The Hindu Business Line : Pantaloon plans to restructure business

The board of directors of Pantaloon Retail India will meet on Monday to consider issue of preferential shares to its promoters/investors and restructuring of the company’s business. Last month, the company had decided to integrate Big Bazaar and Food Bazaar into a separate entity called Future Value Retail. On the current proposal for restructuring, Mr Kishore Biyani, Managing Director of Pantaloon Retail, told Business Line: “We are exploring various options to unlock the potential in each of our business ventures and we will be presenting them to the Board.” He declined to comment on the restructuring specifics, or on the proposed size of the preferential issue. Officials said the group is examining a structure that would eventually enable it to strike a joint venture with a global retailer. According to the company’s statement issued to the Bombay Stock Exchange, the retailer plans to “re-align its business lines as per verticals and is considering creating separate legal entities.”

Equity shares

The statement also said the Board would meet to consider issue of equity shares/convertible securities/warrants convertible into equity shares of the company to the promoters/investors on preferential basis according to the SEBI Guidelines and to fix up the date, time and venue of the extra ordinary general meeting of the members of the company for this purpose. According to a company official, Pantaloon aims to change its operational strategy to preserve cash and repay short-term debts. The company’s cash flows have been negative for the past few months and it has been borrowing to fund expansion. The company’s debt-to-equity ratio has been rising. It has gone up from 1.17 in FY 2007 to 1.21 FY 2008. To conserve cash, the retailer had also slowed its expansion plans for FY 2009 to 2.5 million sq ft of retail space, compared with four million sq ft planned earlier. Earlier this year, in order to battle the slow down and improve operational efficiency, the retailer was negotiating for better credit terms and working to boost its supply chain, cutting inventories and merging stores.

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