India’s Future Retail is scaling down operations across the country as Mukesh Ambani’s Reliance Industries (RIL) begins to take charge. This is despite a legal battle initiated by Amazon India against such a takeover.
RIL will rebrand at least 200 of Future Group’s stores with its own label, several media reports said on Feb. 26, quoting a “source in the known.”
Future Group has confirmed receiving termination notices for a significant number of its stores, including its flagship brand Big Bazaar because of huge outstanding dues.
“The company has been finding it difficult to finance the working capital needs. Increasing losses at store level is a grave concern and is a vicious cycle where larger operations are leading to higher losses,” the group said in its filing to BSE (pdf).
The Future Group has incurred a loss of 4,445 crore rupees in the past four quarters.
Ambani’s Reliance to save Future Retail
With RIL’s takeover of Future underway, it’s been reported that the company is transferring the latter’s employees under the Reliance Retail payroll. The move will save the jobs of at least 30,000 Future staffers.
“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,” Future Group said in its filing.
The Kishore Biyani-led group has also said the “date for its scheme of arrangement” with Ambani’s Reliance has been extended to Sept. 30.
“…The long-stop date for the scheme has already been extended by six months to Sept. 30, 2022, by Reliance,” it said. “
Future Retail’s struggles with Amazon India
This latest development has come amid Future Retail’s ongoing struggle with Amazon India.
The Delhi high court is hearing four cases in the legal battle between Future Group and US-based retail giant Amazon. The next sitting is scheduled for today (Feb. 28). The National Company Law Appellate Tribunal is also hearing Amazon’s case challenging the Competition Commission of India’s order cancelling its 2019 deal with Future Coupons.
Amazon has been creating legal hurdles in the Future Group takeover by RIL since 2020 when the RIL-Future deal was announced. It has questioned the legitimacy of the deal saying that the agreement with Reliance has violated its own deal with the Future Group.