Reliance Defends Takeover of Future Stores in Letter, Says Mounting Dues Compelled It to Act Beyond Expectations

India’s prime retailer, Reliance, has privately defended an abrupt takeover of the shops of debt-laden rival Future Retail, saying mounting dues of $634 million (roughly Rs. 4,800 crore) compelled it to act past expectations, an organization letter exhibits.

The takeover was half of the race to dominate a $900-billion (roughly Rs. 68,11,875 crore) retail sector that set off a bitter dispute in which India’s Supreme Court docket will determine whether or not Reliance or will get to scoop up Future’s belongings.

The March 8 letter, seen by Reuters, reveals for the primary time Reliance’s stance on the occasions of the evening of February 25, when employees abruptly confirmed up at many of its rival’s shops to take management over missed lease funds.

That transfer shocked not solely Future but additionally Amazon, which has cited violation of sure contracts to legally block, since 2020, a $3.4-billion (roughly Rs. 25,735 crore) deal between the 2 Indian giants.

Within the letter, Reliance stated it went “well and truly beyond what can be expected” to hold Future “out of harm’s way,” because it took “significant steps” to guarantee enterprise continuity at Future and ensure there was “no impediment” to their deal.

These steps included monetary assist of $634 million (roughly Rs. 4,800 crore), comprising Rs. 1,100 crore of unpaid lease leases and Rs. 3,700 crore of working capital.

Over months, Reliance had taken over the leases of greater than 900 of Future’s 1,500 shops, whereas nonetheless permitting the corporate to run them.

As Future proved unable to pay excellent dues and losses in its retail operations swelled, Reliance confronted “compelling circumstances” and determined to train its authorized proper to take over the shops, the letter added.

Neither Reliance nor Future instantly responded to a request for remark.

Future, which is looking at chapter as its losses develop, has beforehand referred to as Reliance’s transfer “drastic and unilateral”.

Earlier than Amazon blocked it, Reliance, led by India’s richest man, Mukesh Ambani, had proposed a $3.4-billion (roughly Rs. 25,735 crore) deal to purchase Future’s retail, wholesale and logistics operations, in addition to another companies.

However following Reliance’s abrupt takeover of its shops, Future sought a number of assurances in a March 2 letter, additionally seen by Reuters, asking if Reliance would stick to the deal with out altering its worth or phrases.

In its response on March 8, Reliance stated Future’s request for assurances had to be seen “in the light of the rapidly evolving circumstances”.

It added, “As and when the scheme (deal) is implemented, it will be in accordance with its terms.”

© Thomson Reuters 2022

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