Case Study Analysis

RISE AND FALL OF

FUTURE GROUP
Contents

 Background of Future Group and Its Founder Kishore Biyani

 Brands Under Future Group
 Rise of Future group
 Reasons for Fall of Future Group
 Conclusion
Reliance Retail's acquisition

 of the retail business of the Future Group has brought to an end the three-decade-long
journey of Indian retail sector's owner, Kishore Biyani.
 Reliance Retail Ventures Limited (RRVL), a subsidiary of Reliance Industries Limited,
announced that it is acquiring the retail and wholesale business and the logistics and
warehousing Business from the Future Group for a lump-sum aggregate consideration of
Rs 24,713 crore.
 The deal includes close to 1,800 stores across Future Group's Big Bazaar, FBB, Easyday,
Central, Foodhall formats that are spread in over 420 cities in India.
 But how did Kishore Biyani come to this point where he is left with no option but to sell his company? Here are the main
reasons:

 Future Group has accrued heavy debt over the years. As of September 30, 2019, debt at Future Group's listed
entities rose to Rs 12,778 crore from Rs 10,951 crore as on March 31, 2019.
 He had the March deadline for repayment of some of these dues. But the Reserve Bank of India's loan moratorium
has provided a breather.
 The market buzz about his inability to service debt began in mid-February, sending group companies shares
crashing and triggering rating downgrades. Lenders sought more shares as collateral against loans to Biyani.
 The group has 990 EasyDay stores; it shut down 150 as of Q3FY20. Same-store sales growth of Future Retail
formats was just 2.1 per cent in the quarter, but it stood at negative in Q4 as the coronavirus hit the economy
hard.
 Biyani hoped to attract loyalty in smaller format stores with a Rs 999/ year loyalty programme for a 10 per
cent discount. The model didn't work, say, analysts, adding that Biyani would have managed to pull off the
small store format if the coronavirus pandemic had not happened.
 Almost 35-40 per cent merchandise at Future Group formats were its own brands, which failed to attract
customers. This led to heavy losses for the company.
 Biyani, who is known to be the man of ideas, failed to implement many of them on the ground level.
 Biyani's struggle with debt has a long history. In FY12, he was in an identical Rs 12,000 crore debt soup,
which forced him to sell his most valuable asset, Pantaloons Retail, to Aditya Birla group for Rs 1,600 crore.
He also sold Future Capital to Warburg Pincus for Rs 4,250 crore.
 Coronavirus pandemic crippled the company's operations, and shutdowns of stores and
subsequent cash crunch forced it to default on debts.
 Biyani became over-ambitious in core retailing and his focus on the neighbourhood format
stores EasyDay, Nilgiris and Heritage backfired. He invested heavily on these ventures but
they did not succeed.
 His excitement about the group's FMCG business, Future Consumer particularly proved
infectious. He dreamt of scaling up the Rs 2,000 crore business to Rs 20,000 crore by 2021
 . But the company faced losses, resulting in 11.24 per cent decline in its profit to Rs 619
crore in the first nine months of FY20. The company has not declared full-year results so
far.
Conclusion