Pantaloon to change name, business model

Pantaloon Retail, part of the Kishore Biyani-owned Future Group, has drawn up plans to restructure its business and is preparing to raise Rs1,400-1,500 crore through a preferential share issue to promoters and private equity firms.

At a meeting on Monday, the company's board decided to reorganise its retail business along three verticals – fashion, retail and consumer durables - with each being hived off as a separate legal entity.

The group aims to raise Rs1,100-1,200 crore from private equity firms, who will be offered shares in the newly-created companies, while the remaining amount of Rs300-400 crore will come from a preferential allotment to the promoters. It has already approached lenders like Carlyle, Blackstone, Bain Capital, KKR and the Goldman Sachs PE arm.

There will also be changes in nomenclature. The listed entity is likely to be rechristened Future Market & Consumer Group Ltd, which will be the operating company for the FMCG and consumer business and also serve as the holding company for the other two entities. The fashion company will be called Future Fashion Merchandising Ltd and the retail company, Future Consumer Enterprise Ltd.

Healthy growth
Meanwhile, Pantaloon Retail's same-store sales were reported to have grown for three months in a row, after dipping in December. Pantaloon's March sales in the value retailing segment and lifestyle segment grew 5.32 per cent and 4.28 per cent, respectively. Total sales for the month rose 30.2 per cent to Rs574.56 crore.

Same-store sales in value retailing climbed four per cent in January, after a four per cent drop in December. Lifestyle sales grew 12 per cent in the month, after falling 14 per cent in December. In March, value retailing rose 25.08 per cent to Rs346.32 crore while lifestyle retailing grew by 17.25 per cent to Rs115.96 crore.

''At a certain price point, there is demand. India's consumption story is intact,'' said Kishore Biyani, managing director, Pantaloon Retail. ''Ultimately, consumers won't stop buying food and other basic necessities.'' Reports say the chain is planning to cut the price of its product to 2007 levels.

However, Pantaloon's home retailing sales for March, like in previous months, registered a 10.29 per cent fall, as consumers deferred purchases of new homes.