Amazon-Future Tussle: US E-Com Giant Alleges Rs 7,000 Crore Diverted From Biyani-Led Firm

Amazon, in its letter dated November 24 to the independent directors, said Future Retail has consistently entered into ‘significant related party transactions’ with various Future Group entities

Founder and CEO of Future Group Kishore Biyani. Image: Getty

New Delhi: US e-commerce major Amazon, which is trying to block Reliance Chairman Mukesh Ambani from taking over a struggling retail chain, fired a fresh salvo by alleging significant financial irregularities at the Kishore Biyani-lead firm. Amazon has also written to the independent directors of Future Retail (FRL) on the issue.

According to a report by Bloomberg, Future Retail transferred Rs 7,000 crore ($939 million) in the year ended March 2020 as a capital advance to a company controlled by its founder Biyani and as payment for goods and services purchased from the related firm, Amazon said in a letter seen by Bloomberg News.

Future Retail also created unusual rental security deposits and made advances to suppliers worth a total Rs 4,300 crore the same year, even as business slumped and it was shutting stores, Amazon alleged.

“Significant amounts may have been diverted from Future Retail,” Amazon said. By unwinding at least part of these transactions, Future Retail can “immediately partially repay outstanding debt owed to banks and creditors to ensure business continuity and survival,” it added.

The transactions were part of the public disclosures made by the company as part of standard governance practices, Future Retail’s representative said by email, adding that “there is nothing new that is being brought to the notice, except for false speculations being created out of selective excerpts.” A representative for Amazon India declined to comment.

Amazon, in its letter dated November 24 to the independent directors, said FRL has consistently entered into ‘significant related party transactions’ with various Future Group entities, including with Future Enterprises, Future Supply Chain Solutions, Future 7-India Convenience, and others, and that some of these related parties predominantly depend on FRL for their business. “…the audit committee members have expressed concerns about financial management of FRL, including related party transactions, despite substantial equity and debt fund mobilisation through December 2019 and January 2020.

“The audit committee also proposed an investigation to be done by an independent third party expert to find reasons for increase in FRL’s debt," Amazon said in its letter, a copy of which was reviewed by PTI.

The US giant also marked a copy of its letter to the Finance Minister Nirmala Sitharaman, RBI governor, capital markets regulator Sebi, and other authorities, seeking a probe.

An inquiry would further delay the planned takeover of Future Retail by Mukesh Ambani’s Reliance Industries, making it harder for him to increase his footprint in Indian retail market. Ambani and Amazon are locked in a battle for dominance of the world’s biggest market that’s open to foreign competition, with the tussle playing out in courts in India and abroad, as well as across the country’s regulators.