Amazon seeks control of Future Group’s assets worth Rs 30,000 crore through investment of Rs 1,431 crore

File image of Kishore Biyani, Founder and CEO, Future Group. PTI.

The battle between Amazon and Kishore Biyani-led Future Retail Ltd (FRL)  took another twist on Monday with the US-based company seemingly seeking to control assets worth about Rs 30,000 crore through an investment of just Rs 1,431 crore in an arm of Future Group.

Amazon’s investment exposure is limited to Rs 1,431 crore in Future Coupons Ltd (FCL) alone. It would be noteworthy to note that Future Group’s assets (including retail and wholesale trade, logistics and warehousing, and FMCG outsourcing businesses) are worth in excess of Rs 30,000 crore.

The Future Group employs around 50,000 employees. Banks and financial institutions have an exposure in excess of Rs 18,000 crore towards unpaid debts from Future Group’s accounts. Suppliers and vendors will also have an exposure in excess of Rs 7,500 crore towards unpaid bills from Future Group’s accounts.

Even prior to the lockdown, owing to the COVID-19 pandemic, physical retail of Future Group business suffered losses owing to lesser sales/revenues. After the commencement of lockdown in March-2020, the situation became worse. This resulted in Future Group defaulting in payment of approximately Rs 10,000 crore plus to financial institutions and lenders, vendors and suppliers, and to landlords in respect of unpaid borrowings, bills, and lease rentals, respectively.

In addition, there was also reduction and delay in payment of salaries and incentives to the employees. This crisis is exponentially increasing by the day, and it continues, as at date, and consequential deterioration of significant value of Future Group’s assets.

Sources said this was also made known to Amazon. Amazon engaged in discussions with Future Group, however, could not come up with any viable option to avert the crisis. Future Group also engaged with Reliance Retail for potential partnerships. Amazon was also aware of these discussions.

For one, it was made known to them by Future Group themselves, and for another, the contours of the discussions between Future Group and Reliance were widely reported in the media, and it also appears Reliance also informed Amazon separately. While these events were panning out, Amazon did nothing about it.