1 oCT 2009:
The economic slowdown has hit India's emerging breed of modern retailers hard, causing many firms, including Subhiksha, the local unit of US-based MyDollarStore Inc., and a lingerie chain from Oswal Group to shut operations altogether.
A recent Mint report showed that the so-called organized retailers, including Subhiksha, Pantaloon Retail (India) Ltd, Aditya Birla Retail Ltd, Spencer's Retail Ltd, Reliance Retail Ltd among others, have closed at least 2,000 stores nationwide in the past year. Some of them have also opened outlets in this period.
Vishal incurred losses of Rs115 crore for the last quarter of 2008-09, but managed to cut losses in the June quarter of 2009-10 to Rs90 crore.
The firm, which runs around 170 discount supermarkets nationwide, is trying to sell off inventory of about Rs630 crore through heavy discounts.
Its plans to raise about Rs200 crore through a qualified institutional placement have remained a non-starter in a tough money market. Dwindling cash flow has also seen Vishal offer shares to its vendors instead of cash as reported by Mint on 6 August.
Vshal Retail Ltd and banks hat loaned it money are in the process of going in for a corporate debt restructuring (CDR) exercise in an attempt to revive the fortunes of the cash-strapped retailer.
Vishal is the second chain after Subhiksha Trading Services Ltd to attempt such an exercise after the economic slowdown kept buyers out of shops and inflicted losses on retail businesses. In January, Subhiksha became the first retailer in India to file for a CDR exercise after it ran out of cash and shut about 1,600 stores around the country.
Vishal Retail is seeking to reschedule debt of around Rs730 crore and repay this over nine years at an interest rate of 6%.
sOURCES:mINT
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