News: Biyani to hive off Big Bazaar early next fiscal

(DNA 20/02/2007) Mumbai - The roar of retail is getting louder. As Reliance Retail pumps in Rs 25,000 crore into the country's retail artery and Bharti-Wal-Mart lines up $2.5 billion, Kishore Biyani's Future Group is also switching to battle gear. The Rs 2,500-crore retail major is hiving off one of its popular formats - Big Bazaar - by early next fiscal, as part of its plan to split businesses and raise money separately for each format.

Sources said a team has been on the job for the last few months and work to hive off Big Bazaar as a separate company is in the last stage. Biyani is focusing on the metros and wants to dominate the top eight metros in the country. It needs truckloads of money to expand in these cities. Biyani wants to have 11 Big Bazaars in Bangalore, eight in Mumbai and seven in Kolkata by the end of current calendar year. In all these new upcoming stores, Big Bazaar will place its own private label products. The Big Bazaar network contributed Rs 2,000 crore to the Future Group's turnover in 2005-06.

Kishore Biyani, CEO, Future Group, told DNA Money, "We have plans to hive off Big Bazaar as a separate company."

Analysts say Biyani knows huge markets remain untapped in small cities, but the evolving competitive scenario and aggressive entry of Reliance Retail and Bharti-Wal-Mart will change the dynamics in retailing. So it would make sense to dominate the big cities first.

In last six months, the group had opened nine Big Bazaars, three Food Bazaars, two Brand Factory outlets, two Pantaloons stores and five other stores across formats, taking its total retail space to 3.8 million sq ft across 32 cities.

The company plans to increase the size of Big Bazaar network from 41 at present to 100 by the end of current calendar year, with an investment of Rs 1,000 crore. It is planning to cover 15 more cities, including tier-II cities such as Vijayawada and Visakhapatnam.

It will invest an average of Rs 15 crore on each outlet, depending on the space and real estate prices in various cities. The size of outlets will range from 40,000 square feet to 1.7 lakh square feet.