In yet another turn in the convoluted battle involving the Kishore Biyani-led Future group, global giant Amazon, and the Indian behemoth Reliance Industries, the latter has taken over the operations of at least 200 stores of the beleaguered Future Retail. Reliance Industries, through its subsidiary, Reliance Retail has also offered jobs to its employees after the Kishore Biyani-led group failed to make lease payments to landlords.
The Rs 24,713 crore ($3.38 billion) formal take over of Future Group by Reliance announced in August 2020 is hanging fire as the Amazon Group is fighting it tooth and tail at every legal forum possible, including the Indian courts, the National Company Law Appellate Tribunal (NCLAT) and the Singapore court of arbitration.
Amazon is opposing the deals citing violation of some contracts. The Future, for its part, denies any wrongdoing.
Future Group has said it is finding it difficult to finance the working capital needs and "termination notices have been received for a significant number of stores due to huge outstanding, and we would no longer have access to such store premises."
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Reliance takes over leases from Future Group
The latest twist with Reliance Retail moving in at a physical level happened after several landlords apparently approached it as the Biyani firm which is neck deep in losses, was unable to pay rent.
Future has more than 1,700 outlets, including the popular Big Bazaar stories, and has not made lease payments for some of its outlets. Facing closure, Reliance Retail has reportedly transferred the leases to itself, and sublet them to Future to operate the stores.
Media reports have it that Reliance Retail has since started rebranding the stores and offered to take all employees employed there on its payroll, they added.
"In addition, a majority of inventory at these stores was being supplied by Reliance Jiomart as a cash-strapped FRL could not clear dues to existing suppliers. Reliance will likely replace Big Bazaar signages and branding from these stores with its own brand," a PTI report said.
Amazon to keep fighting
This aggressive intervention, though welcomed wholeheartedly by the employees of Future Group, is bound to trigger some kind of legal response from Amazon. Again, as per media reports, it is mulling various legal options. The choice before it is either knock on the doors of the court and obtain a stay or move the NCLAT. Of course, it can do both as it already is fighting the case on multiple legal planks.
Amazon has argued that Future violated the terms of a 2019 deal the companies signed when the US e-commerce giant invested $200 million in a Future Group unit. Amazon's position has been backed by a Singapore arbitrator.
Future Retail in a stock exchange filing said, "the shareholders are aware that FRL is going through an acute financial crisis. The company has defaulted on its loan servicing and as already informed, the account of the company has been classified as NPA by the banks."
"The ongoing litigation initiated by Amazon in October 2020, and which is continuing for the last one and a half years, has created serious impediments in the implementation of the Scheme (Reliance takeover), resulting in severe adverse impact on the working of the company," it said, adding the firm is scaling down its operations to reduce losses.
FRL is also proposing to expand its online and home delivery business to increase its reach to the customers.
The Future Group has made a loss of Rs 4,445 crore in the last four quarters. It has also challenged its lenders in the Supreme Court to avoid facing insolvency proceedings over missing bank payments, citing its dispute with Amazon.
In a relief to Kishore Biyani's group, the Supreme Court recently directed bankers and FRL to work out a solution.
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