Reliance Retail to bear Rs 19,000 crore of Future Group's debt and liabilities | Economic Times

Kolkata: Reliance Retail Ventures (RRVL), a subsidiary of Reliance Industries Ltd, will take over more than Rs 19,000 crore of debt and liabilities owed by Future Group’s retail, wholesale, logistics and warehousing units until March 31, 2020, as part of its acquisition, said two senior executives aware of the deal. Future Group founder and chief executive Kishore Biyani will have to pay the remaining dues from April 1 until the assets are transferred following regulatory approvals. RRVL is acquiring the Future assets.The Biyani family also has to service personal debt incurred by pledging almost all of the promoter shareholding in the group. If Biyani is not able to pay outstanding debt and liabilities for these businesses at a company level, Reliance will take over that portion too but the Future Group founder will then receive a lower payout as total value of the transaction will not exceed Rs 24,713 crore, executives said.Reliance and Future Group didn’t respond to queries.Biyani likely to be Able to PayThe executives said Reliance expects Biyani will be able to clear the outstanding portion as he will receive money from this transaction and cash flow from other businesses such as insurance. Besides, he will continue running the retail business until the deal is cleared. Biyani will also undertake manufacturing of apparel and consumer goods for Reliance, providing positive cash flow. They said liabilities from April 1 will not be much since all large vendors and fast-moving consumer goods (FMCG) companies have already stopped supplies to Future Group due to high outstanding dues, while banks have frozen lending.77842775If Biyani is able to pay a portion of the debt and liabilities incurred until March 31, he will receive a higher payout, they said. Future Group has debt of around Rs 13,000 crore.Reliance will soon meet the banks and parties involved — which include several top FMCG companies, realtors, mall operators and other vendors and distributors — to clear payments of a few hundred crore rupees that Future Group owes.“The deal agreement clearly specifies how much debt and liabilities Future Group companies have and to whom till March 31, which is the referral date,” said a senior executive. “Reliance will honour everything till that date and Biyani has to settle thereafter. If he fails, Reliance will do it, but then Biyani’s payout will be lower. In no case will the total payout be more than Rs 24,713 crore.”Reliance on Saturday announced the takeover of Future Group’s retail, wholesale, logistics and warehousing businesses as a going concern on a slump sale basis for Rs 24,713 crore in an all-cash deal – one of the largest transactions in organised retail in India. Future Group said the assets and liabilities of retail and wholesale business would be sold to Reliance for Rs 5,628 crore, and the logistics and warehousing business for Rs 25 crore.The deal will help Mukesh Ambani’s oil-to-consumer business control more than a third of India’s organised retail market. Reliance will also acquire a minority stake in the remaining business of Future Group. RRVL undertakes the consumer supply chain and retail businesses of the group through its subsidiaries. RRVL reported consolidated turnover of Rs 1.62 lakh crore and net profit of Rs 5,448 for the year ended March 31.