Last month, Reliance Retail took over retail space that Future Group couldn’t pay rent for.
Last month, Reliance Retail took over retail space that Future Group couldn’t pay rent for.
In a new twist in the battle for dominance of India’s retail market, billionaire Mukesh Ambani’s Reliance Retail has quit Future Retail because it canceled subleases on 950 stores it had previously acquired.
In stock documents, the indebted Future Group companies led by Kishore Biyani said they were served with notices of termination of leases of 835 Future Retail stores and 112 Future Lifestyle stores.
Last month, Reliance Retail took over retail space that Future Group couldn’t pay rent for. These were then subleased to the Future Group for operation.
“The Company has received certain termination notices relating to subleased properties from Reliance companies,” Future Retail said in a stock report.
“So far, notifications have been received regarding 342 large-scale stores (such as Big Bazaar, Fashion @ Big Bazaar (fbb)) and 493 small-scale stores (such as Easyday and Heritage stores) of the company,” it said.
Separately, Future Lifestyle Fashions said it received cancellation notices for 34 Central stores and 78 Brand Factory stores.
“These stores have historically contributed approximately 55 to 65 percent of the company’s retail revenue. Currently, these stores are not operational for stock and inventory reconciliation,” it said.
Reliance Retail, the retail arm of the oil-to-telecom conglomerate, had agreed in August 2020 to acquire Future Group’s retail and logistics business for Rs 24,713 crore, but the deal failed to go through as Future’s wartime partner Amazon went ahead Court for breach of some contracts. Future denies any wrongdoing.
Future Group companies said they are “in constant discussion with Reliance Group to maintain the status quo and protect the interests of various stakeholders.” Future, which owns more than 1,700 stores, including the popular Big Bazaar stores, had not paid rent on some of its stores. This is because the company is neck-deep in losses and has even defaulted on loan repayments.
In light of the closure, Reliance transferred the leases of some stores to its step-down subsidiary RRVL and leased them to Future to operate the stores, the sources said.
Additionally, much of the inventory in these stores was supplied by Reliance Jiomart, as an FRL struggling with cash was unable to pay fees to existing suppliers. Reliance will likely replace Big Bazaar signage and branding in these stores with its own branding.
These subleases will be terminated.
It is not clear why Reliance made this decision.
Reliance has since started renaming the stores and has offered to put all employees working there on the payroll, they added.
Amazon has argued that Future breached the terms of a 2019 deal the companies signed when the US e-commerce giant invested $200 million in a Future Group unit. Amazon’s position was supported by a Singaporean arbitrator.
Future asked its lenders in the Supreme Court in January to avoid bankruptcy proceedings for non-payment by the bank, citing the dispute with Amazon.
In August 2020, the loss-making retail giant proposed to sell its retail, wholesale and logistics arms, which included companies such as Fashion at Big Bazaar, Koryo, Foodhall and Easyday, to Reliance for £24,713m.
