The stock of Future Retail was trading in the BZ category on the National Stock Exchange and Bombay Stock Exchange but the shareholder could not find the stock in the watchlist and their portfolio. The entire wealth and Investment of the retail investors were wiped out with intimation. The stark reality of the stock market investment once again dawned upon the newbies and the seasoned investors without discrimination and with a total lack of emotions.
All of this happened while Kishore Biyani the ‘Godfather of Indian Retail’ and the man behind the story of Future Retail was speaking to speaking to Nikhil Kamath (co-founder of stock brokerage firm Zerodha), Sujeet Kumar (co-founder of B2B marketplace for MSMEs Udaan) and Vidit Aatrey (co-founder of e-commerce company Meesho) in the latest episode of Kamath’s podcast series – Source Business Today Desk
Big Bazaar is a chain of stores that sells products at very low prices. They get the products directly from the manufacturers and pass on the savings to the customers. The company has grown a lot and has stores in many cities in India.
However, there are some problems. Online shopping is becoming more popular, and Big Bazaar doesn’t have as much money as it needs. It also owes a lot of money to other people. The pandemic made things worse. The owner of Big Bazaar sold the company to another big company called Reliance Retail for a lot of money.
But then Amazon said that the sale was not fair and took the matter to court. They are currently having a legal battle in a special court in Singapore.
Amazon Vs Reliance over Future Retail
The rivalry between Amazon and Reliance Industries over the Future Retail deal got intense. Amazon, the US-based firm, has accused Reliance Industries of playing a “fraud” in the $3.5 billion deal that it announced with India’s Future Group in October 2020. The deal involved the Future Group selling its assets to Reliance Industries, but Amazon India objected to it. Amazon argues that this agreement violated its own pact with the Kishore Biyani-led company.
In 2019, Amazon India invested around $200 million in Future Coupons, the promoter entity of Future Group, which holds a 9.82% stake in its retail arm Future Retail. This deal involved a non-compete clause that forbade Future Coupons from selling its retail assets to certain firms, including Reliance Retail. One of the points in the deal said that in case of a dispute, the matter will be settled by the Singapore International Arbitration Centre (SIAC).
However, when the COVID-19 pandemic reached India in 2020, a badly affected Future Group decided to sell some of its assets to Reliance Retail, owned by Asia’s richest man, Mukesh Ambani. Reacting swiftly, Amazon approached the SIAC and successfully stopped the Future-Reliance Retail deal. Both Future Retail and Amazon later challenged each other in Indian courts as well.
For both Reliance and Amazon, their respective deals with Future are guaranteed paths to the dominance of India’s $900 billion retail industry. Reliance Retail is already India’s largest retailer, with over 1,000 offline stores. The Future deal will put it beyond any rival’s reach. Conversely, with its offline 1,500 outlets, Amazon could be in that enviable position if it has its way with the Future.
Both companies are growing roots in India’s e-commerce market as well. Stuck in a legal tangle with both Amazon and Reliance, Future Group recently expressed its surprise over Reliance’s “forceful” takeover of its stores. Unfazed, Amazon offered talks with Future to end the “whirlpool of litigation.” However, on March 15, it informed the Supreme Court that these talks had failed.
Meanwhile, in a filing on March 19, Future Group’s listed companies informed the exchanges about the meetings of their respective shareholders and creditors being convened on April 20 and 21 to get approval for the deal with Reliance Retail. It remains to be seen what the outcome of the legal battle between Amazon and Reliance Industries will be and how it will affect Future Retail.