Pantaloon posts 76% drop in profit, to hive off Home Town

High interest costs, lease rents and higher depreciation expenses brought down net profit of Pantaloon Retail (India) Ltd’s core retail business by 76 per cent in the quarter ended March 2012 to Rs 12.03 crore, compared with Rs 50.54 crore in the year-ago period.

The country’s largest retailer’s consolidated net profit declined 98 per cent in the March quarter to Rs 6 lakh against Rs 4 crore in the corresponding quarter of 2010-11. The company’s financial year ends in June. The core retail business includes all the retail business of the company and its wholly-owned subsidiaries in value, lifestyle and home retailing segments.

Pantaloon saw 58 per cent increase in its interest costs at Rs 172 crore in the March quarter, compared with Rs 109.58 crore a year earlier. There was a 17 per cent rise in lease rents it paid in the quarter at Rs 217.71 crore.

Net sales in the core retail business fell 8.5 per cent to Rs 2,958 crore from Rs 2,726 crore in the same quarter a year ago. In terms of consolidated business, the company posted net sales of Rs 3,277 crore, up from Rs 2,932 crore a year earlier.

Meanwhile, Pantaloon said it was making Home Town, a one-stop destination for home-making solutions, a separate subsidiary of the company. The move is expected to help the company consolidate and draw investors to the format. “In order to manage the scale, expand at a faster pace and bring in requisite investments, the company has decided to form a wholly-owned subsidiary that owns and operates this business,” Pantaloon said.