Amazon reached an arbitration court in Singapore against a deal between Reliance and Future Retail in August 2020.
Today, the Supreme Court has given a big blow to Mukesh Ambani in favor of Amazon in the Future-Reliance retail deal case. Court has stayed the Reliance-Future deal. The top court has said that Reliance cannot go ahead with the deal to buy Future Group’s retail assets. In this case, the Supreme Court has said that the decision of the Singapore Arbitrator to stop the sale of Future Retail can be implemented. Future Retail’s 3.4 billion (Rs 24713 crore) deal with Reliance Retail has been deemed fit to give effect to the arbitrator’s decision.
Let us tell you that in August 2020, there was a deal between Reliance and Future Retail. Amazon had reached an arbitration court in Singapore against the deal. The deal was banned by a Singapore court on October 25, 2020. The Singapore court also did not give a final verdict. It is expected that the court will give its verdict on this matter soon. After banning the deal in October, the court said it would deliver a ruling within 90 days, since the ban was imposed by a Singapore court, so Reliance and Future were not bound to comply with the order. Because of this, Amazon had to appeal to the Delhi High Court to implement the order of the Singapore Court. Subsequently, on November 20, 2020, the Competition Commission of India (CCI) approved the deal between Reliance Retail and Future Group. CCI said it has approved the purchase of Future Group’s retail, wholesale and logistics and warehousing businesses.
Now the question arises that why is Amazon in trouble when Reliance-Future is happy? In fact, in August 2019, Amazon bought a 49% stake in Future Coupons, a Future Group company. For this Amazon paid Rs 1431 crore to Future Group. Future Coupons holds about 10 per cent stake in Future Retail. That is, in a way, Amazon started investing in Future Retail. The agreement between Amazon and Future Coupons states that Amazon will be ready to buy a stake in Future Retail after 3 to 10 years. Apart from this, it was also decided that Future Retail would not sell its stake to Reliance Industries.
However, after this the lockdown was implemented due to Corona and the condition of Future Retail got worse. Kishor Biyani said in an interview that after the lockdown all the stores were closed and the company had to bear a loss of Rs 7,000 crore in the next three to four months. In the end it was decided to sell the company. In August 2020, Reliance announced the acquisition of Future Retail for Rs 24,713 crore. Before the deal went ahead, Amazon approached a Singapore court to block the deal. A Singapore court put a stay on the deal. Amazon said that Future Retail, in breach of the deal, struck a deal with Reliance without asking.
Let us tell you that due to Big Bazaar the turnover of Future Group is Rs. 9,000 crores was done. In 2017, Biyani was included in the list of top 100 richest people in India. However, that all changed over time and by the end of 2019, Future Retail’s profits fell by 15% and revenue by 3%. Corona caused more damage to Biyani’s business. In such a situation, Biyani’s holding company did not repay the loan. The deal with Reliance started earlier this year. Earlier, Kishor Biyani had also discussed with other potential investors. America’s Amazon has also expressed its willingness to invest in Future Group. Biyani’s debt issue was resolved through a deal with RIL.