Yes you heard it right. Future group’s Owner Kishore Biyani is in advanced talk to buy Aditya Birla Group’s Retail arm Aditya Birla Retail. Future Group plans to consolidate its position in the supermarket brick and mortar business and this move would help him consolidate groups position. According to top sources , the two groups got into a discussion last year but had to shelve off their plan due to some valuation issues. Both the groups have resumed their negotiation in this regard and are in final stage to crack the deal. While the discussions are exploratory , Future group is doing a due diligence for a possible merger or acquisition. If the deal materialize , this will be their fourth acquisition in last 5 years and would make them the leader in retail chain with Reliance Retail being their close competitor.
The Pole Position
Aditya Birla gourp is the fourth largest retail chain after Future group , Reliance retail and D Mart . The Aditya Reatail group has more than 500 odd stores covering more than 2 million square feet of retail space .The group registered a gross revenue of Rs 2948 crores in year 2014-15. The group is backed by High margin brands like Allen Solly and Van Heusen.
The Debt Burden
With the acquisition , group would increase its total debt from 4941 crore to a substantial amount as ARBL in itself have a total debt of 5232 crore in Fy 2014-15.
Aditya Birla group will partner with 25 startups to enter into new areas of business pertaining to telecom, retail and financial services. The company started a Biz lab program and has so far added Red Monster Games, Torch, Dressy, ePaisa, Mswipe, Touchfone, Instakash, Bankbazaar, Wealth Pack, Cloud Cherry, Faircent and Coverfox Insurance to its kitty.
These startups will align with the company’s core business and would help them consolidate their position in their respective territory. It is interesting to see as many big enterprises are focusing on startups to keep themselves abreast the technology wave in the country.
Online shopping venture from Aditya Birla group will not follow other ecommerce players by providing deep discounts on top brands that will be sold on the platform. The company will focus on personalization instead in order to gain more user traction.
The e- tailer will be competing with top online fashion platforms like Myntra and Jabong . The company is planning to achieve a market share of 15% by 2020.The company also plans to work on a model in order to achieve greater profitability and reach break even in next five years.
In a statement issued by company’s CEO Prashant Gupta , he said “We will never go for deep discounts for the biggest brands, unlike other portals. Rather, we would give customers personalised experience through our portal. We are in the business for a segment of consumers who are looking to see more curated, selected merchandise and not the largest range. We tried to check if any acquisitions were possible before starting our own venture.”
The company is working on many innovative ideas in order to lure customer and 3D trail room is one such initiative. The company has partnered with a UK tech firm to create a platform for 3D trial. The initiative would help customer make a buying decision much faster.
This is the second ecommerce venture of the group first one being trendin.in where customers can buy in house products from the portal. According to Gupta “TrendIn is basically for a certain section of consumers who are looking for Madura and Pantaloons brands, whereas abof.com is targeting millennials with 55+ brands”.