State Bank of India has asked Future Retail to give a report on the measures taken by the company to take back assets and inventory from Reliance Industries .

Reliance had taken over more than 900 of its 1,500 stores last month after Future Retail failed to pay the lease amount.  Following this, Future Retail had written to Reliance Industries asking it to return the assets and inventory from the stores.

SBI along with others lenders of Future Retail have claimed the first charge over the assets.

After the abrupt possession of stores in the last week of February, Future Retail had said that these stores contributed to over 50 per cent of the company’s revenues. On the other hand, the lenders, too, had issued a public notice informing that they had ‘secured charge’ on the moveable fixed assets and current assets (including receivables, stock, spares, inventories, cash flows) of FRL. 

Reliance has defended its decision to take over the stores, stating in a recent letter, that it had to secure the dues owed by Future Retail. Reliance stated that the lenders were secured creditors, and if they planned to drag Future Retail to the NCLT or Debts Recovery Tribunals, then Reliance would not have an opportunity to recover its monies.”

According to reports, Reliance has given financial support of ₹4,800 crore comprising ₹1,100 crore of unpaid lease rentals and ₹3,700 crore of working capital.

In August 2020, Reliance had agreed to buy out assets of multiple companies of Future Group. It had decided to buy the assets for the logistics, retail and wholesale businesses of the Kishore Biyani–owned company among others for a valuation of ₹24,713 crore. 

However, Amazon, which had invested ₹1,400 crore in one of the Future Group companies in 2019 had opposed this deal. It had dragged Future Group’s companies into arbitration on grounds that it violated an agreement in which Reliance was a restricted party. 

After the e-commerce giant won an interim award in its favour, it moved Indian courts to seek a remedy. This was countered by Future Group. Since then, multiple court cases are being heard in different courts.

The litigations , according to Future Group that has been making losses for at least five quarters now, has further eroded the company’s financial strength. The company has defaulted on payments to lenders and vendors among others. 

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