The TWO BIG B’s of Indian retail sector are all set to bring in a tsunami change if the recent reports are to be trusted. According to the recent news reports conveyed by India’s top ranking online news websites; Kishore Biyani’s Future group is readying itself to join hands with Bharti Retail. The collaboration was on cards since several months and insiders inputs direct that the discussion has caught pace and nearing a conclusive stage. This merger if it happens would be the biggest in the Indian retail sector and is ought to worry other contenders.
So it goes something like this:
Plans are that the biggest entity, the Future Group is ready to soak up Bharti Retail and the deal is believed to involve a lot of stock transaction. Once this takes places, Bharti Retail promoters-the Mittal brothers, Sunil, Rakesh and Rajan are presumed to own minor stakes in some of the entities promoted by the Biyani clan. However, the exact math of the transaction is yet to be decided as the perfect ratios is not received upon and the same is expected to be solved by the end of May this year.
Bharti-Biyani merger will be the 6th retail M&A deal accomplished by Future Group.
Experts in the Indian retail industry indicate that the Future group had steadily segregated its business in the last 3 years. It has divided its business in an absolute systematic manner such as the Future Lifestyle Fashion, Future Retail and Future Consumer Enterprises Limited. Of these, household grocery retail chains like Food Bazaar and Big Bazaar fall under the Future Retail segment. Future Consumer Enterprises include stores like Nilgiris, Big Apple and Aadhaar.
Future Group with an operating space of 17 million square feet is India’s second largest retail name with an annual turnover of 14,000 crores INR. It was just in the last annual where it lost to Reliance Retail in terms of revenue.
It’s a WIN-WIN situation for both:
Bharti Retail has been incurring constant losses since December, 2012 where it had a net loss of 538 crores INR at a revenue of 1,581 crores INR. A merger in this point of time is ought to accelerate conditions of Bharti Retail as it should be enjoying the future even as a junior partner. On the other end, this move of getting together is a big push for the Future Group as it will get an open gate with utilizing Bharti’s clout. Future Group in fact will be benefiting in regions where Bharti has had dominance especially in the northern retail markets.
E-commerce in Retail will change:
Studies have it that the online sales of food and groceries will be an industry worth $5 billion by the end of 2020. Thus, the heat of competition is sure to reach a higher level once the merger news turns real.