Vendors, suppliers, landlords and employees of Future Group retail stores are a happier lot these days after Reliance started taking operational charge of the former’s stores. Many of the employees and vendors were not receiving salaries for months, and rental dues were delayed for years. With Future Retail acknowledging in an exchange filing recently that it had been finding it challenging to finance working capital needs, stakeholders were on the edge.
“Hardships are obvious when you do not receive salary for months,” Pankaj Bansal, a former landlord of Easy Day Mart, told ANI, claiming employees were sometimes receiving partial salaries. “With a strong group like Reliance taking over, employees will receive salaries on time.”Reliance has started making job offers to Future Group’s retail network employees. The network employs nearly 30,000 people.Bansal also said the takeover has “relaxed” him as this would ensure timely rent payments.”I have an Easy Day outlet in Ballabgarh (in Faridabad district of Haryana). Easy Day failed to give rent for many past months. Many times they did not pay rent on time. This has been happening for the past two years. During COVID-19, they didn’t pay a single penny to us. So, we connected with Reliance Group,” Bansal told ANI.
Bansal is not alone. Many others like him approached Reliance, offering them leases of their stores, as they were unsure the Future group would clear rental dues. By January 2021, Future group had received termination notices for many leased stores due to huge outstandings.
Explaining his time with Future Group, NPVS Raju, a landlord and vendor of Heritage store in Hyderabad, told ANI: “We started the Heritage stores in 2011, and it was the first store in the area. Future Group took over from Heritage after seven years. Since then, we have suffered due to irregular payments.”He rued stores were not appropriately maintained, sales went down, and there were not enough employees. “They didn’t pay power bills on time, and there were power cuts. We had to interfere,” he told ANI. “Once the Reliance Group takes over, we see a good future for the stores and the hope the accounts will be regular.”Not just vendors and employees, the markets, too, gave a green signal. Shares of Future Retail, Future Enterprises, Future Supply Chain Solutions, Future Lifestyle Fashions and Future Consumer gained after the news of Reliance’s rescue of Future stores came out.
Stores are now being rebranded under the Reliance Retail label. Reliance has also ensured payment of dues to a number of landlords by signing lease agreements for their premises. So far, Reliance has incurred an expense of over Rs 1,500 crore towards payment of dues, as per sources. Working capital support to Future Retail to the tune of Rs 3,700 crore will also be extended, according to the sources. This has enabled Future Retail to pay dues and continue its business operations.Experts say the move would be beneficial for all stakeholders and open up new opportunities.
Dues were pending for seven years. Reliance is a big player in the industry, and the money will be recovered with its entry,” Shammi Thakur, managing partner of Ambesten Marketing Solutions, told ANI.Once a pioneer in the industry, Future Retail’s acute financial troubles increased during the pandemic’s closures. In August 2020, Future negotiated to sell its retail assets to Reliance. At the time, the outstanding to creditors and landlords exceeded Rs 6,000 crore. But Amazon moved several judicial forums against the deal, citing another agreement with Future.The long-drawn legal tussle made it harder for stores to carry on business as usual amid the pandemic, creating payment uncertainties and delays for employees and landlords and hit vendor businesses.
Despite getting support from Reliance, Future Retail incurred over Rs 4,445 crore losses during the calendar year 2021. Sources said that to help Future Retail contain losses, Reliance exercised its rights to control and manage the loss-making stores. According to sectoral experts, had the situation persisted, Future Group would have plunged into insolvency.
