"The scaling down will help in reducing losses in coming months," the company has said. The company is finding it difficult to finance working capital needs, and "losses are mounting," it added.
Bank accounts of Future have been classified as non-performing assets by its lenders. The long-stop date for its deal with Reliance Industries has also been extended to September 30, 2022.
This comes after news that Reliance had taken over operations of Future Retail stores and offered jobs to employees.
Future is locked in a bitter battle with e-commerce major Amazon at several judicial forums over the sale of its business to the retail arm of the oil-to-telecom conglomerate.
Sources privy to the development have said that Reliance Retail has started taking possession of the premises in which Future Retail is operating its stores such as Big Bazaar and replaced them with its brand stores. The company has also started offering jobs to employees of Future Retail stores and bringing them on Reliance Retail's payroll, the sources added.
Future - which has more than 1,700 outlets, including popular Big Bazaar stores - has been unable to make lease payments for some of its outlets. As a result, Reliance transferred the leases of some stores to its name and sublet them to Future to operate the stores, the sources said.
After the deal was announced in August 2020, several landlords approached Reliance as Future Retail was unable to pay the rent.
After this, Reliance signed leased agreements with these landlords and wherever possible, it sub-leased these premises to Future Retail Ltd (FRL) so that its business could continue, the sources added.
All of these stores which Reliance is taking over are loss-making and the balance stores will continue to be run by FRL. In this way, FRL's operating losses will be reduced and it can continue as a going concern, they said.
(With input from agencies)
Scaling down operations because of mounting losses: Future Retail - Economic Times
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