Future Consumer completes Rs300 cr acquisition of Nilgiri’s
Nilgiri's has 150 franchise stores with revenues of `800 cr of which `200 cr comes from the private labels business
Mumbai: Kishore Biyani-led Future Consumer Enterprise Ltd, which runs convenience retail chains KB’s Fairprice and Big Apple, said on Friday that it has completed the acquisition of the Nilgiri’s convenience store chain for ₹ 300 crore.
Future Consumer Enterprise acquired 97.97% equity shares of the Nilgiri Dairy Farm Pvt. Ltd (NDFPL) and its subsidiary, the company said in a notification to BSE. Private equity firm Actis held 66% in Nilgiri’s, according to the company’s website.
“The deal value is ₹ 300 crore," said Kishore Biyani, managing director, Future Group, the parent company of Future Consumer enterprise. With this acquisition, the company gets a strong base in South India where it had a weak presence, he said.
Nilgiri’s has 150 franchise stores with revenues of ₹ 800 crore, of which ₹ 200 crore comes from the private labels business which includes bakery products, dairy and chocolates, said Biyani, who is looking to integrate the production capacities, supply chains and products of the new acquisition along with his own retail chains. “The benefits of this transaction can be significant," said Biyani.
For the September quarter, Future Consumer Enterprise had reported a narrower net loss of ₹ 8.1 crore compared with ₹ 20.2 crore loss in the year-ago quarter. Net sales for the fiscal second quarter increased by 6.95% to ₹ 95.92 crore from ₹ 89.69 crore a year-ago.
Future Consumer Enterprise leads the integrated food strategy of Future Group. Its business consists of food and packaged consumer goods brands, urban and rural distribution and investments in food parks, salons, spas and an edutainment company.
“Future Consumer Enterprise is strong in the West and North. With this acquisition, the company will have a strong footprint in South India. Also the private labels fit in well with the company’s focus on branded food and the food park initiative," said Santosh Verma, director, investment banking, IDFC Capital Ltd.
Under Future Consumer Enterprise, the company is setting up a food park spread across 110 acres in Tumkur, near Bengaluru. Products developed at the India Food Park will be retailed through Future Group’s retail formats such as Big Bazaar, Food Bazaar, Foodhall, KB’s Fairprice, Big Apple and Aadhaar as well as through general trade and other modern retailers.
Over the past two years, the retailer has also made acquisitions to increase its footprint and product line. In September 2012, Future Consumer Enterprise then known as Future Ventures India Ltd had acquired 100% equity share capital in Express Retail Services Pvt. Ltd, which runs Big Apple, for ₹ 61.35 crore, strengthening its footprint in North India. Earlier in the year, in January, the company had acquired 35% stake in Sarjena Foods Pvt. Ltd, the seller of bakery products under the name Baker Street.
In the year-to-date, 14 deals have been concluded in the consumer packaged goods sector worth $132.59 million and 10 deals have taken place in the retail sector worth $293.78 crore, according to VCCedge, a data service by VCCircle. Some of the top deals in the year include Sequoia Capital India Advisors Pvt. Ltd investing $30 million in snack company Prataap Snacks Pvt. Ltd and Warburg Pincus India Pvt. Ltd investing $198.48 million in Kalyan Jewellers India Pvt. Ltd.
India’s retail market is estimated to be ₹ 30.8 trillion, of which organized retail was 7.79% at ₹ 2.4 trillion in financial year 2014, according to Crisil Research.
On Friday, shares of Future Consumer Enterprise closed at ₹ 11.34 on BSE, up 9.14%, while the benchmark Sensex rose 0.95% to 28,334.63 points.
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