Reliance, India’s largest retailer, would take over at least 200 Future Retail locations after the firm failed to make lease payments to Reliance, two people with direct knowledge of the situation said on Saturday.
Since 2020, Reliance has failed to finalize a $3.4 billion plan to buy Future’s retail assets, which partner Amazon.com Inc has effectively blocked by alleged contract violations. Future is adamantly against any misconduct.
The acquisition of outlets by Reliance indicates that Future’s financial position is deteriorating. Future filed an insolvency petition in India’s Supreme Court in January, citing its disagreement with Amazon, to avoid undergoing insolvency procedures.
Future, which has over 1,700 stores, including renowned Big Bazaar locations, has been unable to make lease payments on several of its locations. According to the sources, Reliance moved the leases of several businesses to its name and rented them to Future to manage the outlets.
As a result of Future’s failure to make the payments, Reliance has opted to run and rename around 200 locations that would otherwise be shuttered, according to the company.
Future announced in a statement to Indian stock markets that “termination notifications for a considerable number of outlets” had been received, to which it will “no longer have access.”
The company is “scaling down its operations which will help us in reducing losses in the coming months,” it said, without mentioning Reliance’s plan to take over many such outlets.
There were no comments on the reports from Reliance and Amazon.
“Over 200 stores will transition to Reliance stores,” said one source, who asked not to be named as the details of the plan were not public.
According to reports quoting information in a letter, Future employees at these stores were given new positions on the same terms by Reliance.. “We welcome you to join our organization,” it reads.
Amazon has claimed that Future broke the terms of a 2019 agreement in which the US company invested $200 million in a Future business. A Singapore arbitration and Indian courts have endorsed Amazon’s argument.
(Adapted from TheEdgeMarket.com)