India’s Reliance Industries Limited (RIL) acquired the Future Group enterprise for $3.4 billion (Rs. 24,713 crores). The acquisition will see RIL acquire the entirety of business platforms of the Future Group crisscrossing across wholesale, retail and even logistical sectors.
In a statement, announcing the acquisition, RIL said, “Reliance Retail Ventures Ltd (RRVL), subsidiary of Reliance Industries Ltd will acquire the retail and wholesale business and the logistics and warehousing business from the Future Group as going concerns on a slump sale basis for lumpsum aggregate consideration of INR 24,713 crore”.
Reliance Industries Limited makes further inroads into Indian commerce spread
Through this business venture, RIL is seeking to be able to narrow the divide that exists between Amazon and Flipkart (owned by Walmart), and it.
The acquisition is expected to open avenues in around 1,800 stores of the Future Group that are based in about 420 cities. These stores cater to different sectors from fashion (Pantaloons and Fashions at Big Bazaar) to supermarket chains (Big Bazaar), and other stores such as Central, Foodhall, and Easyday.
Analysing RIL’s move, New Delhi-based market analysis firm Technopak’s chairman Arvind Singhal, who spoke with Financial Times (FT), shared, “By taking out Mr (Kishore) Biyani, and absorbing the second-largest retail network in the country, the gap between them and anyone else is so much that tomorrow, you can go to anybody saying: ‘If you want to do some retail business in India, I’m the partner to play.’” Biyani started the Future Group in the 1980s and the format he introduced to the Indian markets – a one-stop store where customers could avail of multiple products from fashion to groceries – became quite popular.
The stores’ boom was also helped by the fact that they were largely affordable helping consumers avail qualitative products at relatively cheaper rates. Despite the popularity however, in the last few years with e-commerce portals such as Amazon and Flipkart starting to enter the markets and then dominating it entirely, Future Group became more entangled in debts.
With its inability to pay these debts – which at the time of its acquisition – stood at around $1.7 billion, Reliance Industries Limited’s offer is being seen as a huge respite for the once giant commercial entity.