The battle for offline Indian retail is heating up. The ramificationsof Amazon vs Reliance for Future Group may become tangible for the 29,000individuals employed in the Future Group.
As a Singapore arbitration court has temporarily halted theacquisition process of Future Group's retail business by Reliance Retail, therehas been speculation over what happens to Future Retail if the deal does notactually go through.
Future Retail's representative told the arbitration panelthat if the deal with Reliance Retail fails, then the company would go intoliquidation. The closure of the company would lead to over 29,000 job losses,the company's counsel said, according to the order copy.
Futures Retail, however did not respond to a query on thematter from IANS.
Sector experts too are of the view that if the acquisitionof the company does not go through, then it may have to wind up its operationsor go for bankruptcy.
Arvind Singhal, Chairman of Technopak Advisors said:"On the face of it, this seems stands to be a correct statement. Theliabilities of Future are so large that you are looking at around Rs 25,000crore of payment being in the line.
"If this was not for Covid, then in any case, many ofthe lenders would have invoked not only all the personal guarantees given bythe promoters, including their pledges, but many of the creditors would takenthe company to the NCLT."
In an interim order on Sunday, V.K. Rajah, the arbitratordirected the Kishore Biyani-led Future Retail not to proceed with the deal withReliance Retail for now.
Future Group is likely to approach an Indian court in thematter. Indicating that the matter should not have been dealt with by anoverseas arbitration court, Future Retail said that all the relevant agreementsare governed by Indian law and provisions of the Indian Arbitration Act for allintents and purposes and "this matter raises several fundamentaljurisdictional issues which go to the root of the matter".
According to Future, the order will have to be tested underthe provisions of Indian Arbitration Act in an "appropriate" forum.
Future Group faced mounting debt and was scouting for buyersfor its massive retail business till Reliance Retail Ventures Ltd (RRVL), asubsidiary of RIL, in August announced that it will acquire the retail,wholesale, logistics and warehousing business from the debt-laden group as agoing concern on a slump sale basis for lumpsum aggregate consideration of Rs24,713 crore, subject to adjustments as set out in the composite scheme ofarrangement.
Earlier this month, Amazon said that Future Group violated acontract with it by entering into the sale agreement with the Mukesh Ambani-ledretail major.
Last year, Amazon acquired a 49 per cent stake in FutureCoupons, a Future group entity.
This battle seems to be turning into major war between twoof world's richest tycoons, Jeff Bezos and Mukesh Ambani.