You are here: Home » Companies » News
Business Standard

NCLT allows Future Group to hold EGMs to sell businesses to Reliance

Will seek shareholder approval to sell assets to Reliance Retail

Topics
Future Group | Kishore Biyani | Reliance Retail

Dev Chatterjee  |  Mumbai 

kishore biyani, future group, big bazar
Kishore Biyani, Group CEO, Future Group.

The National Company Law Tribunal’s (NCLT’s) Mumbai Bench has allowed firms to hold extraordinary general meetings (EGMs) of their shareholders and creditors to seek approval for selling assets to Ltd.

In an order on Tuesday, the asked the company to fix a suitable date for the meeting and gave its go ahead.

“The company is pleased to update the stock exchanges that the National Company Law Tribunal, Mumbai Bench, has passed an order allowing the company to hold meetings of its shareholders and creditors to seek approval for the scheme. The has further rejected the intervention application filed by Amazon,” Future Retail said in a statement.

Both Reliance and had announced in August last year Ventures Ltd (RRVL) would acquire the entire retail, wholesale, logistics, and warehousing businesses from as a going concern for Rs 24,713 crore. But the transaction was delayed due to litigation by American retail giant Amazon.

Amazon, which holds 50 per cent in a holding company of Future Retail, moved arbitration court, saying the deal would convert FRL into a shell company while the businesses would be hived off and sold to its arch rival The matter is currently pending in the Supreme Court.

While both Amazon and Future were litigating, the financial metrics of Future Group have deteriorated. All Future Group have reported massive losses, a fall in sales, and a substantial rise in debt in FY21 as compared to the previous financial year (see chart).

With the clearing the way for the EGM, one of the hurdles for Future-Reliance Retail has been removed.

The deal, once closed, will consolidate Reliance Industries Chairman Mukesh Ambani’s position in the Indian retail industry, which is witnessing huge investment by multinational players in e-commerce such as Amazon and Walmart.

Tata Group is also focusing on online retail with its new SuperApp.

The merger would help Future promoter Biyani to get rid of debt, both at promoter and company levels, which rose during the pandemic, resulting in the closure of several stores.

According to the plan, various Future group such as Future Retail, Future Consumers, Future Supply Chain Solutions, Future Lifestyle Fashion, Future Brands, and Future Market Network are to merge into Future Enterprises Ltd (FEL) first.

Subsequently, the retail and wholesale undertakings were to be transferred to Reliance Retail and Fashion Lifestyle Ltd (RRFLL), a wholly-owned subsidiary of RRVL. At the same time, the logistics and warehousing undertaking was to be transferred to RRVL.

In return, RRFLL plans to issue preferential equity shares of Rs 1,200 crore of FEL to acquire 6.09 per cent of post-merger equity, and invest another Rs 400 crore in a preferential issue of equity warrants, which, upon conversion, will result in RRFLL acquiring a further 7.05 per cent of FEL.

RRFLL and RRVL will take over certain borrowings and current liabilities and discharge the balance consideration by cash.

The identified assets and liabilities of the retail and wholesale undertaking would be transferred to RRFLL as a going concern on a slump sale basis for Rs 5,628 crore. The retail and wholesale business includes well-known brands such as Big Bazaar, fbb, Foodhall, Easyday, Nilgiris, Central and Brand Factory.

The acquisition of the retail, wholesale and supply chain business of Future Group complements and makes a strong strategic fit into Reliance’s retail business.

RRVL is a subsidiary of Reliance Industries, carrying on the consumer supply chain business and consumer retail business through its subsidiaries. After the transaction, FEL will retain manufacturing and distributing FMCG goods, apart from its insurance joint vetures with Generali and NTC Mills.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, September 28 2021. 16:54 IST
RECOMMENDED FOR YOU
.