Future Consumer Limited (FCL), a key player in India's consumer goods sector, has reported significant financial distress in its latest quarterly results. The company's financial health has deteriorated, raising concerns about its ability to continue as a going concern.

Financial Snapshot

FCL's financial position paints a grim picture:

Debt Restructuring and Legal Proceedings

The company is grappling with several financial and legal challenges:

1. Loan Defaults: FCL has defaulted on loan payments to banks and financial institutions, resulting in loans being classified as non-performing assets.

2. Debt Assignment: RBL Bank Limited has assigned FCL's financial debt to Prudent ARC Limited under the SARFAESI Act, indicating a potential restructuring of the company's debt obligations.

3. Debenture Transfer: The company received communication regarding the transfer of 2,000 debentures from British International Investment Plc to Resurgent India Special Situations Trust.

4. Legal Action: Resurgent India Special Situations Fund has filed a case against FCL at the National Company Law Tribunal.

Auditors' Concerns

The auditors have expressed material uncertainty about FCL's ability to continue as a going concern, citing:

• Ongoing liquidity issues
• Inability to conclude re-negotiations
• Challenges in obtaining replacement financing

Recent Corporate Actions

Despite the financial turmoil, FCL's Board of Directors has approved some strategic moves:

1. Conversion of Outstanding Dues: The company plans to convert outstanding dues into convertible securities to be issued by its subsidiary companies:

   • The Nilgiri Dairy Farm Private Limited (NDFPL): Up to ₹22.50 Crore
   • Aadhaar Retailing Limited (ARL): Up to ₹7.50 Crore

2. Subsidiary Performance:

   NDFPL (Figures in ₹ Lakhs):

   Metric	FY 2024-25	FY 2023-24	FY 2022-23
   Turnover	3,916.71	4,111.81	3,965.73
   Net Worth	-8,552.51	-	-

   ARL (Figures in ₹ Lakhs):

   Metric	FY 2024-25	FY 2023-24	FY 2022-23
   Turnover	37,748.20	31,108.47	28,574.91
   Net Worth	-10,643.05	-	-

These corporate actions aim to alleviate the interest burden on the subsidiaries, which are currently unable to meet their interest obligations.

The company's financial distress and ongoing restructuring efforts highlight the challenges faced by FCL in the current economic environment. Stakeholders will be closely watching the outcome of the legal proceedings and the effectiveness of the debt restructuring measures in the coming months.

Future Consumer Limited (FCL) has announced a strategic move to address the financial challenges faced by two of its wholly-owned subsidiaries. The company's Board of Directors has approved the conversion of outstanding dues into optionally convertible debentures for The Nilgiri Dairy Farm Private Limited (NDFPL) and Aadhaar Retailing Limited (ARL).

Key Details of the Transaction

Business Overview of Subsidiaries

The Nilgiri Dairy Farm Private Limited (NDFPL)

• Engaged in manufacturing, marketing, and distribution of dairy and bakery products
• Operates under the brand name 'Nilgiris 1905'
• Distributes fast-moving consumer goods and staples to retail outlets

Aadhaar Retailing Limited (ARL)

• Focuses on distribution of fast-moving consumer products
• Utilizes wholesale distribution and franchisee models

Financial Performance

NDFPL Turnover (Rs. in Lakhs)

ARL Turnover (Rs. in Lakhs)

Rationale and Impact

The primary objective of this transaction is to alleviate the interest burden that these subsidiaries are currently unable to manage. By converting the outstanding loans into optionally convertible debentures, Future Consumer Limited aims to provide financial relief to NDFPL and ARL, both of which are reporting negative net worth.

Transaction Timeline and Approvals

• The proposed conversions are expected to be completed by March 31, 2026.
• The transactions are subject to necessary approvals and consents under applicable provisions.

Regulatory Compliance

This decision was disclosed in compliance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended.

Future Consumer Limited's move to convert outstanding dues into convertible securities for its struggling subsidiaries reflects the company's efforts to manage financial challenges within its group. As these subsidiaries play crucial roles in FCL's business ecosystem, particularly in the FMCG and retail sectors, this financial restructuring may help in stabilizing their operations.