NEW DELHI: Call it Kishore Biyani's candid confession on why he sold his sprawling retail empire to Reliance Industries, giving away the crown of India’s retail king. By his own admission, Future Group "got into a trap after COVID-19".
"In the first 3-4 months, we lost nearly Rs 7,000 crore of revenue", and there was no way the company could have survived after losing such an amount, he said while speaking at Phygital Retail Convention. Biyani said that the store closures in the first three-four months were what pushed him into selling his business to Mukesh Ambani’s Reliance.
"The problem is rent doesn’t stop, interest (on debt) doesn’t stop... We did too many acquisitions in the last six-seven years... I thought there was no other answer but to exit," he said.
Reliance Industries Ltd had announced the acquisition of retail and wholesale business and the logistics and warehousing business from the Future Group as going concerns on a slump sale basis for Rs 24,713 crore.
Through the deal, the Ambani–led firm will acquire Future Retail - which owns the popular BigBazaar supermarket chain, selling everything from groceries to cosmetics and apparel, and Future Lifestyle Fashions Ltd, that operates fashion discount chain Brand Factory.
Future Retail operated 1,550 stores, with flagship brands BigBazaar, FBB and Foodhall, Easyday, Heritage Fresh and WHSmith. Future Lifestyle Fashion operates 354 stores.
The investment from Reliance, however, will help Biyani pare debt. But, even after the asset sale deal with Reliance Retail, Future Group’s debt woes are far from over, since banks have refused to extend fresh loans to the Kishore Biyani-led firm.
Future Enterprises has already defaulted on interest payments on loans and the Future Group firm has reported a fresh default on interest on some of its bonds amounting to Rs 15.14 crore.