Future group FD, should you invest?
Article published as on Wednesday, 11th
April, 2020 at 11:34 p.m.
Future group has been running its fixed deposit program since
start of 2019, so how come suddenly we are discussing on this topic again?
Well future enterprise has been sending mails, making people aware
of its FD scheme.
Future enterprise is approaching to small investors now, maybe
banks and other lenders are reluctant to lend more?
Situation has changed a lot since a year, Lets analyse the
current situation again.
Let’s start! With the 3 R’s first!
RETURNS
The returns are same as last years since it was launched. With
*additional 0.25% for Shareholders, Existing Employees, Senior
Citizen, Members of Future Group Customer Loyalty program viz. Future Pay, Big
Bazaar Profit Club, Easyday Saving Club *terms
and conditions apply
Returns of 9.00% for a year to 10.10% for 3 years
(11.60% on simple interest.
These returns are taxable as per individuals tax
slab.
RATINGS
Future enterprise limited had published
advertisement in newspaper stating the rating of “ACUITE FAA” given by ’Acuité
Ratings & Research’
Subsequently received a revised letter
downgrading rating to
“ACUITE FA” (outlook under watch with
negative implications)
Ratings indicate high safety and low credit risk.
(following is an illustration of
rating structure)
 |
The ratings may change over the period of time
and may not stay the same.
RISKS
People should know that the FD’s are unsecured,
now after the union budget BANK FD’s are secured up to INR 5 lakhs, corporate
FD’s which are issued by companies having net worth and turnover of at least
100 crores and 500 crores respectively are not fully secured.
Only INR 20,000 are secured in corporate FD in
case of default.
Also this amount shall be receivable after liquidation
and several rounds of appeals into IBC, MCA and courts.
Coming towards current situation after the
IL&FS, DHFL, ADAG defaults risk in unsecured corporate FD’s has increased.
Based on publicly available data future group’s
cash flow condition is bad, huge promoter holdings are pledged already, and
shares have halved in value within a month.
It is no secret that Kishore Biyani and his group
are passing through tough times, survival of future group with already so much
debt is going to be tough.
They are selling down their non-core business to
deleverage, if they are not able to execute it quickly things can go wrong
quickly.
FINAL VERDICT
As minimum amount of FD is INR 10,000 and maximum
secured amount in case of default is INR 20,000. For large investments it
becomes risky to invest in it. We have already seen red flags in this group due
to excess leverage, one must wait for further developments in
the situation.
If situation deteriorates one may lose
investment.
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