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. (IANS)