Mumbai: Two industry associations representing apparel companies and distributors of fast-moving consumer goods (FMCG) companies have written to the Securities and Exchange Board of India (Sebi), urging the market regulator to review and approve Future Group‘s deal with Reliance Retail Ventures quickly. A quick resolution might help them recover about Rs 6,000 crore in dues, pending almost a year.
In their letter, the Clothing Manufacturers Association of India (CMAI) and All India Consumer Products Distributors Federation (AICPDF) said the transaction approval has taken longer than expected and strained their finances completely. Together, they represent more than 5,000 small vendors and dealers. “Even after your approval comes, it will take another 3-4 months to complete the transaction and for us to get our dues back. We are afraid any further delay in closure of the deal will force many distributors and employees to take grave personal and financial steps,” wrote AICPDF in its letter to Sebi.
Last year, the Future Group that had debt of nearly Rs 12,000 crore approached several investors after lenders exerted pressure and threatened to revoke promoter pledged shares. Reliance Retail Ventures, a unit of Reliance Industries, agreed to buy the retail assets of Future Group on a slump sale basis for about Rs 25,000 crore, it was announced in August. As part of the deal, Reliance had also agreed to take vendor liabilities of Rs 6,300 crore.
Amazon, which owns a 49% in Future Coupons Pvt Ltd, a Future Group holding company, objected to the deal and approached the arbitration court in Singapore. On Thursday, the US retailer asked Sebi to suspend its review of the deal and not grant it a no-objection certificate, since the transaction is under dispute in the Delhi High Court. “Almost all vendors and lenders will be able to recover their dues from Future Group over a period of time after successful completion of the transaction,” CMAI wrote in its letter.