Pantaloon may raise funds for digital biz by March

Pantaloon Retail (India) Ltd is looking to invest Rs300 crore over six months to add 1.5-1.8 million sq ft of retail space across formats —Pantaloon, Central, Big Bazaar, Brand Factory and Home Town, managing director Kishore Biyani said.

He was addressing an analyst concall on Monday when he elaborated on the company’s retail strategy across various formats.

The company that is hiving off electronics format eZone from Home Solutions Retail (India) Ltd to a step-down subsidiary, in order to facilitate induction of strategic partner, is looking for a second round of funding for its digital commerce business by March, Biyani said.

Analysts were expecting Pantaloon’s electronics business to turn around this year but the format reported an Ebidta loss of Rs12 crore in the second quarter of the current fiscal.

eZone operates 58 stores in India, of which the company will be shutting down about nine stores that are not profitable and will instead focus on growing the ecommerce business —FutureBazaar.com.

“We are not looking at expanding eZone by opening stores, the idea is not to increase the number of stores but to use the mobile and digital platform to sell electronics,” Biyani said.

Biyani said the company was confident of an improvement in working capital efficiency, which would fuel the business going forward.

The company that reported same-store sales (SSS) growth of 18% in its home segment during the second quarter (the company’s financial year runs from July to June), is expecting Home Town, the home decor, furnishings and furniture format, to generate
Rs1, 000 crore in turnover next fiscal.

The hiving off of eZone from Home Solutions Retail will help drive profitability of the home segment business, analysts said.

“From being an ordinary performer, our home-improvement segment has become a star performer. In three years, it will be one of the best return on equity (RoE) business for us,” Biyani said.

Pantaloon, which is the best performing format for the company with SSS growth of 21% during the second quarter, is likely to generate Rs2,000 crore in turnover, next fiscal.

For discount-chain Brand Factory that is 11 stores strong, Biyani said there will be an aggressive regional strategy for expansion.

The company will open eight stores under Central, the large-format store that currently operates 16 stores in the country. “Brand Factory should grow faster than Central on the store-count front,” Biyani said.

Under Big Bazaar, the hypermarket format, the company will open 35 stores this year and similar number of stores in the next fiscal. Pantaloon, the flagship departmental format, will see 8-9 new stores this year and 18 stores in fiscal 2012.

The retail major will invest Rs300 crore over second half of fiscal 2011 in order to add about 1.5-1.8 million sq ft of retail space.

In the first half of fiscal 2011, the company added close to 1 million sq ft space, and invested nearly Rs450 crore.

The company, last year, set a target to add 2.5-3 million sq ft of retail space annually, and plans to maintain the same pace for fiscal 2012.

Pantaloon Retail is the country’s largest retailer with reach of close to 14 million sq ft space through core formats such as Big Bazaar, Food Bazaar, Pantaloon, Central, eZone, Home Town and other specialty stores.