Amazon is seemingly seeking to control 100% of FRL by controlling the entire Future Group’s majority equity in FRL, which means with an investment of Rs 1,431 crore, it seeks to control its assets worth about Rs 30,000 crore. This is as per a report by IANS.
Amazon’s investment exposure is limited to Rs 1,431 crores in FCL alone. It would be noteworthy to note that Future Group’s assets (including retail & wholesale trade, logistics and warehousing, and FMCG outsourcing businesses) are worth in excess of Rs 30,000 crore plus.
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 Covid 19, 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.
Future Group is 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.
In another development:-
Reliance-Future’s $3.4-Billion Deal Cleared by CCI Despite Amazon’s Objections
Antitrust body Competition Commission of India (CCI) cleared conglomerate Reliance Industries’ $3.4 billion (or Rs. 24,713 crores) deal to buy Future Group’s retail assets, thwarting Amazon.com’s efforts to block the deal.
Amazon had approached the CCI and market regulator SEBI alleging the deal would violate some pre-existing agreements it had with Future Group. This is as per a report by Reuters.
