Biyani to seek strategic union in retail post non-core sale

Last month, the Future Group sold a majority stake in Pantaloon's department chain to AV Birla Group's Aditya Birla Nuvo for Rs 1,600 crore that included Rs 800 crore of debt transfer.

Biyani plans to sell more non-core assets in a bid to make Pantaloon Retail debt-free by March 2013.

The consolidated debt stands at Rs 6,000 crore at the moment, Biyani told CNBC-TV18 in an interview.

The Future Group, which has been in an aggressive expansion mode, ran into a crisis with consolidated debt of Rs 7,800 crore that weighed on its profitability. Pantaloon Retail has been spending more than Rs 100 crore in interest over each of the past three quarters. This started to pinch as consumer spending slowed. That was when Biyani started looking to sell assets to pare debt.

Also Read: All you want to know about Future Group stake sale

Biyani says the company is in talks to hive off stake in its insurance business. He also said the company has a put option for stake in Staples Future Office Products, which is likely to conclude in the next couple of months.

The Staples sale stake is expected to fetch Rs 150 crore. PRIL holds 39.5% stake in Staples Future Office Products, a joint venture between the company and Staples Asia Investment (a unit of Staples, US).

In Future Supply Chain (FSC), a supply management firm, the group may hive off part of its 70% stake. The rest is held by Li & Fung. FSC has a debt of Rs 125 crore.

"We will make an announcement on Future Supply Chain by July-end," he adds.

Below is an edited transcript of Biyani's exculsive interview on CNBC-TV18. Also watch the attached videos.

Q: Where does your debt stand at after the Future Capital deal and whether for the rest of this calendar year, you have any more strategic sales lined up or that you hope to tie up?

A: I think the debt number will happen only by the end of September or maybe end of December because most of these transactions concluded are in the process of getting executed. Between the two transactions that we have done is a substantial amount of debt, close to Rs 2,300 crore is likely to get addressed with these transactions. Some more transactions are on the anvil early to say, which one will get concluded. But we are trying to focus first on our non-retail assets and then we will look at if there are any opportunities on the retail side for a strategic alliance or a partnership somewhere. But it is too early to say if there is something going to happen there.

Q: Would it be a reasonable estimate at this point though to say that in the next nine months till the end of this fiscal year if things go as your planning, you could pare down your debt to about Rs 4,000 crore or is that too aggressive an estimate?

A: If you go by the consolidated debt position then the debt addressal will be close to 6,000 crore because Future Capital is a large chunk of that debt. In all probability, that debt would be lower than the number indicated. My feeling is that our internal targets would be to see if we can end between 2,000 and 2,600 kind of levels.

Q: The market is expecting some newsflow in the next few weeks if not in the next month or two on Staples Future of its products, how close are you to sealing a deal on that?

A: As part of our agreement with Staples, we do have put option for our stake holding. The date to exercise that is early next month. We already have a lot of discussions with them and the process is currently on. We are hopeful of the fact that within next couple of months, we should be able to conclude that transaction.

Q: The one that has generated the most interest is your insurance venture and some domestic names such as the Anil Ambani Group as well have been spoken off, can you confirm whether you are looking to do a sell and whether it would be a domestic entity that you are leaning towards right now or some kind of global sell?

A: I think under the regulation it needs to be a domestic entity, it cannot be a global sell because we already have an international partner there. So I think it is early to say with the people that we are negotiating with or who is happening. I think it is more to do with also the comfort that our partner also has with. It is a process, it is part of our non-retail assets and definitely that is one of the options available to us to see if we can find a partner to buy that asset also.