India’s high retailer, Reliance, has privately defended an abrupt takeover of the shops of debt-laden rival Future Retail, saying mounting dues of $634 million compelled it to behave past expectations, an organization letter reveals.
The takeover was a part of the race to dominate a $900-billion retail sector that set off a bitter dispute through which India’s Supreme Court docket will determine whether or not Reliance or Amazon.com Inc will get to scoop up Future’s property.
The March 8 letter, seen by Reuters, reveals for the primary time Reliance’s stance on the occasions of the evening of Feb. 25, when employees all of a sudden confirmed up at lots of its rival’s shops to take management over missed lease funds.
That transfer surprised not solely Future but in addition Amazon, which has cited violation of sure contracts to legally block, since 2020, a $3.4-billion deal between the 2 Indian giants.
Within the letter, Reliance mentioned it went “properly and actually past what will be anticipated” to maintain Future “out of hurt’s method,” because it took “vital steps” to make sure enterprise continuity at Future and ensure there was “no obstacle” to their deal.
These steps included monetary help of 48 billion rupees ($634 million), comprising 11 billion rupees of unpaid lease leases and 37 billion rupees 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 known 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 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 keep on with the deal with out altering its worth or phrases.
In its response on March 8, Reliance mentioned Future’s request for assurances needed to be seen “within the mild of the quickly evolving circumstances”.
It added, “As and when the scheme (deal) is carried out, will probably be in accordance with its phrases.”
(Reporting by Aditya Kalra in New Delhi; Further reporting by Abhirup Roy; Modifying by Clarence Fernandez)