FabFurnish, HomeTown may be merged: Kishore Biyani
05 May 2016
About a month after acquiring the home furnishings e-marketplace FabFurnish for an undisclosed sum, Kishore Biyani, group chief executive of the Future Group, said he is considering merging it with HomeTown.
Biyani is looking to unlock value of the group's home furnishings business which is being operated under the banner HomeTown. The plan is to demerge Hometown from Future Retail, merge it with FabFurnish, and list the new entity separately.
Responding to a query from DNA newspaper, Biyani said, "We are looking at opportunities to create value out of our business. Today if you look at Future Retail, nobody values our home business. It virtually has zero value. People value Big Bazaar as a business. And if we can get some value out of this business our shareholders will be happy. So we are going to look upon whether we can unlock value in this business."
When asked how soon is this expected to happen, Biyani said, "Nothing has been finalised yet and there is no board approval either. It's a thought that has emerged and FabFurnish was one of the ideas to look at it."
While Biyani did not share financial details on the kind of business being done by FabFurnish, he said that it is set to become profitable in another three months from now. "If we don't increase the cost while continuing to increase business, we should become profitable," he said, adding that FabFurnish currently has 124 employees and there were no plans add even a single employee. The combine's employee base (HomeTown and FabFurnish) is around 250 people.
Biyani also said that the HomeTown and FabFurnish together would achieve a topline of Rs1,000 crore by the end of fiscal 2017. "And that's not gross merchandise value (GMV), but real business," he said.
Biyani did not share HomeTown financials for fiscal 2016 saying that the vertical has not been looked at in that way. "It is part of the entire business viz. Big Bazaar, Central, etc. Now we are looking at making it independent. There are currently 42 independent (HomeTown) stores and another 7-8 new stores will be added in this fiscal. So HomeTown along with FabFurnish will become a Rs 1,000 crore business by fiscal-end," he said.
On competition from Swedish furniture retailer Ikea, Biyani said, "They will come and open their first store two years from now. By then we will already be Rs1,500 crore in topline. They will start from zero, they will have to touch Rs1,500 crore. Let them touch that number.
''I think Ikea is a very different model. It's a do-it-yourself model – 3.5 to 5 lakh square feet stores. Nobody can compete with Ikea in the world, Ikea is the best. So we can't even dream or compare ourselves to Ikea. So Ikea is one to 10. We will start from 11. Ikea is the Amitabh Bachchan of the design and furniture business."
Commenting on the growth being experienced in the home furnishings business, Biyani said it's in the region of 25 per cent-odd.
On the slowdown in real estate sector and the possible impact on business, Mahesh Shah, chief executive officer of HomeTown, said that people are shifting away from carpenters to organised retail. "The growth in organised retail is coming from this shift. Also, there has been good traction in the replacement market. However, the kitchen business has been impacted a bit due to slowdown in the realty sector," said Shah.