Shares of debt-laden Future Retail were locked in 5% lower circuit for the second straight day on the BSE on Thursday, after the resignation of Rakesh Biyani, managing director (MD) of the company. The stock of the crisis-hit Future group company has been falling for the past nine sessions and dropped 36% during the same period. Weighed down by continued slump in share prices, the stock hit a 52-week of ₹19.6 on the BSE today. It had hit a 52-week high of ₹76.25 on June 16, 2021.
The company, which faces insolvency proceedings by its lenders, said in an exchange filing that MD Rakesh Biyani has stepped down from his position. Adding to the woes, Virendra Samani, company secretary and compliance officer, and Gagan Singh, an independent director, have also tendered their resignation.
“Rakesh Biyani who was re-appointed as Managing Director for a period of three (3) years effective May 2, 2019, his term of office as Managing Director got completed on May 01, 2022. As he has not sought reappointment, his appointment as Managing Director of the Company ceased to be effective with effect from 2nd May, 2022. Consequently, he also ceased to be a member of various committees of the Board where he was member,” says Future Retail in a filing to the BSE on May 2.
“The company and management records appreciation for the leadership role, valuable contribution and long association of Rakesh Biyani as Managing Director of the Company.” adds the company.
In a separate development, CARE Ratings has downgraded the ratings of the company’s debt instruments. The agency has revised rating of Future Retail’s non-convertible debentures (NCDs) as well as short and long-term bank facilities to “issuer not cooperating” categories as the cash-strapped company failed to pay the surveillance fees for the rating exercise.
“The company has not paid the surveillance fees for the rating exercise agreed to in its rating agreement. In line with the extant SEBI guidelines, CARE Ratings Ltd.’s rating on the company’s bank facilities and instruments will now be denoted as CARE D; ISSUER NOT COOPERATING,” Future Retail said in a BSE filing on May 4.
The Kishore Biyani-owned company’s shares have been reeling under selling pressure since April 25 after Reliance Industries called off a ₹24,713 crore deal with Future group to acquire its retail, wholesale, logistics and warehousing assets. The decision was taken after secured creditors of Future group voted against the deal, citing lower valuation.
Following the cancellation of the deal, Future group companies having exposure to bank loans - Future Consumer, Future Retail, and Future Enterprises – face the risk of insolvency proceedings. These group companies owe more than ₹28,000 crore to banks as of January 31, 2022.
Bank of India has already filed insolvency proceedings against Future Retail for non-payment of dues. The bank lent ₹5,322.32 crore as of March 31, 2022, as per the lender’s petition to the National Company Law Tribunal (NCLT). The Mumbai bench of NCLT has given time till May 12 to the company to reply to the bank’s petition.