By David Asta Alares
New Delhi, Mar 12 (EFE).- The richest man in India and the chairman of Indian conglomerate Reliance Industries Ltd, Mukesh Ambani, recently took his rival, American multinational Amazon, by surprise overnight, taking over the operations of hundreds of stores of the Future Group conglomerate.
The conglomerate is a coveted retail network over which both giants have been locked in over-a-year-long battle in a bid to dominate the country’s retail market.
In New Delhi, a trickle of customers were politely turned away by a security guard at the entrance of what was until a few days ago Future’s flagship supermarket chain, Big Bazaar.
The conglomerate has been heavily in debt since the start of the coronavirus pandemic.
In a push to dominate the country’s retail market that has led to several cases in court, Amazon has been seeking control of Future since it acquired 49 percent of a company of the group in 2019.
Located under a subway station in the Kalkaji neighborhood in the south of the capital, the large Big Bazaar logo on the store’s entrance has been covered and a sign warns of an ongoing “inventory balance.”
Although nothing on the outside indicates that the store is now under Reliance’s control, the security guard confirms that it is indeed the case.
Inside, a group of employees are busy remodeling the premises and reorganizing the goods.
Future Group is widely credited as the pioneer of modern retail networks in the country of 1.35 billion inhabitants, owing to its wholesale business, logistics division and more than 1,700 stores in more than 400 cities across India.
But in a letter to the Indian National Securities Market Commission on Wednesday, the conglomerate acknowledged that it has lost almost 850 stores in a matter of weeks.
How is it possible?
In the face of Future’s mounting debt and its inability to pay rent for several of its stores, Reliance became the tenant of these locations, a source involved in the dispute told EFE on grounds of anonymity since the legal battle with Amazon has now reached the country’s top court.
In August 2020, Reliance had agreed to take over the retail and logistics business of the Future Group for about $3.4 billion.
“Future couldn’t pay Reliance” the rental amount and Ambani can’t take over the Big Bazaar stores because of the legal disputes but he can take over the locals and make them his stores,” the source explained.
The move came as an unpleasant surprise to the company of another of the richest men in the world, Jeff Bezos, and apparently also to the Future Group.
“We did not expect Reliance Group to take such drastic actions, without even discussing the matter with us,” Future Retail’s chief financial officer wrote in a letter to Reliance’s retail units, Bloomberg reported.
But the main aggrieved party is Amazon, who has maintained in the Indian courts that the acquisition of 49 percent of Future Coupons, a subsidiary of Future Group, for about $200 million was subject to Future Coupons having a veto over the sale of Future Retail to a list of entities, including Reliance.
“There has been a complete violation of the law,” said a source close to the American giant, who also asked for anonymity.
According to the source, Amazon made a “strategic investment” in one of Future’s subsidiaries with the intention of subsequently taking control of the group’s retail arm “when the government opens up the sector to foreign investments.”