Kishore Biyani led Future Group endeavors to acquire the retail division of Heritage Foods and the ongoing discussion between the firms have reached the advanced phase. If the deal germinates between the two Mr. Kishore Biyani would have power over a network of more than 100 grocery stores in Hyderabad, Chennai and Bengaluru.
Heritage Group which was founded by present chief minister of Andhra Pradesh, Mr. N Chandrababu Naidu had a turnover of 2380.58 crore in previous financial year. The firm has two flagship division viz. dairy and retail and is also keen in small businesses which embrace bakery and animal feed. Retail of the Hyderabad based firm is estimated to be one-fourth of the total business with sales of Rs. 583 crore. More than 115 Heritage Fresh Store spread across 2,500 square feet each on average and satisfy around two million customers in Hyderabad, Chennai and Bengaluru.
Heritage Foods has confirmed Bombay Stock Exchange about the ongoing talks with Future Group for a potential business association though there is no legal agreement between the two. In 2012, Future Group was forced to part with Pantaloon departmental Store chain to reduce its escalating debts. Apart from this Mr. Biyani also departed from non -core businesses such as financial services and office product retailing to pay off the debt which crossed Rs. 8000 crore five years ago. By the end of previous fiscal year the debt-equity ratio was at 0.60 compared to 1.35 in the year prior to it.
This would be Future Group’s fourth acquisition in as many years, as it consolidates its position, especially in grocery retail. Since 2012 the group has acquired Easyday network from Bharti Retail, Big Apple from New Delhi and Nilgiri’s supermarket chain based in Hyderabad. One of the persons who are aware of the development of the deal said that the details of the agreement viz. how Heritage Fresh will be merged within Future Group and are there any possibilities of share switch, apart from cash component, are still in progress.
Presently, Future Consumer Enterprise, FMCG part has brands like CareMate, Clean Mate, Tasty Treat, Nilgiris, Golden Harvest, Sunkist, Kara, Think Skin and Fresh & Pure. The firm anticipates its own food brands to raise 70% earnings from corresponding product categories at its supermarkets and aims to touch Rs. 20000 crore mark in sales from in-house brands by 2021.
Image Source: The Economic Times