Kishore Biyani, Indian retail’s original rockstar at it again. His Future Group is buying Heritage Fresh

Advanced talks about acquiring the retail business of Heritage Foods are being done by Future Group. According to people aware of the development, this deal would provide Kishore Biyani a sway over a network of more than 100 grocery outlets in Hyderabad, Chennai and Bengaluru.

This would be Biyani’s fourth acquisition in many years, if this deal completes, as his Future Group consolidates its position, especially in grocery retail.

"Contours of the deal are still being worked on - how Heritage Fresh will be merged within Future Group and whether the transaction could involve any share swap, apart from cash component," an expert, who wants to remain anonymous, told ET.

Heritage Foods operates more than 115 Heritage Fresh stores of 2,500 square feet each on average, serving more than two million customers every month in the three southern cities.

“The company had hired KPMG to advise it on a search for a strategic partner or investor for its retail business,” Dharmender Matai, COO for retail and bakery at Heritage Fresh, told ET.

Biyani will take the Future Group's total store count to more than 850 outlets including the Heritage Fresh chain.

"Apart from pushing its own label, the deal will also help the company operate a bigger network of stores that will come handy for bulk sourcing and, in turn, more bargaining power to squeeze extra margins from consumer product companies, so his consolidation strategy is a smart move," Abneesh Roy, senior vice-president at Edelweiss Securities told ET.

In many southern cities, the supermarkets contributes to about 25%, indicating growing acceptability of modern store formats, while modern trade accounts for about 10% of overall consumer goods sales.

The strategic buyout will make the Future Group look more attractive to the foreign investors.

India allowed total FDI in brick-and-mortar as well as online retailing of food that's locally sourced and produced, in June this year. However, foreign retailers are not very comfortable with it and are saying that food-only stores won't be viable and non-food general items should also be allowed in such shops.