Reliance-Future deal put on hold as interim judgement goes in favour of Amazon
Amazon, the online retail marketplace has got an interim order against its partner Future Group. Future Group had been previously linked with Reliance Industries Ltd (RIL) and had sold its retail business to Reliance Industries (RIL) for ₹ 24,713. An order passed in a Singapore-based arbitration panel on October 25, has put a pause to the deal between Reliance Industries and Future Group.
Amazon.com had charged allegations against the Kishore Biyani-owned Future Group about contract violation while they sold off their retail portion to Reliance Industries. Future Group had signed off their stake to Reliance Retail Ventures Limited (RRVL). Reliance Industries have focused on developing their retail subsidiary and grow into an online marketplace and is also looking to emerge as a fierce competitor of online marketplaces like Amazon and Flipkart.
RRVL said in a statement to moneycontrol, “RRVL has entered into the transaction for the acquisition of assets and business of Future Retail under proper legal advice and the rights and obligations are fully enforceable under Indian Law.”
“RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay,” their statement also added.
Previously Amazon and Future Group had gone into a deal. Amazon had bought a 49 percent stake in one of Future’s unlisted firms, Future Coupons Ltd, with the right to buy into flagship Future Retail after a period between three and 10 years. Future Coupons holds a 7.3 percent stake in Future Retail.
Future Group had then sold off their retail, wholesale, logistics, and warehousing units to Mukesh Ambani-led Reliance Industries. The US-based e-commerce giant Amazon has then filed for arbitration against the indebted group firm.
The interim decision has gone in favor of Amazon.com. Moneycontrol has also reported that VK Rajah has asked the Future Group to holds off the deal and has also said that the deal cannot go through until the final decision has been taken about the deal. Amazon spokesperson has said that the arbitration panel has granted the reliefs that they asked for and expect an expeditious conclusion of the arbitration process.
Moneycontrol reported the comments as he said, “We welcome the award of the Emergency Arbitrator. We are grateful for the order which grants all the reliefs that were sought. We remain committed to an expeditious conclusion of the arbitration process.”
According to the US-based e-commerce giant believes that Future Group has violated their contract by going into the deal with their rival Reliance Industries. This deal, if it goes through, would help Reliance Retail Ventures Limited to expand and come up as India’s largest retailer.
The dispute will be resolved within 90 days by a three-member arbitration panel where Amazon and Future would appoint one representative each and the other would act as a neutral umpire.
Gopal Subramanium, Gourab Banerji, Amit Sibal, and Alvin Yeo represented the Amazon team while the Future Retail’s team was represented by advocate Harish Salve. The hearing was concluded by the arbitration panel at the Singapore International Arbitration Centre on October 16.
Reliance is one of the upcoming players in the Indian retail market as their retail-based subsidiary Reliance Retail Ventures Limited (RRVL) has been attracting investments and has been on a fundraising spree and since September. RRVL has raised ₹ 37,710 crores by selling a stake in its retail arm. RRVL provides several options like supermarkets, consumer electronics chain stores, cash, and carries wholesale business, fast-fashion outlets, and online grocery store JioMart. They have 12,000 stores in nearly 7,000 towns, with 640 million footfalls across core categories of grocery, consumer electronics, and apparel. Reliance Retail FY20 revenue was at ₹ 1.63 lakh crore.