Pantaloon Retail (India) Ltd, the country’s largest listed retailer, today announced it would demerge its mall management and project management activities into a separate company in a bid to unlock its real estate assets.
The demerged entity, to be called Future Mall Management Ltd, is expected to get listed in the near future, sources said. Pantaloon said it had also created a step-down subsidiary of the demerged company which would hold all leasing business and food courts and restaurants run by the company.
According to the demerger ratio, the shareholders of Pantaloon would get one share of Rs 10 each in the new company for every 20 shares of Rs 2 each held by them in Pantaloon Retail. The date of the demerger scheme is April 1.
“The step-down subsidiary is fully FDI (foreign direct investment) compliant and there is a possibility of bringing in investors but the company is not exploring that option right now,’’ said a source.
Kishore Biyani, managing director of Pantaloon Retail, could not be spoken to on the development.
Pantaloon has around 20 malls on long leases and those assets would be brought under the new company, sources said. “The whole idea was to retain Pantaloon as a profitable retail entity and separate all loss making non-retail businesses,’’ they added.
In October last year, Pantaloon announced it would restructure its stakes in its non-retail ventures such as financial services, brands and education and set up a separate company, Future Value Retail, for Big Bazaar and Food Bazaar, to unlock value for its shareholders.
The listed entity, Pantaloon Retail, now mostly houses fashion and smaller businesses.
Pantaloon also consolidated its investments in the financial services ventures such as Future Capital Holdings and insurance joint ventures such as Future Generali India Life Insurance and Future Generali India Insurance without conceding management control.
“Pantaloon Retail had entered into a lot of related businesses in the past. Some are making losses. By demerging these, Pantaloon is ensuring its balance sheet remains trim and it can focus on core retailing,’’ said an analyst with a Mumbai brokerage.
Merchant banker Enam Securities Pvt Ltd is said to have advised the company on the demerger.
Meanwhile, riding on improved consumer sentiments, Pantaloon posted a 63 per cent jump in its consolidated net profit for the quarter ended March 31, at Rs 55.9 crore as compared to Rs 34.4 crore in the corresponding quarter of the previous financial year. The company’s net sales also went up by 25 per cent for the March quarter of FY2010 at Rs 2,058 crore, as compared to Rs 1,642 crore in the corresponding quarter of the previous financial year.
The company’s shares closed at Rs 422.75, nearly 1.3 per cent lower than Thursday’s close.
