Done deal: Burdened with debt, Kishore Biyani sells Big Bazaar to Reliance

By: |
August 30, 2020 8:00 AM

Reliance Retail, which has a store count of 11,806 outlets across 7,000 towns in the country, had earlier said that store expansion remains a 'thrust' for the business.

Besides strengthening the company’s footprint, the transaction is also expected to significantly add to JioMart’s offerings that plans to expand beyond grocery.Besides strengthening the company’s footprint, the transaction is also expected to significantly add to JioMart’s offerings that plans to expand beyond grocery.

Leveraged to the hilt and struggling to honour repayments to lenders, the poster boy of Indian retail, Kishore Biyani, on Saturday capitulated, selling his Future Group to Reliance Industries. In a slump sale transaction worth Rs 24,713 crore, RIL bought out the wholesale, retail logistics and warehousing businesses of the Future Group.

The deal gives RIL access to Future Retail’s expansive network of hypermarket and supermarket stores, including the company’s flagship Big Bazaar outlets. The retail business also covers the firm’s chain of electronics stores besides its portfolio of lifestyle stores, Central and Brand Factory. Future Retail has a footprint spanning more than 1,500 stores in over 400 cities and towns across the country.

Reliance Retail, which has a store count of 11,806 outlets across 7,000 towns in the country, had earlier said that store expansion remains a ‘thrust’ for the business. Besides strengthening the company’s footprint, the transaction is also expected to significantly add to JioMart’s offerings that plans to expand beyond grocery.

As part of the deal, the Retail & Wholesale Undertaking is being transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL), a wholly-owned subsidiary of Reliance Retail Ventures (RRVL). The Logistics & Warehousing Undertaking is being transferred to RRVL.

RRFLL also proposes to invest Rs 1,200 crore in the preferential issue of equity shares of FEL (Future Enterprises Ltd) to acquire 6.09 % of post-merger equity and Rs 400 crore in a preferential issue of equity warrants which, upon conversion and payment of balance 75% of the issue price, will result in RRFLL acquiring further 7.05% of FEL.

According to ratings agency ICRA, debt for listed companies of Future Group increased to Rs 12,778 crore as on September 30, 2019, from Rs 10,951 crore as on March 31, 2019. Future Retail’s net profits declined to Rs 164.56 crore on a consolidated basis in Q3FY20 from Rs 197.60 crore in the year-ago period. Revenue from operations decreased to Rs 5,193.19 crore in Q3FY20 compared to Rs 5,368.46 crore in Q3FY19.

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