Reliance Industries Ltd. And Amazon Head To Court Over World’s Biggest Online Market

Reliance Retail has offered Amazon Inc. stake in the company worth $ 20 billion. || Source:Bloomberg
Reliance Retail has offered Amazon Inc. stake in the company worth $ 20 billion. || Source:Bloomberg

Indian business tycoon Mukesh Ambani and the world’s richest man Jeff Bezos go head to head in court to assert their claim over the market in India, which has a billion-plus consumer and is one of the fastest-growing markets in the world.

The feud started as Reliance Industries Ltd (RIL) made a deal with Future Group. In the deal worth $ 3.4 billion, RIL’s retail subsidiary Reliance Retail Ventures Limited (RRVL) acquired logistics, wholesale, warehousing, and the retail business of the Future Group. Reliance, through the transaction, is increasing their potential in the retail segment and reportedly is soon to add an online retail unit alongside their already existing offline retail stores. Amazon, the US-based e-commerce company that already has an online retail market in India is trying to block the transaction.

However, various reports from the last few months provided hope that we might see the two heavyweight companies working together. A Bloomberg report in September suggested that Ambani had given Amazon an option to buy as much as 40% of Reliance Retail Ventures Limited. Previously this year, the company of Mukesh Ambani has been quite successful in completing deals with big companies like Facebook Inc. and Alphabet Inc. who have invested in the digital platform of Reliance.

Jeff Bezos led Amazon had bought a 49% stake in Kishore Biyani managed private firm last year. The firm promised to be a modern format retailing unit in the country. This investment also gave the right to the US-based company to acquire Biyani’s shares in the publicly traded Future Retail Ltd from the third year. This investment also came with an added condition that the company would not sell its assets like the estimated 1500 stores in the country to restricted persons, among which is Reliance chairman Mukesh Ambani.

Therefore, as the Future-Reliance deal was announced back in August, Amazon alleged the Future Group with breach of contract. The US-based e-commerce giant also managed to get an interim order from a Singapore court to block the transaction. The company also wrote letters to Indian stock exchanges and regulators asking them not to approve the deal.

Future Retail, on the other hand, has said that the Singapore court ruling has no legal basis in India. The debt-laden company also says that they are doing the right thing by selling of its assets to Reliance after the debilitating impact of the COVID-19 pandemic.

We might still find Amazon and Reliance working together in the Indian market. Amazon, given the right price, might accept a deal with Reliance. Investors like Silver Lake Partners and KKR & Co., have also cashed in and raised $ 5 billion in total. Reliance might emerge as the most powerful retail unit in the country with both physical and online mode of transaction. Previously, Reliance had asked Amazon to be a partner in a deal that would as for $ 20 billion commitment from the US conglomerate.

Amazon kicked off their festive season sale earlier this week and record sales were made in two days. Revenue of Reliance Retail also went up by 30 percent in September than that in the previous three months. The Indian government has lifted the COVID-19 pandemic-led lockdowns, although all stores have not been opened, and also many stores still have not revived the pre-covid levels of the transaction. Reliance Industries shares fell 8.6% in Mumbai on Monday after the company posted a loss statement on Friday.