Reliance Group in letter defends takeover of Future Retail stores

India’s top retailer, Reliance, has privately defended an abrupt takeover of the stores of debt-laden rival Future Retail, saying mounting dues of $634 million compelled it to act beyond expectations, a company letter shows.

The takeover was part of the race to dominate a $900 billion retail sector that set off a bitter dispute in which the Supreme Court will decide whether Reliance or Amazon gets to scoop up Future’s assets.

The March 8 letter reveals for the first time Reliance’s stance on the events of the night of Feb 25, when staff suddenly showed up at many of its rival’s stores to take control over missed lease payments.

That move stunned not only Future but also Amazon, which has cited violation of certain contracts to legally block, since 2020, a $3.4 billion deal between the two Indian giants.

In the letter, Reliance 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 48 billion ($634 million), comprising Rs 11 billion of unpaid lease rentals and Rs 37 billion of working capital.

Over months, Reliance had taken over the leases of more than 900 of Future’s 1,500 stores, while still allowing the company to run them.

Meanwhile, the debt-ridden Future Retail Ltd’s CEO Sadashiv Nayak has resigned from the post seven months after his appointment. Future Group CEO Kishore Biyani has been re-appointed as executive chairman of the company for three years, a regulatory filing said on Thursday.

“Sadashiv Nayak, who was appointed as Chief Executive Officer effective August 25, 2021, has tendered his resignation which is effective from the closure of business hours of March 31, 2022,” Future Retail Ltd (FRL) said in the regulatory filing.