Future Group has ventured in Middle-East market by partnering with Oman based Khimji Ramdas LLC. The group is all set to launch its first fbb store in Muscat, Oman early next year. This JV is going to strengthen exports and distribution of Future Group’s Food & FMCG brands internationally. Both the companies are jointly investing Rs 150 cr in the Oman market to begin with while ambitiously planning to have 17-18 stores in the region in next three to five years. Along with targeting Rs 100 cr sales from Oman market by 2021, the Future Group is also aiming high of taking its in-house brands at global level. Thus, talking about the JV, investments and future move, Kishore Biyani, Group CEO, Future Group spoke to Indianretailer.com on the occasion of announcing this JV in Mumbai.
With this JV how you are leveraging on Khimji Ramdas Groups strength?
We are leveraging on each other’s strengths. Our strength is product with strong manufacturing base in India and Khimji Ramdas Group have strength in retail presence, infrastructure, logistics, warehousing and they have access to retail properties, so we don’t have to rely on a third party. This joint venture in Oman will be considered as Omani company called KR Future Fashions LLC. Oman doesn’t have the policy of foreign company coming in and selling their products so with this JV there will be no restriction on us for selling our products there. Business in Oman is not our concern, but we are thinking of how fast we can grow there.
By when first fbb outlet will be opened in Oman and what is the future target?
By the first quarter of next year the first store of fbb will be in operation in Muscat and Oman. Initially we are planning to launch 4-5 stores in first year and increase it to 10-15 stores by 2019. Our aim is to have 17-18 stores in some regions of Oman in three years. Each store will be of 15-20,000 sqft. The store will be operated by this joint entity.
In terms of brands we are going to largely retail the private labels that we have in fbb. We have a very strong portfolio across men’s ladies and kids. We have over 50 brands for men’s, ladies and kids in our portfolio so it is going to be mix- n- match play. The larger focus will be on great fashion and great price.
Apart from launching our fbb stores, Khimji Ramdas Group will also distribute our staple food products of Future Consumer to hypermarkets in Oman.
What is the equity commitment under this JV?
Under the JV agreement the equity commitment is of 50-50 percent for the proposed Rs 150cr of investment to start with. We are putting in equity capital of Rs 75 cr. Profit will also be 50-50.
With the margin perspective how attractive is west Asia market for you to begin with?
Our volume of business is so high that now we can bring down the prices. There is a huge competition, but we will be cheaper than others. Oman is a price and fashion quotient market and we will compete on both the fronts. It is slightly price sensitive market citing a lot of Indian and Asian people living there. Thus, the prices of our fbb products will differ 5-8 percent compared to Indian market. Our whole intent for fbb is to keep on reducing the prices. This year our prices have reduced from last year and next year it will be further lower.
We have an ambition to reach Rs 100 cr sales from Oman market in four to five years. There is a chance to become one of the largest clothiers to the world. The international market will contribute less than 10 percent to our total business in three to five years.
What will be your future move post this partnership?
It is the beginning of fbb format in Oman market. This JV is a stepping stone for us for overseas venture. With this move we want to convey that Indian brands can also travel abroad. We have to take cues from brands like Zara.
We have created women fashion wear brand called Cover Story, which will go global over a period of time. The brand is designed out of London, made throughout the world and sold in India. We are also going to launch another global brand soon. As a group we have started thinking global now.
How have you prepared yourself for GST?
We are always ready for GST. For distribution we have created the backend unit handling 37-42 crore garments at Nagpur. It is also one of the largest units in the world. It helps us to do service everywhere in the world. GST will be a big change so there will be some amount of misunderstanding.