Lenders to Future Retail have classified the account as a non-performing asset (NPA), but do not want to take any pre-emptive action and have asked the company to submit a “viable” resolution plan.
“There is no deference (in classification of Future Retail as NPA) or so. All of us (banks) have recognised the account as an NPA as on date,” said a banker. Most of the lenders to the company have also made adequate provisions for it. Bankers said they do not want to take any pre-emptive action against the company post the declaration of NPA, as any such step could erode its value.
“Only thing is that the further action that we have to take (against Future Retail) on being marked down as NPA, has been kept in abeyance as lenders feel that an opportunity should be given to the promoter to give a viable plan so that recovery can be enhanced,” another banker said. “The company has been asked to give a viable plan and I think they must be working on it,” he added.
Earlier in January this year, Future Retail Ltd (FRL) had missed the due date for payment of Rs 3,494.56 crore to banks and lenders. The Kishore Biyani-led Future Group firm had said it could not sell assets due to its ongoing litigation with Amazon, which impacted its monetisation plans. Later, it had moved the Supreme Court requesting it to issue a direction to its lenders not to declare the company as NPA.
The Future group firm had also asked for some more time for loan payment. FRL had last year availed the one-time restructuring (OTR) scheme for COVID-19 hit companies from its consortium of banks and lenders, as per an RBI circular dated August 6, 2020 and was to discharge “an aggregate amount of Rs 3,494.56 crore” on or before December 31, 2021. Bank of India is the lead bank in the consortium. During the Q3 results call recently, Bank of India had said it has proactively made 47 per cent provisioning on the account.
The consortium of lending banks had told the Supreme Court that the money lent to FRL belonged to the depositors and to safeguard the public interest, the entire assets of the company can be subjected to open bids by Amazon and Reliance with a reserve price of Rs 17,000 crore. Prior to this, the apex court in a verdict on February 1 had set aside three Delhi High Court orders, including one for attachment of properties of FRL and its directors and refusal to grant a stay on the final arbitral award which had restrained FRL from going ahead with its merger deal with Reliance Retail and had ordered fresh adjudication.
In August 2020, the Future Group had announced a Rs 24,713 crore deal for sale of the retail and wholesale business, and the logistics and warehousing business to Reliance Retail Ventures Ltd, a subsidiary of Reliance Industries Ltd. However, e-commerce major Amazon is contesting the deal through its 49 per cent stake in Future Coupons Pvt Ltd (FCPL), which is a a shareholder in Future Retail.
The matter is presently in dispute before the Supreme Court and Singapore International Arbitration Centre (SIAC).
Reliance Retail Ventures had for the second time extended the timeline for completing the Rs 24,713 crore deal with Future Group to March 31, 2022 as it still awaits regulatory and judicial clearances. In October 2020, an interim award was passed by the EA (emergency arbitrator) in favour of Amazon that barred FRL from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party.
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