Restructuring Pantaloon Retail: The Future Group Initiative

Presented by:Kamalika Nayak Pankaj Manshani Sailesh Nagari

Introduction
Mid 1980 s PRIL begin as a trouser manufacturer March 2006 Pantaloon Group renamed as Future Group Future Group Divided into six verticals

Contd...
23rd May 2006- PRIL announced an agreement to form joint venture with Italy based Generali Group with 26% stake. Future Group planned to operate its insurance and other financial services such as banking, personal finance through its financial arm. Drivers of growth in Indian Retail Sector: Rising income Increased exposure to global products Indian attitude towards saving and consumption Better infrastructure facilities Greater employment generation

Competitors

BACKGROUND
The history of PRIL can be traced to the mid 1980s when Biyani quit his family business to start manufacturing apparels. In 1987 PRIL was incorporated as Manz Wear Pvt. Ltd and manufactured readymade trousers under Pantaloons brand. In 1992 Manz Wear went public, and the name was changed to Pantaloon Fashions (India) Ltd. In 1992 the company inaugurated its first exclusive men s store called Pantaloons Shoppe.

Contd
In August 1997, the first departmental store called Pantaloons was opened in Kolkata with an investment of 0.7 million. It was the first retail store in India that marketed apparel for the entire family and recorded revenues of Rs. 100 million within first year of operation. To reduce the dependency on third parties PRIL opened a manufacturing facility at Tarapur, near Mumbai in May 2001 with a production capacity of 70,000 pieces per month and a denim plant with a capacity of 20,000 pieces pm.

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After success of Pantaloon departmental stores encouraged it to come up with retailing formats such as Big Bazaar , Food Bazaar to retail food products. In 2001 PRIL opened its first Big Bazaar , which had an area of 30,000 sq feet, in Kolkata selling around 200,000 items at discounts ranging from 6% to 60%. The major USP of the Big Bazaar was low prices and the best price proposition being offered to consumers and mainly focused on unbranded products. In 2001, the first Food Bazaar store was set up in the Lower Parel region of Mumbai caption used for promotion was- Ab Ghar Chalaana Kitna Aasaan .

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It was reported Food Bazaar generated Rs. 2 billion in gross revenues achieved a cash break even in the very first year of its launch. As of 2005, the Pantaloon Knowledge Group had 3.5 million sq.ft of retail space and over 100 stores across 25 cities in India. It employed more than 12,000 people and had a customer base of more than 120 million with a revenue of Rs. 10.73 billion (US$ 242 million).

FUTURE GROUP
Verticals
Future Retail Future Space Future Brands Future Capital Future Media Future Logistics

Description
Food & fashion Management of shopping malls & real estate Management of owned & licensed brands Financial products & services Focus on development & management of retail media space Deriving efficiencies through better supply chain management distribution

Developed a B2b model To strengthen its back-end supply chain sourcing capabilities. To reduce costs and to increase business volumes. Increased no. of departments from 16 to 28 with an average area of 20,000 square feet. Launched 2 fashion stations, 4 Big Bazaar hypermarkets and 6 new food bazaar stores.

NEW BUSINESS VENTURES

January 2005
PRIL acquired 68% stake in apparel company Indus League Clothing Limited (ILCL) which owned popular clothing brands like Scullers and Indigo nation. ILCL owned popular clothing brands like Scullers and Indigo nation. PRIL acquired 15.73% stake in Galaxy Entertainment Corporation at a investment of Rs. 88 million.

Contd
February 2005 PRIL acquired 15.73% stake in Galaxy Entertainment Corporation at a investment of Rs. 88 million. PRIL plans to acquire 49% stake in Planet Sports Pvt. Limited, a sports goods and apparel retailing company, for Rs. 142million PRIL entered the restaurant business Established PAN India Restaurant Limited with an investment of 90 million. Its focus was on quick service restaurant, food court and hotels

Contd
April 13, 2005 Pantaloons food product( India)Ltd. Was incorporated as a subsidiary of PRIL with a 100% stake at an investment of Rs. 50 million and was the main supplier of food products to its food bazaar stores. September 2005 PRIL stepped into retailing of footwear by forming a JV called foot mart India Ltd. With Liberty shoes Ltd. PRIL holding 51% stake. it invested Rs. 127.5 million in the JV.

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January 2006
PRIL announced to set up a NBFC with an investment of 65 million to target credit and insurance business. PRIL formed a JV with Gini and Jony Pvt. Ltd. For the purpose of setting up a retail chain for kids wear . PRIL had 50% stake.

Contd
March 2006 PRIL s subsidiary ILCL formed a JV with UK based Lee Cooper to distribute and sell Lee Cooper Brands at its retail outlets in India. April 2006 PRIL ventured into telecom retailing by establishing its wholly owned subsidiary, Convergem Retail India Ltd. With an investment of 1 billion. It was operated through telecom retail formats such as Mport, M bazaar, Gen M.

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April 2006
Pantaloon Group owned Kshitij real Estate Fund (KVC fund) entered into a property acquisition deal with crossroads.

May 2006
PRIL form a JV with Italy based Generali to form a JV called Future Generali with 74% stake and an investment of Rs. 250 million. PRIL ventured into online retailing by launching its e-retail portal, futurebazaar.co to counter competition from leading e-commerce portals in India like eBay, Rediff, Fabmail, and Indiatimes.

Contd
June 2006
50:50 JV with Talwalkars Better value Fitness Pvt Ltd. For retailing health and fitness products and services.

July 2006
PRIL entered into an alliance with Ruchi Soya Industries Ltd (RSIL) for expanding its refined edible oil business through Food Bazaar.

August 2006
PRIL entered consumer durables retailing business by entering into a JV with Videocon Industries LTD.

RECRUITING NEW TALENT

At the senior management level , the group hired high profile executives from reputed organizations like Goldman Sachs, Coca Cola India. In addition to bringing in new talent at the senior management level, PRIL also tied up with a few management schools to create a management talent pool for the lower levels of the organization. PRIL also said that it had a lower attrition rate 8.3 % when compared to the retail industry as a whole around 40 % to 50% per annum

FUTURE OUTLOOK
According to report by KPMG the size of the Indian retail industry was estimated at US $ 200 billion in 2006. For the year ended June 30 2006,PRIL reported a total Income of Rs 18.72 billion as compared to Rs 10.88 billion in 04-05. The company also reported a 66.4 % rise in net profit in the fiscal year 2005-06.

Contd
The company s growth momentum continued as PRIL recorded a net profit of Rs 386.4 million for the quarter ended September 30,2006. This was an increase of around 186 % over the corresponding period of the previous year. In Feb 06, the Indian government allowed single brand retailing in India upto 51 %.

Contd
In July 06,it was reported that WAL-MART received permission from Indian government to set up two liaison offices in India. Though these offices could not undertake business operations in India, analysts saw this as part of retail giant s long term plans for establishing operations in India. In order to compete with Reliance and international retailers Biyani entered into wholesale trading and opened KBs Wholesale market similar to WALMART s Sam s Club

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Biyani had plans to launch 18 formats and over 3340 stores thereby turning PRIL into a US $7 billion company with over US$1 billion in profits by the year 2010. In September 06 Biyani planned to raise around Rs 10 billion over the next 18 months. Biyani also planned to split his businesses so that he could raise money separately from each business entity.

Thank You