E-tailing giant Amazon’s Indian arm is fighting Mukesh Ambani’s Reliance Industries Ltd. for grasping the lion’s share of Indian retail market and it turns out that Future Retail Ltd is a big part of it.
Amazon on Sunday won an interim order against Future Group’s deal with Reliance for a purchase of the retail entities of the former for a sum of US $ 3.4 billion.
The judgement was passed by a Singapore-based single-judge arbitration panel.
The decision comes as Amazon had an agreement to buy 49 per cent stake in one of Future Group’s entities, Future Coupons Ltd. with the right to buy into Future Retail after a period of 3 to 10 years.
Future Coupons has a 7.3 per cent stake in Future Retail Ltd. Therefore, the deal with Reliance for the retail, wholesale, logistics and warehousing businesses is in direct violation of the previously signed pact and has been put on hold until the matter reaches a decision.
Meanwhile, RIL’s retail entity Reliance Retail Ventures Limited (RRVL) put out a statement on the matter saying that it has been informed about the interim order passed by the emergency arbitrator in the arbitration proceedings but it fully intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future Group without any delay.
The deal is set to double Reliance’s footprint as the largest retailer in India, hence Amazon, which has invested upwards of US $ 6 billion on India, is drawing battle lines for a race to capture the estimated US $ 1 trillion retail market of the country.
The dispute is due to be settled by a three member arbitration panel consisting of one member elected by Amazon and Future Group, while the third will be a neutral member within a period of 90 days.