Aditya Birla Group’s couture play

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February 24, 2021

Written By DEBOJYOTI GHOSH

After acquiring 51% in Sabyasachi Mukherjee’s fashion house, Kumar Mangalam Birla-led ABFRL has picked up a 33.5% stake in Tarun Tahiliani’s couture label.

Tarun Tahiliani, founder and CEO, Tarun Tahiliani Brand

Billionaire Kumar Mangalam Birla-led fashion retailer Aditya Birla Fashion and Retail Limited (ABFRL) has announced its second deal with an Indian designer brand in less than a month. The Mumbai-based retailer on Wednesday said that it has acquired a 33.5% stake in fashion designer Tarun Tahiliani’s Goodview Properties Private Ltd (GPPL)— that will own and operate the designer’s eponymous couture label—for ₹67 crore.

The deal comes close on the heels of ABFRL acquiring a 51% stake in Kolkata-based fashion designer Sabyasachi Mukherjee’s company, Sabyasachi Couture, for ₹398 crore late last month. Sabyasachi Couture sells garments, accessories, and fine jewellery under the Kolkata-based designer’s eponymous label.

ABFRL, which owns fashion brands such as Peter England, Louis Philippe, and Van Heusen, said that it has also acquired a 80% stake in a new unnamed entity, as part of the deal with Tahiliani (who will own the rest of the entity). In the new business, ABFRL will collaborate with Tahiliani to develop and launch a new brand of apparel and accessories in the affordable premium ethnic wear segment, the fashion retailer noted in a release. It will soon launch a men’s ethnic wear brand, it added. The new brand will aim to build a ₹500-crore business in the next five years with more than 250 stores across the country. It is looking to launch the first tranche of stores by September.

Commenting on the valuation of the deal Abneesh Roy, executive vice president, Edelweiss Securities, pointed out that considering ABFRL had paid ₹67 crore for a 33.5% stake, it values the existing business of Tahiliani at ₹200 crore. “The deal multiple comes to 3.3x FY20 sales, similar to the multiple paid for Sabyasachi [Mukherjee].

”In FY20, Sabyasachi Couture had posted a revenue of ₹274 crore.

“We believe that over the next few years, ethnic wear is going to be an important category as confident Indians rediscover their culture and heritage. Tarun Tahiliani has been at the forefront of the emergence of the Indian design industry. We are proud to partner with him to launch a new brand that gives the emerging Indian consumer a new range of celebration wear reflecting the unmatched, exquisite design excellence at more accessible prices,” Ashish Dikshit, managing director, ABFRL, said in a statement.

As part of the deal, ABFRL will have the option to increase its stake to 51% in Tahiliani’s couture business in the next few years.

Besides the two deals this year, ABFRL has made two key acquisitions in the Indian ethnic wear and lifestyle space in the past. In 2019, it picked up a 51% stake in fashion designers Shantanu & Nikhil’s Finesse International Design, which makes bespoke apparel, footwear, and accessories for men and women, reportedly for ₹60 crore. The same year, it also acquired ethnic wear and lifestyle retailer Jaypore for ₹110 crore.

“From the recent acquisitions it is clear, ABFRL is betting big on ethnic [wear] as it has nearly five brands in the portfolio now: Sabyasachi, Shantanu & Nikhil, Jaypore, the new brand with Tahiliani, and Pantaloons (economy range),” Roy said, adding that ABFRL will have to strategise on driving scale and synergies with its existing businesses, besides managing the cultural aspects of these [acquired] companies.

“With [ABFRL’s] new venture [in men’s ethnic wear with Tahiliani], the key thing to understand is how the company will differentiate it from Shantanu & Nikhil’s positioning and focus, which is also menswear-driven,” Roy said.

As part of the deal, Tahiliani Design Private Limited (TDPL), which currently runs the garments and accessories business under the Tarun Tahiliani brand, will be transferred to GPPL. TDPL, which was incorporated in 2002, posted a revenue of ₹69 crore in FY18, followed by ₹72 crore in FY19 and ₹67 crore in FY20.

“Last year, we celebrated 25 years of the Tarun Tahiliani label. The next big leap for the brand was to take our craftsmanship and expertise and offer it to a larger Indian market that knows and values quality and is actively seeking it. I was clear that we needed a partner who could not just help us with this scale, but also have the same dedication to quality and the customer,” Tahiliani, founder and CEO, Tarun Tahiliani Brand, said in a release.

Industry experts point out that corporate partnerships and acquisitions allow a designer-entrepreneur and his/her investor partners to unlock some of the value that is being built.

“There may be benefits from operational and systems disciplines, sourcing strengths, the financial muscle of a larger partner, but the brand and its intrinsic identity must not be diluted. If the brand has to maintain its cachet, its distinctiveness, it would need to be allowed to run with significant independence on the product and the customer experience side,” Devangshu Dutta, chief executive of retail consultancy Third Eyesight had told Fortune India when ABFRL announced its deal with designer Mukherjee in late January.

Shares of ABFRL closed at ₹179.25, up 6.54%, on the BSE on Wednesday, while the Sensex was up 2%.

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Source: fortuneindia

Tatas to buy 68% in BigBasket for Rs 9,500 cr, deal likely in 4-5 weeks

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February 17, 2021

Written By Shivani Shinde & Samreen Ahmed

The deal is the biggest in online groceries space so far, values BigBasket at Rs 13,500 cr; will give exit to investors Alibaba, Abraaj and IFC

The total size of the e-grocery market in the country is expected to grow from $1.9 billion in 2019 to $3 billion by the end of 2020

The is in the final stages of acquiring a majority stake of 68 per cent in Supermarket Grocery Supplies, which runs and operates brand BigBasket, for about Rs 9,300-9,500 crore, said a source close to the development. The deal — biggest in the space so far—values at Rs 13,500 crore (around $1.85 billion). This comes about 20 months after the Hari Menon-led Bengaluru company had entered the unicorn club ( with valuation of at least $1 billion).

The deal, which is expected to close in the next four to five weeks, will give exit to investors Alibaba, Abraaj Group and IFC. The parties are awaiting approval from the Competition Commission of India (CCI).

The top management, including co-founder and CEO Hari Menon, will continue to stay on board, said the source. The and refused to comment on the matter.

The acquisition of fits the Tata Group’s plans for serious online play. Tata Sons Chairman N Chandrasekaran has in the recent past talked about the group’s ambitions to have a super app.

“Our e-commerce play will be really big and we’ll not contend with a minor stake in any company,” a spokesperson had last year said in response to a potential stake purchase in BigBasket.

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“BigBasket has created a significant presence in the online space that has got certified further in the past 12 months. For Tatas to make a transition from a physical to a digital space, an inorganic route makes more sense,” said analyst and chief executive of Third Eyesight Devangshu Dutta. This transaction would allow the conglomerate access to a large customer base.

According to a RedSeer and BigBasket report, the total size of the e-grocery market in the country is expected to grow from $1.9 billion in 2019 to $3 billion by the end of 2020. At an annual growth rate of 57 per cent, it is expected to touch $18 billion by 2024.

With big names including Tatas, Amazon, Reliance, Walmart-owned Flipkart and Udaan making their presence felt in this space, e-grocery is emerging as one of the most coveted retail segments. As marquee players line up, BigBasket will need serious money to remain a leader in the game, according to experts. Hence, a deal with the Tatas coming in as a strategic partner makes perfect sense, they say.

Supermarket Grocery had reported a consolidated net loss of Rs 611 crore in FY20, a 6.7 per cent rise from Rs 572 crore in the previous year. The company posted a 36 per cent jump in revenue at Rs 3,822 crore in FY20, according to business intelligence platform Tofler.

BigBasket had earlier said it had seen an almost 84 per cent increase in the number of new customers accompanied by 50 per cent higher retention rates during the pandemic, compared to the pre-Covid levels. The Alibaba-backed company is currently recording about 20 million orders per month and reached the milestone of $1 billion run-rate in annual revenues last year.

Source: business-standard

Kishore Biyani’s stress test

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February 15, 2021

Written By MG Arun

From having to sell his business to facing legal challenges on his deal with Reliance and a one-year ban from the capital markets, retail icon Kishore Biyani finds himself indistinctly inglorious circumstances.

Kishore Biyani

By MG Arun: Kishore Biyani, 59, CEO of the Future Group, whose name became a byword for corporate innovation, is also a close observer of human psychology, a street-smart entrepreneur who often ignored PowerPoint presentations and instead backed his business instincts. Often called the pioneer of organised retail in India, Biyani consistently bet on the Indian consumer’s penchant for physical shopping before the onslaught of online retail shook up his business empire. The Republic Day sales of Big Bazaar, his grocery retail chain, regularly attracted tens of thousands, to the point that in some cases, as he wrote in his 2007 memoir It Happened in India, the fear was not running low on stocks but the safety of shoppers. In time, Big Bazaar became a hugely popular one-stop shop for the Indian middle class. As the popularity of Big Bazaar soared, Biyani’s ambitions took wing, too. However, the e-

tail boom disrupted his business, compelling him to overhaul the group in 2015. More recently, the Covid pandemic played havoc with his offline business model. Forced to strike a deal with Reliance Retail to sell the family silver, Biyani now finds himself in a legal quagmire, with e-tail giant Amazon challenging the deal in a Singapore court. In a far cry from the accolades he won at the height of his career, he now faces a one-year ban from the bourses—market regulator Sebi (Securities and Exchange Board of India) has pressed insider trading charges in a 2017 case, an order he has challenged.

Big Bazaar made Biyani an icon in the retail business, but that was not his starting point. After dabbling in his family’s fabric trading business in Mumbai (his grandfather had moved there from Rajasthan’s Nimbi Jodha to open a textile shop), he ventured into making fashion-ready fabric in 1983. The Manz Wear brand he launched in 1987 would later become Pantaloons. In 1992, he listed Pantaloon Retail on the stock market to fund his expansion plans. In 2012, as the debt pile kept mounting, he sold his majority stake in Pantaloon Retail to Aditya Birla Nuvo for Rs 1,600 crore. What remained were Big Bazaar, Central, Ezone, Brand Factory and HomeTown brands. “What worked for him (in the early years) was that his group was willing to try out different [business] concepts and did not shy away from failure,” says Devangshu Dutta, CEO of Third Eyesight, a consultancy. This innovative spirit gave the Future Group a bigger footprint than many others. Balancing the raising of capital, deploying it into ventures and figuring out which ones worked and which didn’t was a tough juggling act, which Biyani managed well. But fresh trouble was in the offing.

The e-commerce challenge

After a decade of high growth, the Future Group’s business began to slow post 2010. The success of e-tailers such as Flipkart, Snapdeal and Amazon, on the back of discounts and doorstep-delivery convenience, was a big threat. So was the growth of rival Reliance Retail. Biyani had no option but to shake his firm out of slumber in 2015, with new initiatives he said would mark the group’s ‘rebirth’, white-label FMCG products under Future Consumer Enterprises, allowing shoppers to shop from anywhere and take deliveries anywhere, and so on. (Under the white label strategy, products made by one company would be packaged and sold by other companies under various brand names.)

Over the next few years, Biyani, who prefers to be spartan in his personal life and has a connect with his staff due to his accessibility, continued to increase his store count, taking the number to 1,800 across formats, from apparel and lifestyle to groceries. Flush with funds from banks, he acquired as many as six companies in the past seven years to expand his reach. By 2019-20, revenues from the business he ultimately sold to Reliance Retail stood at Rs 28,272 crore. But his debt was mounting too. Future Retail’s debt, which Reliance took over as part of the deal, stood at Rs 19,000 crore. The final blow came in the form of the pandemic, halting his business and pushing him closer to defaulting on his loans. The absence of an e-commerce arm closed all doors on his business.

The deal that Biyani stuck with Reliance Retail during the pandemic was just what the doctor ordered. Mukesh Ambani, 63, chairman of India’s largest private sector firm Reliance Industries, harboured big ambitions in e-tail but had little to boast of in offline retail except for electronics (comprising three-fourths of Reliance Retail’s stores and giving it Rs 45,000 crore in annual sales). He found in Future Group the perfect platform for his retail play. Many feel that at Rs 24,713 crore, the deal came cheap for Ambani, but Biyani could not have asked for better. While valuations have been soaring for e-commerce players and have attracted global giants such as Amazon and Walmart to the Indian market, there are not many takers for brick-and-mortar businesses, especially during a pandemic that caused almost total economic paralysis. In short, Ambani was nothing less than a saviour for Biyani. The deal was a steal for Ambani. When complete, it would create a Rs 1.2 lakh crore business for him, four times bigger than Reliance Retail’s nearest rival, Avenue Supermart, which runs the popular DMart stores.

Amazon, Reliance at war

But e-tail giant Amazon threw a spanner in the works. In 2019, Amazon had acquired a 49 per cent stake in Future Coupons, a promoter group entity of Future Retail, for around Rs 2,000 crore. The deal would help place Future Retail’s products on Amazon’s online market, and also gave Amazon a ‘call’ option, it could acquire all or part of Future Coupon’s promoter, Future Retail’s shareholding in the company, in three to 10 years of the agreement. Amazon challenged Biyani’s sale to Ambani at the Singapore International Arbitration Centre (SIAC), arguing that the Future-Reliance deal violated its

right-of-first-refusal agreement and a non-compete clause it had signed with the Future Group in 2019. In October 2020, a single bench of the court of the SIAC barred Future Retail from taking any step to sell its assets to another party. On February 2 this year, a single bench of the Delhi High Court ordered a freeze on the Future-Reliance deal, but on February 8, a two-judge bench of the court stayed that order. The next hearing is slated for February 26.

Most experts see the battle between the Future Group and Amazon over the Future-Reliance deal as a fight for control of the Indian e-tail landscape. While Covid-19 hit the retail segment badly, e-commerce has seen some traction with an increasing number of people ordering products and fresh goods online. A report by Deloitte and the Retailers Association of India said in 2019 that Indian e-commerce, valued at $24 billion (Rs 1.75 lakh crore) in 2017, would jump to $84 billion (Rs 6 lakh crore) by 2021. India is an attractive market for global e-tail giants such as Amazon and Walmart (which bought Flipkart in May 2018) as they eye growth in emerging markets. With China out of bounds for these players, India is the land of promise, but they need to invest big, deep and early, says Dutta. It is only natural, then, that an equally aggressive and cash-rich player like Reliance should lock horns with Amazon, he adds. In the recent past, brick-and-mortar retail players have found the going tough as e-tailers, with their deep discounts and aggressive advertising have stormed the market. Only corporates with deep pockets, such as the Tata Group, the Aditya Birla Group and Reliance Industries have been able to stand up to this challenge. Biyani’s aggression, which helped him grow in the initial years, boomeranged during his foray into FMCG, where he was pitted against established players such as Britannia, ITC and HUL.

Fresh trouble

If that weren’t enough trouble already for Biyani, on February 3, Sebi barred him, and several related entities, including his brother Anil, from trading in the securities market for one year, following an insider trading case dating back to 2017. Biyani has also been barred from transacting in securities of Future Retail for two years. As per the case, Future Retail consolidated its home retail business in April 2017, which benefitted the company’s stock. Sebi’s investigation found that while the consolidation became public knowledge on April 20, Biyani and his associates had been buying Future Retail shares from March onward that year. The funds to buy these shares were transferred from Future Corporate, a Biyani family-controlled entity. Biyani has moved the Securities Appellate Tribunal against the order.

According to Sonam Chandwani, managing partner at KS Legal & Associates, “it is evident that the Sebi order is unsustainable as it treats a publicly-known reorganisation of the Future Group business as unpublished price-sensitive information. However, whether Biyani’s trading in 2017 amounts to [exploiting] unpublished price-sensitive information remains a debatable issue in this case.” In a statement to the BSE, Future Retail said that the Sebi order barring Biyani from the capital market will have no impact on the Future-Reliance merger process.

A man who regularly made the headlines, Biyani is again in the spotlight, but for the wrong reasons. Now, as the retail world watches the unfolding battle in the e-commerce space, the big question is whether this is the end of the road for Biyani, or whether he has something else up his sleeve.

JOURNEY OF A RETAILER

1987: Biyani enters the apparel business by launching the Manz Wear brand, later renamed Pantaloons

1992: He lists Pantaloon Retail on the stock market

2001: Plans diversification, sets up Big Bazaar grocery stores

2012: Sells his majority stake in Pantaloon

Retail to Aditya Birla Nuvo, with the latter investing Rs 1,600 crore in the firm

2015: Launches white-label FMCG products under Future Consumer Enterprises, allowing shoppers to shop from anywhere and take deliveries anywhere

2016: Forays into consumer goods by launching 27 private labels in 64 categories

Dec 2019: Amazon acquires 49 per cent in Future Coupons, a promoter group entity of Future Retail, for around Rs 2,000 crore

Aug 2020: Future Retail sells its retail, wholesale, logistics and warehousing units to Reliance Retail for

Rs 24,713 crore

Oct 2020: Following an appeal by Amazon, a single bench of the Singapore International Arbitration Centre bars Future Retail from taking any step to sell its assets to another party

2021

Feb 2: A single bench of the Delhi High Court orders a freeze on the Future-Reliance deal

Feb 3: Sebi bars Biyani, his brother Anil, and a few others from the stock market for a year in an insider trading case dating back to 2017

Feb 8: A two-judge bench of the Delhi High Court stays the order of the single bench. The next hearing of the case is slated for February 26

Source: indiatoday

Online grocery sales surged 65% to Rs 6,820 crore in FY20: Report

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February 11, 2021

Written By MONEYCONTROL NEWS

The biggest winner in terms of sales was BigBasket, which accounted for 50 percent of the sales growth followed by DMart, Grofers, Spencer’s Retail and StarQuick (Tata)

Representative Image (Reuters)

Online grocery sales for the largest online and offline retailers grew by a combined 65 percent to Rs 6,820 crore in FY20, while collective losses measured Rs 1,175 crore.

The biggest winner in terms of sales was BigBasket, which accounted for 50 percent of the sales growth, followed by DMart, Grofers, Spencer’s Retail and StarQuick (Tata), a report by The Economic Times said.

Moneycontrol could not independently verify the report.

BigBasket owner Innovative Retail Concepts clocked a net sales growth of 43 percent, or Rs 3,418 crore, while losses rose to Rs 424 crore, as per data with the Registrar of Companies and business intelligence platform Tofler, the report said.

Most executives and experts credit the growth jump to the COVID-19 pandemic and lockdowns, which pushed consumers towards online options for grocery and other purchases, it added.

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A spokesperson for Grofers told the newspaper that the value of goods the company sold in FY20 vaulted 88 percent to Rs 3,000 crore, with losses at Rs 637 crore, largely due to investments for strengthening delivery services and building awareness.

Among offline retail chains, DMart’s e-commerce business saw sales zoom to Rs 345 crore, with losses at Rs 79 crore. StarQuick operator Fiora Online saw revenue of Rs 33 crore against a loss of Rs 21 crore and Spencer’s owner Omnipresent Retail reported Rs 15 crore sales with a loss at Rs 14 crore.

Devangshu Dutta, CEO of consulting firm Third Eyesight, said that the customer shift to online propelled investments to enhance capabilities in the space, while a concurrent rise in the average order values would likely benefit companies with a “healthier bottom line”.

Nielsen noted that online sales in the FMCG segment were notable, accounting for 3.1 percent of the India market value–in metros this surged to 8.6 percent as of the September quarter.

Source: moneycontrol

What’s In Store For India After Jeff Bezos Steps Down As Amazon CEO? Find Out!

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February 4, 2021

Written By Amaan Khanna

The news of Jeff Bezos stepping down as the CEO of Amazon.com, Inc. (NASDAQ: AMZN) sent shockwaves across the entire business community. It is being gauged that the move will surely result in ripple effects affecting various global destinations where the e-commerce behemoth operates. 

So, what’s in store for India post the change?

Well, according to industry experts not much, as Amazon had long identified India as a strategic market to expand way back in 2013.

Devangshu Dutta, Chief Executive at Third Eyesight, a consulting firm said that the switch in position will not really have a drastic impact on India as the U.S. based e-commerce giant has committed themselves to the Indian market as a ‘market for the future’.

That being said, since early 2020, there has emerged a series of problems for Amazon in terms of the ease of doing business in India which needs to be taken note of.

Devangshu Dutta, Chief Executive at Third Eyesight, a consulting firm said that the switch in position will not really have a drastic impact on India as the U.S. based e-commerce giant has committed themselves to the Indian market as a ‘market for the future’.

And now, as most are very well aware, Bezos’ transition from power comes at a time when Amazon is tangled in a host of legal battles with Kishore Biyani’s Future Group in order to prevent the latter from selling its assets to India’s largest business conglomerate Reliance Industries aka RIL.

What more? Recent reports have suggested that it might get even tougher for Amazon to operate in India as talks of further tightening the rules of Foreign Direct Investment aka FDI norms are currently in motion. Thus, it can very well mean more trouble for Amazon to conduct business in the country.

To this, Third Eyesight’s Dutta said, even though how Amazon perceives the various regulatory barriers present in India is an issue, it is not individual driven and therefore the change at the top management will not create an immediate impact of any sort which might result in the e-commerce giant to pull back from India.

What more? Recent reports have suggested that it might get even tougher for Amazon to operate in India as talks of further tightening the rules of Foreign Direct Investment aka FDI norms are currently in motion. Thus, it can very well mean more trouble for Amazon to conduct business in the country.

As for Bezos, he will still be managing the reigns of the company’s broader vision, albeit from a distance. Bryan Olsavsky, Chief Financial Officer at Amazon, in a call with various analysts post the company’s announcement of its December quarterly results mentioned that

Bezos will continue to be involved in many ‘one-way door issues’ or important decisions such as acquisitions, strategies and venturing into grocery as a market space.

Now, it remains to be seen what does the future hold for the current strained relationship between Indian regulations and Amazon. As of now, the Delhi High Court has ruled in favour of the e-commerce behemoth for the dispute over RIL-Future deal and blocked the sale. We will keep you updated on all future developments. Until then, stay tuned.

Source: dazeinfo