Amazon invested in Future Group, which is a promoter entity of Future retail, in the year 2019. Amazon invested in the group by acquiring 49% of the stake in FCPL. Amazon was granted the option to choose and acquire all or some parts of the promoter’s shareholding excised between the third and the tenth year imperilled to the applicable laws.
Companies such as FRL, FCPL, Kishore Biyani companies entered the agreement between the shareholders. Under this agreement, FRL was required to take the prior consent of FCPL for some specific matters including disposal of its retail and assets to any third party or person, which also included Mukesh Ambani’s Reliance Group.
The future group made a deal with Reliance Retail Ventures Limited and sold most of its assets to Mukesh Ambani in the year 2020. Amazon attempted to block the transitions of ground that violated Amazon’s right in FRL. It has been fighting the case against Future Group entities in several Indian courts and also received the emergency arbitrary award.
The Independent Directors of Future Retail Private Limited after writing the first letter to CCI a week back have written a second letter to the competition regulator providing the email exchanged between both the parties and a draft shareholders’ agreement that happen before making the deal to strengthen the allegations that Amazon misinterpreted the deal made between both the companies.
Ravindra Dhariwal, Gagan Singh, and Jacob Mathew are the three independent directors of FRL. The company is chaired by Kishore Biyani. The directors said that Amazon signified its decision to invest in Future Coupons Private limited because of its business model and the potential it has to grow.
They also talked about the rights they had in FRL via FCPL where to unlock value for FCPL, whereas, the directors claimed that according to the email by Amazon it showed that Amazon used the FCPL route to invest in FRL, which they cannot do due to India’s foreign direct investment policy. They also mentioned that the agreement with FRL and FCPL was part of one transaction and asked CCI to revoke the approval of the deal.
The independent director claimed that one of the emails written by Rakesh Bakshi, the legal head at Amazon India to Jeff Bezos shows that the giant American e-commerce investment leaned mostly towards the FRL.
In one of the letters, filed with the stock exchange Rakesh Bakshi highlighted ‘’Due to the recent PN2 restrictions under Indian foreign investment laws, we will use a “twin-entity investment” structure to invest in Future Retail…” The director argued how the letter was only focused on the virtues of FRL and talked nothing about the business conducted by FCPL. The price paid by Amazon for the shares of FCLP was determined based on the valuation of future retails.
This is not the first time the Independent director has written to the Competition Commission of India seeking the revocation of approval of the deal, as the giant e-commerce American establishment did not reveal its true intentions regarding its investment in FCPL. The director also claimed that they have been misled by Amazon.
“Such control, over a retailer, if properly revealed, may have at the least triggered an open offer under SEBI regulations, or worse still violated India’s FDI policy at true intent” the director appealed.
All of this has been going on for a long time now, and according to Future Retail’s directors, the internal emails from Amazon only expose the illegal deal sham. Future Retail Limited has also challenged Amazon in the Supreme Court, which agreed to hear the company’s petition but also declined to grant an interim say on it.
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