Adding a new twist to its ongoing spat with Future Group, e-commerce major Amazon has warned its promoters against sale of the company’s supply chain and logistics businesses to Reliance Industries (RIL) in a fresh transaction.
In a letter addressed to Kishore Biyani and other family members who are classified as promoters, Amazon has said the transfer of the supply chain and logistics businesses were part of the transaction struck by the board of directors of Future Retail with RIL on August 29, 2020, and was subsequently put on hold by the Singapore emergency arbitrator. Further, the transaction was struck down in April by the creditors of Future Retail, hence any move to sell these assets to RIL now would be nothing but a ‘fraudulent move’, like the company handing over 835 of its stores to Reliance Retail, it said.
“It is, therefore, clear that the proposed transaction (sale of supply chain and logistics businesses) is in continuation of a larger fraudulent stratagem to give effect to the impugned transaction by circumventing the binding injunctions contained in the EA order and subsequently reaffirmed by the arbitral tribunal in the tribunal order. The said actions are contrary to statements made before courts through pleadings or otherwise. The element of collusion between the Future Group, and the MDA (Reliance Industries) Group is manifest,” the Amazon letter stated.
“The newfound conducive discussion belies the statements made by FRL in the March 16 disclosure whereby, FRL had claimed that the MDA Group had ‘forcefully’ taken over the retail stores and its board of directors have taken a ‘strong objection’ to such actions taken by the MDA Group,” it added.
The US retailer also said it was shocking to note that despite the MDA Group having caused such a huge loss of revenue to FRL’s retail business, the Future Group is negotiating the transaction and intends to continue having a business relationship with the MDA Group. RIL got FRL’s retail stores against rental dues of “a mere” Rs 1,100 crore, while the small-store format itself was valued by the lender banks at Rs 3,000 crore, it said. “It is clear that what was injuncted has been achieved by unlawful devices, arrangements, which are not only in contravention of law but shake the very foundation of any ethical business operation.”
Amazon further said it had constantly expressed willingness to extend financial assistance to FRL for servicing its debts, including a potential investment of Rs 7,000 crore through Samara Capital in FRL. It continues to offer such financial assistance, but the independent directors of FRL, in collusion with the MDA Group and at the behest of the promoters, had raised vague, absurd objections and rejected them.
FRL had also entered into an agreement dated April 26, 2021, to monetise small-format stores for Rs 3,000 crore. Even though there were no outstanding lease rental dues, FRL on a “spurious basis” allowed termination of its leases which resulted in the MDA Group taking over as many as 835 retail stores.
“Such facts clearly reflect malfeasance and misfeasance on the part of FRL’s promoters, independent directors and key management personnel to deliberately erode the value of FRL to the detriment of not only Amazon, but also its retail investors,” the letter said.
It also accused the promoters, particularly Kishore Biyani and Rakesh Biyani, of spearheading and orchestrating these deals.
Earlier in a letter dated May 19, Amazon had accused FRL’s independent directors of “facilitating” to alienate and transfer the latter’s 835 retail stores in favour of Reliance Retail. The letter also accused the independent directors of fraudulent stratagem to defraud the Indian public and regulators.
On May 25, FRL denied all accusations made against its independent directors by Amazon, stating that the US e-commerce major has been making “baseless and irrelevant allegations”.