Kishore Biyani, India's best-known retailer, is in trouble. Deep, deep trouble. Already drowning in Rs 13,000 crore of debt, Biyani's Future Group was dealt a deathly blow by the coronavirus lockdown, bringing revenues to nil, and crippling its finances. The prolonged slowdown and lockdown double whammy has by now made the business entirely unsustainable. Future Group is struggling to even service debt. On the verge of bankruptcy, Biyani got a lease of life when Centre first allowed EMI moratorium on loans and then deferred the insolvency and bankruptcy code by a year. But with uncertainty staring in the face, Biyani has been forced to get to the negotiating table to attempt a sell-off. A deal is as close as the end of the month. Potential suitors: Rival Reliance Retail and two Amazon-backed consortia of Premji Invest and Samara Capital.
When historians chronicle India's coronavirus-induced business collapses, Biyani's Future Group is unlikely to go unnoticed. An instinctive, intrepid entrepreneur, Biyani has tried his hands at every possible business, besides retail. From restaurants to gyms to beauty salons and consumer finance. He even dabbled in film production.
But eventually, it was the dramatic collapse in share prices of group companies between mid-February and April first week that forced Biyani to pledge almost his entire stake in group companies. With stock prices at the bottom, he has little option to raise more resources through pledges, even as the business empire is crumbling. Biyani went through a similar crisis a decade back but emerged stronger. This time, though, even his staunchest supporters admit that he has given in. In fact, he'll be lucky if the sale proceeds are enough to square off all the loans. So, what next for the fearless entrepreneur? "He's never without a plan," a close associate tells me. "In fact, he has too many." Ajita Shashidhar and Nevin John take you through Kishore Biyani's roller-coaster ride.
Biyani's plight is symptomatic of what ails India Inc.-as reflected in the latest Business Today-C Fore Business Confidence Index that surveyed 500 CEOs and CFOs across the country. Though business confidence has shown marginal improvement from 46.3 in the January-March quarter to 47 in the April-June quarter, the index has stayed below the 50 mark for six quarters in a row now. No wonder, 82 per cent of the respondents surveyed said the government hasn't done enough to revive the economy; 84 per cent believe interventions like direct cash transfers, interest rate reduction, higher public expenditure and capital injection in businesses can boost economic growth in FY21.
But look at the flip side. Downturns bring opportunities for mergers and acquisitions(M&As). Sectors such as airports, hospitality, tourism, NBFCs, malls and multiplexes, fashion, affordable housing, auto components are facing severe cash and liquidity issues. Many firms will require 'rescue capital'. For entrepreneurs with war chest, new opportunities are opening up faster than ever before. Investment bankers are rightfully salivating at the prospects ahead as M&A outlook looks robust for the next 12 to 36 months. Anand Adhikari takes you through that journey.