Reliance Industries Limited (RIL) has effectively taken over the operations of Future Retail stores and has offered jobs to their employees. Explain that this has been done despite Reliance being embroiled in litigation with the Kishore Biyani-led group giant American e-commerce company Amazon in connection with the sale of retail business.
Sources close to the development told PTI that Reliance Retail has started taking over the premises in which Future Retail is operating its stores like Big Bazaar and replacing them with its own brand stores. He said that RIL has also started hiring employees of Future Retail stores and bringing them on the payroll of Reliance Retail. When contacted by Amazon for comment, the company declined to comment.
After the Reliance-Future deal was announced in August 2020, several landlords approached Reliance as Future Retail was unable to pay the rent. Thereafter, Reliance signed lease agreements with these landlords and wherever possible, these premises were sub-lease to Future Retail Limited (FRL), so that the business could continue, the sources said.
Reliance taking over loss making stores
He said the stores that Reliance is taking over are making losses and the rest will continue to be operated by FRL. In this way the operating loss of FRL will be reduced. However, the exact number of stores that Reliance Retail has had is yet to be ascertained. According to a source, Reliance will evaluate such premises and use them if found commercially viable. In this way, Reliance will re-employ around 30,000 employees. Otherwise, they would have lost their jobs.
The move is in the interest of all stakeholders of FRL, including banks, creditors and employees, as the company continues its business and remains valued, the source said. Future Retail has over 1,700 retail stores, including Big Bazaar. The company has not paid rent for some stores. Sources said that most of the stores are being supplied by Reliance JioMart as FRL is unable to clear dues to existing suppliers due to cash crunch.
RIL may replace the sign board of Big Bazaar with its own brand
Reliance can replace the sign board and branding of Big Bazaar with its own brand from these stores. Without confirming or denying the acquisition of its stores, Future Retail Limited told the stock exchange that shareholders are aware that FRL is going through a serious financial crisis. The company has defaulted on loan repayments and banks have declared the company’s account as NPA.
FRL said it is finding it difficult to meet working capital requirements and has received notices to vacate most of the stores due to large dues, and we no longer have access to such stores.
The matter is in the Supreme Court
Future Group has filed a petition in the Supreme Court challenging the High Court’s refusal to stay the emergency decision of the Singapore Arbitration Centre. The arbitration center, in its emergency decision, had stayed Future Group’s Rs 24,731 crore sale deal with Reliance Retail to go ahead with it. This gave a big relief to Amazon, the e-commerce company that challenged the deal.
Amazon took the matter to the Singapore Arbitration Center in October last year. It said that Future Retail Limited has violated the investment agreement signed with Amazon in the year 2019 by entering into a sale agreement with rival company Reliance Retail. Future Retail’s merger deal with Reliance Retail has been embroiled in frequent legal disputes. The matter has been brought up for consideration in several regulatory and judicial establishments.
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