Future Retail says to cut operations to cut losses in legal dispute with Amazon
Kishore Biyani-led Future Retail, which is embroiled in a major legal dispute with Jeff Bezos-led electronic communications giant Amazon, said today the company was struggling to fund working capital needs and that it was reducing operations to contain losses.
“The company is struggling to finance its working capital needs. Rising losses at the store level are a serious concern and constitute a vicious cycle in which larger transactions result in higher losses,” Future Retail said in an exchange filing.
The company added that it had made a loss of ₹4,445 crores in the last four quarters. “Termination notices have been received for a significant number of stores due to huge backlog, and we would no longer have access to these premises,” Future Retail said.
Read also : Reliance on taking over operation of 200 Future Retail stores amid dispute with Amazon: report
Saying it was reducing operations to reduce losses in the coming months, Future said it was proposing to expand its online and home delivery business, to increase its reach to customers.
He also expressed hope that the proposed Scheme of Arrangement with Reliance will be implemented, which will be beneficial for all stakeholders.
Regarding the Scheme of Arrangement between Future Retail and Reliance Retail, NCLT’s Mumbai Bench has reserved its orders, after hearing arguments from lawyers for the company and Amazon.
The orders were reserved on the application relating to the issuance of instructions to convene meetings of shareholders and creditors of Future Retail and other petitioning companies involved in the scheme to review and approve the scheme.
“The company has proposed to hold the meetings during the first half of April 2022. In view of this, the extended shutdown date for the program has already been extended by six months to September 30, 2022 by Reliance,” said Future Retail.
According to the company, shareholders are aware that Future Retail is going through an “acute financial crisis”. The company defaulted on its loan service and its account was classified as NPA by the banks.
The company said the ongoing litigation initiated by Amazon in October 2020, which has been ongoing for a year and a half, has created “serious hurdles” in implementing the program with Reliance Retail, resulting in serious negative impacts on its functioning.
Never miss a story! Stay connected and informed with Mint. Download our app now!!