Future group seeking buyers for insurance arm to pay off its debt

The Future group is looking for a buyer for its insurance company in order to ease the pressure on the promoters to repay its debt. The share prices of group companies falling rapidly on the stock markets, the group is facing margin calls from banks to accelerate the sale of its insurance branch or sell more stakes in its operating companies, say bankers. The current closure of points of sale will put additional pressure on the group while sales of operating companies are falling, analysts said.

The total market capitalization of listed companies in the group fell to 10,740 crore rupees, compared to 42,000 crore rupees declared a year ago. At the same time, the value of the promised shares fell by half to Rs 8,100 crore a year ago for Rs 3,868 crore currently. The group must pay a debt of Rs 316 crore and Rs 729 crore in FY21 and FY22, respectively.

Last week, the group’s holding company – Future Corporate Resources – was downgraded by the rating company ICRA to an undesirable status due to the high indebtedness of its promoters.

The group sold several assets to reduce its debt, including a sale of stake in Amazon. Their external debt reduced to 1,430 crore rupees as of December 31, 2019. At the same time, the total debt of listed companies in the group increased to 12,778 crore rupees as of September 30, 2019, compared to 10,951 crore rupees as of March 31 2019. 2019.

An e-mail sent to the Future group elicited no response before going to press.

With the continued decline in the share prices of listed companies in the Future group, ICRA said that the group’s total debt compared to market capitalization had increased 1.2 times as of March 16, 2020, compared to 0.4 times as of March 31, 2019. In addition, this led to an increase in the pledged participation of the promoter group, resulting in reduced financial flexibility.

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