Kishore Biyani’s Future Group-owned Future Retail has reported a net loss of Rs 692.36 crore for the July-September quarter, as against a profit of Rs 165.08 in the quarter last year. For the first six months of the fiscal, the retail firm posted a loss of Rs 1,254.31 crore as against a profit of Rs 324.32 for the same period last year.
With COVID-19 having a significant impact on the business, revenues from operations also saw a steep decline to Rs 1,424.11 crore in Q2, compared to Rs 5,449.06 crore last year. The company said in a statement that the pandemic has had a significant impact on the business operations in the first half of the financial year.
Future Retail includes popular retail formats such as BigBazaar, FBB, Heritage Fresh, Foodhall, HyperCity, eZone, among others.
“The Company will continue to closely monitor any material changes to future economic conditions. The Company continues to take various precautionary measures to ensure health and safety of its customers, employees and their families from COVID-19 pandemic,” Future Retail said in a statement.
With several stores being forced to close down in the beginning of the pandemic, Future Group founder Kishore Biyani had said that the group company had lost Rs 7,000 crore revenue in first 3-4 months of the pandemic, and that there was no way the company would have survived losing such a huge amount and that there was no other way but to sell his business to Reliance Industries.
In August, the company announced that it would be selling its retail, wholesale, and logistics business to Reliance Retail by way of a slump sale in an all-cash deal for Rs 24,713 crore.
It has filed its initial application with the Bombay Stock Exchange (BSE) and the National Stock Exchange to obtain the no objection and observation letter from Securities and Exchange Board of India to proceed with the further process of filing application with National Company Law Tribunal.
“Further necessary application has also been filed with Competition Commission of India for approval to the said combination transaction,” the company said in a BSE filing.
However, the company is currently locked in a legal battle with e-commerce giant Amazon, which has objected to the Reliance deal. Amazon bought a 49% stake in the company’s promoter entity in august 2019 and the deal included a list of 15 companies that Future Coupons was barred from entering into share sale agreements with. Amazon has alleged that Future Retail didn’t inform it of the deal and that a sale to Reliance violates its terms of agreement. It filed an arbitration suit with the Singapore International Arbitration Centre in October and won an interim favourable ruling as well. It then wrote to the regulators in India to not allow the Reliance deal to proceed.
While Future Retail and Reliance have maintained that they entered into the deal under proper legal advice and intend to continue with the transaction, Future Retail filed a legal suit against Amazon in the Delhi HC for ‘interfering’ with the transaction.
The matter is currently being heard, where Future Retail’s counsel has argued that Amazon is not a shareholder in Future Retail since its deal was with Future Coupons and therefore doesn’t have a say in the company’s matters.
Amazon is not even a minority shareholder in Future Retail. How can there be rights conferred upon it, the counsel argued, adding that Amazon is asserting minority rights without holding even a single share in FRL.
Harish Salve, who is representing Future Retail also told the Delhi HC on Thursday that the order of the Emergency Arbitrator is of no value and has no efficacy in law.
"I am entitled to ignore it. I am subject to Indian Courts. If a gentleman sitting in Singapore says something, I can bin that order. It is not to show any disrespect. I'm saying as a matter of law..", Salve contended.
...thousands may lose jobs, FRL may go bankrupt but this great American giant should not be upset! Compare the figures invested by Amazon and what Reliance is offering. That is the amount needed to rescue FRL from bankruptcy, he said.
The next hearing is scheduled for November 19.
With PTI inputs