Shares of brick-and-mortar retailer Future Retail tanked 8% in the intraday trade on Thursday after the company clarified that Reliance Group has unilaterally terminated leases and forcefully taken over control of hundreds of its stores since the last week of February.

The termination of leases and takeover of stores by Reliance Industries has come as a surprise to Future Retail and its board, the company said in an exchange filing.

Future Retail's board has taken strong objection to the actions taken by the Reliance group and has put the oil-to-telecom conglomerate on notice to reconsider all other actions initiated over the last few days, the Kishore Biyani-led company said.

The board has also notified Reliance Group that assets such as store fixtures, infrastructure, merchandise, inventory etc. belonging to Future Retail and lying inside these stores are hypothecated as security in favour of the FRL lenders. "The Board has called upon Reliance Group to ensure that the possession of the secured assets is not transferred and retained unharmed for the benefit of the lenders."

The retailer's board also objected to Reliance issuing offer letters to employees of Future Retail, since the transfer of employees was envisaged to take place pursuant to the Scheme and not through any other mechanism. "FRL Board had once again requested to reconsider the issuance of the termination notices, offer letters to employees and other actions initiated by them in recent past," it said.

The cash-strapped company called Amazon's newspaper ads which accused Reliance of taking over Future's stores in a clandestine manner by playing a fraud on the constitutional courts in India as "inaccurate" and "factually erroneous".

"There have been several media reports and public notices issued by Amazon misreporting that FRL has handed over Retail Assets of FRL to Reliance in breach of orders of Tribunal and Supreme Court of India. Such reporting is FRL has not handed over the stores to Reliance Group. On the contrary, FRL's Board had two meetings and notified Reliance Group that such a drastic and unilateral action of Reliance Group to takeover the stores has not only come as a surprise to FRL but also complicated the positive scenario, which had started building up after the CCI order in December 2021," it said.

The company said it remains committed to take all such action as may be necessary to seek value adjustments and reversal of takeover of the stores by Reliance Group.

The talks between Amazon and Future Group, initiated at the behest of the Supreme Court, to reach an out-of-court settlement have failed.

Since March 2020, the operations of Future Retail have been impacted by the Covid-19 pandemic. The company has seen a massive erosion in its sales and complete erosion of its net worth due to mounting losses.

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