MUMBAI: Even as lenders to Kishore Biyani‘s Future Group struggle to recoup their losses from the debt-laden retailer, there could be some hope of recovery from a defunct mall in South Mumbai controlled by the Biyani family.
Lenders to Bansi Mall Management Co Pvt Ltd (BMMCPL), which owns SOBO Central Mall in Mumbai’s Haji Ali area, have initiated Sarfaesi proceedings to recover their dues totalling Rs 571 crore.
Canara Bank and Punjab National Bank (PNB) are the two primary charge holders as they are direct lenders to the company. Canara Bank is the lead lender with Rs 131 crore of loans outstanding, while PNB has primary dues of Rs 90 crore, people familiar with the matter said.
PNB, along with Union Bank of India, also has a secondary charge over the company’s assets because they had together lent Rs 350 crore to a group company, Future Brands, with lease rental discounting of BMMCPL as collateral.
“These two banks have secondary charge over the assets and will receive their dues only after Canara and PNB recover their principal and interest,” a person familiar with the matter said.
Lead lender Canara Bank has still not decided whether to find a buyer through an auction or sell the loan to an assreconstruction company on a cash basis. But bankers are confident of the recovery potential from this account. Canara Bank did not reply to an email sent on Friday.
“This is a four-storey commercial building in a prime Mumbai locality with redevelopment potential. If banks find a right buyer, then this property can be redeveloped and sold for more than Rs 1,000 crore. It will be a rare recovery from the Future Group,” said a second person aware of the matter.
To be sure, the latest valuation done by Canara Bank has pegged the value of the property at Rs 400 crore, down from Rs 600 crore when the loan was given.
“The value has fallen because it is practically a defunct mall. When there are no tenants, the value ascribed is lower, though banks are looking at it from a redevelopment potential,” said the first person.
SOBO Central mall has no tenants except a McDonalds joint which was launched when it was inaugurated in 1999. It is Mumbai’s oldest mall with a total leasable area of 150,000 square feet. But the emergence of new shopping places within the city and in the suburbs followed by a Covid shock meant that it never recovered from a slump. To add to it all, almost all its real estate was given out to Future Group companies which themselves were under stress.
In a report issued last month, ratings firm Crisil flagged non-cooperation of BMMCPL while rating its Rs 250 crore bank loan facilities as ‘D’, or default category. In June 2021, Crisil downgraded BMMCPL to ‘C’ from ‘B-‘, implying a very high risk of default.
“The rating downgrade reflects weak liquidity position of the company … The company is expected to be dependent on group support to manage repayments commencing from March 2022. However, the credit risk profile of the Future Group has also weakened significantly due to the pandemic, further affecting the credit risk profile of the company,” Crisil said.
Lenders are hoping that the prime real estate with a future for redevelopment could help them recover some dues from Biyani-promoted companies even as they stare at almost a complete whitewash from the close to Rs 32,000 crore dues from Future Retail and Future Enterprises, the two flagship entities of the group.
