Asset light Model:
Future Retail Ltd. (FRL) has an asset light model as all the backend and store infrastructure
is a part of Future Enterprises Ltd. (FEL). FRL is expected to pay operating lease
charges of around Rs. 600-650 Crores p.a. for its existing stores. However, the
future store capex will be undertaken at an arm’s length basis by FEL and would
be at commercial rates. So for every new store addition, FRL’s balance sheet will
show lease deposits, whereas P&L statement will show higher store rentals and
lease charge for furniture and fixtures.
Focus to strengthen Food Division:
FRL is focusing on strengthening its food division after its fashion business became
reasonably large. Recently, Future Group was in buyout talks with Heritage Foods
(a company which is backed Andhra Pradesh Chief Minister Chandrababu Naidu’s family)
& with Aditya Birla Retail (ABRL) to buy or merge ABRL’s supermarket business.
In the last four to five years, the group has acquired companies like Nilgiri, Big
Apple and Bharti Retail & has contributed to the groups’ over 700 stores spread
across 13 million square feet space in across 25 cities. It is also aiming to reach
across India through Mergers & Acquisitions. Apart from plans to expand its
acquired business, the group is also focusing on developing its own food brands
like Golden Harvest, Sunkist and Tasty Treats. The Group is targeting a Rs. 1 lakh
crore turnover by 2021 from its recent business and acquisitions in the long-run.
Acquisition of online home furnishing & Décor business:
Future Retail has approved of the acquisition of an online home furnishings and
décor business, FabFurnish.com, from Bluerock eServices for Rs. 4.86 per share.
FabFurnish is a high margin and profitable business, currently operating at 40-41
% margins. FRL plans to operate in 100 cities eventually via FabFurnish, which will
bring in significant capabilities of building a digital business.
With this acquisition, the company expects be the first one to get into the Rs.
1,000 crores league in this business & is expecting an EBITDA of close to Rs.
40-50 crores this year.
Partnership with brands to attract new customers:
Future Retail Ltd., the Big Bazaar brand took a leadership position by being among
the first to form a partnership with Patanjali Ayurved and offer its entire range
of health-positive, ayurvedic FMCG products in categories like food, staples, nutrition,
hair care, skin care, dental care and toiletries etc. The company has seen excellent
traction in the initial period post launch & has become the 3rd largest FMCG
seller at Future Retail. It is also in process of launching some products of Sri
Sri Ravi Shankar. Such alliances would help to attract new customers to the stores
& at the same time enhancing the company’s offerings to existing customers.
Partnership with Bajaj Finance Ltd:
Bajaj Finance Ltd., the diversified retail lending arm of Bajaj Finserv, announced
its unique partnership with Future Group, to enable and empower customers to convert
all their purchases from any of the Future Group brands into easy EMIs, thus ushering
in a digital era of smart purchase.
The credit facility available to customers on a minimum invoice amount is Rs. 5,000
stretching up to a maximum of Rs. 3 lakhs, with the tenure of loan being 3 months
to 2 years.
With this tie-up, easy EMI finance would cover the complete spectrum of the customers’
lives – from grocery and household essentials to fashion and accessories, from small
appliances to consumer durables, and from furniture to furnishing. This facility
is available across all the stores of Big Bazaar, FBB, Central, Home Town and Ezone
& soon, will also be available in Foodhall, Easy day and online platform FabFurnish.com.
To enable this smarter purchasing option, both companies have also unveiled a cobranded
EMI Network card.