Even as the Kishore Biyani-led Future Group has sold its retail & wholesale and logistics business to Reliance Retail to pare down debt, the All India Consumer Products Distributors Federation (AICPDF) has written to Biyani to clear outstanding dues, which they claim amounts to nearly Rs 1,000 crore.
AICPDF represents over 4 lakh consumer goods (FMCG) distributors from across the country. Speaking to TNM, AICPDF President Dhairyashil H Patil said that the group will look at taking legal action if dues are not paid, or a resolution is not arrived at in the next 15 days.
â€śWeâ€™ll wait for another 10-15 days and then weâ€™ll approach the National Company Law Appellate Tribunal (NCLAT) and the Competition Commission of India (CCI). We want CCI to intervene to clear our payments, since the anti-trust regulator looks at not only competition but also sees if a deal is hurting larger masses,â€ť he added.
On Saturday, Reliance Retail and Fashion Lifestyle (RRFL) acquired the retail and wholesale business of Future Enterprises in a slump sale for Rs 24,713 crore. This includes key formats such as Big Bazaar, FBB, Foodhall, Easyday, Nilgiris, Central and Brand Factory. Future Group is also selling its logistics and warehouse business to Reliance Retail Ventures Limited (RRVL).
However, distributors across the country have been impacted with Future Group not clearing their dues. These are FMCG distributors who supply to Big Bazaar, and other retail and grocery stores of the group.
â€śNormally their payments used to come in 30-60 days, but for over the past few weeks the payment cycle has gone up to 125 days, which means payments of up to six months have not come either. So, itâ€™s a huge amount pending right now, and this is only FMCG distributors,â€ť he added.
He claims that while payments are supposed to come every 30 days, this never happened with Big Bazaar.
According to the letter, the current outstanding is 45 to 60 days and the outstanding amount is to the tune of hundreds of cores.
â€śThe distributors of various FMCG companies are your direct vendors and have been supplying stocks at various locations on the terms and conditions laid down by your company and have been doing it since long time in spite of the credit terms decided for 21 days were not met always... We at AICPDF would like to request to clear the outstanding of all the distributors at the earliest,â€ť Dhairyashil wrote in the letter.
Distributors want the dues to be cleared before the merger deal is signed. According to AICPDF, distributors have also invested heavily into their businesses due to the â€śdemanding nature of the companyâ€ť.
â€śThe demanding nature of the company has led to huge infrastructure and financial investments, attracting financial institutions to be a part and parcel of the above investments, which is speculated to be in danger too. And heavy manpower is involved in this activity. Our federation is committed to assure stability to our members and protect their interest by mediating to co-ordinate with the company and resolve the issues amicably,â€ť Dhairyashil wrote.
The distributors and AICPDF have reached out to the company and Kishore Biyani on several occasions and had received assurances of reverting on the same.
Sources in Future Group told TNM that the deal with Reliance Retail has accounted for all pending dues of vendors, including that of the FMCG distributors, and that the company intends to continue doing business with these distributors, as the deal will take another six months to reach completion.
Responding to AICPDF, Kishore Biyani wrote that all legitimate dues will be paid in full in the next coming weeks. The mail, a copy of which was accessed by TNM states that the closure of stores due to COVID deeply impacted the companyâ€™s business and cash flows.
â€śOur objective is to pay full to everyone for all legitimate dues. We have worked out a deal with Reliance that takes care of all concerns of outstanding of all distributors.â€ť
â€śI assure you that each and every distributor will be paid all legitimate over dues in full. You will see progress on this front in coming weeks. I want to assure each and every distributor that there will be full payment of all dues through this letter to you,â€ť Biyani wrote.
TNM has reached out to Future Group, this article will be updated when the company responds.