Pantaloon Retail Ltd, the country's largest retail company, and Future Value Retail Ltd, recently carved out from Pantaloon as a 100 per cent subsidiary, plan to issue non-convertible debentures worth Rs 750 crore in the next three-four months, according to sources.
The funds would be utilised to repay debt and convert some of the short-term loans into longer duration debt. Sources said while Pantaloon had plans for an additional NCD of Rs 250 crore after it raised a similar amount last year, FVRL was planning a fresh Rs 500-crore NCD issue.
Though Pantaloon had a Rs 3,858-crore debt on its books as on June 30, 2009, its repayment obligation for the current financial year, that ends in June, could not be ascertained. Sources said the average cost of funds would come down substantially after the debenture issue.
When contacted, Pantaloon Managing Director Kishore Biyani refused to comment on the issue. Last November, Pantaloon raised 500 crore by selling 15.8 million equity shares to repay debt.
According to analysts, Pantaloon's credit matrix improved substantially in this financial year, as it has seen an improvement in sales and also managed to mobilise funds from investors.
Pantaloon posted a 63 per cent jump in its consolidated net profit for the quarter ended March 31, compared to the corresponding quarter last year. Net sales also went up by 25 per cent.
In December last year, Pantaloon announced that it would transfer its value formats -- Big Bazaar and Food Bazaar -- into a separate firm, FVRL, and as per restructuring plan, Pantaloon's debt would be split between it and FVRL.