Kishore Biyani, founder, Future Group, talks to Piya Singh about how he has taken to investing in small brands and scaling them up rapidly to exit a few years later at a neat profit. Contrary to reports, the retail baron denies that he is trying to sell a stake of Future group to global retailers.
How do you see the easing of FDI rules for multi-brand retail impacting the sector? What is your reaction to Tesco’s $110-million investment in India?
It is a very welcome move. The reality is that it is impossible to ignore a market of 1.2 billion. That is a big opportunity. The approval for Tesco seems to be for a brownfield project and it augurs well for the sector as a whole.
Has Carrefour approached you again for a stake sale after the new FDI rules?
We are not in discussions with Carrefour.
What key retail trends do you expect in 2014?
I am optimistic about this year. Indian retail players have matured and survived quite a few challenges. There will be new retail categories in food and fashion as people are becoming more conscious about what they eat and wear. They are buying less gold and more lifestyle products, like gadgets. This is a good sign. We are betting big on footwear, men’s casual wear and ceremonial wear. On the food side, international cuisines, packaged and frozen food and value-added products are entering customers home. On the macro front, there are challenges like high interest rates.
You seem to be focusing on food and FMCG in a big way. Plans?
In 2014, we will launch juices and aerated drinks under our tie-up with Sunkist. We are also getting into new arrangements for frozen foods, bakery and dairy and we will also be launching our food park this year. After studying the fasting and feasting preferences of communities, we have launched brands like Ektaa and Tasty Treat.
The Future group has drastically cut debt and exited several JVs. How much have the asset sales brought in and are you making any fresh investments this year?
The group’s turnover is around `15,000 crore and we have almost halved our overall debt during the year to around `4,500 crore. We have acquired more brands and exited from some. The idea is to invest in our suppliers and partners who need to scale up with our expertise and retail formats that offer them a sound distribution network. Typically, we invest in small brands and grow them multi-fold over five to seven years’ time. We have recently exited from Biba, AND, Capital Foods and our life insurance business and these sales have brought us around `900 crore.
At the same time, we have invested in fashion brand Mineral, footwear brands Tresmode and Famozi and men’s brand Giovanni, among others.
Going forward, what are your growth areas?
Food and fashion, whatever be the retail format. We have the largest portfolio of fashion brands in the country; this is a `7,000-crore business. We will make our existing brands Lee Cooper, Manchester United, Clarks, Indigo Nation, Scullers and Jealous much bigger.
Reports say that your retail formats in the metros are facing pressure. Comment?
Of the 90-odd cities that we are present in, the top eight contribute to 60 per cent of our business.