India’s high retailer, Reliance, has privately defended an abrupt takeover of the shops of debt-laden rival Future Retail. They said mounting dues of $634 million compelled it to behave past expectations, an organization letter reveals.
The takeover was a part of the race to dominate a $900-billion retail sector that set off a bitter dispute through which India’s Supreme Court docket will determine whether or not Reliance or Amazon.com Inc will get to scoop up Future’s property.
The Supreme Court, however, will decide whether Reliance or US e-commerce major Amazon will finally acquire Future Retail’s assets in the $900-billion retail sector race that set off a bitter dispute between RIL and Amazon.
The letter sent on March 8 revealed RIL’s stance on the events of the night of February 25, when its staff suddenly showed up at many of Future’s stores to take control over missed lease payments.
In the letter, Reliance said it went “well and truly beyond what can be expected” to keep Future “out of harm’s way,” as it took “significant steps” to ensure business continuity at Future and make sure there was “no impediment” to their deal.
These steps included financial support of 48 billion rupees ($634 million). It comprises 11 billion rupees of unpaid lease rentals and 37 billion rupees of working capital.
In its response on March 8, Reliance mentioned Future’s request for assurances needed to be seen “within the mild of the quickly evolving circumstances”.
It added, “As and when the scheme (deal) is carried out, will probably be in accordance with its phrases.”
The Deal
Over months, Reliance had taken over the leases of more than 900 of Future’s 1,500 stores, while still allowing the company to run them.
As Future proved unable to pay outstanding dues and losses in its retail operations swelled, Reliance faced “compelling circumstances”. They decided to exercise their legal right to take over the stores, the letter added.
Future, which is staring at bankruptcy as its losses grow, has previously called Reliance’s move “drastic and unilateral”.
Before Amazon blocked it, Reliance, led by India’s richest man, Mukesh Ambani, had proposed a $3.4-billion deal to buy Future’s retail, wholesale, and logistics operations, as well as some other businesses.
But following Reliance’s abrupt takeover of its stores, Future sought several assurances in a March 2 letter, also seen by Reuters. They asked if Reliance would stick to the deal without changing its value or terms.
Meanwhile, the debt-ridden Future Retail Ltd’s CEO Sadashiv Nayak has resigned from the post seven months after his appointment. Future Group CEO Kishore Biyani has been re-appointed as executive chairman of the company for three years, a regulatory filing said on Thursday.
