Kishore Biyani, founder and CEO of Future Group, spoke about what led to the crumbling of his business empire in a no-holds barred conversation with YouTuber Raj Shamani. Biyani, usually credited as the ‘king of Indian retail’, acknowledged how the group could not handle the COVID-19 crisis, and how the conglomerate was caught in a tussle between two global giants, Reliance Industries and Amazon.
Elaborating on what went wrong with Future that ran Big Bazaar, Kishore Biyani said, “I think one can keep talking about what went wrong and what went right but if we look at it in a positive way, we maintained the leadership from the time we started. We were ahead of the curve in terms of offering technology, customer proposition and I think during the journey of being the leader, we stretched our balance sheet. FDI was not allowed in retail so we were not able to get FDI into the company as much as wanted…at that point all the big investors were foreigners.”
The COVID-19 pandemic that reduced many businesses to dust took its toll on the Future Group too. “We were not able to handle the COVID event. When COVID happened we lost business of Rs 7,000 crore in three months. To recover from that was very difficult because you are working on bank lines and everything gets into a jam. And then we decided that there was no other option but to settle and sell out,” he said.
Biyani then spoke about the tussle between Reliance and Amazon that further added to its woes. “We found a suitor who was willing to buy and extinguish all the liabilities and continue with it. But then that deal got into legal issues and then it could not happen. Things didn’t go the way we wanted it to. We were caught in between two leaders of the world and things didn’t work the way we wanted it to,” he said.
Also read: ‘Went to Tirupati temple to learn to manage crowd at Big Bazaar,' says Future Group’s Kishore Biyani
The Future Group founder said that they sold the company to Reliance but Amazon, because of their investment in the company, thought “they (Future Group) were not doing right”. “That went into a legal dispute and didn’t allow the deal to consummate. It got delayed and delayed and delayed and finally the outcome was not best,” he said.
“The dispute still continues but nothing remains to be fought over, that’s the challenge,” he lamented. Talking about the insolvency process at the National Company Law Tribunal (NCLT), Biyani said that he does not have much of a role as a promoter and they have to go through the entire process, which is likely to “take some time”.
In 2020, Future Group decided to sell its assets to Reliance Industries. But Amazon swiftly entered the scene to throw a spanner in the works. That led to a legal stand-off, stalling the sale of Future’s assets worth $3.4 billion.
Amazon’s contention goes back to 2019, when it became business partners following its investment in Future. That deal, it later argued, came with a non-compete clause that prohibited Future from selling retail assets to certain rivals and giving it the first right of refusal. The e-commerce giant then approached Singapore International Arbitration Centre (SIAC) to successfully stop the sale. Both parties also challenged each other in Indian courts, including the Supreme Court.
Amazon argued that its deals with Future gave it special rights over Future’s assets, some of which it had hoped to own should India ease its rules for foreign investors. A potential Future-Reliance deal “destroys” its prospects, it said. Future, on the other hand, denied any wrongdoing and accused Amazon of seeking to exert control over the company illegally.
In April 2022, Reliance Industries announced that its agreement to buy Future Retail for nearly Rs 25,000 crore cannot be implemented after lenders rejected the deal.
Also read: 'Kaam karne ki zaroorat hi nahin’: Kishore Biyani's masterclass on the size of Indian retail market
Also read: 'Growing debt, did not have strong balance sheet': Kishore Biyani on what went wrong with Big Bazaar