Four debt schemes of Franklin Templeton Mutual Fund (MF) that are under wind-up saw 1.3 per cent-4.85 per cent dip in their net asset values (NAVs) following payment defaults by two Future group firms — Nufutre Digital (NDIL) and Future Ideas (FCIL).
Of the six schemes that are under wind-up, four schemes are exposed to NDIL, FCIL and Rivaaz Trade Ventures (RTVPL). While the latter was able to meet its dues on Thursday, the other two missed the payments.
In a note, FT MF said, “Due to default in payment, the securities of FICL and NDIL will be valued at zero basis Amfi standard hair cut matrix and interest accrued and due will be fully provided”.
“These valuations only reflect the realisable value and do not indicate any reduction or write-off of the amount repayable by these companies”.
Franklin India Income Opportunities saw its NAV dip by 4.85 per cent on Friday. For Credit Risk Fund, the NAV was down 2.31 per cent. Short Term Income Plan and Dynamic Accrual Fund saw 1.72 per cent and 1.34 per cent dip in NAVs, respectively.
FT MF schemes have already taken 25 per cent mark down on exposure to RTVPL in-line with valuation matrix. This was after the non-convertible debentures (NCDs) of the firms were downgraded to BB by Brickwork Ratings on Wednesday.
The downgrade was on account of deteriorating credit profile of the “credit enhancer” Future Retail (FRL), on which these companies have significant reliance for their income.
Lower sales due to closure of most of its outlets during the pandemic-induced lockdown has impacted FRL, which has also led to the latter missing a coupon payment on a $500 million on July 22, FT MF’s note pointed out.
The fund house said that the Future group firms can benefit if Reliance Industries buys a controlling stake in Future Group’s retail business, as “reported in certain sections of the media” last month.