‘Acute financial crisis’: Future Retail says slashing ops to cut losses

“The company is finding it difficult to meet the working capital requirements. Rising losses at the store level is a serious concern and it is a vicious cycle where larger operations are leading to more losses,” Future Retail said in an exchange filing.

The company said it had suffered a loss 4,445 crore in the last four quarters. “Large dues have resulted in termination notices for a large number of stores, and we will no longer have access to such store premises,” Future Retail said.

Read also: Reliance to operate 200 Future retail stores amid dispute with Amazon: Report

Stating that it is scaling down operations to reduce losses in the coming months, Future said it is proposing to expand its online and home delivery business to increase its reach to customers.

It also expressed hope that the proposed arrangement plan with Reliance would be implemented, which would be beneficial to all stakeholders.

The Mumbai Bench of NCLT has reserved its orders after hearing the arguments of the counsels of the company and Amazon regarding the scheme of arrangement between Future Retail and Reliance Retail.

Order has been reserved on the application for issuance of instructions for convening the meeting of the shareholders and creditors of Future Retail and other applicant companies involved in the scheme for consideration and approval of the scheme.

Future Retail said, “The company proposes to hold the meetings in the first half of April 2022. In view of this, the long-stop date for the plan has already been extended by six months to 30 September 2022.”

According to the company, shareholders are aware that Future Retail is going through an “acute financial crisis.” The company has defaulted on its loan service and its account is classified as NPA by the banks.

The company said the ongoing litigation initiated by Amazon in October 2020, which has been ongoing for the past year and a half, has created “serious impediments” in the implementation of the plan with Reliance Retail, resulting in a serious adverse impact on its functioning Is.