Amazon-Future face-off: From partners to foes

Forum Gandhi Mumbai | Updated on October 29, 2020

Kishore Biyani, CEO and founder of Future Group   -  REUTERS

The genesis for the ongoing dispute between Amazon and Future Group can be traced back to March this year when Kishore Biyani’s companies — Future Coupon and Future Retail — started getting notices from lenders about possible defaults.

E-mails and communication between the two sides, accessed by BusinessLine, reveal that Future Group was in discussion with Amazon to find a new investor until August, just before Biyani announced the deal with Reliance Retail.

Increased encumbrances

Between March 12 and 15, 2020, Amazon was notified by Future Coupon that the lenders had issued notices of events of default requiring the Biyanis to either encumber more Promoter Securities or to repay the loans due to them.

On March 16, Biyani sent a note to Amit Agarwal, Head of Amazon India, saying that the pandemic had led to a significant deterioration of Future Retail’s market capitalisation, which, in-turn, led to a requirement for increased encumbrances on FRL shares.


As part of the agreement done in 2019, when Amazon had acquired stake in Future Coupons (FCRPL), Amazon had reserved the right to step in and nominate lenders or financial institutions to avoid alienation or disposal of Future Retail shares held by the Promoter group. “Given the exigency in hand, which is solely led by the pandemic impacting investor confidence, we request that Amazon consider stepping in some form to avoid further deterioration,” Biyani had written.

In response, on March 28, Agarwal sent an e-mail offering to help the Future Group. But on April 9, FCRPL informed Amazon that the Promoters had pledged Securities constituting nearly 40.6 per cent of the share capital of FRL, and Securities constituting only 0.5 per cent of the share capital of FRL remained free from any encumbrances.


On April 16, Amazon put the Biyanis on notice as the 2019 agreement had barred Future group from diluting or selling promoter shareholding. In response, Future Retail sent a letter on May 14 requesting Amazon to consider providing financing, which could also help in getting the encumbrances released.

On May 13, 2020, a detailed presentation was circulated over email, which identified “Putting FRL Back on Track” as its objective. FRL stated that it needs to mobilise ₹5,000 crore cash owing to ALM mismatch till September 2020 . It was proposed that Amazon should invest further sums of money in FRL in a manner similar to its investment in FCPL with a seat on the board of directors of FRL. However, isntead of investing directly, Amazon was keen on bringing on another strategic investor. Premji Investments and Samara were the two options that were being considered as part of this plan.

Enter Reliance

Meanwhile, media reports started coming out that the Future Group was in talks with Reliance with a view to selling its retail and supply chain business. On June 21, Rakesh Biyani sent a thank you note to Amazon “for its support to build a strategic partnership and solve the problem with an alternative solution”.

But he expressed concern on the speed of executing a deal. Biyani also requested a joint call between Premji Invest, Amazon and the Future Group team. On June 23, Amit Agarwal again wrote to Biyani, that it was important to clearly understand “what is it specifically that can help the [premji] or other financial investment offer to solve your problem”.

Biyani responded the very next day by sharing a note which dealt with multiple options. On June 30, 2020 Agarwal sent Biyani a media article reporting a potential transaction with Reliance and raised concerns about this news. Biyani dismissed the media report stating that nothing had been concluded. He conveyed that talks with Samara were alive. Upon being specifically asked by Amazon about media reports claiming a deal could happen between the Future Group and Reliance, Biyani curtly responded on June 30: “Nothing concluded.”

Flurry of mails

Amazon placed its concerns on record by sending an email to Kishore Biyani stating “As we have discussed over the last few weeks, I wanted to remind you of the rights that you, Amazon and Future group entities have collectively signed up to under the shareholders’ agreement. To reiterate, our consent will be required for finalizing any transaction involving transfer of assets / shares of FRL.”

On August 24, Kishore Biyani sent an email to Amit Agarwal stating “Am in dialogue with Samara, can discuss where we are as of now with Both options.” On August 27, Amazon sent another reminder to Kishore Biyani stating, “We have not heard back from the Future Group regarding media reports suggesting a potential transaction involving the transfer of assets / shares of Future Group companies. We would like to reiterate that Amazon’s prior written consent will be required for any such transaction.”

Just two days later, on August 29, the FRL Board held a meeting approving the deal with Reliance.

Published on October 28, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like