Retailer transitions from retail to food processing, targets Rs 20,000 crore revenues from the business; to announce e-commerce plans on October 1
Kishore Biyani, the maverick retailer who suffered several setbacks in recent times, is making yet another bet.
The founder and CEO of Future Group is entering the fast moving consumer goods (FMCG) segment by setting up a chain of food processing parks, in an indication of potential shift from core business of retailing.
"Food processing will eventually become a bigger business than food retailing for us. The new business will see investments to the tune of Rs 1,000 crore over a period of time and is likely to gives us revenues of over Rs 20,000 crore in coming years," Biyani announced at the India Retail Forum 2014 summit on Thursday.
His first food processing park spread across 110 acre at Tumkur in Karnataka is ready for operations and will be inaugurated by Prime Minister Narendra Modi on September 24. The second one in Kolkata is in the works and will cater to the eastern region.
"We are in advanced stages of acquiring a huge land parcel in Madhya Pradesh and should be in a position to close the deal in another week's time," said Biyani, adding that the Tumkur food park will be a world class facility that integrates farm to plate, produce to processing, packaging to consumer with best infrastructure and technology.
On reasons behind transitioning from retail to FMCG, Biyani said FMCG companies enjoy margins ranging between 8% and 18%, while a retailer gets just a fraction of it.
"Our food processing foray will help us get those margins and we will sell these products from our food retail chain as well as through entities like Walmart, Metro cash and carry stores in addition to other stores that sell food and related products in the country," he said.
This apart, giving existing online retailers a run for their money, Biyani is expected to unveil something big in the e-commerce space on October 1, 2014.
"That will be a bigger event and will share details at the time of the launch," he told dna. The group is expecting revenues of around Rs 1,000 crore from e-commerce this fiscal.
Expressing optimism on the consumer electronics business, Biyani said the company's Ezone retail operations have picked up significantly and have already clocked in revenues of Rs 1,000 crore.
"We are targeting a run rate of over Rs 2,000 crore from Ezone this year," he said.
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