Reliance takes control of Future Retail stores amid litigations with Amazon

The country's largest retailer Reliance Retail's business will get a massive boost in its operations soon as the Mukesh Ambani-led Reliance Group is all set to take control of Future Retail's business that it has been eyeing for quite some time. Amid fierce courtroom battles between Future Group and American e-commerce giant Amazon over control of the retailer, Reliance Retail Venture's (RRVL) move to take control of the second largest physical retailer in the country is the latest turn of events that is expected to keep the pot boiling.

After failing to pay rents for its stores and under severe shortage of working capital, in the last few days Future began shutting down its 1,700-odd outlets. On Saturday, it informed the investors through Bombay Stock Exchange (BSE) filing about the difficulties it is facing in paying "rent for the leased properties and that is has received termination notice from a number of property owners.

"Amid COVID-19 pandemic, the company has been finding it difficult to pay the rent for the leased properties for its retail stores. In view of this, termination notices have been received for substantial number of stores on account of non-payment of rent for these properties and consequently, we may no longer have access to such store premises," Future Lifestyle and Fashion Ltd (FLFL) said in the filing.

Meanwhile, RRVL began taking stock of the stores and has already initiated rebranding exercise so that it can reopen the outlets in a week's time, sources familiar with the developments said. According to them, it has already repaid a part of the dues - to the tune of Rs 1,500 crore - to the landlords to ensure store locations remain intact. Further, RRVL helped Future by extending working capital with which the later managed to repay some of its dues (more than Rs 6,000 crore) against operational expenses and its debts.

"The management is in discussion with the landlord(s) to evaluate options for ensuring the continuity of business operations at these retail stores. The Management has also scheduled to convene the Board Meeting on March 02, 2022 to decide further strategy in this respect, " FLFL informed the BSE.

If Reliance can manage to pull off the latest bet, then it would expand its store count by a whopping 12 per cent - taking the overall count of its physical stores to over 16,000 from 14,400 at the end of 2021.

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