AMAZON TRYING TO PLAY INSIDE INDIAN RETAIL MORE

AMAZON FOCUS THE FUTURE RETAIL GROUP INDIA

Kishore Biyani's Future Retail Limited may have posted a net loss of over Rs 463 crore for the quarter ended March 31, 2018 - compared with a net profit of Rs 123.05 crore in the same period a year ago - but that's not deterring potential suitors. A day after the company disclosed its results, FactorDaily reported that e-commerce giant Amazon is in talks to acquire a 10 per cent stake in it.

Citing sources the report added that there are other suitors too, but Amazon has the best chances and talks are in advanced stages. The deal values Future Retail - the company that owns Big Bazaar, EasyDay, Foodhall, Nilgiri's and now Foodworld, among others - at about $6 billion. Amazon reportedly may shell out around $500-600 million to acquire the stake.

But there is a rider in the Amazon-Future Group talks that could prove a deal breaker. According to the news portal, Amazon does not want Future Retail to continue with its e-commerce expansion - it is looking at an exclusive tie-up with Future Retail - and that is holding things back.

Could this be Amazon's strategy to kill future competition? It is already facing a stiff fight for India's mushrooming e-commerce pie from Flipkart, especially after the recent Walmart deal, and from Paytm Mall, backed by China's Alibaba Group Holding Ltd and Japan's SoftBank. Given that India's e-commerce market is projected to grow at a compounded rate of 21 per cent over the next decade to $202 billion, limiting things to a three-way race - or less - would certainly work out in its favour. Let's not forget that just a few weeks back Amazon had sought to acquire a majority stake in Flipkart but ultimately lost out to rival Walmart.

Incidentally, Amazon may have to compete with Walmart over the Future Retail deal too - the buzz is that the latter is also looking to buy a stake in the company. The report added that Alibaba, founded by Chinese billionaire Jack Ma, has also shown interest in the Future Retail.

The reason Future Retail is generating such interest is mainly its pan-India footprint. In its Q4FY18 investor presentation, the company pointed out that it boasts 1,035 retail stores spanning 14.5 million sq.ft spread out across India in 321 cities as of end March. It had also seen over 340 million customer footfalls in FY17, a number that could only have grown further in the last fiscal.

"Future has consolidated the market. There are only three big retailers left: Reliance Retail, D-Mart and Future Retail... Future is an attractive target," Abneesh Roy, senior vice-president (research) at Edelweiss Capital, told theportal. No wonder so many suitors have come calling.