Kishore Biyani, Group CEO, Future Group, is eyeing distressed retail chains in the southern markets to add distribution muscle for his FMCG business.

While he has decided to acquire chains such as Sangam Direct and Heritage Foods, the need to get a stronger foothold in the southern States has become priority for the group which is also seeking to enhance its distribution in the FMCG business.

In talks with Heritage

Speaking to Businessline , Kishore Biyani, Group CEO, Future Group, said: “While we are in discussions with the Heritage Group in the South, we have not decided to buy ‘More’ outlets from the Aditya Birla Group. We need more outlets for distributing our brands and the South is the place where there are maximum number of chains which can get acquired.’’ Having set up the first food park in Bengaluru, Future Group is now seeking to strengthen its stronghold in the region with more outlets that can help in enhancing distribution for his private brands. “Most of our factories and manufacturing happens in southern India and we need to have more chains in the South,’’ said Biyani.

While it did acquire the 165 outlets belonging to Nilgiris, it was obviously not enough for the Future Group, which is now negotiating another buyout of the loss-making outlets of the Hyderabad-based Heritage Group. “Heritage Group has 120 outlets and all options including equity dilution are being explored by KPMG who is advising us as we need new investors who can grow with us,’’ said Dharmendar Matai, COO, Retail & Bakery, Heritage Group.

In fact acquiring distressed and loss-making outlets as been the strategy followed by Biyani in most of his acquisitions. While he may have eyed the ‘More’ outlets of the Aditya Group, which also has hypermarkets, it is small grocery formats which is likely suit him more like the Easy Day and Nilgiris outlets that he has already acquired. Today Easy Day contributes a turnover of ₹1,800 crore while Nilgiris has added a turnover ₹800 crore to the 20,000-crore top line of the Future Group.

Pankaj Jaju, Head of strategic partnerships, Axis Bank, said: “Today Biyani is scouting for smaller retailers who are not profitable and have high retail costs. These are businesses which he can afford unlike the 500 odd ‘More’ Outlets of Aditya Birla Retail which have scale but may not be on sale immediately.’’

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