions are expected to reduce the debt of Pantaloon Retail, the parent company, by around Rs 600-700 crore. Future Logistics, a group firm that manages logistics for the group as well as other companies, is looking to raise Rs 800-1,000 crore from private equity funds. "Talks are on with three PE funds and we will able to seal a deal within two months," Biyani said.

In addition, the group plans to raise Rs 2,500-3,000 crore by selling a minority stake in Future Value Retail, the company that owns Big Bazaar hypermarkets and Food Bazaar supermarkets, to a strategic investor.

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The Future Group's name has previously been linked to foreign retail majors such as Carrefour and PE funds such as Bain Capital, but Biyani's fund-raising plans have been stymied by Indian rules that prevent foreign players from investing in local stores selling assorted branded goods directly to consumers. The group is said to be looking at models that will allow it to induct a strategic investor without violating foreign investment norms. Biyani, who started off with a lone Pantaloon store in Kolkata in 1997, is now India's largest retailer with 1,200 stores spread over 16.5 million sq ft - enough to accommodate 236 football fields.

In 2003-04, the Future Group decided to diversify into other businesses. It launched Future Ventures, a company that provided seed capital to entrepreneurs, which was subsequently listed on the bourses. It then entered the consumer-lending business through Future Capital, and forayed into insurance via its majority-owned joint venture Future Generali. The diversifications cost about Rs 3,000 crore and were primarily funded through loans, causing a sharp increase in interest liability.

For A Better Future

BUSINESS WORLD | Monday 18 June, 2012

Retail veteran Kishore Biyani seems to have found a way to reduce his Future Group’s debt burden. The group will sell its 53.7 per cent stake in consumer finance arm Future Capital Holdings to US-based private equity firm Warburg Pincus for an estimated Rs 692 crore. Future Capital, formed in 2007, had a loan book of Rs 4,670 crore as of March 2012. Future Group’s Pantaloon Retail India, India’s largest listed retailer, and its fully-owned arm, Future Value Retail, will sell their stake in Future Capital to Warburg’s Cloverdell Investment. The deal is expected to help Pantaloon ease debt, which  stood at Rs 5,500 crore as of March 2012, according to ICICI Securities. The company says the move is part of its strategy of doing away with its non-core businesses. In April, it sold more than 50 per cent stake in Pantaloon to Aditya Birla Nuvo.

Future Group chairman Kishore Biyani to cut 18 deals to kill all debt by March 2013NEW DELHI: The Future Group, India's largest retailer, is negotiating as many as 18 divestment and fund-raising transactions simultaneously, including inducting a strategic partner in its flagship Big Bazaar stores, as it seeks to pare its near Rs 7,800-crore debt and put finances back on track.

"We are working on 18 deals and expect to consummate many of the transactions early next fiscal. We will be a zero-debt company by March 2013," said Future Group Chairman Kishore Biyani. "We need to streamline operations, enhance our focus on food and fashion, and reduce our focus on furniture and electronics," he added.

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Rakesh Biyani entrusted with Future Group's reboot strategy; KB plans malls for wholesalers

SHOES & ACCESSORIES | Thursday 7 June, 2012

Having lost flagship brand Pantaloons to Aditya Birla Nuvo to stave off a crushing debt of Rs 5,000 crore, Rakesh Biyani, Director, Future Group has been entrusted with implementing a major restructuring and consolidation process across Future Group's retail divisions. “There are a lot of revival plans that we have implemented to build Big Bazaar. The new stores are looking very good. The assortment strategy there is working very well. There's also been quite a lot of consolidation that has happened within the team structure,” he says.

This also means more stores. “We're at 165 stores today and plan to add 35 stores in the next 12-14 months,” he informed.

The home-furnishing retail business, Hometown, which has been hit by weak demand, is also set for an overhaul. Biyani says this will now operate as a wholly-owned subsidiary of Future Group. He also says that a slew of JVs to fuel growth and a new product portfolio are in the offing. “We are also trying to overcome the import issue and the depreciating rupee by working on getting a lot more production done locally in India.”

The thrust on apparel is also not over. More stores under the Big Bazaar banner will open doors this year. And Biyani hopes this will keep the cash registers ringing.

Malls for wholesale retailers Kishore Biyani, Group CEO, Future Group is planning to launch malls for wholesalers, to be called World Market, the first of which will open in Bangalore this year.

World Market will allow wholesalers to own shop space of 200-500 sq.ft. in an airconditioned mall and is being positioned as an expansion option for wholesalers housed in traditional markets that are often overcrowded, inaccessible and where they run the risk of not holding legitimate title deeds.

“Our aim is to create a modern and a nonintimidating environment for the wholesale segment with a quintessential Indian lift to it,” Sumit Dabriwala, Managing Director of the group's real estate arm Future Market Networks, was quoted as saying.

“Real estate developers have built infrastructure only for organised retail so far,” he said. Wholesalers are crucial in the distribution chain as they buy merchandise in bulk from manufacturers to sell it to retailers in smaller quantities.”

At 10-lakh sq.ft. across 10 acres of land, World Market in Bangalore's Old Madras Road will have around 10 designated zones for categories such as fashion accessories, electronics, crockery, plastic, hardware, leather and stationery.

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The company plans to expand World Markets to Kolkata, Ahmedabad and the national capital region and may use land parcels owned by the company for this purpose. In Mumbai, it is experimenting with a similar model at Future Group-owned The Orchid City Centre Mall, which will be rebranded, Dabriwala further informed.

Biyani looking to sell additional stakes to stave off debt

INDIA RETAIL NEWS | Tuesday 19 June, 2012

New Delhi: Kishore Biyani, head of Future Group, is mulling to sell additional stakes and reorganize his business as he is preparing to set up the second stage of his retail business.

Pantaloon Retail Industries Ltd (PRIL) that owns Big Bazaar, has just completed a few transaction to stave off its debt and it would carry on selling stakes in part or completely before heading on with its plans to expand its core business.

Foreseeable transactions include stake sales in companies, such as e-Zone, Future Supply Chain, Home Town, Staples Future Office Products, and also in its insurance joint venture Future Generali.

Rakesh Biyani, younger brother of Kishore Biyani, who is the joint managing director at Future Group, said that they had many non-core retail businesses and a few of them were prime investment and were about to exit.

Edelweiss’ associate director for institutional equities for research, Abneesh Roy said: “The company is well poised to make a comeback, as it has more or less been able to control its debt. It’s going to focus on apparel, food and home.”

Future Supply Chain Solutions Ltd is an India-based company. The company is a part of Future group and deals in offering end - to - end consumer logistics and supply chains services for categories like food, fashion, home and furniture, general products, etc. The company offers warehousing, transportation, reverse logistics, international logistics, brand distribution, supply chain management, etc.

Future Group on a selling spree to reduce debt

INDIA RETAIL NEWS | Friday 22 June, 2012

New Delhi: Kishore Biyani, touted as the king of Indian retail, is on a selling spree. The Future Group, after announcing the selling of its stake in Pantaloon and Future Capital, is moving ahead with plans to sell stakes in Future Supply Chain and Staples Future Office Products.

The Group is also considering selling its stake in Future Generali, a partner with Italy's Generali Group, according to people following the development. Sources further said that the Biyani Group is in deliberation with interested parties for a stake sell in Future Supply Chain (FSC) and Staples Future Office Products.

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The group with an estimated debt of Rs 60 billion may also divest part of its 70% stake in FSC, the logistics and supply chain vertical of Future Group. Hong Kong based Li & Fung which holds the remaining 30% has shown its interest in obtaining more stakes in the company.

Future Group also intends to sell its stake in Staples Future Office Products (SFOP), a collaboration between the company and Staples Asia Investment (a unit of Staples, US).

Biyani to scale up no-frills store chain:

After divesting majority stakes in Pantaloons and Future Capital, the Kishore Biyani-led Future Group plans to scale up its no frills, neighbourhood store format KB’s Fair Price stores, as well as its rural distribution venture, Aadhaar.

A group executive said this was part of the group’s plan to deepen its penetration in food and grocery distribution.

In the next 18 months, Future Group plans to open 1,000 KB’s Fair Price stores in top cities. It also plans to appoint franchisees. The executive said pilot projects for this were already on the way.

India has about 15 million kiranas, or grocery stores, and KB’s Fair Price competes with these in urban areas. “These stores can be set up with one third the capital invested in modern trade and can be run at half the cost of running other stores. The biggest point is these have the highest per-square feet revenue, compared to other formats,” the executive said. The stores, spread across 1,000 to 1,500 sq ft, sell 400 products, or stock keeping units.

ON THE ANVIL

Format Stores Size (sq ft)

KB’s Fair Price

1,0001000-1,500

Aadhar Wholesale

215,000-20,000

 Aadhar

30franchisestores inGujarat

600- 800

Though the group had planned to open 1,400 stores in 2008, today it runs just 190 KB’s Fair Price outlets. “Earlier, it was not our priority. Those stores were kept in incubation. We later discovered the model is more robust, and it can be scaled up,” said Damodar Mall, group director (integrated food strategy) at Future Group, who supervises the format.

After feedback from customers, the chain has added new categories and has even started selling vegetables in certain stores, Mall said.

Though Mumbai and the national capital region (NCR) account for the majority of KB’s Fair Price stores, the group would focus on opening many such stores in metros such as Bangalore, Mall said. “Wherever we can set up a large cluster of stores, we will go to those cities,” he said.

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However, a few rivals argue kiranas have an edge over these stores. “Kiranas, which compete with KB’s Fair Price stores, have lower distribution costs and their cost of operations is low. Cost of operation is a challenge for small-box stores,” said the chief executive of a national retail chain, on condition of anonymity.

Prashant Agarwal, joint managing director of retail consultant Wazir Advisors, however, says consumers are shifting towards modern stores such as KB’s Fair Price for their weekly or monthly shopping, and these stores offer big opportunities.

After opening its first rural wholesale and distribution centre ‘Aadhaar Wholesale’ in Kalol, Gujarat, the group plans to open two more centres in the state, said the Future Group executive. When the Kalol centre was opened, the group had said it planned 65 wholesale stores, and was looking at revenue of Rs 4,000 crore in the near future. Each such centre caters to the group’s rural retail chain, Aadhaar, and the general trade around these.

“The store is doing well, and it is easy to learn business in Gujarat,” he said.

The Future Group plans to increase the Aadhaar stores near the Kalol centre from 20 to 50 through franchisees. The group has 55 Aadhaar stores across the country. “Tomorrow’s distribution is not done the mom-and-pop way. Concepts such as KB’s Fair Price and Aadhaar are new ways of distribution that reach out to both urban consumers and rural retailers,” Mall said.

Agarwal of Wazir says after Kishore Biyani divested stakes in fashion apparel chain Pantaloons to Aditya Birla Nuvo and Future Capital to private equity major Warbug Pincus early this month, he planned to expand existing formats faster. The divestment was aimed at reducing the group’s debt pile of about Rs 7,800 crore.

Future Group plans to dilute stake in Future Supply Chain, Staples Future to pare debt

CONTIFY INVESTMENT | Thursday 21 June, 2012

New Delhi: India’s largest retail chain Future Group plans to dilute its stake in some more of its non-core assets, including Future Supply Chain Solutions Ltd and Staples Future Office Products Pvt Ltd, to further pare down its debt, media reports said citing a company official.

The group plans to conclude the stake sale in Staples Future Office Products in few months, Rakesh Biyani, joint managing director of Pantaloon Retail India Ltd, said. Pantaloon Retail is the group's flagship listed entity.

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Staples Future Office Products is a joint venture between Pantaloon Retail and Staples Asia Investment, a unit of the US-based Staples Inc. Pantaloon Retail holds 39.5% stake in Staples Future Office Products.

“As part of our agreement with Staples, we do have put option for our stake holding. The date to exercise that is early next month. We already have a lot of discussions with them and the process is currently on. We are hopeful of the fact that within next couple of months, we should be able to conclude that transaction,” Biyani told CNBC-TV18 on Wednesday.

The group also plans to sell its stake in supply management firm Future Supply Chain, in which Pantaloon Retail has 70% holding. The remaining 30% stake is held by Hong Kong-based Li & Fung Ltd.

“We have had a very good partnership with Li & Fung. Li & Fung has expressed the desire to move up on their stake in the venture and that is currently in discussions. We would be happy to come down to about 51% kind of level in that particular venture. So again, that is the process currently on, if there is something which will happen on that again it should likely to happen in July or August on that front,” Biyani told the channel.

The group also intends to offload stake in Future Generali Insurance, a joint venture with Italian insurer Generali Group, Biyani said.

Pantaloon Retail, which currently has debt worth Rs 60 billion, recently sold its stake in the group's non-banking finance wing Future Capital Holdings Ltd to the US-based private equity (PE) Warburg Pincus LLC.

Besides, in April, Future Group had announced spinning off its branded apparel business from Pantaloon Retail India into a separate entity, and selling a majority stake in the resultant company to Aditya Birla Nuvo Ltd for Rs 8 billion.

Shares of Pantaloon Retail Thursday closed at Rs 182.55, up 1.11%, on the Bombay Stock Exchange.

Pantaloon Retail to sell 39% stake in stationery JV to US partner Staples for up to Rs 2 bln: reports

CONTIFY INVESTMENT | Saturday 30 June, 2012

New Delhi: India's largest retail chain Pantaloon Retail (India) Ltd, controlled by Kishore Biyani's Future Group, plans to offload its about 39% stake in the stationery joint venture, Staples Future Office Products Pvt Ltd, to its US-

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based partner Staples Inc, for Rs 1.5-2 billion, media reports said, citing unidentified sources.

Staples' holding in the Indian JV will rise to 89% following the stake acquisition, which will likely be announced in July.

“The deal will be announced in mid July... The details of the remaining 11% stake, which is held by the current heads of the joint venture, are still being worked out,” the Reuters quoted a source as saying.

Staples Future Office Products is a JV between Pantaloon Retail and Staples Asia Investment, a unit of Staples Inc, the largest office supply chain in the US.

The group also plans to sell its stake in supply management firm Future Supply Chain, in which Pantaloon Retail has 70% holding. The remaining 30% stake is held by Hong Kong-based Li & Fung Ltd.

Future Group also intends to offload stake in Future Generali Insurance, a joint venture with Italian insurer Generali Group.

Pantaloon Retail, which currently has debt worth Rs 60 billion, recently sold its stake in the group's non-banking finance wing Future Capital Holdings Ltd to the US-based private equity (PE) Warburg Pincus LLC.

Besides, in April, Future Group had announced spinning off its branded apparel business from Pantaloon Retail India into a separate entity, and selling a majority stake in the resultant company to Aditya Birla Nuvo Ltd for Rs 8 billion.

Shares of Pantaloon Retail Friday closed at Rs 181.95, up 1.85%, on the Bombay Stock Exchange.

Biyani looking to sell additional stakes to stave off debt

INDIA RETAIL NEWS | Tuesday 19 June, 2012

New Delhi: Kishore Biyani, head of Future Group, is mulling to sell additional stakes and reorganize his business as he is preparing to set up the second stage of his retail business.

Pantaloon Retail Industries Ltd (PRIL) that owns Big Bazaar, has just completed a few transaction to stave off its debt and it would carry on selling stakes in part or completely before heading on with its plans to expand its core business.

Foreseeable transactions include stake sales in companies, such as e-Zone, Future Supply Chain, Home Town, Staples Future Office Products, and also in its insurance joint venture Future Generali.

Page 9: Future Group

Rakesh Biyani, younger brother of Kishore Biyani, who is the joint managing director at Future Group, said that they had many non-core retail businesses and a few of them were prime investment and were about to exit.

Edelweiss’ associate director for institutional equities for research, Abneesh Roy said: “The company is well poised to make a comeback, as it has more or less been able to control its debt. It’s going to focus on apparel, food and home.”

Lines of Business

The company is present across several lines of business which have various formats (stores) Plywood, The Dollar Store (JV)

Fashion - Pantaloons, Central, aLL, Brand Factory, Blue Sky, Top 10, Fashion Station, Big Bazaar, Lee Cooper (JV)

General Merchandise - Big Bazaar, Shoe Factory, Navras, Electronics Bazaar, Furniture Bazaar, KB'S FAIR PRICE, Food Rite

Electronics - eZone, Electronic Bazzaar, STAPLES (JV) Home Improvement - Home Town Furniture - Collection i, Furniture Bazaar, Home Bazaar E-tailing (online shopping) - www.futurebazaar.com Books and music - Depot Leisure and entertainment - Bowling Co., F123, TGIF (Thank God it's Friday!) Wellness - Star & Sitara, Tulsi Telecom and IT - Gen M, M Bazaar, M-Port, ConvergeM, Future Axiom, T 24, One Mobile

(in alliance with TATA Teleservices) Consumer durables - Koryo, Sensei, IPAQ Service - E Care, H Care , Design & Service Malls - Central (Bangalore, Hyderabad, Pune, Mumbai,Kochi, Vadodara, Gurgaon, Indore,

Ahmedabad, Thane) Investment and savings - Insurance: ULIP, Pension, Endowment, etc.

The Big Future Group SaleImage: Sunil Raju For Forbes India It’s not about what’s the right thing to do. It’s about what’s the first thing you can do.”

Nobody had looked Kishore Biyani in the eye before and told him that. But Sameer Sain, the founder of Everstone Capital, had to do it. His words made Biyani squirm. It’s not the kind of thing you tell a man who’s demonstrated to the world you can build an empire worth $2.5 billion (Rs 13,800 crore) in 15 years. But that said, his debts were in the region of a back breaking Rs 9,000 crore, roughly $1.66 billion at today’s exchange rates.

Biyani knew it was the kind of number which could swamp all the Future Group companies he had meticulously built over the years to earn himself the title of “India’s Retail King”. To rid himself of the burden, he was negotiating with prospective lenders and suitors of all kinds. But Biyani’s problem was this: How do you make a considered decision when you’re running out of time? More importantly, how do you know what is the right thing and what can possibly go awry?

Biyani and Sain had known each other for a long time. When Biyani was starting out, Sain’s

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father was one of his most trusted partners. That is how, when he was just 18, Sain got to intern at Pantaloon, one of Biyani’s earliest ventures. He recalls those times in the mid-90s when Biyani placed him at his trouser manufacturing facility in a run-down part of Andheri, a Mumbai suburb, to iron trousers with three pleats. Sain was pretty damn sure the trousers would bomb. Another matter altogether that the trousers went on to become a rage and he got a glimpse of Biyani’s genius. The man knew what the market wanted.

And then, in 1997, Pantaloon made its retail debut with a store in Kolkata that catered to men. It was the start of Biyani’s incredible run. On Sain’s part, soon after his internship was done, he went off to the US to pursue a degree in finance and ended up at Goldman Sachs. But he stayed in touch with Biyani and they bounced ideas off each other regularly.

In 2007, when Biyani thought up of creating a financial services firm that could piggyback on his fast-growing retail empire, he asked Sain to come back and set up Future Capital Holdings (FCH). Three years later, after an acrimonious parting, Sain took the investment banking and private equity portfolios of FCH to set up Everstone Capital.

But it didn’t stop Biyani from calling up Sain for advice. “When you have people out to kill you, you don’t wait to think what the best move to strike back probably is,” Sain told him.

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On April 30, this year, four weeks after his chat with Sain, Biyani made a move no one expected of him. He agreed to hand over majority control of Pantaloon, his department store chain to Kumar Mangalam Birla, chairman of the Aditya Birla group. It helped that Birla was a fellow Marwari. Biyani retained a 25 percent stake for himself. And then three weeks later, Biyani sold his majority stake in FCH to Warburg Pincus, the blue-blooded private equity firm.

These two transactions—along with a few others in the pipeline—ought to help Biyani halve his debt and move to a safer harbour.

What nobody is clear about though is the endgame. With debt out of the way, will the maverick think up something dramatic as he had 15 years ago? Or will he simply ride away into the sunset by selling his stakes to a global retailer at a fancy valuation? The latter has been the subject of intense speculation since 2001 when he thought up Big Bazaar—the Indian version (or a Biyani-version, if you will) of a hypermarket.

What we know is this: The endgame will be around what he does with Big Bazaar. It

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contributes to half of the group’s turnover and is his crown jewel. But after taking in Sain’s advice and doing the unthinkable by giving up stakes in Pantaloon and FCH, he’s earned some breathing space. Trying to second guess him though is a bit like watching S Sreesanth run in to bowl. Nobody has a clue where he’ll pitch the next ball.

Biyani defended the move to enter the financial services sector but conceded it could have been done differently. "Consumption in India can be increased only through credit. However, the financial sector needs a different skill set. At times you feel you could have done it differently. The insurance venture was wrongly timed, as we were caught in the downturn in Europe," he said.

Two persons familiar with the development said the Future Group hoped to raise Rs 1,000 crore through the sale of its life insurance venture and Rs 600-700 crore more by selling its stake in Future Capital. Both these deals are in advanced stages of negotiations and are likely to be concluded shortly. But Biyani refused to comment on these two transactions due to regulatory restrictions.

The Future Group chairman said he was ready to unlock shareholder value in Future Ventures, which has invested in three dozen brands, including BiBa, Indus League, Celio and Indigo Nation. For instance, Future Ventures may sell its 30% stake in BiBa, an ethnic wear brand, back to the promoter. The brand has revenues of Rs 275 crore.

During the first half of the financial year ending June 2012, the group's profit from the core retail business, including Pantaloon Retail and Future Value Retail, shrank to Rs 47 crore from Rs 90 crore over the yearago period. This was largely due to interest payout from the retail business increasing to Rs 289 crore from Rs 201 crore.

Pantaloon Retail's turnover increased marginally to Rs 5,816 crore during the same period, up from Rs 5,353 crore.

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