Kishore Biyani: Why ‘Janak’ of Modern Retail had to sell business in India

Future Group’s retail and wholesale business and logistics and warehousing business will be owned by Reliance Retail Ventures Limited (RRVL). The deal has been officially announced and is going to be a lump sum of Rs 24,713 crore. Future Lifestyle Fashions will also be acquired under the deal. After this deal, stores like Big Bazaar, FBB, EGDay of Future Group will be owned by Reliance Retail.

Pantaloon store opened at age 26

Kishore Biyani was born in 1961 to a Mumbai textile trader. She started her journey in the 1980s by selling stonewash denim fabric in Mumbai. He started a retail business named Erstwhile Manz Wear in 1987. Shortly after this, its name was changed to Pantaloons. Biyani opened the first Pantaloons store in Kolkata at the age of 26.

In 1992, Pantaloon was listed on the stock exchange to raise funds for expansion, store improvement and marketing. After this, he did not look back because he had created an entire retail ecosystem. He also mentored many other entrepreneurs and brands.

The first Big Bazaar store in 2001

In 2001, Future Group opened the first Big Bazaar store in India. It became so popular that within 6 years it had about 100 stores across India. In 2007, Biyani’s Future Group also ventured into the insurance sector and launched Future General Insurance. The same year Future Capital also came into existence, offering financial products, wealth management services, equity broking solutions and real estate broking. Future Group also entered real estate.

As time passed, other competitors started entering the retail market. One of them was Reliance Retail. Also, e-commerce also entered, which Biyani did not initially consider as a challenger. After the economic downturn of 2008, the company’s business was severely affected. Gradually, the burden of debt increased. To reduce the burden of debt from his retail empire, Biyani was forced to invest assets several times.

Majority of Pantaloons sold in 2012

In 2012, he sold most of his stake in the Pantaloons chain to Aditya Birla Nuvo. The deal was worth Rs 1600 crore, which included debt transfers of Rs 800 crore. In 2012 itself, Biyani also sold a majority stake in Future Capital Holdings to US private equity Warburg Pincus to raise money again. At the same time, out of a stationary joint venture started with Staples of America, the entire stake was sold out to the partner firm. At that time, his group was burdened with a debt of about Rs 5000 crore.

Similarly, in 2013, Future Lifestyle Fashion Ltd sold a minority stake in AND owned by ethnic wear firm Biba Apparels and designer Anita Dongre for Rs 450 crore. In August 2019, Kishore Biyani held a 49 percent stake in Future Coupons. Amazon.Com NV Investment Holdings LLC. Sold to Future Coupons has a 7.3 per cent stake in Future Retail.

The financial crisis increased from this year

Biyani’s Future Group got into financial trouble earlier this year when their listed entity Future Retail failed to make debt reparations and the lenders talked of holding shares. It was a big setback for Kishore Biyani, who became the 80th richest Indian in Forbes’ list with Rs 13,016 crore in 2019. After this incident, several rating agencies including Standard & Poor’s and Fitch downgraded Future Retail’s credit ratings. According to some reports, the Future Group is currently in debt of Rs 13000 crore and most of the promoter group shares have fallen.

What after the deal with Reliance Retail?

Following the deal with Reliance Retail, Future Enterprises Ltd will retain the manufacturing and distribution of FMCG goods and the integrated fashion sourcing and manufacturing business. It will also retain its insurance joint venture with Generali and joint venture with NTC Mills.