Pantaloon Retail, the country’s largest retailer by market value, today said it would restructure its stakes in its non-retail ventures such as financial services, brands and education, and set up a separate company for Big Bazaar and Food Bazaar, to unlock value for its shareholders and focus on its core retailing operations in the country.
ntaloon said it would consolidate its investments in the financial services ventures such as Future Capital Holdings and insurance joint ventures such as Future Generali India Life Insurance and Future Generali India Insurance without conceding management control, the company said today.
The move to consolidate its investments in non-retail ventures is aimed at reducing exposure of the company in some of its loss-making units (such as Future Generali and Future Knowledge Services) and retain Pantaloon a profitable entity, a official in the company said.
“The management does not want Pantaloon to be a holding company of all non-retail ventures, of which some are loss making,” a company official said.
Pantaloon Retail’s consolidated net profit fell by 54 per cent in FY2009 at Rs 10.1 crore compared with Rs 21.9 crore posted in FY2008.
As part of its realignment strategy, the company’s board today approved transfer of its investments in Future Brands Ltd and subsidiaries such as Future Knowledge Services Ltd and Future Learning and Development Ltd to promoter group company PFH Entertainment Ltd for around Rs 190 crore. Global accountancy firm Grant Thornton India and merchant banker Enam Securities Private Ltd valued the assets held by the subsidiaries.
The company’s board also approved its plans to create a separate subsidiary for value formats such as Big Bazaar, Food Bazaar and related formats to expand these in a faster way. The move is primarily aimed at raising funds for these units through an initial public issue or strategic placement to investors, the official said.
“In the last few years, the company had forayed into allied businesses in the consumption sector with a view to strengthen the retail business, as well as leverage on new opportunities that the Indian economy provides. In order to unlock more value for the shareholders, the management had proposed to independently govern and build these businesses, while retaining the character of Pantaloon Retail as a pure retail play, focusing on retail businesses,” said Kishore Biyani, managing director of Pantaloon Retail.
However, analysts panned the company’s move, saying the announcement does not have any detailed or concrete proposals. “It is nothing new. It does not bring any substantial changes in the operations of the company. We have to wait and see how the company will implement the strategy,’’ said an analyst from an international brokerage.
The company’s stock ended the day at Rs 312.60, nearly 0.86 per cent down from Thursday’s close.
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