Future Tense

Rejection of the Reliance deal by its creditors has put Future Retail in deep trouble. With Reliance becoming the main tenant of 835 FRL stores across formats, it has very little to offer to any potential buyer, once its creditors drag it to the auction block

- KRISHNA GOPALAN

THERE IS NO DEARTH of uncertainty on the fate of the Kishore Biyani-promoted Future Group. Caught in a mountain of debt, its flagship, Future Retail as also Future Lifestyle Fashions, among other group companies, face an uncertain future as the next stop appears to be the insolvency courts.

A deal struck in August 2020 had Reliance Retail agreeing to buy out the wholesale, retail, and logistics businesses of Future Group in a ₹24,713-crore ($3.4-billion) deal. The beleaguered seller could not have asked for anything better since it allowed him to emerge from a deep hole. However, the hole only got deeper when, on April 22, as much as 69 per cent of the flagship Future Retail’s secured creditors rejected the deal.

The acquisition was already in the midst of a huge controversy as Seattle-based e-commerce giant, Amazon, objected to it. The company, in mid-2019, had acquired a 49 per cent stake in Future Coupons, an unlisted entity, giving it an indirect 4.81 per cent holding in Future Retail Limited (FRL), the entity that houses Big Bazaar, FBB, Easyday, and Heritage. Given the restrictions on FDI in Indian retail, the deal with Future Coupons was expected to lead to control over FRL as and when regulations eased up. With Reliance now out of the picture at a critical juncture, how the story will play out is intriguing for several reasons.