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, he wanted a consumer play as well. His excitement about the group’s fledgling FMCG business, Future Consumer, was particularly infectious. He dreamt of scaling up the ₹2,000 crore business to ₹20,000 crore by 2021.
Three years down the road, those dreams lie shattered. With profits dipping 11.24 per cent to ₹619 crore in the first nine months of FY20 (it is yet to declare full-year results), the group’s woes came out into the open in the last quarter of FY20. Slowdown and an uncertain future amid lockdowns have crippled his ability to service loans, drowning him in ₹13,000 crore of debt. Biyani is staring at sure-shot bankruptcy.
There is a temporary reprieve, thanks to the loan moratorium and one-year suspension of the Insolvency and Bankruptcy Code(IBC). Had it not been for the coronavirus lockdown, Biyani’s companies would have been facing insolvency. He had a March deadline for repayment of dues. But the Reserve Bank of India’s loan moratorium has provided a breather. In mid-May, the Centre also exempted all Covid-related debt from the definition of default under the IBC and suspended fresh initiation of insolvency for up to a year. In this one-year period, the lenders will not be able to recommend Future Group companies for insolvency, even if they default on loan repayments. Instead, the loans will have to be restructured, by taking out the unsustainable portion.
But the business is already unsustainable and Biyani is on the negotiating table to exit — in full or
