Kishore Biyani reveals why he sold Future Group units to Reliance Industries Limited

With mounting losses, Biyani said he thought there was no other answer but to exit

Future Group founder Kishore Biyani on Wednesday revealed that a series of acquisitions over the last few years and loss of nearly Rs 7,000 crore revenue in first three-four months of the Covid-19 pandemic forced him to sell his chain of retail stores, warehousing and logistics businesses to Reliance Retail.

In August this year, billionaire Mukesh Ambani's Reliance Industries announced the acquisition of the retail and wholesale business and the logistics and warehousing business from the Future Group as going concerns on a slump sale basis for Rs 24,713 crore.

"We got into a trap to be very honest with Covid-19. In the first 3-4 months, we lost nearly Rs 7,000 crore of revenue," Biyani said at the Phygital Retail Convention.

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There was no way the company could have survived losing such an amount, he said, adding the problem is rent doesn't stop, interest (on debt) doesn't stop.

Biyani further acknowledged that the group had made too many acquisitions in the last 6-7 years, especially of small-format stores. "We did too many acquisitions in the last six-seven years... I thought there was no other answer but to exit," he stated.

He said that the group had other options, but it needed to find a “holistic solution" to clear its mounting debt, than to part ways with one entity or format.

Through the deal made in August with Reliance Industries, the Ambani-led firm will acquire Future Retail that owns the BigBazaar, which sells everything from groceries to cosmetics and apparel, and Future Lifestyle Fashions Ltd that operates fashion discount chain Brand Factory.

Also read — Future Group lost Rs 7,000 crore amid Covid-19: Kishore Biyani

Biyani is now left with parts of the Group's business that deals with manufacturing of packaged consumer goods.

Speaking at length about the future of consumption in the country, he said for retailers the worst is yet to come. "We have designed business to be profitable at 90 per cent of our targets. In any scenario... we will not be able to touch 70-80 per cent (of target)... If you look at long-term planning – 5 to 10 years -- it will not be easy for physical stores," he said.

He added that the post-Covid-19 era, retailers and marketers will have to work hard to get shoppers to come back to stores. “...Our economy is going to shrink and we will have to restart our life again from there. So, we will have to rebuild consumption in a way, (because) our consumption is definitely going to drop," he said.