To The Members
The Directors are pleased to present the Twenty Fifth Annual Report
together with the Audited Statements of Accounts for the period ended
December 31, 2012.
FINANCIAL HIGHLIGHTS
The operating results of the Company for the period under review are as
follows:
(Rs. in Crores)
2011-2012 2010-2011
Sales (Net of Taxes) 6,771.78 3,942.31
Other Operating Revenue 215.95 159.17
Other Income 27.70 16.34
Total Revenue 7,015.43 4,117.82
Profit Before Depreciation, Exceptional
Items & Tax 343.59 261.67
Less: Depreciation 311.87 146.37
Profit Before Exceptional Items & Tax 31.72 115.29
Exceptional Items 256.60 -
Profit Before Tax 288.32 115.29
Less: Earlier Year's Income Tax - 2.08
Less: Tax Expense 15.06 36.55
Profit After Tax 273.26 76.66
Add: Balance Brought Forward From Previous Year 506.35 495.98
Surplus Available for Appropriation 779.61 572.64
APPROPRIATION
Excess Provision Reversal of Tax on Dividend (0.85) (0.16)
Debenture Redemption Reserve 69.38 35.00
Proposed Dividend on Equity Shares 25.54 20.27
Proposed Dividend on Preference Shares - 0.01
Provision for Dividend Tax 4.14 3.29
Transfer to General Reserve 27.33 7.88
Balance carried to Balance Sheet 654.07 506.35
REVIEW OF PERFORMANCE
The review is for the financial period of eighteen months pursuant to
extension of the present accounting period by six months. We are
pleased to inform you that the Retail business of the Company has been
showing growth trend in spite of economy slowdown in entire retail
industry during the financial period under review. The Company is now
present in Lifestyle Retail segment and for the year under review
recorded a good growth through increase in presence in various cities.
Income from operations for the financial period under review were at
Rs. 6987.73 Crores which was at Rs. 4101.48 Crores during the financial
year of 2010-11. Profit Before Depreciation, Exceptional Items & Tax
stood at Rs. 343.59 Crores in during the financial period of 2011-12,
which was at Rs. 261.67 Crores in the previous year. PAT for the
financial period under review was Rs. 273.26 Crores, which was at Rs.
76.66 Crores in the previous year. As explained above, since the
current financial period was of eighteen months, accordingly, the
current financial period result is not comparable with the previous
financial period, which was of twelve months.
During the financial period 2011-12, the Company increased its retail
presence from around 15 million square feet to approximately 16.5
million square feet space spread pan India basis.
Restructuring / hiving off businesses:
1. Scheme of Amalgamation between the Company and Future Value Retail
Limited
During the period under review, the Board of Directors of the Company
approved the amalgamation of Future Value Retail Limited (FVRL) with
the Company pursuant to the Scheme under Sections 391-394 of the
Companies Act, 1956 with effect from July 01, 2012. FVRL is wholly
owned subsidiary of your Company having retail business formats like
Big Bazaar, Food Bazaar etc. The Company is in process to file the
application with the Hon'ble High Court of Bombay for its approval.
However, the Scheme was subject to further review of the Board.
2. Scheme of Arrangement between the Company and Aditya Birla Group
Pursuant to the approval of the members at the General Meeting held on
May 30, 2012 the Company filed petition with the Hon'ble High Court at
Bombay for demerger of Pantaloon Format Business to Peter England
Fashions and Retail Limited, a Aditya Birla Group entity. The demerged
undertaking comprises of Company's business under the name
"Pantaloons" together with all assets, liabilities, brands etc.
attached to the said Brand. The Company has obtained all requisite
approvals from NSE, BSE, CCI and shareholders of the Company and
petition had been submitted in the Hon'ble High Court of Bombay and
would be coming up for final hearing on March 01, 2013.
3. Composite Scheme of Arrangement and Amalgamation between PRIL,
FVIL, LEE, ILCL and FLFL
The Board of Directors at its meeting held on November 09, 2011
approved the composite scheme of arrangement and amalgamation between
Indus-League Clothing Limited (ILCL), Lee Cooper (India) Limited (LEE),
Future Ventures India Limited (FVIL), Pantaloon Retail (India) Limited
(PRIL) and Future Lifestyle Fashions Limited (FLFL) under Sections
391-394 of the Companies Act, 1956. The Scheme provides for demerger of
fashion business of ILCL and amalgamation of LEE into FVIL, demerger of
fashion business of FVIL and PRIL into FLFL. Pursuant to the said
Scheme becoming effective, the shareholders of FVIL and PRIL shall be
allotted equity shares of FLFL in the ratio as mentioned in the Scheme.
The Company has already filed the application with the Hon'ble High
Court at Bombay which has directed to hold the shareholders' meeting on
March 04, 2013 for obtaining approval of the Scheme.
4. Divestment of stake in Future Capital Holdings Limited
On September 27, 2012 the Company divested its majority stake in its
subsidiary company Future Capital Holdings Limited (presently Capital
First Limited) as a part of Company's strategy to focus on retail
segment. At the end of the financial period ended December 31, 2012
your Company holds 9.55% stake in Capital First Limited. The majority
stake sold by your Company was acquired by Cloverdell Investment
Limited (Acquirer) following the open offer made by the Acquirer
pursuant to the SEBI (Substantial Acquisition of Shares and Takeover)
Regulations, 2011.
DIVIDEND
The Board of Directors of the Company has recommended a dividend of Rs.
1.10 (55%) per equity share {Previous year Rs. 0.90 (45%)} and dividend
of Rs. 1.14 (57%) per Class B (Series-1) share {Previous year Rs. 1.00
(50%)} for the Financial period ended December 31, 2012. The said
dividend shall be subject to the approval of the members at the Annual
General Meeting.
The dividend, if approved by the shareholders in the Annual General
Meeting shall entail a payout of Rs. 25.54 Crores including dividend
distribution tax of Rs. 4.14 Crores. The dividend is free of tax in the
hands of the shareholders.
EQUITY SHARE CAPITAL
Paid-up Equity Share Capital
Pursuant to the conversion of Compulsorily Convertible Preference
Shares (CCPS), the Company issued and allotted 63,47,635 equity shares
of Rs. 2/- each as fully paid up to the holders of CCPS on July
31,2011.
Pursuant to the approval of the members at the Extra Ordinary General
Meeting held on May 30, 2012 the Company issued and allotted 81,63,265
equity shares of Rs. 2/- each to Bennett, Coleman & Co. Limited on June
06, 2012 on preferential basis.
After the above allotments, the paid up equity share capital stood at
Rs. 46,31,65,182 divided into 21,56,53,439 equity shares of Rs. 2/-
each and 1,59,29,152 Class B (Series-1) Shares of Rs. 2/- each.
WARRANTS
During the period under review, the Company forfeited 100 lacs warrants
allotted to the Promoter Group entity which were not converted into
equity shares. The subscription amount of Rs. 100 crore paid on these
warrants have been forfeited and transferred to capital reserves.
DEBENTURES
During the period under review, the Company has raised long term funds
through Non-Convertible Debentures aggregating Rs. 225 Crores. The
funds raised were utilised for the objects as stated at the time of
raising of funds.
FIXED DEPOSITS
The Company has not accepted any Deposits during the period under
review.
REPORT ON CORPORATE GOVERNANCE
A detailed report on Corporate Governance together with Auditors
certificate as required under clause 49 of the listing agreement has
been included as an enclosure to this Report.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
The management discussion and analysis as required under clause 49 of
the listing agreement has been dealt with extensively as part of this
Annual Report.
THE FUTURE
The Company entered the new financial period with a renewed focus on
driving profitability within the stores and in full preparedness for
the upcoming sale season across both the lifestyle and value segment.
While spaces within some stores have been rationalised, the Company
also added merchandise in preparation for the promotion period.
Encouraging response from customers during the promotion has resulted
in the promotion period ending on time and fresh merchandise entering
stores on time to be sold at full price.
Heavy investment in refurbishment and up-gradation of format stores to
make them more contemporary and in line with higher value and more
aspirational merchandise being introduced, especially in the fashion
category. These steps have met with an encouraging response from
customers and have started yielding higher sales in these stores. In
the year ahead, the Company will continue to selectively refurbish
existing stores even as it adds new, upgraded stores. Change of overall
strategy to format specific strategy would result in direct attention
towards various formats of the Company and enable immediate resolution
of the various format specific issues.
Various divestment and realignment initiatives taken by management and
strategic management changes made during the financial period under
review would result in reduced debt, cost reduction and better
planning. This all initiatives would contribute to better profitability
in years to come.
SUBSIDIARY COMPANIES & JOINT VENTURES
SUBSIDIARY COMPANIES
The Company has 15 subsidiaries as at the end of financial period.
Subsidiary companies information for financial performance is given for
eighteen months period ended September 30, 2012 as applicable for
respective subsidiaries.
Home Solutions Retail (India) Limited
Home Solutions Retail (India) Limited (HSRIL) was incorporated to
operate in the home and hard goods consumption space. Your Company has
66.86% stake in HSRIL. During the period ended on September 30, 2012
HSRIL registered total income of Rs. 4.50 Crores and net loss of Rs.
5.34 Crores.
Future Supply Chain Solutions Limited
Future Supply Chain Solutions Limited (FSCSL) is designed to operate in
the logistics, transportation, distribution and warehousing space.
FSCSL provides solutions in the areas of integrated Supply Chain
Management, warehousing, distribution and Multi-Modal transportation.
Your Company has 70.17% stake in FSCSL. FSCSL has warehousing space of
4 million square feet spread over all across India. The company is
currently building large scale warehousing facilities and also
increasing its presence in 3PL logistics solutions. During the period
ended on September 30, 2012 FSCSL registered total income amounted to
Rs. 514.07 Crores and net loss stood at Rs. 8.70 Crores.
Future Agrovet Limited
Future Agrovet Limited (FAL) is to strengthen sourcing and distribution
of staples and other food products for the Company. FAL has sourcing
and distribution bases at all key cities across the country. The
Company has 96.16% stake in FAL. During the period ended on September
30, 2012 FAL registered total income amounting to Rs. 1633. 96 Crores
and net profit stood at Rs. 4.52 Crores.
Future Media (India) Limited
Future Media (India) Limited (FMIL) is the Group's media venture, aimed
at creation of media properties in the ambience of consumption and thus
offers active engagement to brands and consumers. FMIL offers relevant
engagement through its media properties like Visual Spaces, Print,
Radio, Television and Activation. Your Company has 93.10% stake in
FMIL. During the period ended on September 30, 2012 FMIL registered
total income amounting to Rs. 57.27 Crores and net loss of Rs. 1.19
Crores.
Future E-Commerce Infrastructure Limited
Future E-Commerce Infrastructure Limited (FECIL) is to capture the
consumption space through the internet, as well as other technology
based and digital modes and provide infrastructure services for the
same. The Company has 72% stake in FECIL. During the period ended on
September 30, 2012 FECIL registered total income amounting to Rs.
112.60 Crores and net loss stood at Rs. 42.88 Crores.
Futurebazaar India Limited
Futurebazaar India Limited (FBIL) is set up as the e-Retailing arm of
the Future Group for providing on-line shopping experience through
e-portal www.futurebazaar.com. Your Company holds 100% in FBIL. FBIL
is operating its e-retailing business and during the period ended on
September 30, 2012 it has registered total income amounting to Rs.
36.57 Crores and net loss after tax stood at Rs. 6.70 Crores.
Future Knowledge Services Limited
Your Company holds 100% in Future Knowledge Services Limited which has
a net loss of Rs. 3.92 Crores as on September 30, 2012.
Future Value Retail Limited
Future Value Retail Limited (FVRL) is a wholly owned subsidiary of your
Company and engaged in Value Retail Business under various formats like
Big Bazaar, Food Bazaar etc. and other small formats in Value Retail
Business. During the period ended December 31, 2012 FVRL registered
total income amounting to Rs. 11,121.55 Crores and net profit for the
said financial period stood at Rs. 90.04 Crores. The Company has161 Big
Bazaars at the close of financial period. Further, the Company has 43
Food Bazaars at the close of financial period. In addition to the
above, other formats of FVRL also saw a good growth in terms of numbers
as well as turnover.
Future Learning and Development Limited
Your Company holds 100% in Future Learning and Development Limited
which has registered total income of Rs. 0.03 Crore During the period
ended on September 30, 2012 with net loss of Rs. 1.76 Crore.
Future Lifestyle Fashions Limited
Future Lifestyle Fashions Limited (FLFL) was incorporated on May 31,
2012 and is wholly owned subsidiary of your Company. With a view to
dedicated focus on fashion business of your Company and Future Ventures
India Limited (FVIL) comprising of Central, Brand Factory, Planet
Sports etc., it is proposed to demerge these businesses to FLFL under
the provisions of section 391-394 of the Companies Act, 1956. FLFL has
not yet completed its first accounting year.
Future Home Retail Limited (Formerly known as nuZone Electronics
Limited)
Future Home Retail Limited (FHRL) has been created as subsidiary with
the objective to transfer the retail electronic and consumer durable
business from PRIL. During the period ended September 30, 2012 FHRL
registered total income of Rs. 0.0035 Crore and net loss of Rs. 0.003
Crore.
nuZone Ecommerce Infrastructure Limited
nuZone Ecommerce Infrastructure Limited (NEIL) has been created as
subsidiary with the objective to transfer the wholesale and sourcing
business related to electronic and consumer durable business from PRIL.
During the period ended September 30, 2012 NEIL registered total income
of Rs. 0.0035 Crore and net loss of Rs. 0.0016 Crore.
Winner Sports Limited
Winner Sports Limited (WSL) is a wholly owned subsidiary of the
Company. At present the WSL does not have any operating business and
management is evaluating various business opportunities. During the
period ended on September 30, 2012 WSL registered income from
operations of Rs. 1.56 Crore and net loss of Rs. 0.005 Crore.
Future Freshfoods Limited
Future Freshfoods Limited (FFL) is a company which caters to the
sourcing and supply of fresh food products to retail formats of the
group. FFL is subsidiary of FVRL. FVRL holds 79.17% of equity capital
in FFL. During the period ended on September 30, 2012 FFL registered
total income amounting to Rs. 118.61 Crores and net loss stood at Rs.
16.52 Crores.
FSC Brand Distribution Services Limited
FSC Brand Distribution Services Limited (FSCBDSL) was incorporated to
deal in the business of distribution services. The company has earned
total income of Rs. 45.98 Crores & incurred net loss for Rs. 0.97
Crores during the period.
As required under the Listing agreement with the Stock Exchanges, the
Company is mandatorily required to prepare the Consolidated Financial
Statements, according to the applicable Indian Accounting Standards and
reflects the financial position of all the subsidiary Companies of the
Company. For the purposes of consolidation subsidiary accounts of
eighteen months ended September 30, 2012 have been considered except
for Future Value Retail Limited where financial account of eighteen
months ended December 31, 2012 has been considered.
A statement pursuant to section 212 of the Companies Act, 1956 relating
to subsidiary companies is given as an annexure to the Annual Report.
Further the Board has passed resolution pursuant to the General
Circular No. 2/2011 dtd February 08, 2011, issued by Ministry of
Corporate Affairs, giving consent for not attaching the balance sheet
of the subsidiary companies. The Company is publishing the consolidated
financial statements of the holding company and all subsidiaries duly
audited by its auditors, in compliance with the applicable accounting
standards and listing agreement and a statement disclosing the
necessary information regarding each of subsidiaries.
It is hereby confirmed that Annual accounts of the subsidiary companies
and the related detailed information shall be made available to the
shareholders of the holding and subsidiary companies seeking such
information at any point of time. The annual accounts of the subsidiary
companies shall be available for inspection by any shareholders at
Registered Office of the holding company and of the subsidiary
companies concerned. Details of accounts of subsidiaries shall be
furnished to any shareholder on demand.
JOINT VENTURES
Future Generali India Life Insurance Company Limited
Future Generali India Life Insurance Company Limited (FGI-Life) is
Company's joint venture in the Life insurance sector. FGI-Life has
introduced many insurance products to suit requirements of various
categories of customers.
Future Generali India Insurance Company Limited
Future Generali India Insurance Company Limited (FGI-Nonlife) is
Company's joint venture in the general insurance sector. FGI-Nonlife
has introduced insurance products for various general insurance needs
of the different categories of customers.
Apollo Design Apparel Parks Limited & Goldmohur Design & Apparel Park
Limited
The Company has entered into joint venture with NTC for the
restructuring and development of the Apollo Mills and Goldmohur Mills
situated in Mumbai. For the same two separate
SPV companies have been created viz. Apollo Design Apparel Parks
Limited (ADAPL) & Goldmohur Design & Apparel Park Limited (GDAPL). The
ADAPL & GDAPL would be working for the restructuring and development of
the Apollo Mills and GoldMohur Mills respectively. During the period
ADAPL made a total income of Rs. 273.17 Crores and earned net profit of
Rs. 7.62 Crores. Further during the year GDAPL made a total income of
Rs. 255.60 Crores and earned net profit of Rs. 7.66 Crores.
Staples Future Office Products Private Limited
Staples Future Office Products Private Limited (SFOPPL) is designed to
capture the consumption space of office supplies, office equipments and
products. SFOPPL was formed as a joint venture between the Company and
Staples Asia Investment Limited (a subsidiary of Staples Inc USA).
During the period ended September 30, 2012 SFOPPL registered total
income amounting to Rs. 315.05 Crores and net loss stood at Rs. 59.85
Crores.
After the close of the financial period under review, your Company has
acquired a part of the stake from Staples Asia Investment Limited by
which SFOPPL became the subsidiary of your Company.
Integrated Food Park Private Limited
Integrated Food Park Private Limited (IFPPL) is designed to capture the
consumption space of food and aims to facilitate the establishment of
strong food processing industries backed by an efficient supply chain,
which would include collection centres, processing centres, cold chain
infrastructures. The Company has received the approval from the
Government for setting up 'Mega Food Park' at Tumkur District in the
State of Karnataka. IFPPL was formed as a joint venture between the
Company, Capital Foods and Satva Developers Private Limited with 26%
stake held by your company. IFPPL has not earned any income during the
period ended September 30, 2012 since its project has yet not
commenced. Net loss of IFPPL for the said period stood at Rs. 0.06
Crores.
Shendra Advisory Services Private Limited
Shendra Advisory Services Private Limited (Shendra) is a SPV with
respect to the Company's insurance arm Future Generali India Insurance
Company Limited. During the period ended on September 30, 2012 Shendra
has registered a total income of Rs. 0.09 Crore and net loss of Rs.
0.68 Crore.
Sprint Advisory Services Private Limited
Sprint Advisory Services Private Limited (Sprint) is a SPV with respect
to the Company's insurance arm Future Generali India Life Insurance
Company Limited. During the period ended on September 30, 2012 Sprint
has registered a total income of Rs. 0.015 Crore and net loss of Rs.
0.68 Crore.
DIRECTORS
Mr. Shailesh Haribhakti, Mr. S. Doreswamy and Mr. Gopikishan Biyani
retire by rotation and being eligible, offer themselves for re-
appointment. The details as required by clause 49 of the listing
agreement, is given as part of the notice.
DIRECTORS RESPONSIBILTY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of
Directors of the Company hereby state and confirm that: -
(i) in preparation of the annual accounts, the applicable accounting
standards have been followed with proper explanation relating to
material departures;
(ii) the accounting policies selected have been applied consistently
and judgments made and estimates given are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
on December 31, 2012 and the profit of the company for the period ended
on that date;
(iii) The proper and sufficient care have been taken for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) the accounts have been prepared on a going concern basis.
AUDITORS
M/s. NGS & Co. LLP, Chartered Accountants, Mumbai, hold office as
Statutory Auditors upto the conclusion of the ensuing Annual General
Meeting and being eligible, offer themselves for re-appointment.
Shareholders are requested to re-appoint them as Statutory Auditors to
hold office upto the conclusion of the next Annual General Meeting and
to fix their remuneration. The observations made by the auditors are
self-explanatory.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited consolidated financial statements are provided as part of
the Annual Report in accordance with Accounting Standard AS- 21, AS-23
& AS 27 dealing with the consolidated financial reporting. These
statements have been prepared on the basis of the financial statements
received from subsidiaries and joint ventures, as approved by their
respective Board of Directors.
PARTICULARS OF EMPLOYEES
The statement containing particulars of employees as required under
Section 217(2A) of the Companies Act, 1956 and the rules made
thereunder, is given as an annexure appended hereto and forms part of
this report. In terms of Section 219(1)(b)(iv) of the Act, the report
and accounts are being sent to the shareholders excluding the aforesaid
annexure. Any shareholder interested in obtaining the copy of annexure
may write to the Company Secretary at the Registered Office of the
Company.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS & OUTGO
A Statement giving details of conservation of energy (in Form A) and
foreign exchange earnings and outgo, as required under Section
217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Directors) Rules, 1988, in
Annexure I is enclosed and forms part of this report. However, there is
no expenditure on R&D, Technology absorption, adoption & innovation
during the current financial period. The Company being concentrating on
the domestic consumption space do not have any specific exports
initiatives to report to members.
EMPLOYEE STOCK OPTION PLAN
The management has recognised need to introduce reward plans to
acknowledge efforts of the emplyees. Accordingly, the Board and
Shareholders of the Company has approved Employee Stock Option Scheme
2012 (ESOS 2012) and same has been adopted in Nomination and
Remuneration Committee Meeting held on February 25, 2013. So,
applicable disclosure will be required to be given from the current
financial period.
AWARDS AND RECOGNITIONS
Rural Marketing Association of India's (RMAI) Corporate Awards 2012
Best marketing communication towards women, youth and children - Future
Learning 2012
Brand Equity Most Trusted Brands 2012
Big Bazaar Ranked No. 3 as The Most Trusted Brand and Is the Most
Trusted Retailer of The Year for Top Service
Retail Asia Pacific Top 500 2012
Future Value Retail Won Gold in Top 10 Retailers Award, India Pantaloon
Retail India Received Certificate oF Distinction in Top 10 Retailers
Award, India
Star Retailer Awards 2012
Retailer of The Year 2012 - Future Group. Most Valued Retailer - KBFP
Asia Recognition Award 2012
Highest Sale in Asia by VF Corporation - Central
Images Fashion Awards (IFA) 2012
Reliance Performance Award for Best Performing Partner - Indus League
CISO Award 2012
Future Group was felicitated for using Information security technology
in the most effective and innovative manner
Golden Spoon Awards 2012
Most Admired Food and Grocery Retailer of the Year for its Private
Labels in Big Bazaar - Future Group
Retail Professional of the Year for innovation in Private Brands- Mr.
Devendra Chawla, President - Food & FMCG Category
Images Fashion Awards (IFA) 2012
Most Admired Private Label Retailer - Pantaloons
ET Retail Awards 2012
FedEx Most Trusted Retailer of the Year Award - Big Bazaar TRRAIN
Retail Employee of the Year Award - Mr. Jitendra Kalyani, Big Bazaar
Recognition by CMO Council, USA and CMO Asia
Master Brand Award - Future Supply Chains
Retail Icon of the Year- Mr. Anshuman Singh, MD & CEO, Future
Supply Chains
Bloomberg UTV B-School Excellence Award
Best educational institute in Retail- Future Innoversity
ACKNOWLEDGMENT
The Board wishes to place on record their sincere appreciation to all
the consumers, working capital consortium bankers lead by Bank of
India, vendors, and other stakeholders for the continued support and
patronage during the previous year. The board further wishes to record
their sincere appreciation to the employees of the Company whose
efforts, hard work and dedication has enabled the Company to achieve
the targets and recognitions.
For and on behalf of the Board,
Place: Mumbai Shailesh Haribhakti
Date : February 25, 2013 Chairman