June 26, 2022

Indian retail chain Future Retail recorded an increased net loss during the second quarter of 2021-22 (FY22) due to rising expenses.

The company in the July-September period recorded a net loss of Rs. 1,117 crore, from a loss of Rs. 692.4 crore in the same quarter a year ago. While its overall expenses were also up 60.4 percent at Rs. 3,500.8 crore.

According to reports, the company also recorded an operating loss of Rs. 339 crore, from an operating profit of Rs. 47 crore in the year-ago quarter.

Its revenue was however up by 66.3 percent in the quarter at Rs. 2,369 crore.

The Indian government earlier in 2018 had amended the country’s foreign direct investment regulations for e-commerce marketplaces through a Press Note 2 (PN2). The law restricted companies from selling products on marketplaces having equity from the same e-commerce platform.

Hence, Amazon due to the above concerns decided to change its investment structure in FRL. It went instead went ahead to would invest in FCPL, the promoter entity of FRL, and FCPL would acquire 9.82 percent of FRL.

Amazon in August 2019 had acquired a 49 percent stake in FCPL for around Rs. 1,500 crore.

Background of FRL and Amazon legal battle

The legal battle between American e-commerce giant Amazon and FRL began last year after FRL’s merger with Reliance Retail.

Amazon then alleged that the above transaction breached its agreement with the Indian company. The e-commerce giant then took the matter to the Singapore International Arbitration Centre (SIAC) and got a favourable ruling in October last year.

The Supreme Court (SC) of India earlier in August this year, also went on to rule in favour of Amazon, holding the SIAC award against the Future-Reliance deal enforceable in India.

The Future Group however, in September this year, received a major relief after the SC stayed proceedings before Delhi High Court, ordering a no-coercive action.

The court had also directed the the Securities and Exchange Board of India, CCI, and National Company Law Tribunal, not to pass any final order in relation to the dispute for four weeks.