Shares of crisis-hit Future Retail, which operates store chains such as Big Bazaar, Easyday and Heritage, declined as much as 6% in opening trade on Friday after it received termination notices for 947 stores, which it had sub-leased from Reliance Industries-owned entities.
Extending its selling spree for the third straight session, Future Retail shares opened 2.98% lower at ₹47.20 today, against the previous close price of ₹48.65 on the Bombay Stock Exchange (BSE). The stock declined as much as 5.86% to hit a low of ₹45.8 in the first half an hour of trade so far. In contrast, the BSE was trading 157 points, or 0.28%, higher at 55,621 at the time of reporting.
The market capitalisation of the smallcap company dropped to ₹2,540.60 crore. The stock is trading nearly 13% lower than its 52-week low of ₹40.6 touched on April 1, 2021. It hit a 52-week high of ₹76.25 on June 16, 2021.
The cash-strapped company in an exchange filing said it had received termination notices for 342 Big Bazaar and Fashion @ Big Bazaar (fbb) outlets, 493 small format stores, including Easyday and Heritage stores. As per the company, these stores had been historically contributing about 55% to 65% of total retail revenue operations.
The debt-laden Future group company said it was in continuous discussion with Mukesh Ambani-led Reliance group to maintain status quo and for "safeguarding the interest of various stakeholders".
The Kishore Biyani-led firm had been under pressure for the last few months amid ongoing legal battles with U.S.-based e-commerce giant Amazon, which has resulted in “severe adverse impact on the working of the company”. Future Retail shares have fallen 6.3% in a week and 4.5% since the start of the calendar year 2022. The stock has dived 31.5% over the past one year and 89% in the last three years.
The retail major posted a loss of ₹4,445 crore in the last four quarters. Besides, it has defaulted on its first repayment obligation of ₹3,495 crore in December following the one-time debt recast. It owes ₹6,278 crore debt to the lenders including Union Bank of India, Bank of India, Bank of Baroda, State Bank of India, Axis Bank, and IDBI Bank. Overall, the group companies owe around ₹30,000 crore to the banks.
Adding to it, the company also missed payment of interest due on the dollar-denominated note, listed on the Singapore Stock Exchange on January 24, 2022, citing weak liquidity conditions due to business disruption caused by the Covid-19 pandemic.
The firm alleged that the ongoing litigation initiated by the U.S.-based retail giant Amazon in October 2020 has created serious impediments in the implementation of the scheme over the last one and a half years. Reliance Retail's ₹24,500 crore takeover deal for Future assets has been delayed for more than one and a half years due to the objections raised by Amazon as it holds a 49% stake in Future Coupons, the promoter entity of Future Group. Amazon argued that Future Retail violated their contract by entering into a deal with Reliance.
In December 2021, the Competition Commission of India (CCI) revoked the U.S. giant's 2019 agreement, citing misrepresentation and suppression of details. Last month, the Supreme Court deferred a hearing on Amazon's plea saying it will hear the matter post a decision by the National Company Law Appellate Tribunal (NCLAT) where Amazon has challenged a December order by the CCI. The apex court also asked both the companies to find an out of the court settlement to end the 18-month-old dispute. The court is set to hear the matter again on March 15.
