Is it going to be Ambani vs Amazon?

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If it were a paid event, you would be pitted as Asia's richest man against the world's richest man in a battle for supremacy in one of the world's toughest markets. world - India. That's basically what it boils down to, because Mukesh Ambani-led Reliable Industries should cross swords with Jeff Bezos-led Amazon, the Kishore Biyani-owned Future Group of Companies is, if you will, the arena of battle. In a season in which a lot has happened for Reliance Industries and Jio Platforms, it was learned that the Ambani company is in advanced stages of discussions to buy units of Future Group, which in this case is already linked to Amazon. If that doesn't take the fight to Camp Enemey, then what is? According to various sources, Reliance Industries, in order to pursue its ambitions in the area of ​​e-commerce, plans to buy stakes in Future Group Future Retail and possibly another unit as well. To counter the story, Future Group is also in talks with Amazon, which wants to increase its existing stake. The Financial Group, which is plagued by financial turbulence, wants to close the deal early to get rid of its problems.

Why the future retail?

Future Retail operates some of the most popular retail chains in India and is located in more than 400 cities in every state of the country through digital platforms and more than 1,500 stores covering more than 16 million square feet of retail space. It has large format stores, Big Bazaar, its flagship chain, as well as convenience stores, small shops, EasyDay Club and Heritage Fresh. Although it is a group with enormous potential, today it is subject to serious financial difficulties. The debt book of Future Group's six listed companies increased to Rs 12,778 crore in September 2019 against Rs 11,463 crore in March 2019. Market news indicates that Future Group needs Rs. 6,000 to 8,000 crores to stay afloat. And the sooner the better. So the company has interviews with different players, but the focus is naturally on Reliance and Amazon.

Amazon game plan

(Image credit: Amazon India) Amazon is heavily dependent on India. It has slowly increased its Indian presence considerably. Recently, it rolled out Amazon Food Deliery in Bangalore. And, of course, his main activity is the Amazon online platform, on which he wants to sell as many products as possible. Amazon already has an indirect 1.3% stake in Future Retail. (In August of last year, Amazon agreed to buy 49% of one of Future Group's unlisted companies, allowing it to enter Future Retail after three to 49 years.) Ties between the two companies were further strengthened after Amazon became the authorized online sales channel for Future Retail stores that sell everything from groceries to cosmetics to clothing. Amazon now wants to add its investment in Future Retail for a stake of up to 5.5%. If the deal comes to fruition, Amazon can consolidate its position in the Indian market, having already committed to investing €XNUMX billion in the country. Amazon, which has been beaten in China by Alibaba, wants better results in India. So it has been quite aggressive in its approach to India so far.

Confidence is not ready to roll

It's no secret that Mukesh Ambani wants to build an Indian Alibaba that allows offline merchants and kirana stores to sell their products online to Indian consumers. Reliance hopes to leverage its 10,415 retail stores in 6,600 cities and leverage its 380 million Jio subscriber base to reach the masses. The company first built the connection layer, providing affordable data and even selling phones for consumers to connect to, and is now expanding the market by providing hardware (POS machines). After doing all the hard jobs in the past 3-4 years, Reliance now wants to move in to kill him. Going for an over-the-top and aggressive investment request, he sold almost a quarter of his stake in Jio Platforms and raised €15,2 billion in just over two months. Reliance Retail, to date, operates a network of 11,784 stores covering 28.7 million sq ft and has reported sales of Rs 38,211 crore in the January-March quarter.

Dependency without debt

Reliance Industries raises Rs 168.818 Cr in less than 60 days (58). # JioPlatforms has secured investments of almost Rs 115,694 Cr from top global investors. The rights issue raised Rs ₹53,124.20 cr. pic.twitter.com/Tc4NrHLe6TJune 19, 2020 Thanks to their sustained efforts, Reliance Industries has become debt free much earlier than anticipated. Reliance Industries raised over Rs 168.818 crore in just 58 days thanks to: 1. Global Tech Investors - Rs 115,693.95 crore 2. Rights Issue - Rs. 53,124.20 crores. The combined capital raised has no global priority in such a short time. These two elements are also unprecedented in the history of Indian societies and have set new benchmarks. Apart from the sale of a stake in BP in the petro-retail joint venture, the total fundraising is more than Rs 1.75 lakh crore. Reliance's net debt stood at Rs 161.035 crore as of March 31, 2020. With these investments, RIL has now become net debt free.

Reliance raised over €22 billion in 58 days, through rights and investment issues from @Facebook, KKR, Saudi PIF and more. In the midst of a global pandemic and one of the strictest Indian lockdowns in the world. Incredible June 19, 2020 Mukesh Ambani, in a press release, said, “Today, I am delighted and humbled to announce that we have delivered on our promise to shareholders by releasing Reliance from net debt well in advance of our original schedule of March 31, 2021.” He added, “In recent weeks, we have been overwhelmed by the phenomenal interest from the global financial investor community to partner with Jio.” Ambani is now set for the next shipment from Jio and Reliance Retail, which, he said at the company's AGM earlier this year, "will induct major global partners in the coming quarters and guide the listing of these two companies over the next five years."

Investors in Jio Platforms (Image Credit: Jio Platforms)

Batalla real

The e-commerce space in India is very attractive to all the major players. With 500 million internet users and e-commerce growing by 30% a year, experts expect online sales in India to become a €200 billion opportunity by 2027. Basically, there should be enough space for multiplayer players. But Amazon and Reliance have shown they don't like competition in the areas where they operate. As personalities, Bezos and Ambani are different, but both are no-nonsense men and fear no threat to their market sovereignty. In India, Amazon also has to be careful about government rules. As a local player, Reliance has more advantages than Amazon, which is why Amazon wants to ride behind Future Group and enjoy the advantages of being an Indian competitor. Last year, the Indian government released new e-commerce guidelines that directly affect foreign players like Amazon and Walmart (which acquired Flipkart for around €16 billion two years ago). The main focus may be on the warehouses. Foreign-owned companies are not allowed to have e-commerce shares in India. This is a disadvantage for Amazon, as it prevents the company from taking full advantage of its much-appreciated logistics activity, considered one of its most decisive advantages in the United States. And it's a good time to point out that Amazon is also in talks to take a majority stake in Future Supply Chain Solutions (FSC) promoted by Kishore Biyani, which is a third-party supply chain and logistics service provider that also offers warehousing facilities. . So there are many layers to this battle between Ambani and Amazon over the Future Group challenges. Confidence, without the need to stay, points to a majority stake in the Group, so that you can make decisions from all corners. Like we said, Reliance vs Amazon is essentially a variation of an immovable object vs. an unstoppable force. They say Jeff Bezos could be the world's first billionaire by 2026, Mukesh Ambani by 2033. However, the two industry captains would appreciate who will win the battle for the Indian market.