The existing network of Future Retail includes small-format EasyDay stores and large-format Big Bazaar stores, along with apparel chain fbb, Foodhall, electronics store eZone and furniture and home decor chain HomeTown. Photo: Indranil Bhoumik/Mint
Shares of Future Retail Ltd hit an all-time high on Thursday after India’s biggest departmental store chain said its board has decided to consolidate its offline and online home retail businesses under a single entity called Praxis Home Retail Pvt. Ltd.
In a stock exchange filing, Future Retail said the home retail business operated through its HomeTown stores, and the e-commerce home retail business operated by Blue eServices (which owns Fabfurnish.com) will be demerged into Praxis Home Retail.
Future Retail had acquired Rocket Internet-backed online furniture and home furnishings store FabFurnish.com in an all-cash deal in April last year, its first acquisition of an Internet store.
With this, Future Retail will spin off its specialty retail business and focus on large format and small format pure retail businesses. The company said this will bring “greater visibility on the performance of home retail business and e-commerce home retail business”.
Under a so-called scheme of arrangement, Praxis Home Retail will issue one share to Future Retail shareholders for every 20 shares of the latter and its shares will be listed on the stock exchanges. Following the demerger, there would not be any change in the shareholding pattern of Future Retail, it said.
Future Retail shares rose more than 7% to hit an all-time high of Rs312.85 during the day, before shedding some gains to close 4.46% higher at Rs305.90 on BSE. The benchmark Sensex closed 0.29% up at 29,422.39 points.
The scheme is subject to approval from the National Company Law Tribunal, stock exchanges, the Securities and Exchange Board of India and various statutory approvals, including those from shareholders and lenders/creditors of the firms involved.
The existing network of Future Retail, the flagship of the Future Group, includes small-format EasyDay stores and large-format Big Bazaar stores, along with other chains such as apparel chain fbb, Foodhall, electronics store eZone and furniture and home decor chain HomeTown.
The hypermarket and supermarket business is led by Big Bazaar, fbb, Food Bazaar and Foodhall, while home solutions segment include HomeTown and Ezone, along with newly added Fabfunish.
In November, Kishore Biyani-led Future Retail agreed to acquire the retail and allied businesses of Hyderabad-based Heritage Foods Ltd in an all-stock deal.
For the fiscal year ended on March 2016, the revenue of the demerged division was recorded at Rs187.36 crore, out of the company’s overall Rs6,716 crore. It was considered on the basis of the five-month turnover of the demerged business vested with the company during the previous year with effect from 31 October 2015 and total revenue for the HomeTown division for fiscal 2015-16 (Rs477 crore).