Future's low-value products and Paytm a good match: Biyani

Future Group has partnered with Paytm and that is likely to help the company to reach more geographies, said Kishore Biyani, CEO, of the company. "Since we deal with low value products, cost of economics becomes the most important part of the business and Paytm is the only player to work on those lines," he said.Going ahead, Future Group may become the largest collector of Paytm wallet money, he told CNBC-TV18. Calling the Goods and Services Tax (GST) a 'path breaking' development, Biyani said the system will help India become one big unified market. More so, it will help the company on all fronts. "Logistics, retail and consumer goods will benefit the most from GST and we are present in all the three segments,” he added. In addition, cost saving to the tune of 1 percent is what Biyani expects to come from the GST.Below is the verbatim transcript of Kishore Biyani's interview to Priya Seth on CNBC-TV18.Q: Tell us something more about your tie up with Paytm?A: Since we have established our relationship, we believe the Paytm Mall the e-commerce business, the marketplace which they have created, how can we be the anchor customers because Paytm has lot of customers and lot of merchant establishment which accepts Paytm cards and everybody need something which we sell in Big Bazaar that is the grocery, that is the fast-moving consumer goods (FMCG) item, the processed food, the general merchandise, every household goods. I believe they are probably in unit economics, we will be the lowest cost operator because they already have customers on board, they don’t need to spend money to acquire customers.Since we deal with low value products, the cost economics becomes very important and we thought probably Paytm is the only player who can work on that economics and which can help us to grow a business to more geographies. How can we use our stores, how can we integrate the entire technology, I think something which we will work out and see that we reach to more and more geographies and more and more destination and more and more customers across the country.Q: I understand this tie-up is on two fronts one is on the marketplace as well as on the wallet front. Run us through what are the kind of targets that you are working with maybe possibly by the end of this financial year, what kind of customer acquisition do you expect and in terms of revenues, what kind of revenues it will bring to the table?A: We might in the next 2-3 months become the largest collector of Paytm wallet money.Q: What would that amount be?A: I don’t know their number, but as an individual I think the numbers can be shared by -- we have just started it, but we believe we will be a significant part of their wallet spent.Q: Does it mean that your e-commerce strategy has seen a sort of shifts, what kind of strategy do you think Future Group will get going ahead?A: For us e-commerce is reaching to more consumers for our products, for our brands and our strategy will keep on evolving and when we have to look at right partners at right model and right unit economics to make this happen.Q: The biggest landmark bill amendments to the goods and services tax (GST) have been cleared by the cabinet, what is your view on this, how do you see this shaping up for the industry and for you as a player?A: One big unified market as India is a big-big achievement and a big thing. It is a path-breaking thing. I believe personally the three sectors which benefit the most, we belong to all the three sectors. One is the logistics because of our efficiency which will build up, one is a retailing because that is the last leg of economic activity so all the cascading effect of tax gets captured there and third is the consumer goods companies. On all the fronts it should be very beneficial to the companies as well as to the consumers.Q: What kind of strategy will you change with GST being implemented?A: No, we have a GST compliant logistic business model, but some of our warehouses will definitely get reduced, the goods will reach much, much faster, the ease of doing business, the compliances, a lot of thing will change for us.Q: In terms of cost savings what would that amount be and if you could give us some percentage terms as well?A: It will be very difficult to ascertain, but I believe in terms of efficiency there is 1 percent cost saving which can happen and in terms of various other set offs depending on the rates it can be another percentage to 2 percentage.Q: But in terms of warehouses is there a some sort of number that as to how many warehouses would you look at reducing, will this have any impact on how goods are moved from one state to the other?A: Absolutely, the way the goods will move now will undergo a change and that will mean little bit of recalibration of certain warehouses.Q: So we can expect the benefit to trickle in maybe 3 months after implementation.A: I don’t think it will come in so soon, but there will be a short-term pain there will be a medium-term gain and a long-term lot of gains.