On Saturday, Biyani sold off his retail empire built steadily over the last three decades to Reliance Industries Ltd (RIL) for ₹24,713 crore after mounting debt and a ratings downgrade prompted the company to look for buyers
New Delhi: Two days after Reliance Industries announced taking over the retail, wholesale, logistics and warehousing business of Future Group, suppliers and vendors to the group raised concerns over pending dues, even as Kishore Biyani wrote to them assuaging their fears.
The transaction with Reliance considers the interest of Future Group's stakeholders including supply partners, vendors, lenders, creditors, and employees, Biyani said in his letter to supply partners.
“The transaction includes a specific amount that has been set aside to pay all the accounted dues owed to suppliers and creditors in the business," he said. “We would like to assure you from our side that every business partner will be paid in full and everybody is assured of getting their dues. This was among objectives of entering this transaction and we are committed to it. The transaction also ensures full continuity of all the businesses," he said in his letter.
On Saturday, Biyani sold off his retail empire built steadily over the last three decades to Reliance Industries Ltd (RIL) for Rs24,713 crore after mounting debt and a ratings downgrade prompted the company to look for buyers. Post the deal, Mukesh Ambani’s Reliance Retail Ventures (RRVL) will hold a 13.14% stake in Kishore Biyani’s Future Enterprises Ltd (FEL) and will assume debt of Rs12,500 crore, Mint reported earlier.
The deal could take at least six months to culminate pending regulatory approvals, said people in know of the deal.
In the meanwhile, the groups's marquee stores such as Big Bazaar, Central, Easyday, Nilgiris etc will continue functioning and servicing customers.
However, it becomes pertinent for the company to clear dues, as several fast moving goods companies have been tightening supplies to the company over fears of outstanding dues, leading to a supply shortage of inventory.
A person familiar with the development said that as part of the deal Reliance has assumed the debt and liabilities of Future Group. However, since the completion of the deal could take six months, lenders, who may now be more inclined, could extend interim financial support to the company that could help it clear dues over the next few months.
“In a slump sale what happens is—the assets and liabilities for a lump sum value are getting transferred, invested and assumed by the relevant Reliance entity. So as part of that process they will assume the relevant liability, trade payables so to speak, so they (lenders and suppliers) will have to wait for that process," said a person in the know, who spoke to Mint on the condition of anonymity.
The person quoted above said that the deal is in everyone’s best interest, because if Future Group was to continue, given their financial distress, there would have been uncertainty over how much they (lenders and creditors) would have been able to recover.
On Monday, a group of FMCG distributors wrote to Biyani seeking clearance of dues.
"Outstanding of the distributor is ranging from 45 to 180 days and the amount is in hundreds of crore which we believe to be at rust as there are news in regarding the discount on the credit outstanding…" All India Consumer Products Distribution Federation said in their letter.
In his letter to supply partners, Biyani said that the impact of the lockdown and the subsequent dip in footfalls led the company to lose potential business worth Rs6,500 crore. “Our primary objective is to ensure that we can repay in full everyone we owed money to. We also want the business to continue to operate in the days and years ahead," Biyani said.
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