IndiaRetailBiz

Although, Ram Chandra Agrawal-led Vishal Retail, which went public in July 2007, could succeed in bringing down its quarterly losses from Rs 115 crore in Q4 2009 (ending March, 2009) to Rs 90 crore in Q1 2010 (ending June, 2009), it is continuing to struggle hard to come out of the financially difficult situation.

While, the Delhi-based home goods, value, retailer, which currently operates around 170 large format (mega) stores across the country, has closed some 12 non- performing stores and removed around 6,000 employees in the past few months to come out of its financial woes, it’s going to be a long and arduous journey for the company to restore confidence of its stakeholders including lenders, employees, vendors, and investors, among others.

According to a Live Mint report, the cash strapped retailer, which carries a debt burden of around Rs 730 crore, has now begun to even offer the company’s equity shares in lieu of outstanding payments to its vendors.

While, asserting that “nothing of this sort is happening” the company Chairman has, however, conceded to the newspaper “… If any supplier is interested in having stake in the company while having faith in its future, then we would welcome them to be our stakeholders as this will bring in more sense of belongingness, which will only benefit us in the long run.”

Agreeing that “cash flow is under stress” Agrawal has also confirmed that “the worst is not over yet.” According to him, “The company is gradually moving towards normalcy and lot more is being done before we say that the worst is over.”

Despite several measures undertaken by the company to stem the rot, including freeze on further expansion, situation continues to remain grim. “In the present situation, very few suppliers will give credit to the company,” said an erstwhile apparel vendor of the company.

Vishal Retail, it may be recalled, was once a darling of equity investors. They had lapped up the company’s Rs 10 equity shares at a premium of Rs 270 each in the IPO during the boom days for retail sector in July 2007. The IPO was oversubscribed 81 times. The equity share, which once touched the dizzy heights of Rs 1001, is currently selling at around Rs 60 each.