From India’s Biggest Retail Chain To Debt Ridden Firm: Saga Of Future Group
Once known as the Retail King of India, Future Group’s Kishore Biyani now waits for his company Future Retail to go in new hands. 49 companies have shown interest to buy the assets of Future retail, which includes Reliance and Adani group. Biyani captured the hearts of millions of Indians, especially in Tier II cities with the concept called Big Bazaar, a super market that offered everything under the sun at a single platform. Ruling the Indian market for over two decades, Future Group now waits for its own ‘future’.
Debt Ridden Saga of Future Group
According to media reports, Future Group has a debt of about Rs 29000 crore, in which Future Retail's share alone is Rs 21000 crore. The group's company Future Enterprises is also burdened with debt. But what one fails to register is how Biyani, who is known as the Retail King of India, went wrong?
The Journey
Biyani started his business journey in the 1980s by selling stone wash denim fabric in Mumbai. Later, he ventured into retail business under the name Erstwhile Manz Wear, later rechristened to Pantaloons. The Future Group came into existence in 1987. In 2001, the group opened the first 'Big Bazaar Store' in India and within 6 years, there were 100 stores across India. 'Future Group' started spreading its wings in other sectors and in 2007, Future General Insurance was launched, alongwith Future Capital.
The Downfall Begins
The economic downturn of 2008 and some wrong decisions affected the Future Group. With Future Retail, the debt burden on the Future group started increasing, due to which Kishore Biyani had to divest assets several times. He sold his majority stake in Pantaloons to the Aditya Birla Group in 2012. Along with this, he also had to sell his majority stake in Future Capital Holdings to US private equity Warburg Pincus. This process did not stop here, and in 2019, Biyani sold 49 percent stake in Future Coupons to Amazon. This definitely helped Biyani to reduce the debt burden to some extent, but this decision proved to be a mountain of difficulties for him.
The Crisis Continues
The financial crisis of the Future Group escalated in early 2020 when Future Retail failed to repay the debt repayment and the lenders talked about pledging the shares. The Covid lockdowns also added a nail to the coffin.
Reliance offered to be the saviour for Biyani. And after several months of negotiation, Reliance Industries Limited decided to buy the assets of Future Group for 24,713 crores. Future Retail Limited earlier agreed to merge its 19 businesses with Reliance Retail. However, even after the assets of Future Group came to Reliance, it was still run by Kishore Biyani. At the same time, a deal between Amazon and Kishore Biyani came to the fore and his deal with Reliance was in trouble.
Several stores of the group were shut. Many of the stores went into the hands of Reliance Industries Limited. Meanwhile, Bank of India filed a petition in the National Company Law Tribunal (NCLT) requesting it to initiate insolvency proceedings against Future Retail, which was accepted by the NCLT.
However, American e-commerce company Amazon did not want Future Retail to be declared bankrupt. Amazon appealed to the NCLT to stop the bankruptcy process, saying that initiating proceedings to declare Future Retail as insolvent now would 'compromise' its rights, but to no avail.
In 2019, Amazon bought a 49 per cent stake in Future Coupons, a Future Group company. The deal was finalised for Rs 1431 crore and Future Coupons has a 9.8 per cent stake in Future Retail. Apart from this, it was agreed in the deal of 2019 that within the next 3-10 years, Amazon would be entitled to buy the stake of Future Retail. In such a situation, when Biyani made an agreement with Reliance, Amazon embroiled him in a legal battle. Seeing this, Reliance also left him.
Who Is Keen To Buy Future’s Assets ?
A total of 49 companies including Mukesh Ambani's Reliance Retail, Adani Group, WHSmith Travel Limited, Jindal Power Limited, JC Flowers Asset Reconstruction Limited have shown interest in buying the heavily indebted Kishore Biyani's Future Retail. Future Retail has released a list of companies that have shown interest in presenting a resolution plan. The company has given this information in a filing. Future Retail is currently going through the bankruptcy process and is expected to find a new owner soon.
