The board of Future Retail has approved realignment of its retail operations with Bharti Retail, marking another consolidation in the retail business.
"To streamline the operations resulting from this consolidation, the board of directors of Future Retail and Bharti Retail have proposed a demerger of the retail business of Future Retail to Bharti Retail, and a demerger of the infrastructure business of Bharti Retail to Future Retail," a company statement said.
BS Nagesh, founder, TRRAIN believes it will be very good for both the businesses considering scale has become critical for retail business. “Bharti has a much larger presence in the North and Future Group will get much deeper inroads into the northern markets,” he told CNBC-TV18.
Below is the verbatim transcript of BS Nagesh & Arvind K Singhal's interview with Sumaira Abidi, Pragya Bhardwaj & Nigel D'Souza on CNBC-TV18.
Sumaira: Your first thoughts on this finally coming through?
Nagesh: It is good for both the business; the scale has become very critical for retail business. This seems to be a good merger. Bharti has a much larger presence in the North and Future Group may get much deeper inroads into the northern markets.
Pragya: The deal has been on the offing for quite some time. How does the subsuming of Easyday differentiate from Big Bazaar that Future Retail already has. How would the company manage to distinguish these brands, they are pretty much similar line of businesses?
Nagesh: If you go back and look at history of some of the super markets and hydro markets - many of them had retained the brand as entity of the in commence companies. I presume that when you are doing this kind of merger you will retain the brand identity probably the front-end things will still remain what they are.
May be they will try to consolidate the backend teams that is how they will get efficiency of scales as well as cost. That is the way one has to look at it because suddenly if you change the brand name then from the consumer's point of view the benefit in that proposition will go off. I presume that this is a merger of synergies and scale and the consumer will only get the benefit either out of experience or better price or better cost.
Sumaira: Your first take on how this may shape up and anything that you want to look out for in the press conference?
Singhal: Coming together of Future Retail and Easyday can give them a very strong pan India footprint which is matched only by Reliance Retail as of now. The potentials are far more synergies in terms of logistics, in terms of supply chain management, technology platform in this particular merger. I personally think that this will be quite interesting for the overall retail industry, especially food and grocery where people have struggled almost for the last 10 years now.
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