Pantaloon - To Spin Off Mall Division

Future Group Doing some Aggressive Stuff

Pantaloon Retail (India), part of the Future group, plans to spin off its 'Central' mall division to create a new company. It also plans to come with an IPO for the new company by the end of 2008. Rakesh Biyani, director, Pantaloon Retail, said: "Currently, Central is a division under the Pantaloon Retail, and there are only four Central malls in the country — Bangalore, Hyderabad, Pune and Vadodara. We will be coming up with a new company for the same and will list it on the stock exchange.” The decision to carve out a subsidiary out of the mall division was taken to unlock the value of the 'Central' mall concept and raise funds through the IPO for future expansion, Biyani said. However, he did not divulge the exact quantum of fund it planned to raise from the IPO. The three operational 'Central' malls fetch Rs 400 crore.

The company has already initiated the process of creating the subsidiary, which was part of its long-term goal, he added. The company plans to have 11 Central malls. Responding to recent media reports suggesting that Pantaloon Retail will divest its 49 per cent stake from Planet Retail Holdings, he said the company believes in buying and not selling. He further hinted at the firm’s plans to acquire a travel portal in the country and that the acquisition would be concluded by the year-end.

Pantaloon is also planning to more than double the Big Bazaar stores to reach the 100-mark from the present 41 stores, while substantially increasing its presence in the South besides tier-II cities. Addressing a press conference in connection with the opening of second Big Bazaar store in Hyderabad, Rohit Malhotra, head of south zone operations of the retail arm of Pantaloon, said the company was planning to increase this number to seven stores, besides adding an equal number of standalone Food Bazaars in the city in the next 6-8 months. The company has invested Rs 15 crore in the second store, which has been set up after a gap of five years, and is expected to gross Rs 100 crore turnover in the first year, Malhotra said. "Locations for the remaining stores in the pipeline for Hyderabad have also been finalised," he said.

He added that the number of Big Bazaar stores would be increased to 30 from 11 in the entire South. Close to Rs 1,000 crore is being invested in the country-wide expansion plans this year, he said. According to him, the Big Bazaar stores currently have combined sales of about Rs 2,000 crore annually. Besides increasing the number of stores in the existing cities, the company is planning to cover 15 more cities, including tier-II cities such as Vijayawada and Visakhapatnam.

The motto of nobody sells this cheaper and better and everything is available under one roof continues to represent our sales strategy. Besides keeping 1.6 lakh products under one roof, the company is offering huge price discounts of up to 60 per cent on various products," he said. Set up in a 52,000-sq. ft. area, the company's second store in the city is strategically located at the busy RTC crossroads, which houses a number of cinema theatres besides being one of the important junctions in the city.

Future Logistics is close to announcing a domestic acquisition. The company is said to be in talks with Patel Integrated Logistics and is likely to buy a majority stake in the company, say sources. The two companies are likely to sign the term sheet this week, they add. The deal will be funded by Indivision, the PE arm of Pantaloon Retail, say sources. Patel Integrated recently merged Patel Roadways with itself and Patel On-Board Courier. Post merger, the management holds 57% in the company. But sources say the management is likely to offload 30-35% stake for Rs 100 crore. But the management could not be reached for comments on the same.