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India’s Future Retail scales down operations to reduce losses

India’s Future Retail scales down operations to reduce losses

Future Retail, the second-largest retailer based in India, has reportedly announced plans to scale back its operations to effectively reduce losses, as part of what is the latest setback in the company's years-long feud with rival Amazon.

In filings with the stock exchanges, the company, run by Kishore Biyani, stated that it has been challenging to finance the working capital requirements, and that they are experiencing growing losses at the store level, which is of great concern.

According to its filings, Future Retail has lost approximately $593 million over the last four quarters.

As per reports, Reliance Industries, which engaged in a now-contentious $3.4 billion agreement to buy numerous operations of Future Retail, was acquiring approximately 200 of Future's 1,700 stores as well as potentially absorbing up to 30,000 Future Retail staff after brokering agreements with landlords.

Supposedly, Reliance is expected to rename those 200 stores as its own.

Reliance Retail is the biggest retail chain in India. However, things got tricky soon after the company revealed that it would buy Future Group's retail, logistics, wholesale, and warehousing operations.

Amazon, which three years ago had invested in one of Future Group's divisions, alleged that Future Retail was breaching its agreement and asked the Singapore arbitrator to put a stop to the agreement between the two Indian companies.

At the time of Amazon’s investment, Future Group had stated that the US giant’s investment offers a chance for the company to understand worldwide trends in digital-payments services and new product launches.

According to Amazon, the transaction with Future Retail gave it the first right of refusal on the acquisition of further Future Retail holdings.

Future Retail stated that Amazon's ongoing lawsuit, which was filed in October 2020 and has been underway for the past one and a half years, has conjured up major obstacles in the deployment of the Scheme, leading to severe negative impacts on the firm's operations.

Amazon considers India to be a key overseas market. The company has also purchased holdings in the More chain of hypermarkets and supermarkets, as well as Shoppers Stop, the department store chain based in India, where it has made more than a $6.5 billion investment.

Last year in August, the Supreme Court of India had ruled in favor of the American e-commerce giant to halt the Future Retail sale.

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Sunil Jha

Sunil Jha has been a part of the content industry for close to two years. Having previously worked as a voice over artist and sportswriter, he now focuses on writing articles for, across a slew of topics, ranging from technology to trade and finance. With a business-oriented educational background, Sunil brings forth the expertise of deep-dive research and a strategic approach in his write ups.