SEBI has ordered forensic audit of the books of accounts of Future Group companies for 2019‐20 to 2021‐22.
At least four companies including the holding company Future Enterprises, Future Consumer, Future Lifestyle Fashions, and Future Supply Chain Solutions have received SEBI notices.
“The Securities and Exchange Board of India (SEBI) has reasonable grounds to believe that the disclosure of financial information and the business transactions in the matter of Future Retail Limited (“FRL” or “Company”), have been dealt with in a manner which may be detrimental to the interest of the investors or the securities markets and/or an intermediary or a person associated with the securities market may have violated the provisions of the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’) Securities Contracts (Regulation) Act, 1956 (‘SCRA Act’), SEBI (PFUTP) Regulations, 2003 and the provisions as specified in Section 24 of the Companies Act, 2013 or any other Rules or the Regulations made or directions issued by SEBI there under,” said the notice issued by SEBI.
All the notices include a review of three fiscal years between 2020 and 2022. The audits of these companies will be with respect to the related-party transactions with FRL during the above review period.
Future Retail’s troubles
BusinessLine had reported in April that Amazon had asked the Reserve Bank of India (RBI) to undertake a forensic audit against Future Retail for the past three financial years to investigate alleged fraud by the company.
Earlier this year, Bank of India dragged Future Retail to the insolvency court for unpaid dues. The matter has been admitted.
In August 2021, Future Retail entered into an agreement to sell its assets to Reliance Retail for ₹24,713 crore. Amazon, which had invested ₹1,400 crore in one of the Future Group companies in 2019, had opposed the 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 enforcement of the award. This was countered by the Future Group. Since then multiple cases have been filed in different courts by both sides. These cases may be withdrawn now since the deal in question itself is in jeopardy.
In August 2021, since Future Retail’s stock prices had taken a hit, it was facing a liquidity crisis, and its deal with Reliance was stuck, it had approached its lenders to restructure its debt.