Mir Saqib

Future Group, famously known by its brand name – Big Bazaar, a billion-dollar company – was seen as the future of brick and mortar retail business in India. It was seen as the horizon of organising the retail market and creating a new benchmark of retail outlets across India with 295 of total huge multi-storey stores till the wind changed anticlockwise.

It housed everything from grocery, fashion, accessories, stationary beauty, and cosmetics, that’s why founders of Future Group named it Big Bazaar. More than 30% of products sold at the Big Bazaars were manufactured or labelled in-house, which later in the day become a negative point in revenue. Big Bazaar since its early days was aggressively taking over the small brands and stores across the country. From the beginning of the journey, all didn’t go well for the venture. Initially big retail players didn’t take it well and founders bet to make FMCG business to reach Rs 21,000 crore at the end of the decade didn’t materialise. Despite the aggressive investment, it didn’t pay well for them.

And it became a stream of bad investments. Even they tried to venture out of the genre to invest in some other segments, one among them was to tie up with Italian insurance giant “GENERALI” in India. They launched Future Generali, an insurance joint venture in 2007 right before the global meltdown in 2008, eventually that investment went flat. Future Group also tried to invest in Bollywood in 2003 but that didn’t pay off at all. They burnt their fingers in real estate also and so many bad investments nevertheless to say created a debt cycle for the group to the extent it went to sell its stake of Pantaloon store for Rs 1600 crore for Aditya Birla Group in 2012. Even then the debt cycle was growing which eventually led to Rs 21,000 crore debt exposure to the group in 2019. New entrants like TATA, Reliance and Aditya Birla in the retail business worsened the revenue model for the Future Group as the competition grew manyfold.

Future Group sold 50% share of one sister company (Future Coupon Ltd) to Amazon in a deal to sell future Big Bazar products online. In 2020, pandemic made it worse to keep the cash flow going and led to finally call it a day for Kishore Biyani, the founder of future retail and subsidiary group.

To keep it running and going, they will need $300 million (Rs 2190 crore) as investment, for that they hired an investment banker to find an investor. And it was time when Reliance Retail was already looking to invest in Jio Retail aggressively, found a nice opportunity to buy assets of Future Group for Rs 27,000 crore and the deal was sealed. Big Bazaar could have seen an end but the global retail bully, Amazon, was yet to come into the picture. AMAZON and Future Global had signed agreements a couple of years ago, in which Amazon invested in the group under the condition that in case of selling outright the group to any other party, Amazon needed to be informed. That started a deadlock which finally reached the different courts of the country but eventually, the local bully eventually got away with it and secured the deal. After the deal went through, recently Kamath committee gave recommendations for restructuring of loans of Rs 21,000 crore of future group, which was otherwise to be paid by April. This was done to keep credit rating better before Reliance Retail takes over the affairs of the group.

Future Group could have survived this time also like before but Biyani was caught between the world’s two biggest corporate bullies Amazon and Reliance.

Global leader Amazon tried to hold the deal by using any legal means. In a way, both were making Future Group more vulnerable and making it difficult for the group to retain its assets. Reliance kept hooks tightly grabbed around, before the deal was vetted by controlling authorities like SEBI etc, not giving Future Group a single chance to start operations without them at all. It was nothing but a clash of big capitalist bullies, a battle of Big Bazaar fought inside corporate offices which are battlefields for the capitalist economy.

You can reach the author at mirsaqibali@gmail.com