Kishore Biyani's Future group companies are on a revival path as most of its stores turned operational post-Covid-19 restrictions, say sources familiar with the matter. "The stores of Future group companies are getting support from Reliance Retail. In addition, the onetime restructuring (OTR) of loans gave a new lease of life," says a Mumbai-based banker.
Reliance Retail Ventures (RRVL)—the retail arm of Mukesh Ambani's Reliance Industries (RIL)—has recently extended the timeline for completing the ₹24,713 crore acquisition of Future group companies, to March 31, 2022, as it awaits regulatory and judicial clearances. They extended it for the second time after announcing the deal in August 2020.
“Lenders are confident about completion of the Reliance deal and that is the reason why they agreed for OTR. Without the support of Reliance, Future group companies won't be able to evade bankruptcy. Restarting operations is another positive aspect," says an executive.
In April, lenders had executed OTR under the RBI guidelines issued on August 6, 2020. The cash-strapped group companies jointly owe around ₹19,000 crore to banks, besides the ₹6,000 crore dues to the vendors. The flagship firm Future Retail’s lenders include Union Bank of India, Bank of India, Bank of Baroda, State Bank of India, Indian Bank, Central Bank, Axis Bank and IDBI Bank, among others.
Though the merger plan is stuck because of the litigations and pending approvals, Reliance and Future are going ahead with collaboration. Some of the store lease agreements that got expired have been renewed in the name of Reliance Retail. Redesigning and rebranding, soft launches and staff training are in progress as part of the integration.
In August last year, RRVL had agreed to pay ₹24,713 crore for key formats of Future group—including Big Bazaar, FBB, Foodhall, Easyday, Nilgiris, Central and Brand Factory—besides the group’s logistics and warehousing business. It had also agreed to take over certain borrowings and liabilities. As the first step of the deal, Future group has been in the process of consolidating the retailing businesses scattered across six entities—Future Enterprises, Future Retail, Future Lifestyle Fashions, Future Consumer, Future Supply Chain, and Future Market Networks.
E-tail giant Amazon played went to court against the deal. It had invested ₹1,500 crore in Future Coupons—the promoter entity of Future Retail—in 2019, intending to take over the assets. Amazon claimed the Reliance-Future deal is a breach of agreement—as it had the first right of refusal to purchase the retail assets. Amazon received a favourable interim award from SIAC. In the same matter, the Delhi High Court in March ordered to attach the assets of Future Coupons, Future Retail and Future Group promoter Kishore Biyani.
The Supreme Court, a month back, stayed all the proceedings in the dispute. The apex court has stayed the High Court order for four weeks as the final award of the Singapore International Arbitration Centre (SIAC) in the matter is going to be pronounced as the arguments have been completed.