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Several Public Sector Banks have declared the loan account of Future Enterprises Limited (FEL) as Fraud. Le’t have a look at how much loan this company had taken from Banks.
Future Enterprises Limited (FEL) owes financial creditors more than ₹13,540 crore in total admitted claims. When the Committee of Creditors (CoC) was formally structured for the insolvency process, the breakout of debt included:
- Secured Financial Debt: Around ₹6,952 crore admitted from 22 secured lenders.
- Unsecured Financial Debt: Around ₹5,313 crore admitted.
The largest single exposure sits with Central Bank of India (and its subsidiary Centbank Financial Services), holding over ₹4,000 crore of the total admitted claims. Other major consortium lenders heavily impacted include Union Bank of India and Bank of Baroda. Exposure of other banks is as follows:
- Bank of India: ₹575.40 crore (Fully provisioned and classified as fraud).
- Axis Bank: ₹164 crore direct individual exposure strictly allocated to the Future Enterprises entity (part of its larger ₹648 crore aggregate exposure across the entire Future Group).
- Other Consortium Lenders: Lenders including Bank of Baroda, Indian Bank, and Punjab National Bank account for the remaining core pool of the ₹6,952.42 crore in total admitted secured financial debt.
How Banks are recovering money?
After the loan turned NPA, Banks tried to sell the firm, but the plan failed. Then banks divided Future Enterprises’ remaining assets into three separate clusters—insurance stakes, textile units, and residual assets. The insurance cluster (Cluster 1) was the most highly valued.
1. Total Cash Recovery from the Bid
Central Bank of India acquired Future Enterprises’ remaining joint venture stakes in its insurance arms for ₹508 crore:
- ₹451 crore for a 24.91% shareholding in Future Generali India Insurance Co. (General)
- ₹57 crore for a 25.18% shareholding in Future Generali India Life Insurance Co.
2. The Overall Impact on Recovery (Severe Haircut)
While the ₹508 crore injection represents the single largest pool of liquidity recovered from FEL’s assets so far, it is minor compared to the scale of the debt.
- A 2% to 4% Recovery Range: Prior to splitting the assets, lenders rejected a consolidated bid from Jindal (India) Ltd of ₹301 crore because it represented just a 2% recovery rate against the ₹13,540 crore total debt.
- While the ₹508 crore from the Central Bank of India insurance deal elevates the recovery pool, lenders are still absorbing a haircut of over 95% on their aggregate exposures.
- Offsetting Individual Exposures: For a bank like Bank of India (with its ₹575.40 crore exposure), its proportional cut from this ₹508 crore recovery pool will only recuperate a small fraction of its capital. This minimal recovery explains why Bank of India proactively took a 100% provisioning hit upfront to wipe the exposure from its active earnings equations.
3. Strategic Realignment Over Cash Outflow
For Central Bank of India specifically, the transaction serves a dual purpose. Because they are the largest creditor, the cash they “paid” under the Insolvency and Bankruptcy Code (IBC) framework effectively loops back into a credit pool where they hold the highest voting share. Instead of losing everything to a massive write-off, they converted a fraction of their bad debt into direct ownership of a revenue-generating corporate insurance asset.
Cluster 2: Textile Mill Investments
This cluster includes FEL’s premium real estate and core joint-venture interests in manufacturing:
- The Assets: A 39% equity stake in two prominent textile entities: Apollo Design and Apparels and Goldmohur Design and Apparels. These companies hold the development and restructuring partnerships signed with the government-backed National Textile Corporation (NTC) for two massive mill plots in Mumbai.
- Bidding Status: Given the commercial real estate and infrastructure value tied to these Mumbai mill properties, the assets attracted interest from major infrastructure and financial resolution firms. Major asset restructuring entities, including Authum Investment and Infrastructure Ltd and Capri Global Holdings, submitted baseline expressions of interest to absorb the entire textile cluster.
Cluster 3: Garment Manufacturing Units & Residual Assets
This cluster comprises the company’s remaining direct physical infrastructure and operations:
- The Assets: Two fully functioning apparel production facilities located in Tarapur-Palghar (Maharashtra) and Mahadevapura-Bengaluru (Karnataka), alongside general remaining retail infrastructure assets.
- Bidding Status: The resolution for Cluster 3 became a heavily contested battle between metal, industrial, and financial bidders. Lenders initiated an e-challenge mechanism to drive up valuations, yielding a close, competitive bidding margin:
- Orissa Metaliks Private Limited submitted a top bid of ₹148 crore.
- Uniworth Finlease Limited followed closely with a counter-bid of ₹146 crore.
- Current Status: Following extended litigation where bidders challenged e-auction rules in court, the Committee of Creditors (CoC) successfully moved forward with finalizing the bids. The resolution professional received standard majority approval (93.26% of CoC votes) to clear the transaction path for the successful resolution applicant, OMPL (Orissa Metaliks Group), to officially take control of the Cluster 3 manufacturing facilities.
