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Is Amazon Looking To Control INR 30,000 Cr-Worth Future Group Assets?

Is Amazon Looking To Control INR 30,000 Cr-Worth Future Group Assets?

Amazon is reportedly seeking 100% control of Future Retail Limited, by controlling Kishore Biyani-owned Future Group’s majority equity in its retail arm

While Amazon’s investment exposure is limited to INR 1,431 Cr in Future Coupons Limited, Future Group’s assets are worth in excess of INR 30,000 Cr

Amazon, through the Singapore International Arbitration Centre, had stalled the sale of Future Group’s retail, wholesale, logistics, and warehousing businesses to Reliance Retail for INR 24,000 Cr

US-based retail giant Amazon is reportedly seeking 100% control of Future Retail Limited, by controlling Kishore Biyani-owned Future Group’s majority equity in its retail arm. However, while Amazon’s investment exposure is limited to INR 1,431 Cr in Future Coupons Limited (FCL), Future Group’s assets, (including retail and wholesale trade, logistics and warehousing, and FMCG outsourcing businesses) are worth in excess of INR 30,000 Cr, reported IANS

In August last year, Amazon had acquired a 49% stake in Future Coupons, the promoter entity of Future Retail. 

With the deal, Amazon would have also managed to acquire a 3.58% stake in Future Group as Future coupon owns 7.3% share in the company.

It is worth noting that Amazon, through the Singapore International Arbitration Centre (SIAC), has stalled the sale of Future Group’s retail, wholesale, logistics, and warehousing businesses to Reliance Retail for INR 24,000 Cr. According to the deal, Biyani’s Future Enterprises Ltd (FEL) would have retained the manufacturing and distribution of FMCG goods, integrated fashion sourcing and manufacturing businesses, its insurance joint venture with Generali, and a joint venture with NTC Mills.

Currently, both companies are engaged in a legal battle in the Delhi high court. Last week, Inc42 reported that senior advocate Harish Salve, appearing for Future Retail Limited (FRL) told the Delhi HC that Amazon’s interference with its lawful business would lead to a massive loss of jobs and that Future Group may go bankrupt.

The delay in the proposed deal between Reliance and Future Group could see the latter’s creditors see their loans to the company turn into non-performing assets (NPAs). The Future Group stakes sale was expedited by its creditors after Biyani had defaulted on loan repayments in March this year. 

It is reported that Future Group firms owe around INR 16,000 Cr to a clutch of banks and debt mutual funds, while Future Group founder Biyani owes close to INR 11,000 Cr to lenders. 

Future Retail is India’s second-largest retail chain after Reliance Retail and has more than 1500 stores across 437 Indian cities and towns covering an area of 16 Mn square feet. It employs around 50,000 people and is the parent of brands like Big Bazaar, Fashion Big Bazaar, HomeTown, Food Bazaar, and others. 

Big Bazaar reportedly contributes about 80% to Future Retail’s revenue. Comparatively, Reliance Retail operates in nearly 12K stores across 6,600 towns and cities, covering an area of 28.7 Mn square feet.