Palguntech’s Bid for Future Retail: Urging CoC’s Consideration 2023
In the ongoing saga surrounding the acquisition of Future Retail, a new player has emerged. Palguntech, a relatively lesser-known entity in the retail landscape, has recently made headlines by urging the Committee of Creditors (CoC) to consider its bid for the beleaguered retail giant.
Future Retail, one of India’s leading retail chains, has been embroiled in financial troubles and legal tussles, making it the subject of acquisition interests from various entities. The ongoing crisis at Future Retail can be attributed to several factors, including rapid expansion, high debt, and the repercussions of the COVID-19 pandemic on the retail industry.
Palguntech, with its bid, seems keen to establish a stronger foothold in the retail sector. Although not as popular as some of the other bidders, the company sees value in acquiring Future Retail and believes that with the right strategy, it can turn around the fortunes of the retail chain.
Following the denial of SpaceMantra’s resolution proposal, US-based technology consultancy firm Palguntech is pleading with the Committee of Creditors (CoC) of Future Retail (FRL) to reconsider its bid submitted in May.
Palguntech representatives asked for a meeting with the CoC in an email sent earlier this month to FRL’s resolution professional (RP). According to those with knowledge of the situation, the corporation further stressed that its offer should be taken into account to stop FRL from being liquidated because no other parties had made an offer for the entirety of FRL’s assets.
Through the purchase of FRL’s assets, Palguntech, financed by US-based technology entrepreneurs, hoped to enter the Indian retail industry. Currently, the business serves well-known US clients and focuses on technological consultancy.
Palguntech had presented its option-1 resolution plan, which involved bidding on FRL and its affiliates, in April.
After SpaceMantra’s offer was rejected by FRL’s CoC because it did not receive the necessary number of affirmative votes through the e-voting procedure, Palguntech filed its own proposal. This happened after the process’s electronic voting concluded on September 30.
On September 30, the third time-extended deadline for the bidding procedure came to a close.
A re-evaluation of the bidding procedure and an extension of the deadline had been sought by SpaceMantra and several lenders. This was done in order to prevent FRL from being liquidated, which would further reduce the value of its assets and lower the fair price that was provided through the bidding process.In the FRL’s CoC, Bank of New York Mellon holds the most voting shares (21.18%), followed by Union Bank of India (9.17%), and Bank of Barod (8.95%).
The greatest voting stake in FRL’s CoC is held by Bank of New York Mellon (21.18%), followed by Union Bank of India (9.17%), and Bank of Barod (8.95%).
The former promoter of FRL, Kishore Biyani, filed a petition with the Bombay High Court on September 25 opposing a forensic audit of the business. Bank of India requested responses from Kishore Biyani and his brother Rakesh Biyani in August of the same year on the findings of the forensic audit report produced by forensic auditor BDO.
Bank of India requested representation and responses from the firm about the credit facilities used by Biyani after the forensic auditor’s report was sent in on August 9, 2023.
Addressing the immediate concern of Future Retail’s escalating debts, which has been a significant cause of its financial woes.
Streamlining operations, optimizing supply chains, and possibly downsizing some non-performing assets to enhance efficiency.
Recognizing the role of e-commerce and omnichannel strategies in the future of retail, Palguntech might focus on enhancing Future Retail’s digital presence.
The Committee of Creditors (CoC) has a critical responsibility in determining the fate of Future Retail. While their primary goal is to maximize the value for creditors, they also need to consider the long-term viability of any resolution plan.
Several bids, including from larger, more established players, are on the table. In such a scenario, Palguntech’s plea to the CoC emphasizes the importance of an objective evaluation based on the merits of the proposal rather than just the reputation or size of the bidder.
The news of Palguntech’s bid has elicited mixed reactions from the market. While some analysts believe that a company with a fresh perspective might be what Future Retail needs, others are skeptical about Palguntech’s ability to manage such a vast enterprise given its limited experience in the sector.
The acquisition of Future Retail is a complex process, with multiple players vying for control. Palguntech’s request to the CoC is a testament to the dynamic nature of the business environment, where the underdog can sometimes offer as much value, if not more, than established players. Only time will tell if the CoC will heed Palguntech’s plea and what the future holds for one of India’s largest retail chains.
