The Kishore Biyani-led Future Retail has managed to secure fresh loans of approximately ₹350 crore since it announced the ₹25,000-crore deal with Reliance Retail in August. Though the loan amount is not enough to meet its overall payment obligations, it will help the beleaguered company meet some of its operational expenses.
According to documents seen by BusinessLine , Future Retail has done agreements with UCO Bank, CentBank Financial Services Ltd, Bank of Baroda, and Union Bank for amounts ranging between ₹7.40 crore and ₹200 crore.
To secure the loans, the company has had to bring in collaterals which include NCDs and properties in Karjat, Mumbai, besides personal guarantee from the promoter group, and a higher rate of interest on previous loans.
The company has also got a moratorium on interest payments on loans taken under the Covid schemes. Separately, Future Retail is believed to have taken loans of ₹170 crore under the Common Covid-19 Emergency Credit Line (CCECL) scheme from multiple banks since April.
Asset-light model
The Future Group works on an asset-light model but to stay afloat, it needs daily cash flows to pay its vendors. Due to the Covid impact on the retail industry and the mounting debt, the company’s credit ratings had taken a hit. Future Group entities have defaulted on loans at least four times since August 29, when the Reliance deal was announced.
Reliance Retail, a subsidiary of Reliance Industries Ltd, is to buy Future Group’s retail and wholesale, and logistics and warehousing businesses for ₹24,713 crore. But the money is yet to reach the lenders as the deal has not been completed, yet.
The ongoing battle between Amazon, which invested close to ₹1,430 crore in 2019, and Future Group over the deal with Reliance Retail, has only delayed the process. Sources say that Future Retail’s request for one-time debt restructuring is being conditionally considered by the bankers.