Pantaloon Retail, the retail arm of the Future Group has apparently sold its shares to the Alpha Airports Group which has been indirectly taken over by the pan-European travel dining chain Autogrill SpA, controlled by the Italian Benetton.
The take over has changed equations between the two JV partners, leading to a management deadlock. The MoU had been signed in October 2006 to develop retail and food & beverage businesses at leading airports. GMR, which is running the Delhi International Airport, had awarded the contract to the Joint Venture.
The Future Group has sought board approval to exit the venture according to the report in ET which feels that some legal issues have to be resolved before Future Group makes an official announcement in this matter.
One of the reasons indicated by Future Group are unsustainable high rentals and infrastructure delay at the Delhi international airport. Recently, Delhi International Airport (DIAL) has rejected the reduction in minimum annual guarantee payment by the JV which has been running duty-free operations at the Indira Gandhi International airport. Alpha Future is obliged to pay a minimum guarantee of Rs 5 billion over a span of 39 months.
Modernisation of the outlets notwithstanding, the operational costs are said to have escalated sky high, eroding the profitability and sources say that despite the higher sales prices on most of the alcoholic products the JV has been losing money every month. With the thinning of international operations due to the imminent recession, the revenues are set to be under further pressure.
It is not clear what would happen to the contract. Officials of GMR claim it was awarded to the Alpha-Future JV. With the Indian partner missing from the JV, it may not be easy for Alpha to continue with the contract.
Meanwhile Pantaloon Retail, which is also the country's largest listed retailer, has announced 39 % rise in Jul-Sep sales over corresponding period last year.
It has also announced that its joint venture (JV) with Alpha Future Retail, the UK based Alpha Airport Group is still operative, adding that the news item had not been confirmed with, the company maintained that it is still invested in the joint venture, reports myiris.com.
There is no smoke without fire, they say. Or is it smoke on the water? Read these columns for further developments. |