The Biyani family, promoters of Pantaloon India, have divested a little less than 10 per cent of the company's equity to financial investors.
Kishore Biyani, managing director of Pantaloon Retail India, said: "We did a block market deal of our equity to foreign and domestic funds yesterday." He, however, refused to divulge the identity of the investors.
On the Bombay Stock Exchange, the Pantaloon scrip moved up today to a 52-week high of Rs 127.30 with traded volumes of 252,000 shares.
Pantaloon is also floating a preferential issue of 953,000 equity shares to the promoters at a premium of Rs 102 per Rs 10 paid-up share and also a fully convertible debenture issue.
These debentures, with a face value of Rs 1,000 each, will be converted into equity shares in two tranches within 18 months from the date of issue.
On June 30, 2003, the promoters held a 51.95 per cent stake in Pantaloon Retail (India), while institutional investors held another 18.77 per cent.
After the preferential allotment, the Biyanis' stake in the company will stand reduced to around 47 per cent.
With the fresh infusion of funds following the preferential issue, the promoters intend to expand their retail reach.
While the number of Pantaloon retail stores will be increased from 14 to 19 by 2005, the number of hyper-market stores (Big Bazaar) will go up from six to 19 across the country.
"The money will be used to fund the company's expansion plans," Biyani added.
The company requires Rs 100 crore (Rs 1 billion) for its expansion plans. Of this, Rs 50 crore (Rs 500 million) will be raised through borrowings, Rs 32 crore (Rs 320 million) from preferential allotment and the balance from internal accruals.
Pantaloon has turned into a retail major from an apparel manufacturer over the past 15 years. The company reported net sales of Rs 95.88 crore (Rs 958.8 million) for the quarter ended March 31, 2003, against Rs 76.58 crore (Rs 765.8 million) in the corresponding quarter last year. Its net profit increased from Rs 1.81 crore (Rs 18.1 million) to Rs 2.01 crore (Rs 20.1 million) in the same period.