As Future Group awaits markets regulator SEBI’s approval for the deal to sell its retail, wholesale and logistics business to Reliance Retail, the All India Consumer Products Distributors Federation (AICPDF) has also written to SEBI urging it take a decision at the earliest on this transaction.
In a letter addressed to Ajay Tyagi, Chairman of the Securities and Exchanges Board of India (SEBI), the AICPDF says that there are over 500 distributors of FMCG companies that have dues of over Rs 700 crore pending from Future Group since March 2020.
These distributors, the federation says, were hoping that the Reliance deal would mean that their dues would be cleared.
However, with Future Group now embroiled in a legal battle with Amazon over the deal, regulatory approval for the deal is taking longer than expected, and post SEBI clearance too, distributors believe that it would take another 3-4 months for the deal to be closed and dues paid back.
These pending dues, along with a decrease in business is causing a strain on finances of distributors, forcing many to ‘sell or mortgage family assets like house and jewelry to tide over their crisis’, the federation wrote.
“We bring to your notice the dire situation of the distributers and suppliers of future group and how the delay in your approval and closer of the transaction is worsening the situation and bringing thousands of families distributors and their employees in very poor financial situation,” Dhairyashil Patil, President of AICPDF wrote.
These distributors had written to Biyani days after the Reliance deal was announced to clear outstanding dues. Prior to that as well, they reached out to the company on several occasions and had received assurances of receiving their dues.
Responding to the letter written post the Reliance deal as well, Future Group Chairman Kishore Biyani wrote to all suppliers and creditors assuring them that they would be paid their dues in full and that the transaction with Reliance Retail includes a specific amount that has been set aside to pay dues owed to suppliers and creditors.
Future Group, in a deal with Reliance Retail in August 2020, agreed to sell its retail, logistics and wholesale business to Reliance Retail in a slump sale for Rs 24,713 crore.
However, Future Group has been engaged in a legal battle with Amazon, which filed an arbitration suit against Future Retail seeking to halt the Reliance deal in Singapore in October.
While the Singapore International Arbitration Centre passed an interim ruling in Amazon’s favour, Future Group filed a suit in the Delhi High Court for interfering with the deal.
Delhi HC in its ruling refused to restrain Amazon from interfering in Future Retail’s deal with Reliance Retail by writing to statutory authorities, but also found, prima facie, that the suit filed by Future Retail was maintainable, that the Emergency Award was valid, and that Future Retail's resolution approving the transaction with Reliance was also valid.
Future Group now awaits the last leg of proceedings at the SIAC, which formed a panel on Tuesday to pass the final judgement on the case.