The independent directors of Future Retail Ltd (FRL) have shot off another letter to the Competition Commission of India (CCI) that reiterates their earlier request to revoke an approval given by the anti-monopoly body in 2019 following which Amazon picked up a 49 per cent stake in Future Coupons Pvt Ltd (FCPL), a promoter group entity.

In the second letter on Sunday, the independent directors have cited internal communications of the US e-commerce giant to establish its contradictory statements before the courts and the CCI. In the earlier November 10 letter, they accused Amazon of submitting “completely opposite information” which was “contradictory” to its own internal communications.

The letter cited representations made by Amazon, one of which was the rationale for investing in FCPL. Amazon said it was investing in FCPL because of its unique business model which addresses an existing gap in the payment landscape of India.

However, the independent directors submitted documents and emails which they said, showed that Amazon never intended to invest in FCPL because of its unique business model or strong potential.

They claimed that the US major was initially planning to put money into FRL through a proposed foreign portfolio investment.

On December 11, 2018, Amazon had finalised an agreement to acquire a 9.9 per cent direct stake in FRL.

However, this plan was buried soon after Press Note-2 was issued by the Government in December 26, 2018. The note had said that foreign direct investment (FDI) is not permitted in the inventory based model of e-commerce.

Though it did not bar Amazon from holding a stake in FRL, sources said Amazon’s concerns were with regard to a clause in the note which barred e-commerce players from selling products of companies in which they have stakes.

The clause effectively meant the products of Future group could not be sold through the e-commerce channel of Amazon, resulting in Amazon investing in FCPL rather than directly infusing capital into FRL.

The independent directors alleged that Amazon adopted a twin-entity investment structure wherein it will invest in FCPL and the latter will acquire 9.82 per cent stake in Future Retail Limited.

The directors cited an email from Rakesh Bakshi, head, legal and assistant general counsel, Amazon India, to Jeff Bezos, the CEO of Amazon, where he said that they will use such an investment structure to invest in FRL. FCPL now holds 9.82 per cent stake in FRL.

The email to Bezos stated Amazon’s shareholding in Future Coupons will be divided into voting equity share capital (25.1 per cent), and non-voting equity share capital (23.9 per cent), though Amazon will have all the statutory rights available to a 49 per cent shareholder.

The email said a similar structure was adopted by Amazon — to resolve the restrictions of Press Note 2 — in Project Brigade, where it acquired a 49 per cent interest in More Retail Limited which is also engaged in retailing food and grocery in India. It went on to add that Amazon is paying a premium of 25 per cent for the acquisition of the stake in FCPL, which gave it strategic rights over FRL.

“This premium is being paid on account of the strategic rights and call option being provided to Amazon. Due to the call option and the strategic rights being at or above the prevailing market price, we currently estimate a $41 million P&L loss at sign,” the email quoted Bakshi as writing.

Future Coupons was founded in 2008 and is engaged in the business of marketing and distribution of gift cards, loyalty cards and other rewards programmes to corporate customers.

The independent directors said in the letter that Amazon had obtained the CCI approval by making deliberate misrepresentations and by “actively misleading’’ the body.

They claimed that Amazon’s representation that it does not have any direct or indirect shareholding in FRL is also contradicted by its own internal records.

The directors referred to the same email which said that the number of equity shares of FRL to be held by Future Coupons has been calculated such that Amazon can indirectly hold the same number of shares of FRL that it would have acquired had it directly invested Rs 1,400 crore in FRL, which would have been at a 25 per cent premium.

“The price which has been paid for the FCPL shares has been determined by Amazon on the basis of FRL’s valuation as is clearly set out in the email. There is no valuation ascribed or carried for FCPL business per se. FCPL is just used as a vehicle for an investment in FRL,’’ the letter said.

On Amazon’s contention that it has limited investor protection rights in FCPL, the independent directors said that the retailing major had paid a premium over their perceived valuation of FRL to acquire strategic rights over the latter.

“Inspite of the fact that in their mind, the rights acquired by Amazon over FRL were strategic, Amazon has chosen to represent these rights as ‘investment protection rights’ to CCI’’, the letter said.