Future Ventures India IPO - Subscribe - Ajcon Global

Future Ventures India Limited is a part of the future group, led by Mr. Kishore Biyani. The group focuses on consumption-led businesses in India with multiple businesses under one umbrella. The group has successfully demonstrated the ability to identify, incubate and grow various consumption-led businesses in India like Pantaloon Retail India Ltd., Future Capital Holdings Ltd., Future Generali Insurance, Future Media, Future Brands, Future Supply Chain, Future Bazaar, Central, Big Bazaar, Food Bazaar, Home Town and E-Zone. It has popularized brands like Lee Cooper, John Miller, Indigo Nation, Scullers, Biba, Holii, Ching's Secret, Smith & Jones under its nourishing umbrella. However, at this stage, profitability is under pressure and company has accumulated losses.

With due consideration to factors like company's established presence in most of the business ventures, across the value chain such as Life style, FMCG and Food products segment, robust capital adequacy levels, debt free profile (at standalone level), possibility of potential upsides in terms of divestment gains, we believe it may be a dark horse in the future and recommend investors with a higher risk appetite to 'SUBSCRIBE' to the issue.

Key positives

Synergy with future group, established market presence:

Future group's track record of incubating and growing businesses coupled with proven execution skills has resulted in being one of the largest organized multi-format retail networks in India. It has conceptualized, supported and developed various consumption-led business concepts such as Pantaloons, Central, Big Bazaar, Food Bazaar and Home Town, which enjoy wide brand recognition and customer loyalty. A key element of the Future Group's growth has been its strategy of actively mentoring its projects and as a result FVIL expects to benefit from access to such mentoring capabilities. It has entered into a Mentoring Services Agreement with Pantaloon Retail (India) Ltd, pursuant to which Pantaloon Retail (India) Ltd. would provide mentoring services to FVIL and/or the Business Ventures. The assistance to be provided by Pantaloon Retail (India) Ltd. would include, amongst other things, insights into consumer behavior, advice regarding business strategy, review or development of business plans for the Business Ventures, guidance in development of new businesses, products and/or distribution strategies, assistance in sourcing products and materials, and assistance in brand building and marketing of products.

Business sourcing opportunities

On account of its strong market presence and successful track record of establishing new formats, the group has access to a range of business opportunities in consumption-led sectors in India. Strong network with industry will help the company to source business opportunities which were evident in the past with respect to its business ventures such as Biba Apparels Private Ltd., AND Designs India Ltd., Indus Tree Crafts Private Ltd., and Capital Foods Exports Pvt. Ltd.

Key negatives

The company started undertaking the business of investing in, and operating, innovative businesses in consumptionled sectors in July, 2007. As a result, it has limited experience in creating, building, acquiring, investing in and operating innovative and emerging businesses in consumption led sectors in India, which may increase its vulnerability to various risks.

Secondly, the company being in its nascent stage of operations has accumulated losses, as result its ability to successfully turnaround operationally and financially the business ventures would be a key aspect.

Thirdly, with regards, to utilization of IPO proceeds, FVIL has not entered into any definitive agreements and may not deploy the Issue proceeds immediately following the Issue.

Source : Equity Bulls

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