Shares of Future Retail (FRL) were locked in the lower circuit limit for the fifth straight session on Monday, down 5 per cent at Rs 106.85 on the BSE after the company reported a consolidated net loss of Rs 478 crore for the March quarter (Q4FY20), due to higher depreciation and other expenses. Future group company, which owns brands like Big Bazaar, fbb, Foodhall, Easyday and Nilgiris, had posted a net profit of Rs 203 crore in the year-ago quarter.
According to FRL, the nationwide lockdown has "significantly impacted the company's operational capabilities" as most of the stores were closed except those selling essential commodities. "The company is closely monitoring the developments and possible effects that may result from the current pandemic on its financial condition, liquidity and operations and is actively working to minimise the impact of this unprecedented situation," it said.
In the past one week, the stock of Future Retail has underperformed the market by declining 34 per cent, as compared to a 0.73 per cent decline in the S&P BSE Sensex. Till 02:03 pm, a combined 1.38 million equity shares had changed hands on the counter. There were pending sell orders for 11 million shares on the NSE and BSE, exchange data shows.
On August 29, 2020, FRL board had approved the amalgamation of Future Retail along with other group companies with Future Enterprises to facilitate Rs 24,713 crore deal to sell the retail and wholesale business to Reliance Retail, owned by oil-to-chemical conglomerate Reliance Industries (RIL).
Last week, Fitch Ratings had placed FRL’s issuer default rating of C and the rating on its 500 million dollars 5.6 per cent senior secured notes due in 2025 of C with a recovery rating of RR4 on rating watch positive.
However, "FRL's liquidity position remains under severe pressure as a result of the impact of the India-wide coronavirus-related lockdown measures, and we believe that this will continue to be the case if the deal with Reliance Retail Venture (RRVL) is not completed. Recent localised outbreaks led to several states reimposing restrictions - which do not currently have an end-date - and these continue to limit FRL's ability to generate sufficient cash flows to meet its obligations. This stress is likely to increase after the end of a moratorium on its domestic debt servicing requirements on 31 August 2020, Fitch had said. CLICK HERE FOR MORE DETAILS
Meanwhile, according to disclosures made by the company to stock exchange, 450,000 equity shares held by the Future Corporate Resources Private Limited (“FCRPL”) were invoked on September 1, 2020 by the lender as those equity shares were pledged in favour of the lender. CLICK HERE TO READ FULL DETAILS