In a candid conversation with YouTuber Raj Shamani, Kishore Biyani, the founder and CEO of Future Group, opened up about the factors that led to the downfall of his business empire. Often referred to as the 'king of Indian retail,' Biyani acknowledged the challenges his group faced during the COVID-19 crisis and its entanglement in a clash between global giants, Reliance Industries and Amazon.
When delving into the reasons behind Future Group's struggles, Kishore Biyani remarked, "Analyzing the situation, we can discuss both our successes and failures. From the outset, we maintained our leadership position by pioneering technology and customer offerings. However, in our pursuit of staying at the forefront, we extended our financial resources. Since foreign direct investment (FDI) was restricted in the retail sector, we couldn't secure the desired level of FDI. During this period, most major investors were foreign entities."
The impact of the COVID-19 pandemic, which devastated numerous businesses, also took a significant toll on the Future Group. Biyani explained, "We were ill-equipped to deal with the COVID-19 crisis. In just three months, we incurred a staggering loss of Rs 7,000 crore in business. Recovering from such a setback proved exceptionally challenging, as our financial resources were stretched thin, leading to operational difficulties. Ultimately, we concluded that selling our assets and settling was the only viable option.
Biyani then addressed the conflict between Reliance and Amazon, which only exacerbated their challenges. He expressed, "We had found a willing suitor who was prepared to acquire our business, clear all its liabilities, and continue its operations. However, this deal encountered legal complications, leading to its derailment. Unfortunately, things did not unfold as we had hoped. We found ourselves caught in a struggle between two global industry leaders, and the situation did not align with our intentions."
The founder of Future Group went on to explain that they had initially sold the company to Reliance, but Amazon, owing to their previous investments in the company, raised concerns about Future Group's actions. "This disagreement escalated into a legal dispute, causing significant delays and ultimately an unfavorable outcome," he remarked.
"The dispute persists, but there's nothing left to contest, which is quite a challenge," Biyani lamented. Regarding the insolvency process at the National Company Law Tribunal (NCLT), he stated that, as a promoter, his role is limited, and they must navigate through the entire procedure, which is expected to be time-consuming.
In 2020, Future Group made the decision to divest its assets to Reliance Industries. However, Amazon swiftly intervened in the process, triggering a legal standoff that halted the sale of Future's assets valued at $3.4 billion.
Amazon's contention dates back to 2019 when they established a business partnership with Future through their investment. Amazon argued that this agreement included a non-compete clause, preventing Future from selling its retail assets to specific competitors and granting Amazon the first right of refusal. Consequently, the e-commerce giant pursued legal action through the Singapore International Arbitration Centre (SIAC) and Indian courts, including the Supreme Court, successfully halting the sale. Amazon claimed that its deals with Future granted it special rights over Future's assets, some of which it aspired to own in the event that India eased its regulations for foreign investors. The potential Future-Reliance deal, in Amazon's view, undermined its future prospects.
On the other hand, Future denied any wrongdoing and accused Amazon of attempting to exert illegal control over the company.
In April 2022, Reliance Industries announced that its agreement to purchase Future Retail for nearly Rs 25,000 crore could not be executed due to lenders rejecting the deal.
