We introduce it as Ambani vs Amazon. And if the latest reports are to be believed, the first round appears to have gone to India's richest man, as his company Reliance Industries now appears to be the forerunner to take a large stake in Group of the Future, in which Amazon already has a small stake and was looking for more. According to the Indian newspaper Times of India, Future Group will merge three companies: Future Retail, Future Lifestyle Fashions and Future Supply Chain Solutions, with the combined entity to be acquired by Reliance Industries. This deal, if it ultimately goes through, will further strengthen the position of Reliance Industries, which recently became debt free thanks mainly to the massive investments that Jio Platforms has managed to attract, as the number one brick and mortar in categories like grocery, fashion and merchandise in general. Future Retail's activities include Big Bazaar, Nilgiris, Foodhall and Easyday supermarkets, Fbb clothing stores and eZone electronics stores, while Future Lifestyle runs department store chain Central and Brand Factory. Future Retail has 1,388 stores in different formats. Over the years, Future Group has also created Future Consumer Enterprises, its consumer goods company, and has been involved in financial services, through insurance joint ventures with Generali. However, Future Group is now in shock due to financial problems and its total debt was Rs 12,778 crore as of September 30, 2019, compared to Rs 10,951 crore as of March 31, 2019.
amazon pipped
As business stumbled due to stagnation and its share price plummeted due to financial difficulties, the Future Group was looking for a savior. There were many contenders, including Amazon, which naturally wants to cement its place in the e-commerce segment in India. At the beginning of last year, Amazon had acquired a 49% stake in Future Coupons, an entity of the promoter group. But the various restrictions on FDI in multi-brand retail have undermined Amazon's plans, and Reliance Industries would be in charge of this deal. For the record, a few other companies and equity investment companies were also vying for a play in the Future Group.
Confidence advances
Reliance Retail is the largest retailer in the country with 11,784 outlets. Reliance Industries' digital subsidiary, Jio Platforms, also recently introduced JioMart, the digital platform that will unite neighborhood grocery stores with consumers. It will be based on the Reliance Retail infrastructure and ecosystem. Facebook and Walmart, with their reach and depth in the Indian market, would be an essential cog in Jio Mart's plans. Of course, Facebook has invested €5.7 billion in Jio platforms. Jaadhu Holdings LLC, Facebook's wholly owned subsidiary, was established in Delaware, in the United States, specifically for this deal. Reliance Organized Retail Industry reported revenue of Rs 162,936 crore and EBITDA of Rs 9,654 crore for the year ended 31 March. If Reliance does buy from the Future Group, it will also upset the existing (complex) deal that Amazon has with the Future Group. Given their own dream of building a platform for small kirana stores, it's hard to see how Reliance and Amazon can stay in the same ranks as Future Retail. Via: Times of India.