For the troubled Indian company Future Group that was recently acquired by the Mukesh Ambani’s Reliance Industries Limited (RIL), the acquisition has come as a timely intervention. When the Indian stock markets opened on Monday, 31st August after the weekend closure, Future Group’s shares’ values reflected the positiveness of the move.
Future Group's shares go bullish after RIL acquisition
The shares of Future Retail Ltd increased by 17 per cent after Saturday’s acquisition. Meanwhile, Future Enterprises Ltd’s shares not only increased by five per cent but also touched the upper share value limit.
Three other branches of Future Group – Future Lifestyle Fashions increased by five per cent, Future Food Supply Chain Solutions also increased by five per cent, and Future Consumer Ltd increased by four per cent. Banks to whom Future Group owned around $1.7 billion also saw an increase in the valuation of shares.
These banks include the government-run institutions: Bank of India whose share value went up by 7.2 per cent, and Bank of Baroda whose shares rose by 1.3 per cent, and lastly the private banking entity, Axis Bank whose shares gained around 1.8 per cent.
Meanwhile, RIL’s shares also rose following the business decision by 1.1 per cent. RIL’s foray into the retail business beyond its existing market share is being seen as a move to counter Amazon and Flipkart’s growing influence on the Indian consumers.
Future Group’s multi-speciality retail offerings were quite eagerly used by the Indian customers, who were introduced to the concept for the first time around 30 years ago, in the 80s. However, with consumerism driven to a peak by these e-commerce outlets, Future Group’s stability started to get displaced.
Mounting debts and inability to pay them also started affecting the company’s prospects. RIL’s move to take over has, therefore, injected not only the Future Group but also RIL itself with vigour. Especially since the Indian government is pushing for “self-reliance” over dependence on the existing international e-commerce platforms.
It is to this end that Isha Ambani, the director of RIL’s Reliance Digital Ventures, the arm that bought Future Group, said, “We hope to continue the growth momentum of the retail industry with our unique model of active collaboration with small merchants and kiranas (groceries) as well as large consumer brands”.