Great Vision Backed By A Master Strategy

It was march 2014 when Sanjay Jain took over the role of CFO at Future Group. The aggregate market cap of listed companies under the Future Group umbrella was fairly low at that point in time. But, that did not deter Future Group’s founder CEO Kishore Biyani from dreaming big.

He set himself a target in 2014 — to achieve a market cap of at least $10 billion (Rs 65,000 crore) by year 2021. Today, four years on and before time, the target has almost been achieved; the Mumbai-headquartered retail group is already nearing a market cap of Rs 60,000 crore.

Call it a great vision or an even greater strategy that worked in the group’s favour. And why not? After all, one has to first set a goal and then work towards it.

To achieve the target, Future Group, adopted a two-pronged approach – what it called ‘Creation and Control’. Creation included a four-point agenda that was led by Biyani himself. Delivery on revenue growth and operating margins, focus on brands, integrated value chain in food and fashion and finally, augmentation of senior leadership across the group, were the key points that he worked on.

And Jain took charge of  ‘control’ of the group and supported Biyani in leading the four-point agenda and worked on conservation of capital employed and ensured return on capital employed (ROCE) maximisation. That’s not all. He also facilitated monetisation of non-core assets, worked on capitalisation of balance sheet as well as ensured higher corporate governance.

“The combination worked very well,” says Jain, reminiscing his initial days in the group. “As against the original target of seven years, the Group is already nearing a market cap of Rs 60,000 crore in just over four years,” he adds.

Retail and FMCG businesses have long gestation periods  and are large-scale, and thus require significant amount of long-term capital, which needs to include a good proportion of equity. The retail sector in India operates within serious limitation of avenues for capital raising. Knowing these parameters, Jain undertook the challenge of refinancing the entire liability side of the balance sheet.  

Result? The asset-liability mismatch was fully corrected, achieved through an appropriate mix of debt and equity. For equity, the group undertook a Rights Issue, an IPO and raised multiple rounds of private equity capital.  The bonds, on the other hand,were tapped both in India and overseas. Today, the group’s key investors include prominent names such as IFC, CDPQ, BlackRock, UBS, Apollo, Nomura, Barclays and Templeton from the international market. On the domestic front, there are investors such as Premji Invest and Yes Bank, among others.

“The entire design of the capital structure also ensured the key objective of the family, to continue to own the controlling stake across all its businesses,” says Jain, who added another feather in the cap by leading consolidation in the retail industry by acquiring Bharti Retail (Walmart India operations), Heritage, Nilgiri’s, HyperCity, Sangam Retail, FabFurnish. Besides, he also helped augment the portfolio of brands and product offerings by acquiring Kara from Grasim and strengthened back-end supply chain logistics through acquisition of cold chain as part of Brattle Foods and last-mile delivery through Vulcan from Snapdeal.

“Given the parallel pursuit of fixing balance sheets, all acquisitions were primarily equity funded by issuing shares to sellers in Future Group companies. The acquisitions were also creatively structured leading to significant tax savings,” says Jain.

All in all, Jain, a big believer in India story, likes to dream big, and “convert them into measurable and achievable strategic goals.” When not working, he loves to travel and watch movies.