Rating Rationale
April 15, 2024 | Mumbai
Future Lifestyle Fashions Limited
Ratings Reaffirmed at ‘CRISIL D/CRISIL D’
 
Rating Action
Total Bank Loan Facilities RatedRs.1500 Crore
Long Term RatingCRISIL D (Reaffirmed)
Short Term RatingCRISIL D (Reaffirmed)
 
Rs.500 Crore Non Convertible DebenturesCRISIL D (Reaffirmed)
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its ‘CRISIL D/CRISIL D’ ratings on the bank loan facilities and non-convertible debentures of Future Lifestyle Fashions Ltd (FLFL).

 

The rating reflects continuing default by FLFL and initiation of Corporate Insolvency Resolution Process (CIRP) as per the order passed by the National Company Law Tribunal (NCLT) on May 04, 2023, as disclosed by the company to the Bombay Stock Exchange (BSE). NCLT has also approved the appointment of an Interim Resolution Professional (IRP) under section 16 of the Insolvency and Bankruptcy Code, 2016. The company continues to be under CIRP.

 

CRISIL Ratings has also received the information from the debenture trustee on April 06, 2024, that the company has defaulted on interest/principal repayment on March 31, 2024.

Analytical Approach

For arriving at the rating, CRISIL Ratings has combined the business and financial risk profiles of FLFL and all its subsidiaries, given their common business. Also, the company’s networth has been adjusted for revaluation reserve.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Weaknesses:

  • Admission of CIRP as per the order of the NCLT: On May 04, 2023, the NCLT allowed the admission of Bank of India’s petition, filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 on August 26, 2022, against the company. NCLT has also approved the appointment of Mr Ravi Sethia as an Interim Resolution Professional ('IRP') under section 16 of the code. The company continues to be under CIRP.

 

  • Stretched liquidity with substantially high debt obligation: The company’s liquidity was constrained on account of severe impact on cash flow following the Covid-19 pandemic and termination of sub-lease of some of the stores by Reliance entities. Consequently, the company could not meet its debt obligation and loan accounts were downgraded to non-performing assets as on May 31, 2022 (as per the order of NCLT filed with the stock exchange on May 09, 2023).

 

Strength:

  • Established position in the past in the departmental stores segment: The company has historically been one of the largest players in the domestic departmental store format. However, this has been impacted on account of the termination of the sub-lease of some of its stores by Reliance entities, and a tight liquidity position.

Liquidity: Poor

The company has defaulted on its bank loan servicing in the first quarter of fiscal 2023. CRISIL Ratings has also received the information from the debenture trustee on April 06, 2024, that the company has defaulted on interest/principal repayment on March 31, 2024.

Rating Sensitivity factors

Upward factors:

  • Repayment of entire overdue amount along with track record of timely servicing of debt
  • Sustained improvement in the financial risk profile with debt service coverage ratio of over 1.1 times

About the Company

Incorporated in 2012, FLFL is the apparel retail venture of the Future group. It was established by combining apparel retail formats and fashion brands that were demerged from Pantaloon Retail India Ltd and Future Ventures India Ltd, respectively.

Key Financial Indicators*

Particulars

Unit

2022

2021

Operating Income

Rs crore

3004

2285

Profit after tax (PAT)

Rs crore

-2549

-937

PAT margin

%

-85

-41

Adjusted debt/adjusted networth

Times

-0.9

7.5

Interest coverage

Times

-4.79

-1.97

*CRISL Ratings adjusted numbers

**Result for quarter and nine months ended 31st December 2022 and fiscals 2023 & 2024 are not prepared/finalized as on date and the company continues to be under CIRP

Status of non cooperation with previous CRA

FLFL has not cooperated with CARE which has marked it as non-cooperative through its rating rationale dated May 03, 2022. The reason provided by CARE is non-furnishing of information by FLFL.

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name of the instrument Date of
Allotment
Coupon
Rate (%)
Maturity
Date
Issue size
(Rs.Crore)
Complexity
Level
Rating assigned
with outlook
INE452O07054 Non-convertible debentures 09-Nov-2017 8.70% 08-Nov-2024 350 Complex CRISIL D
NA Non-convertible debentures** NA NA NA 150 Complex CRISIL D
NA Cash credit* NA NA NA 550 NA CRISIL D
NA Letter of credit^ NA NA NA 475 NA CRISIL D
NA Long-term loan NA NA Sep-2023 85.13 NA CRISIL D
NA Long-term loan NA NA Mar-2027 150 NA CRISIL D
NA Long-term loan NA NA Mar-2027 239.87 NA CRISIL D

*Interchangeable with working capital demand loan and commercial paper

^Interchangeable with letter of undertaking and bank guarantee

**Yet to be issued

Annexure - List of Entities Consolidated

Names of entities consolidated

Extent of consolidation

Rationale for consolidation

FLFL Business Services Ltd

Full

Subsidiary

Future Special Reality Ltd

Full

Subsidiary

Future Trendz Ltd

Full

Subsidiary

Celio Future Fashion Pvt Ltd

Equity

Joint venture

Clarks Future Footwear Pvt Ltd

Equity

Joint venture

FLFL Lifestyle Brands Ltd

Equity

Joint venture

FLFL Travel Retail West Pvt Ltd

Equity

Joint venture

FLFL Travel Retail Bhubaneswar Pvt Ltd

Equity

Joint venture

FLFL Travel Retail Guwahati Pvt Ltd

Equity

Joint venture

FLFL Travel Retail Lucknow Pvt Ltd

Equity

Joint venture

Elisir Lifestyle Pvt Ltd

Equity

Associate

Future Style Labs

Equity

Associate

Future Style Labs UK Ltd

Equity

Associate

Indus-League Clothing

Equity

Associate

Indus Tree Crafts Pvt Ltd

Equity

Associate

Indus Tree Producer Transform Pvt Ltd

Equity

Associate

Mineral Fashions Ltd

Equity

Associate

Rachika Trading Ltd

Equity

Associate

Annexure - Rating History for last 3 Years
  Current 2024 (History) 2023  2022  2021  Start of 2021
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 1025.0 CRISIL D   -- 04-07-23 CRISIL D 04-07-22 CRISIL D 10-05-21 CRISIL C/Watch Developing CRISIL C/Watch Negative
      --   -- 06-04-23 CRISIL D 24-01-22 CRISIL C 09-02-21 CRISIL C/Watch Negative --
Non-Fund Based Facilities ST 475.0 CRISIL D   -- 04-07-23 CRISIL D 04-07-22 CRISIL D 10-05-21 CRISIL A4/Watch Developing CRISIL A4/Watch Negative
      --   -- 06-04-23 CRISIL D 24-01-22 CRISIL A4 09-02-21 CRISIL A4/Watch Negative --
Commercial Paper ST   --   --   --   --   -- Withdrawn
Non Convertible Debentures LT 500.0 CRISIL D   -- 04-07-23 CRISIL D 04-07-22 CRISIL D 10-05-21 CRISIL D CRISIL D
      --   -- 06-04-23 CRISIL D 24-01-22 CRISIL D 09-02-21 CRISIL D --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Rating
Cash Credit& 75 CRISIL D
Cash Credit& 80 CRISIL D
Cash Credit& 80 CRISIL D
Cash Credit& 110 CRISIL D
Cash Credit& 80 CRISIL D
Cash Credit& 125 CRISIL D
Letter of Credit! 70 CRISIL D
Letter of Credit! 65 CRISIL D
Letter of Credit! 110 CRISIL D
Letter of Credit! 70 CRISIL D
Letter of Credit! 90 CRISIL D
Letter of Credit! 70 CRISIL D
Long Term Loan 10.13 CRISIL D
Long Term Loan 139.87 CRISIL D
Long Term Loan 239.87 CRISIL D
Long Term Loan 85.13 CRISIL D
& - Interchangeable with working capital demand loan and commercial paper
! - Interchangeable with letter of undertaking and bank guarantee
Criteria Details
Links to related criteria
Rating criteria for manufaturing and service sector companies
CRISIL's approach to Covid-19-related restructuring
Rating Criteria for Retailing Industry
CRISILs Criteria for Consolidation
Understanding CRISILs Ratings and Rating Scales
CRISILs Approach to Recognising Default

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