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MUMBAI : A section of minority shareholders of Future Retail Ltd (FRL) has written to the government and the markets regulator opposing the rebranding of former Big Bazaar stores to ‘Smart Bazaar’ by Reliance Retail. They alleged that the move was an attempt to appropriate FRL’s brand value.

In a surprise move in January, Reliance Retail, a unit of Reliance Industries Ltd (RIL), took over 950-odd Big Bazaar stores across the country through lease rental transfers from the owners of the premises after FRL defaulted on rental payments. In a series of letters written to regulators and the government, minority shareholders alleged connivance between FRL promoters, the Biyani family, and Reliance Retail to asset-strip FRL and compromise the interests of minority shareholders.

“The rebranding of Big Bazaar store with similar sounding Smart Bazaar name is a concerted move to encash on the brand image and goodwill of the Big Bazaar brand and part of a larger conspiracy," a shareholder of FRL said, requesting anonymity.

“Smart Bazaar stores have retained staff working for Big Bazaar," the letter said. “Smart Bazaar will sell similar goods that Big Bazaar used to merchandise, the locations of the stores remain the same, and Big Bazaar customers with loyalty programme Future Bazaar cards and coupons may also get to utilize the balance in wallets to shop at Smart Bazaar," the letter added.

Emails sent to spokespeople for RIL, Future Group and the ministry of finance remained unanswered.

Investors have alleged that though RIL’s takeover of Future group businesses has fallen through, the takeover of Big Bazaar stores can be construed as an indirect takeover of Future’s core retail business.

“Courts in India and outside should not allow Future Retail or group companies or any entity to do any business (at Big Bazaar stores) without the logo and the name ‘Future’," said the letter.

RIL should disclose to the courts if there is any agreement signed between RIL and Future Retail, through which RIL could start a business in Big Bazaar stores, despite calling off the 24,713 crore takeover deal, said the letter.

“RIL has illegally and forcefully acquired Future Retail. For this, heavy penalty and heavy compensation should be paid by RIL," read the letter.

On 29 August 2020, RIL announced a 24,713 crore deal that involved the proposed sale of Future Group’s retail, wholesale, logistics and warehousing business. The deal collapsed after RIL lowered the proposed deal value to about 16,000 crore. Secured creditors of FRL rejected the offer in April. Subsequently, RIL withdrew its proposal to buy FRL’s assets.

On 4 April, Amazon filed a petition in the Supreme Court, alleging collusion between RIL and promoters of FRL. Amazon alleged that even after the Singapore International Arbitration Centre’s (SIAC) order of October 2020 restrained FRL from entering into any deal with Reliance, FRL entered into sub-lease arrangements with RIL to operate at least 835 retail stores under the Big Bazaar brand. In fact, just 11 days before RIL took control of Big Bazaar stores, FRL told the courts that all retail stores would continue to be vested with FRL till the deal was approved by the National Company Law Tribunal (NCLT), according to the petition. “FRL has played an elaborate and orchestrated fraud to procure favourable orders by continuously making false assurances in relation to the continued vesting of its retail stores with FRL," Amazon alleged.

A spokesperson for Amazon did not respond to an email seeking comment.

While surrendering the lease deeds of Big Bazaar stores to landlords, FRL said it “did not have money to clear the lease rental dues and prevent termination of leases with the landlords". FRL, however, paid $14 million in interest to bondholders on FRL’s 5.6% senior secured notes due in 2025. “The solitary payment was sufficient to make out a clear case of falsehood and obstruction of justice," Amazon said.

RIL has been using ‘Smart’ in its grocery value format stores. For instance, RIL has Reliance Smart, Reliance Smart Superstore and Reliance Smart Point formats for grocery products.

ABOUT THE AUTHOR

Anirudh Laskar

Anirudh Laskar is a senior editor at Mint, with 17 years of experience. He has reported on significant corporate matters including large mergers and acquisitions, India's emerging e-commerce sector and regulatory issues in the financial services industry. Based out of Mint’s Mumbai bureau, Anirudh has worked with Business Standard and The Telegraph before joining Mint in 2009.
Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
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