[ad_1] Billionaire Mukesh Ambani’s Reliance Industries Ltd has taken over the operations of at least 200 stores of Future Retail and has offered jobs to its employees after the Kishore Biyani-led group failed to make lease payments to landlords, sources said on Saturday. Reliance Retail, the retail arm of the oil-to-telecom conglomerate, had in August 2020 agreed to take over the retail and logistics business of the Future Group for Rs 24,713 crore but the deal couldnt be closed as Future’s warring partner Amazon went to courts citing violation of some contracts. Future denies any wrongdoing. Sources said several landlords had approached Reliance as Future Retail Ltd (FRL), 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 transferred the leases of some stores to its step-down subsidiary, RRVL and sublet them to Future to operate the stores, the sources said. It 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. Amazon has argued that Future violated the terms of a 2019 deal the companies signed when the US e-commerce giant invested USD 200 million in a Future Group unit. Amazon’s position has been backed by a Singapore arbitrator. Without confirming or denying the takeover of its stores, Future Retail Ltd 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.” FRL 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.” “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 proposing to expand its online and home delivery business to increase its reach to the customers. “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 filing said. “The company has made a loss of Rs 4,445 crore in the last four quarters.” FRL said it is hopeful that the Reliance deal will be implemented as it will be beneficial for all the stakeholders. When contacted, Amazon declined to comment on the development. FRL had in January challenged its lenders in the Supreme Court to avoid facing insolvency proceedings over missing bank payments, citing its dispute with Amazon.The Delhi High Court on February 28, 2022 will hear arguments in the dispute between Amazon and Future Group. In August 2020, the loss-making retail giant proposed to sell its retail, wholesale and logistics arms that included businesses including Fashion at Big Bazaar, Koryo, Foodhall and Easyday to Reliance for Rs 24,713 crore. FRL missed the due date of repayment of Rs 3,494.56 crore to its lenders on December 31, 2021. The retail enterprise blamed the delay on the ongoing dispute with Amazon. But it had sought to repay the debt in the next 30 days, that is by January 2022 — which it also missed. It thereafter sought to sell its small-format stores to pay the first installment of the debt, but Amazon contested that move too. The latter volunteered to help FRL with a loan of Rs 7,000 crore via Samara Capital which was refused by FRL’s independent directors. In a relief to Kishore Biyani’s FRL, the Supreme Court recently directed bankers and FRL to work out a solution.The Delhi High Court was also directed by the apex court to hear the case from Future Group’s point of view since any order would affect a lot of Indian employees of the firm, the bankers and lenders. [ad_2] Source link
