Potential customers have been turned away by security due to the state of closure of the store, which is still branded as Future’s biggest brand, Big Bazaar, but is likely to be rebranded as the Reliance store soon.
Across India, similar scenes are unfolding as Reliance Industries, India’s largest conglomerate headed by the country’s richest man, Mukesh Ambani, moves to take de facto control of a seized commercial property. which Amazon.com Inc. wanted to become a co-owner.
India’s Supreme Court is currently hearing a dispute between the corporate titans, in which Amazon sought to block Reliance’s planned $3.4 billion purchase of retail assets. of Future Group.
Reliance’s takeover began very quietly on the night of February 25, when its staff began arriving at Future stores. Many members of Future’s management were in the dark about the plans, as shop workers across the country began calling frantically, according to people with direct knowledge of the matter.
“It was tense, everyone was freaking out. We didn’t know who they were. They wanted access and the elderly didn’t know,” said an employee at a Big Bazaar store in New Delhi, describing what which happened around 8 p.m. that day.
At a Future store in Sonipat town in northern Haryana state, announcements were made asking customers to leave as Reliance had taken over, a source said. Vadodara in western Gujarat state, Future employees arriving for work the next morning were told to go home without explanation, another source said.
Citing unpaid payments by Future, Reliance has taken over the operations of some 200 Big Bazaar stores and plans to seize another 250 Future outlets. Together they represent the crown jewels of Future’s retail network and approximately one-third of all Future outlets.
Although Reliance has not played a big public role in the legal dispute, it had, according to sources, for some months taken over a large number of leases held by Future, India’s number two retailer and business partner of ‘Amazon, which is short of money.
Reliance’s sudden possession of the stores appears to have delivered what some analysts call a knockout blow that spoils Amazon’s chances of unraveling the transfer of Future Reliance’s assets. This is despite a series of legal battles won by the American e-commerce giant so far, stalling the announced 2020 deal between the two Indian companies.
“Why is Amazon going to fight now?” said a source close to the US company with knowledge of the legal dispute. “The stores are gone”.
Representatives for Reliance, Amazon and Future did not respond to questions from Reuters for this story. The sources asked not to be identified due to the sensitive nature of the dispute.
AFTER THE REDEMPTION, THE DISCUSSIONS
Future Retail said on February 26 that it was “reducing its activities” in order to reduce its losses, without mentioning Reliance in its statement. The Future group as a whole has more than $4 billion in debt.
Reliance plans to keep Future employees at the stores it takes over, sources say.
Amazon, which has a stake in a separate unit of Future Group that it says prevents Future from selling retail assets without its permission, has called supermarkets and other network stores “irreplaceable” in a sector whose turnover annual turnover amounts to 900 billion dollars.
Over time, the legal wrangling escalated and was marked by inglorious rhetoric. At one point, Amazon called for Future chief executive Kishore Biyani to be detained in jail for disobeying a legal order. And Future once compared Amazon Alexander the Great and his “ruthless ambition to scorch the earth”.
But on Thursday, six days after Reliance’s action, Amazon, in a Supreme Court hearing, unexpectedly called for cordial talks to end the dispute – a proposal Future accepted.
“People have taken over stores…let’s at least have a conversation,” said Gopal Subramanium, Amazon’s attorney.
Discussions should start soon.
Regardless of the outcome of the talks, analysts say Amazon seriously undervalued Reliance.
“If anyone should have seen this coming, it was Amazon and they should have been prepared for it,” said Devangshu Dutta of retail consultancy Third Eyesight.
“Obviously they didn’t.”