How the Future story evolved

Towards the end of January, the grace period of 1 month to repay defaulted dues of Rs.3,500 crore to banks expired leaving Future group on the verge of an absolutely certain default. The Future group had defaulted on its obligation to the banks on 30-Dec and as is the norm the banks had give the group 30 days grace time to pay the dues. With the deal with Reliance still stuck, there was no way Future group was going to pay the  dues. Where does it leave them? In a way, it is endgame for the Future group in the form we know it. The deal with Reliance was signed way back in Aug-20 but has been caught up in legal tangles with Amazon since then. While Amazon has offered a solution which is just about one-third as attractive as the Reliance offer, one thing is crystal clear. This problem can no longer be resolved at the level of the Future group. Giving them another 2 weeks would just be a waste of time unless they have a clear back-up plan to offer a resolution. It is time for the Supreme Court to take the matter in its hands and force a solution to the deadlock that can contain losses. 

Amazon has a point, so what?

One of the big gaps that the Future case revealed is that when it comes to deals at a global level, Indian companies are still wanting. Amazon had made out a water tight case leaving little room for Future group to wriggle out. Reliance had understood the logic of the case much earlier and stayed out of the case to maintain neutrality. The time now is for a resolution as after the second default, banks have to start making provisions for the Future group dues and the numbers are quite substantial. The court can order a straight bidding between Amazon and Reliance for the assets of Future group. That would be, perhaps, the best solution for everyone. 

Big lessons for India

The case of Future group is a classic case of how it has become so easy for the Future groups and Amazons of the world to game the Indian legal system and delay things interminably. The courts should have forced a resolution to the issue much earlier and much of the damage could have been averted. With dues piling up, it is not clear how much the lenders can actually recover. The second issue is about Indian players creating water tight contracts to be able to operate in the global ecosystem. In the global marketplace, there is no room for lax paperwork. If these 2 things are addressed, lot of time could have been saved and losses reduced for banks! ©