Future Market Networks Ltd Management Discussions.

Economic review & Indian Economy

Global economic activity which was already under protracted pressure since 2018 contracted sharply in 2020 due to the Covid-19 pandemic. India also recorded a steep contraction in output in 2020-21 on account of the pandemic which is treated as a Force Majeure event. According to the provisional estimates released by the Central Statistics Office (CSO), decline in Indias Gross Domestic Product (GDP) for 2020-21 is estimated at 7.3 per cent, compared to a 4 per cent growth in the previous year. Both industry and services were severely impacted. In contrast, agriculture grew at 3.6 per cent in 2020-21 cushioning some of the decline in GDP. Economy may revive considerably post pandemic periods.

Real Estate Industry

From the real estate industrys perspective, the construction sector which accounts for around 7.5 per cent of GDP contracted by 8.6 per cent in 2020-21, compared to a growth of 1.0 per cent in 2019-20. Even as the uncertainty and challenges posed by the Covid-19 pandemic continue, the world is better placed today than a year ago armed with multiple vaccines and more effective therapies to combat the infection as well as having gradually adapted to a pandemic-appropriate way of going about its business. Significant policy support by governments across the globe have also contributed to an improved outlook.

The real estate sector is one of the most globally recognized sectors. Real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment. The global real estate market is expected to grow from $2687.5 billion in 2020 to $2774.5 billion in 2021 at a compound annual growth rate (CAGR) of 3.%.The growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges.

Warehousing Industry Overview

Warehousing is significant with respect to the role it plays in the smooth functioning of supply chain networks. Warehouses have become one of the major segments of the rapidly growing Indian logistics industry. Sensing the tremendous growth potential of the warehouse sector, the private players (including both domestic & international) have ventured in the space with a view to bridge the gap between cost and efficiency of operations. Nearly 60% of the modern warehousing capacity in India is concentrated in the top six cities, namely, Ahmedabad, Bangalore, Chennai, Mumbai, NCR and Pune, with Hyderabad and Kolkata being the other major markets. This is driven by concentration of industrial activity and presence of sizeable urban population around these clusters. Going forward, due to factors such as quality of infrastructure and availability of labour, these advantages are likely to remain with these cities.


As the year started with the economy under complete lockdown and unprecedented uncertainty, the focus initially was on health risks posed by the Covid-19 pandemic. The market for real estate, and indeed for all high-value and discretionary spend categories, saw extremely limited activity in the first quarter (Apr-Jun) of 2020-21 as both consumers and businesses adjusted to the emerging realities of living and operating under the pandemic.

Arrangement for Logistic Park

Company in alliance with ESR engaged in constructing and developing integrated large-scale warehouses at Jhajjar (Haryana) and Nagpur (Maharashtra) aggregating to 1.3 million square feet. Accordingly, your Company has, along with Gati Realtors Private Limited (SPV-1) and Future Retail Destination Limited (SPV-2 entered into a strategic arrangement with ESR NAGPUR 1 PTE LTD and ESR DELHI 3 PTE LTD (investor SPVs) respectively. The construction of both large-scale warehouses is completed and ready to commence the operation.

Retail infrastructure

The Indian retail industry is one of the fastest growing in the world. Retail industry in India is expected to grow to US$ 1,200 billion by 2021 from US$ 672 billion in 2017.

India is the fifth largest preferred retail destination globally. The country is among the highest in the world in terms of per capita retail store availability. Indias retail sector is experiencing exponential growth, with retail development taking place not just in major cities and metros, but also in Tier-II and Tier-III cities. Healthy economic growth, changing demographic profile, increasing disposable incomes, urbanization, changing consumer tastes and preferences are the other factors driving growth in the organized retail market in India.


Mall Management

The business of shopping malls falls among the several businesses that have been severely dented by the Covid-19 pandemic. The digital revolution swept across the world and brought the convenience of on-line shopping, malls did not continue to be looked at as favourably as in the past by customers. However, the trend may change post pandemic periods since malls are part of entertainment spots apart from shopping.

Business Risk

The business of construction and development is heavily dependent on the performance of the real estate market in India and could be adversely affected if market conditions deteriorate. The real estate market is significantly affected by changes in government policies, economic conditions, demographic trends, employment and income levels and interest rates, among other factors. The development of real estate projects involves various risks including regulatory risks, financing risks and the risks that these projects may ultimately prove to be unprofitable.

Rental realizations

The rental realizations on the space leased depends upon the project location, design, tenant mix (this is relevant in the case of shopping malls), prevailing economic conditions and competition. Your Company has set up its retail property in prime location and maintains a fresh ambience resulting in-crowd pull and attracting first time kind of retailers. Owners revenue declined by around 50 per cent during the last fiscal as the retail sector was badly hit since the outbreak of the COVID-19 pandemic in March last year.

Most of the mall owners, which generally leases space in their shopping malls on a revenue-sharing model with retailers having a minimum guarantee clause, gave complete rental waiver during the April-June period of 2020 because of the nationwide lockdown to control COVID.

The mall promoters offered huge discounts during the remaining nine months of the last fiscal as well, resulting in a huge dent in their overall income. The nearly six-month-long lockdown wreaked havoc on the retail segment. Weak consumer sentiment along with stringent lockdowns and restrictions in the wake of the pandemic have significantly slowed down mall businesses in India since March 2020

Economy Risk

Economic and market conditions can adversely affect the performance of the Company. In particular, the decline in the performance of the global and Indian economies as a result of the economic downturn can reduce demand and occupancy levels in property markets. An increase in interest rates or an increase in the margin on which finance can be obtained may increase the Company and the Subsidiarys financing costs and such increase in interest rates may increase the cost of borrowing, which could have an adverse impact on the Company and the Subsidiarys business, financial condition and results of operations.

Financing costs

The acquisition of land and development rights needs substantial capital outflow. Inadequate funding resources and high interest costs may impact regular business and operations.

Your Company has always tried to build sufficient reserves resulting out of operating cash flows to take advantage of any land acquisition or development opportunity.



The Company is optimistically envisages its business plan on the robust Indian economy particularly the warehousing sector. Since the consumption pattern is intact, the company anticipates a vibrant business outlook in relation to retail shopping centres managed by the Company particularly during post pandemic periods. The Company has entered into a Composite Scheme of Arrangement which involves (i) merger of Future Market Networks Limited and other 18 Transferor Companies with Future Enterprises Limited (FEL) (ii) Transfer and vesting of the Logistics & Warehousing Undertaking from FEL as a going concern on a slump sale basis to Reliance Retail Ventures Limited ("RRVL"); (iii) Transfer and vesting of the Retail & Wholesale Undertaking from FEL as a going concern on a slump sale basis to Reliance Retail and Fashion Lifestyle Limited, a wholly owned subsidiary of RRVL ("RRVL WOS"); and (iv) Preferential allotment of equity shares and warrants of FEL to RRVL WOS pursuant to Sections 230 to 232 and other relevant provisions of the Companies Act, 2013. The combination contemplated under the scheme has been approved by Competition Commission of India on November 20, 2020. Further stock exchanges have issued observation letter without any adverse observation on January 20, 2021. Pursuant to this the scheme application has been filed with National Company Law Tribunal Mumbai (NCLT) on January 26, 2021 for convening the meeting of the Shareholders and Creditors of the Transferor Companies and Transferee Company.

Financial Performance Revenues

The income from Operations for the Company has decreased by 46.90 % to Rs. 64.55 Crores in 2020-21 from Rs. 121.55 Crores in 2019-20 due to corona virus (disease) pandemic.

Other Income

Other Income decreased to Rs. 7.75 Crores for 2020-21 from Rs. 49.03 Crores for 2019-20.

Operating Margin

EBIDTA (including other income) (Adjusted effect of Ind AS -116) for 2020-21 was Rs. (16.12) Crores as compared to Rs. 47.22 Crores for 2019-20.

Costs & Expenses

Employee Costs

Manpower cost for 2020-21 was Rs. 4.53 Crores, which decreased from Rs. 5.92 Crores in 2019-20. In terms of percentage of Turnover, there was increase of 2.15 % (as compare to 7.02% for 2020-21 with 4.87% for 2019-20).

Other Expenses

Other Expenses as a percentage of turnover has increased to 38.60 % in 2020-21 as compared to 21.88 % in 2019-20.

Interest Expenses

Interest expenses for the year 2020-21 decreased to Rs. 20.56 Crores from Rs. 29.47 Crores in 2019-20. In terms of percentage of Turnover it has increased to 31.86% for 2020-21 from 24.25% for 2019-20.


Depreciation cost as a percentage of turnover has marginally increased to 57.77% in 2020-21 to 42.07% in 2019-20.

Taxes on Income and Deferred Tax Provision

The Companys Deferred Tax Asset (net) has increased from Rs. 71.47 Crores in 2019-20 to Rs. 79.38 Crores in 2020-21. The Company has made current tax provision of Rs. Nil and deferred tax provision of Rs. (7.90) Crores and Earlier Years Provision Written back 0.06 Crores. Hence total tax expenses works out to Rs. (7.84) Crores.

Profit before Tax

As a result of the foregoing factors, profit before tax decreased from Rs. 20.14 Crores in 2019-20 to Rs. (36.66) Crores in 2020-21.

Net Worth

The net worth of the Company has decreased from Rs. 114.54 Crores as on March 31, 2020 to Rs. 85.69 Crores as on March 31, 2021. The decrease in amount of net worth is on account of loss for the current year due to corona virus pandemic.

Income Tax Expense

Income tax expense was Rs. (7.84) Crores for 2020-21 and Rs. 9.07 Crores for 2019-20.

Profit for the Year

As a result of the foregoing factors, profit after tax decreased from Rs. 11.07 Crores in 2019-20 to Rs. (28.82) Crores in 2020-21.

Earnings Per Share (EPS)

Basic and Diluted EPS was Rs. (5.01) for 2020-21 and Rs. 1.94 for 2019-20.


The total standalone borrowing is Nil for the both year ended on March 31, 2021 and on March 31, 2020.

Cash and Bank Balance

Cash and Bank balance increased to Rs. 15.09 Crores as of March 2021 from Rs. 4.44 Crores as of March 2020.


Total Investment of the Company was Rs. 94.01 Crores as of March 2021 and Rs. 94.02 Crores as of March 2020.

Current Assets & Liabilities

The Companys current assets primarily consist of debtors, investment in liquid fund, inventories, cash and bank balances, loans and advances and other current Assets. Total current assets as on March 31, 2021 were Rs. 120.23 Crores as against Rs. 145.64 Crores as on March 31, 2020.

The Companys current liabilities primarily consist of short term borrowings, trade payables, short term provisions and other current liabilities. Total current liabilities as on March 31, 2021 was Rs. 283.18 Crores as against Rs. 310.65 Crores as on March 31, 2020.

Net Profit Margin

Net Profit Margin decreased to 360.36 % in 2020-21 as compared to 2019-20 due to adverse effect of corona pandemic in business.

Return on Net Worth

Return on Net Worth decreased from 9.66% in 2019-20 to -33.63% in 2020-21 due to adverse effect of corona pandemic in business and decrease in other income.

Debtors turnover Ratio

The debtor turnover ratio increased from 0.30 in 2019-20 to 0.38 in 2020-21 due to decrease turnover.

Current Ratio

The current ratio decreased from 0.46 in 2019-20 to 0.42 in 2020-21.

Internal Control System and Adequacy

Your Company has a proper and adequate system of Internal Controls, to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposal and that transactions are authorized, recorded and reported correctly.

The internal control system is supplemented by extensive internal audits, regular reviews by management and well-documented policies and guidelines to ensure reliability of financial and all other records to prepare financial statements and other data. Moreover, the Company continuously upgrades these systems in line with best accounting practices. The Company has independent audit systems to monitor the entire operations and the Audit Committee of the Board review the findings and recommendations of the internal auditors.

Human Resources

The Company regards its human resources as amongst its most valuable assets and proactively reviews policies and processes by creating a work environment that encourages initiative, provides challenges and opportunities and recognizes the performance and potentials of its employees. The industrial relations across different locations of the Company were cordial during the year. The Company has, over the last few months, built the team necessary to be able to build and execute the vision that has been articulated in the preceding paragraphs. The total number of employees of the Company as on March 31, 2021 stood at 55.

Cautionary Statement

Statements in Management Discussion and Analysis describing the Companys objectives, expectations or predictions may be forward-looking within the meaning of applicable securities law and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include stiff competition leading to price-cuts, high volatility in prices of major inputs such as steel, cement, building materials, petroleum products, change in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.