RIL has also started hiring employees of Future Retail Stores and bringing them on payroll.
Reliance Industries Limited (RIL) has effectively taken over the operations of at least 200 Future Retail Stores and has offered jobs to their employees. Sources gave this information on Saturday. This has been done despite the Kishore Biyani-led group being embroiled in litigation with e-commerce giant Amazon for selling its retail business to RIL. Sources close to the development said 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 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. Following this, 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.
He said that the stores which are being taken over by Reliance are running in loss and the rest of the stores will continue to be operated by FRL. In this way the operating loss of FRL will be reduced. However, till now the exact number of stores that have come to Reliance Retail is not known. According to an industry source, Reliance will evaluate such premises, and use them if found commercially viable. In this way, Reliance will re-employ about 30,000 employees. Otherwise they would have lost their jobs.
The source said the move is in the interest of all stakeholders of FRL including banks, creditors and employees, as the company continues its business and its value remains the same. 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. 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, “The 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 its working capital requirements and “most stores are vacant due to huge outstanding balances”. We have received notices to do so, and now we do not have access to such stores.
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 the 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 brought the matter to the Singapore Arbitration Center in October last year. It said that Future Retail Limited has violated the investment agreement 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 constant legal disputes. The matter has been brought up for consideration in several regulatory and judicial establishments.
(This news has not been edited. It has been published directly from Syndicate feed.)