Debt-laden Future Lifestyle Fashions’ auditors have cast doubt on the company’s possibility to continue as a going concern as the “entire net worth” has eroded. The net loss has increased multifold to ₹1,879 crore in the last quarter of FY22 compared to ₹146 crore registered in Q4 FY21.

In May, Kishore Biyani-led Future group firms — Future Retail and Future Lifestyle Fashion — had expressed their inability to convene a board meeting before May 30, to approve financial results on account of vacant positions on their respective boards.

Future Lifestyle’s revenues dipped to ₹607 crore in Q4 FY22 from ₹832 crore as of March 31, 2021. It’s expenses, too, rose by over ₹500 crore.

Liquidity crunch

“The Covid-19 pandemic has adversely affected the operations of the company, including its ability to be consistent with the suppliers and sales, which in turn, has impacted liquidity position of the company. While the company continues to work with all the stakeholders, the situation still continues to be evolving. It has adopted several cost reduction measures to address the liquidity crunch to maintain sufficient operational cashflows,” the company informed the exchanges.

The measures taken include the invoking of one-time restructuring of loans. However, the company was not able to repay those as well. As of March 31, 2022, the company’s negative networth was ₹2,358 crore (₹224 crore).

Revival plans

“We draw attention to note 2 and 4 of the statement which says the entire networth of the company has been eroded due to losses incurred in the previous year and its current liabilities exceeded its current assets which indicates a material uncertainty exists, that may cast a significant doubt on the company’s ability to continue as a going concern,” the company’s auditors said in their report.

They added that the company has informed them that it was in the process of implementing business revival plans, which in the opinion of the management, would enable the company to have sustainability and turnaround of its business operations. “The company’s ability to generate positive cash flow depends on the successful implementation of such business revival plans. Pending the resolution of the above uncertainties, the company has prepared the aforesaid statement on a going concern basis,” they added.