Business Today 9-Aug-20

A leading business magazine read by the business leaders for staying ahead and managing challenges that comes right away in the ever changing world of business.

Living Media India Limited
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26 Edições

nesta edição

2 minutos
a felled retailer

Kishore Biyani, India’s best-known retailer, is in trouble. Deep, deep trouble. Already drowning in ₹13,000 crore of debt, Biyani’s Future Group was dealt a deathly blow by the coronavirus lockdown, bringing revenues to nil, and crippling its finances. The prolonged slowdown and lockdown double whammy has by now made the business entirely unsustainable. Future Group is struggling to even service debt. On the verge of bankruptcy, Biyani got a lease of life when Centre first allowed EMI moratorium on loans and then deferred the insolvency and bankruptcy code by a year. But with uncertainty staring in the face, Biyani has been forced to get to the negotiating table to attempt a sell-off. A deal is as close as the end of the month. Potential suitors: Rival Reliance Retail and two…

1 minutos
auto sales throw up june surprise

Demand for automobiles rose sharply in June compared to May as states eased the coronavirus-induced lockdown The rise was led by rural and semi-urban areas. People bought vehicles to commute as public transport remained dysfunctional; Hero MotoCorp sales rose nearly four times Tractor demand remained strong due to partial economic recovery in rural markets; Escorts reported a rise in sales Sales, however, were substantially down yearon-year. This shows it will be months before demand returns to pre-Covid levels…

5 minutos
hoping against hope

The exodus of companies from China is not new. It’s been happening since the start of the trade war between China and the US in 2018. The only difference this time is that India has a fair chance of attracting companies leaving China. This is in sharp contrast to the earlier situation where almost all companies which moved out of China went to CLMV (Cambodia, Laos, Myanmar, and Vietnam) countries as they were cost efficient and better connected to the global supply chain. The Covid-19 pandemic has changed everything. As companies look at diversifying away from China, they are looking for not just cost savings but also a captive market for their products and services. India, with its big market, is asking companies to set up base here, reportedly developing a…

18 minutos
future uncertain

Scale has always fascinated Future Group Chairman Kishore Biyani. The bigger, the better. In 2017, when he unveiled his ambitious Retail 3.0 strategy, he articulated his dream of creating a $1 trillion business by 2047. At that time, the world’s biggest retailer Walmart generated $485 billion in revenue, a little less than half of Biyani’s ambition. But Biyani was banking on a modest year-on-year growth of 20 per cent per annum for his then ₹20,000 crore empire. His recipe for greater scale: service every possible consumer. First with 70,000-1,00,000 sq.ft. big-box retail stores, Big Bazaar. Second, in local areas through 2,000 sq.ft. small-format neighbourhood stores, EasyDay (he targeted 10,000 tech-enabled EasyDay stores by 2020). And third, create an online marketplace where these stores could access Future Group’s entire retail inventory. Alongside,…

1 minutos
how biyani got into debt

Acquired Nilgiris for ₹300 crore (2014); EasyDay for ₹500 crore (2015) and Heritage for ₹295 crore (2016) Set up 1,100 small format stores; most were non-performers. Consumers were not willing to pay ₹999 annual fee for 10 per cent discount Aggressive expansion of small-format stores backfired Private brand strategy failed. Aimed to scale up private brands (Future Consumer) to ₹20,000 crore by 2021. Reached ₹4,040 crore in FY20 Strategy of using stores to distribute private brands and reduce presence of established brands led to dip in footfalls Private brands constituted 35-40 per cent of inventory, but there were quality issues While rentals shouldn't exceed 2 per cent of a store’s cost, in case of Future Group, they were 10-20 per cent of the cost Liquidity crisis prior to Covid and complete halt of business during the nationwide…

1 minutos
how recent crisis unfolded

According to ICRA, Future Group’s six listed firms had ₹12,778 crore debt in September 2019 The issue surfaced in mid-February when shares of listed firms started crumbling. This led to rating downgrades. Lenders sought more promoter shares as collateral for loans against shares Pandemic disrupted operations. Cash flow was not enough to pay off debts; what came to the rescue was government’s exemption of Covid-related debt from default and suspension of fresh insolvency cases UBS and IDBI Trusteeship tried to invoke pledged shares but Biyani got interim relief from the Bombay High Court. The Supreme Court dismissed the Special Leave Petition filed by UBS AG London Branch challenging the high court ruling…