Reliance Industries In A Letter Defends Its Move Of Taking Over Of Future Retail Stores

The letter sent on March 8 revealed RIL’s stance on the events of the night of February 25, when its staff suddenly showed up at many of Future’s stores to take control over missed lease payments

New Delhi: Reliance Industries (RIL) in a letter defended its move of abruptly taking over the stores of debt-laden Future Retail, according to a report by Reuters.

In the letter, the conglomerate said that mounting dues of $634 million compelled it to act beyond expectations.

The Supreme Court, however, will decide whether Reliance or US e-commerce major Amazon will finally acquire Future Retail’s assets in the $900-billion retail sector race that set off a bitter dispute between RIL and Amazon.

The letter sent on March 8 revealed RIL’s stance on the events of the night of February 25, when its staff suddenly showed up at many of Future’s stores to take control over missed lease payments.

That abrupt move by RIL not only stunned Future but also Amazon, which has already locked horns with Future in an arbitration.

Future Retail, which is staring at bankruptcy as its losses grow, has previously called RIL’s move “drastic and unilateral”.

Amazon has cited violation of certain contracts to legally block, since 2020, a $3.4-billion deal between the two Indian retail majors.

Future and Amazon have been engaged in a long-running dispute, which is being heard by a Singapore arbitration panel. However, both sides have been fighting parallel cases in Indian courts to enforce or overrule certain decisions taken by the arbitrator.

According to the letter, RIL said it went “well and truly beyond what can be expected" to keep Future "out of harm's way," as it took "significant steps" to ensure business continuity at Future and make sure there was "no impediment" to their deal.

These steps included financial support of Rs 4,800 crore ($634 million), comprising Rs 1,100 crore of unpaid lease rentals and Rs 3,700 crore of working capital, the report mentioned.

The letter stated as Future proved unable to pay dues and losses in its retail operations swelled, RIL faced “compelling circumstances” and decided to exercise its legal right to take over the stores.

As of now, RIL had taken over the leases of more than 900 of Future’s 1,500 stores over months, while still allowing the company to operate them.