Pantaloon Retail to raise Rs1,500 crore to overcome debt burden

Pantaloon Retail India Ltd (PRIL), part of retail giant Future Ggroup, plans to raise up to Rs1,500 crore by issuing equity-linked securities. The company's scrips soared on the Bombay Stock Exchange on Tuesday morning, but closed with a loss of three per cent at Rs186.

The company's board decided to raise up to Rs1,500 crore by issuing securities either through convertible instrument, convertible into shares, debt instruments with warrants, giving right to the holder to subscribe for equities.

The board directed the company that it should ensure that overall dilution of equity is within 15 per cent and the debt equity ratio is not to exceed 1.33.

Pantaloon Retail is the flagship of the Future Group and operates multiple retail formats in the value and lifestyle segments. Its brands include Pantaloons, a chain of fashion outlets; Big Bazaar, a hypermarket chain; Home Town; Food Bazaar, a supermarket chain; Central, a mall; and eZone, an electronics chain.

While the company's sales and profits have shot up – by 25 per cent and 110 per cent respectively – its debt has also soared by 75 per cent to Rs6,410 crore. The debt equity ratio has gone up to 2.44. In comparison, other retailers, including Shoppers Stop and Tata group major, Trent Ltd, have a debt equity ratio of below 0.5.

In the current fiscal, interest costs for Pantaloon has touched Rs615 crore, with rising inventory levels, which have shot up by more than 50 per cent in the past year.