Future Retail to scale down operations to reduce losses

Future Retail, which is caught up in a legal battle with Amazon, on Saturday said that it is scaling down its operations to reduce its losses in the coming months.

"The company has been finding it difficult to finance the working capital needs. Increasing losses at store level is a grave concern and is a vicious cycle where larger operations are leading to higher losses. The company has made a loss of Rs 4,445 crore in the last four quarters," Future Retail said in an exchange filing.

The company said it has received termination notices for significant number of stores due to huge outstanding, and it would no longer have access to such store premises.

"The company is scaling down its operations which will help us in reducing losses in the coming months. The company is proposing to expand its online and home delivery business, to increase its reach to the customers," Future Retail, which operates Big Bazaar, said.

The company said that Reliance has extended the long-stop date for its scheme of arrangement, under which it was to acquire the retail assets of Future Group, till September 2022. Future Group is fighting a court battle with online retailer Amazon which has been able to block the acquisition of the former's retail assets by Reliance citing violation of some contracts.

"The shareholders are aware that FRL is going through an acute financial crisis. The company has defaulted on its loan servicing and as already informed, the account of the company has been classified as NPA by the banks," the filing said.

Future Retail said that the ongoing litigation initiated by Amazon in October 2020, and which is continuing for the last one-and-a-half years, has created serious impediments in the implementation of the scheme, resulting in severe adverse impact on the working of the company. 

Earlier today, news agency Reuters reported that Reliance will take over operation of at least 200 stores of Future Retail, which failed to make lease payments due to Reliance.

Also Read: Reliance to take over operations of 200 Future stores amid Amazon row: Report

Also Read: Cabinet allows up to 20% FDI in IPO-bound LIC under automatic route: Report