Chairman of the Future Group looks for foreign partner

The Kishore Biyani Chairman of the Future Group,controlled and the country’s largest retail chain, has marked Ezone as its first target for a partnership with a foreign player.This might be the group’s first tie-up with a foreign company after a committee of secretaries recently approved a proposal to increase the limit of foreign direct investment (FDI) in multi-brand retail to 51 per cent.

A Future Group spokesperson said, Talks were at an initial stage and the company was yet to decide on what percentage it would offload.

He added, “Ezone will be the first among Future Group’s formats to receive an influx of money. While talks are on a preliminary stage and nothing has been worked out yet, the first tie-up would definitely happen in this vertical.”

Ezone, which has more than 45 stores across India, is the consumer durable and infotech chain of the Rs 12,000-crore Future Group. It was separated from the flagship Pantaloons and made into a separate company earlier this year.

Besides Ezone, Future Group operates other retail formats like Pantaloons, Big Bazaar and Brand Factory.

The spokesperson said, “There has been a problem of shrinking margins. Mr Biyani has earlier said that Future Group is FDI-ready. Ezone has been separated and business verticals reorganised in anticipation of the funds the new norms will allow.”

In allowing FDI into multi-brand retail, the committee of secretaries has allowed the entry of multinational retailers like Walmart, Carrefour and Tesco into the country. Most of these companies have been waiting for a while to enter the organised retail market in India, currently valued at nearly $22 billion.

The spokesperson said, “We are looking at an increasingly digitalised Ezone. This would mean a format with lesser number of stock keeping units, which allows us better inventory management in a more cost-efficient manner.”

Leela: ITC keeping cards close to chest on EIH

Y. C. Deveshwar, Chairman, ITC, addressing shareholders at the company’s 100th annual meeting in Kolkata on Friday told,

It’s not just EIH or Hotel Leela Venture, ITC’s other competitors, too, should now be scared of the diversified conglomerate picking up stakes in them.
ITC has significant equity investments in these two hotel companies, and the company may invest in a similar way in other competing companies also,

ITC’s investments in EIH have reaped significant financial gains as it could foresee the prospect in a company present in same industry, a strategy.On investments in rival hotel companies he said that ITC had ‘temporary liquidity' with funds to the tune of around Rs.5,000 crore.

Deveshwar told,“We invested in EIH at a price of Rs35 while others invested at a much higher price. This is the reason our investments are confined to industries, by and large, where we operate. It’s not only that we would invest in these two companies, we could also invest in other hotel companies, we could also invest in other fast moving consumer goods companies. We could also invest also in agri-products businesses, even information technology companies,”

He told, if the new relaxation in the takeover laws would lead to ITC raising its stake in EIH, now at 14.98%, a tad less than 15%, the level, if breached, would trigger an open offer under present rules. Under the new takeover rule announced on Thursday, that trigger level has been raised to 25%.
ITC would invest (in East India Hotels) further if the price was good or it might even sell if the price went up further.

 He told,“We want to be present in fast moving consumer goods businesses and one of the businesses under the umbrella of foods in dairy-based products. India is the world’s largest producer of milk and there is a great opportunity to add value to it by making derivative products and brand them and market them. Our first project would be in Munger where we have been engaged in animal husbandry programme, upgrading the quality of cattle leading to improvement in yield of milk.