profile: newsmaker
We believe in destroying what we have
created,” Kishore Biyani once famously said. India India
The maverick entrepreneur probably realised that great empires can be built with passion, but cannot be preserved with uncalculated risks, nor by expanding too fast to drive mind-boggling valuations. The move to sell stake in Pantaloon will partially ease his debt burden, as once the deal is complete, the group’s debt will be pruned by Rs 1,600 crore, or roughly 20 per cent of the current outstanding. For far too long, many have been mesmerised by Biyani's rapid ascent to the peak rather than the soundness of his business strategies, to draw parallels with Wal-Mart’s Sam Walton. So what if much of his posturing was a result of acquired arrogance and well-crafted media manipulation over the years?
And then one day, the dreamer was hit by reality. Biyani, who had invested way ahead of the cash flows from his network, found himself trapped on a debt treadmill. His empire was saddled with an outstanding of around Rs 5,800 crore on a consolidated basis, and obviously, the company found it difficult to service high interest-bearing loans, with interest costs alone eating up 90 per cent of its profit before tax of Rs 270 crore during the December 2011 quarter. The stock market pummeled him and his net worth tumbled. Biyani had little choice other than to give away Pantaloons, his most profitable format.
Armed with a degree in commerce and five years after joining the family business of textiles, Biyani launched the first branded ready-made trouser, Pantaloons, in Kolkata. He marketed the trousers through The Pantaloon Shoppe. By the time, Pantaloon Fashions, the company he had formed, went public in 1992, Biyani had set up 60 exclusive stores. Looking at ever-expanding opportunities in the retail space, Biyani decided took to direct retailing in 1994, and launched a new division of the company, called Pantaloon Direct Retailing. In its first year, this division generated business of over Rs 18 crore.
Within a short span, the group expanded into verticals such as apparel, furniture, electronic items, restaurants, food and insurance. Biyani spoke about his vision of making the Future Group a $20 billion enterprise by 2020. He internally restructured his group's operations; drove technology to bring efficiency in the backend; hired top leaders from multinationals such as Unilever and PepsiCo, while deciding to focus on four key businesses — food and grocery, home, apparel and electronics. Two of his companies, Future Capital Holdings and Future Ventures, went public. The unassuming and shy entrepreneur of yesteryears, Biyani gained in stature and recognition over time. His clairvoyant, shrewd yet rustic demeanour won him public adulation. Yet as he climbed up the ladder, his newfound aggression and success turned him heady and indifferent to the external forces that shaped him.
Will Biyani revert his focus to retail by divesting his non-core assets, such as Future Capital Holdings and Future Generali, to pay off his remaining debt? Only time will tell. Who knows Biyani’s future may well be the story of the proverbial phoenix rising from the ashes.
meghnamaiti@mydigitalfc.com
The maverick entrepreneur probably realised that great empires can be built with passion, but cannot be preserved with uncalculated risks, nor by expanding too fast to drive mind-boggling valuations. The move to sell stake in Pantaloon will partially ease his debt burden, as once the deal is complete, the group’s debt will be pruned by Rs 1,600 crore, or roughly 20 per cent of the current outstanding. For far too long, many have been mesmerised by Biyani's rapid ascent to the peak rather than the soundness of his business strategies, to draw parallels with Wal-Mart’s Sam Walton. So what if much of his posturing was a result of acquired arrogance and well-crafted media manipulation over the years?
And then one day, the dreamer was hit by reality. Biyani, who had invested way ahead of the cash flows from his network, found himself trapped on a debt treadmill. His empire was saddled with an outstanding of around Rs 5,800 crore on a consolidated basis, and obviously, the company found it difficult to service high interest-bearing loans, with interest costs alone eating up 90 per cent of its profit before tax of Rs 270 crore during the December 2011 quarter. The stock market pummeled him and his net worth tumbled. Biyani had little choice other than to give away Pantaloons, his most profitable format.
Armed with a degree in commerce and five years after joining the family business of textiles, Biyani launched the first branded ready-made trouser, Pantaloons, in Kolkata. He marketed the trousers through The Pantaloon Shoppe. By the time, Pantaloon Fashions, the company he had formed, went public in 1992, Biyani had set up 60 exclusive stores. Looking at ever-expanding opportunities in the retail space, Biyani decided took to direct retailing in 1994, and launched a new division of the company, called Pantaloon Direct Retailing. In its first year, this division generated business of over Rs 18 crore.
Within a short span, the group expanded into verticals such as apparel, furniture, electronic items, restaurants, food and insurance. Biyani spoke about his vision of making the Future Group a $20 billion enterprise by 2020. He internally restructured his group's operations; drove technology to bring efficiency in the backend; hired top leaders from multinationals such as Unilever and PepsiCo, while deciding to focus on four key businesses — food and grocery, home, apparel and electronics. Two of his companies, Future Capital Holdings and Future Ventures, went public. The unassuming and shy entrepreneur of yesteryears, Biyani gained in stature and recognition over time. His clairvoyant, shrewd yet rustic demeanour won him public adulation. Yet as he climbed up the ladder, his newfound aggression and success turned him heady and indifferent to the external forces that shaped him.
Will Biyani revert his focus to retail by divesting his non-core assets, such as Future Capital Holdings and Future Generali, to pay off his remaining debt? Only time will tell. Who knows Biyani’s future may well be the story of the proverbial phoenix rising from the ashes.
meghnamaiti@mydigitalfc.com
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