InvestorQ : Why has Future Group CEO said that he had no choice other than selling out to RIL?
vaishnavi mhatre made post

Why has Future Group CEO said that he had no choice other than selling out to RIL?

Answer
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vidhya Laxmi answered.
2 weeks ago


From the time the sale deal between the Future group and Reliance Retail was closed, the big question has been why there was such a hurry? Kishor Biyani finally opened up about the reasons why they had to rush the deal.

Biyani confirmed that the combination of COVID-19 and the drying up of bank funds left the group with very little choice but to sell out when the opportunity was still there. Of course, that did mean that Biyani was selling his dream creation but the brand now survives.

In fact, Kishore Biyani confirmed that their retail franchise had piled up losses in revenues of close to Rs.7000 crore in just 3 months of the pandemic. That had exerted immense pressure on their finances almost compelling Biyani to sell out.

It maybe recollected that the entire retail and wholesale operations plus the logistics business was sold to Reliance Retail Ventures just a couple of months back for a consideration of Rs.24,713 crore. The final approvals are still pending.

Biyani admitted that due to a combination of factors, there was no way they could have survived losing so much sales as costs were mounting. Many of their costs like rentals, salaries and license fees were fixed commitments and became a burden with zero flows.

However, Biyani also acceded to the fact that their organic expansion in the last 6-7 years had also added substantially to their debt. The expansion also matched with the rise of online commerce and that added to the pressure on the company.