Days after it emerged that Reliance Retail had started taking control of many Future Retail’s stores after the latter had failed to pay leases, the Kishore Biyani-owned company has said it has received termination notices in respect of sub-leased properties from Reliance entities. What’s significant is that these outlets historically contributed to more than half of Future’s retail revenues.
“So far notices have been received in respect of 342 large format stores (such as Big Bazaar, Fashion @ Big Bazaar (fbb)) and 493 small-format stores (such as easyday and Heritage stores) of the company. These stores have been historically contributing approx.55 per cent to 65 per cent of retail revenue operations of the company,” Future Retail said.
Separately, Future Lifestyle said it had received termination notices for sub-leased properties from Reliance entities concerning 34 ‘Central’ stores and 78 ‘Brand Factory’ outlets.
As of now, the stores are not operational for stock and inventory reconciliation.
Future Retail has been in a legal standoff with US e-commerce giant Amazon for almost two years. Back in August 2020, Future Retail had agreed to sell the retail, wholesale, logistics and warehousing business to Mukesh Ambani-owned Reliance Retail for Rs 24,713 crore.
Amazon managed to get a stay on the deal from an arbitration court in Singapore, arguing that its 2019 deal to acquire a 49 per cent stake in promoter company Future Coupons, prohibited Future Group from selling the assets to anyone else. The case has been ongoing in the Supreme Court and Delhi High Court.
A source had told THE WEEK last week that after Future Retail had failed to pay leases, several property owners had started terminating the agreement and leasing the properties subsequently to Reliance Retail. Reliance had allowed Future Retail to continue running the stores, until now. With both Amazon and Future continuing to fight, Reliance has begun taking over the stores and will rebrand them.
Future Group had 1,700 outlets across various formats spanning grocery to apparel retail.
This move to take over Reliance’s stores has reportedly angered lenders as their consent was not sought.
In the Supreme Court hearing on March 3, the lawyers representing Amazon and Future Group agreed to initiate an informal dialogue to solve their dispute. How that pans out will have to be seen.
Meanwhile, Future Retail said it is in continuous discussion with Reliance Group to maintain the status quo and for safeguarding the interest of various stakeholders.
The National Company Law Tribunal has already given a green ahead for the various Future Group companies to convene meetings of shareholders and creditors with respect to Future’s deal with Reliance. Future Group has said that these meetings will be convened in April.