The Kishore Biyani-controlled Future Group, which is a minority shareholder in several mid-sized consumer-focussed companies, is looking to sell its stakes in those that have attained scale and invest in new companies at a lower cost.
This will allow Biyani to generate more wealth for investors and drive future profitability of the group. It will also enable him to generate funds to cut his group's Rs. 4,000-crore debt burden.
"The plan is to review the portfolio (of investments) from time to time and exit mature investments," a source, who didn't wish to be quoted, said.
Future Retail is now planning to cut its 40% stake in Capital Foods, which manufactures noodles, ketchup and chutneys under the Smith & Jones brand and instant Chinese soups, spices and curry mixes under the Ching's Secret brand.
"The talks are at an initial stage, but there could be some announcement in the next 3-4 months," another source, who didn't wish to be quoted since he is not authorised to speak to the media, said. He declined to reveal valuations.
Then, Future Retail picked up minority stakes in Tresmode, a footwear and accessories maker, and Mineral Fashions, which makes western wear, this year even as it has sold its stake in BIBA Apparels and AND Designs, two fashion wear companies.
Future Lifestyle (the demerged fashion and apparel business of Future Retail) made Rs. 190 crore from the sale of its 25.8% stake in BIBA in July-September quarter, according to an investor presentation made by the company. The 22.9% stake sale in AND Designs will reflect in its earnings for the October-December quarter.
That apart, the Future Group, which owns 26% in fashion brand Turtle and 50% in its joint ventures with fashion companies Celio and Clarks, is open to the idea of selling out. Its stake in these companies could be worth about Rs. 800 crore.
A Future Group spokesperson refused to "comment on market speculation" when asked about the planned stake sales.
The group has, over the past couple of years, sold its majority stake in Pantaloon retail store chain to the Aditya Birla Group for Rs. 1,600 crore and Future Capital Holdings to Warburg Pincus for Rs. 560 crore. It also reduced its stake in its life insurance JV with Generali earlier this year.