Founded in 19991 by K Raheja group, Shopper’s Stop, currently operates around 27 stores and occupies a total retail space of 1.88 million sq ft. It is looking at setting up 15 to 18 new stores of its flagship chain operating under its own name. The expansion will take the tally of its stores to around 45 stores in the next 3 to 3.5 years by March 2013. Each of the new stores is expected to require an investment of Rs 12 to 15 crore.

Shopper’s Stop is also raising an amount of Rs 100 to 120 crore to exercise its option of purchasing additional 32 per cent stake in HyperCity– a hypermarket format, retail chain owned by the group. HyperCity is currently operating three stores at Malad (Mumbai), Vashi, and Hyderabad. The purchase of additional 32 per cent stake will help Shopper’s Stop become majority shareholder in HyperCity as its stake will then rise from present 19 per cent to 51 per cent. Shopper’s Stop can exercise purchase option up to June, 2010.

Coming out of the specter of falling footfalls and declining ticket size last year, Shopper’s Stop has recorded a rise of 7 per cent in sales to Rs 720 crore during the first six months of this fiscal (April-September, 2009). The rise in sales (Rs 413 crore) was even more significant at 11 per cent during the latest quarter ending September, 2009.

Thanks to several measures of cost cutting and increase in sales, the lifestyle retailer was also able to earn a net profit of Rs 12.06 crore in the last quarter as against the loss of Rs 11.02 crore for the same quarter of the previous year.

“The net profit,” according to Govind Shrikhande, President & CEO, Shoppers Stop, “was due to a combination of cost reduction, maintained margins and increase in sales.”

Among the several cost cutting measures, top management of the company, agreed to take a cut of 15 per cent in its salaries. During the difficult period, Shopper’s Stop refrained from resorting to retrenching of staff, it also refrained from hiring new staff and met requirement of new stores through existing people.

Apart from operating large format, flagship, department format, retail chain, Shopper’s Stop also operates several other home and specialty retail chains. Besides, Crossword– a leading specialty books and leisure chain– Shopper’s Stop is operating retail stores of well known global brands including M.A.C cosmetics (under a retail agreement with Estee Lauder), Mothercare (under distribution tie-up), and Mustang (German lifestyle and jeanswear) in India.

“The realignment is not happening right now. There are some legal issues. We are waiting for feedback from our legal team on this,” said Kishore Biyani, founder and CEO, Future Group, while speaking to reporters at Mumbai on 4th August, 2009.

Future group, it may be recalled in April this year, had unveiled a plan that will realign businesses of PRIL into a multi-tiered structure under the new name of Future Merchandise & Consumer Group (FMCG Ltd). PRIL wanted to attract a large amount of foreign capital in mult-brand retail via a web of subsidiary companies as infusion of foreign capital (FDI) for multi-brand retail is currently banned in India. The group is constantly looking for resources to fructify its expansion plans.

Although unsure of how long it would take to achieve the realignment, Future group is sure of its intention to implement the same as soon as feasible.

PRIL, the retail arm of Kishore Biyani-led Future group, opertes several multi format retail chains like Big Bazaar, Pantaloons, Central, Home Town, e-Zone, Ethnicity, among others, across value, lifestyle, and home retail segments.

Planet Retail Holdings Pvt. Ltd., a joint venture between Kishore Biyani  (49 per cent) and V N Sharma (an Indonesian resident of Indian origin), operates several retail chains in lifestyle segment for products covered under fashion and sports categories. While, the JV operates Planet Sports, Sports Warehouse and The Athlete’s Foot under sports segment, it operates Guess, Next and Women’s Secret, among others, in fashion segment. The company had recently ventured into beauty segment with the launch of The Body Shop stores in India. Prior to Mark & Spencer’s tieup with Reliance, Planet Retail was also operating 14 stores of the UK-based iconic fashion and homeware brand in India.

According to Kishore Biyani, Planet Retail JV had to be terminated because Pantaloon is already in a sports business, which has now become a wholly owned subsidiary of Pantaloon.

Blue Food, on the other hand, operates several restaurant chains under brand names of Bombay Blue, Noodle Bar and Copper Chimney, among others. The JV with Blue Foods, operating under the name of Pan India Food Solutions, had to be terminated because Blue Foods has already merged into a different entity.

According to Sunil Kapur, chief executive officer of Blue Foods, no operational or management changea are envisaged as a consequence of termination of the JV. It may be recalled that Indivision Capital, a private equity (PE) firm, had agreed to invest Rs 100 crore in Blue Foods in October 2008.

The Rahejas-led Shoppers’ Stop is among the country’s pioneering and leading listed retailers. It operates a flagship retail chain under its own name of department format stores across India. Soppers Stop operates Mothercare store in the country under an exclusive franchise agreement signed with the UK-based retailer in August, 2005.

While, standalone Mothercare stores in India ocuppy between 3,000 and 6,000 sq ft of space, the shop-in-shop outlets, which are located inside Shoppers Stop stores occupy an average of 2,000 sq ft in space.

Mothercare has a vision of becoming the country’s number 1 retailer of mother’s to be & baby products in its target segment. It sources 70 per cent of its product requirements in India from global vendors.

Mothercare, the £723 million retailer operating over 1,000 stores across 50 countries of the world, according to reports, is reported to be unhappy with performance of its stores operated by Shoppers Stop in India. The UK-based retailer, according to unconfirmed reports, is believed to have already commenced talks with Trent Limited, a Noel Tata headed retail arm of Tata group, for a possible tieup with the latter. Trent currently operates three retail chains under Westside, Star Bazaar, and Landmark brand names.

In fact, there is not much difference the retail formats operated by the two companies. Westside, the flagship brand of the retail is a lifestyle chain of department store format stores similar to Shoppers Stop’s flagship chain. Both of these draw a large part of their revenues from lifestyle fashion and homeware products and focus on private labels. Star Bazaar is a hypermarket value chain that mainly deals in food, grocery, fresh foods, apparel, and fast moving consumer products. Shoppers’ Stop has a sister retailer in hypermarmarket space called HyperCity. Landmark, on the other hand is a books and leisure products (music, games, toys, stationery) retail chain similar to Shoppers’ Stop’s ‘Crossword’ retail chain.

While, Shoppers’ Stop has several franchise and licensing arrangements with iconic European retail brands, Trent has recently tied up with Tesco, the world’s third largest UK-based food and grocery retailer, to set up a chain of 50 hypermarket stores. Of course, Tesco will provide only back-end and technical services as still no foreign investment is allowed in India in multi-brand retail.

Kishore Biyani promoted and led Future group moved a step closer towards the goal of restructuring its businesses when shareholders of the group’s flagship company Pantaloon Retail India accorded their approval for creation of three separate entities. These entities will cater to FMCG, fashion, and retail businesses of the group. The group has also been rechristened as Future Markets & Consumer Group (FMCG).

According to a filing made to the Bombay Stock Exchange, the shareholders of the company have approved the sale of its fashion division, including the entire investment in Home Solutions (Retail) India, to its wholly-owned subsidiary, Future Value Retail and sale of its retail division to subsidiary Future Speciality Retail. Pursuant to the said transfer, Future Value Retail would be renamed as Future Merchandising and Future Speciality Retail would be rechristened as Future Consumer Enterprises, informed the company.

The recent changes and approvals, despite the current ban on FDI in multi-brand front-end retail, are expected to help the group to induct foreign capital in this area by taking advantage of revised provisions in terms of the Press Release Nos 2, 3, and 4 issued a few months back by the Government of India. In the past few days, promoters have also been allowed to bring in fresh capital with a view to induct additional resources and increase their holding in the company.

In this regard, the contry’s largest multi-format, multi-product, predominantly retail group operating across all product segments, is already believed to have struck a deal with the world’s second largest retailer France-based Carrefour SA for its retail foray in India.

Turtle Ltd, Kolkata-based fashion apparel maker that specialises in sale of ‘mass premium’ menswear and accessories, under ‘Turtle’ brand, is close to completing the process of  strategic stake transfer to Kishore Biyani-led Future group within one month. The apparel company, owned by Landasaria family, has for quite sometime been in talks with Future group for strategic investment through partial sale of its equity. Although, terms of the transfer deal, for which the two parties are in talks for some time, have been finalised, the process of actual transfer of stake may take a month.

According to the deal worked out between Turtle and Future, the fashion apparel maker will induct the retailer as a strategic investor, by selling a minority stake (in double digits) in the company.The deal will allow the leading menswear apparel brand to increase its retail presence across the country by shop-in-shop and other format stores in the retail chains operated by Future group. Turtle brand, which earlier was having its major presence in the Eastern states of Assam, West Bengal, Bihar and Orissa, is now availble across the country. The brand is currently sold through more than 1,200 retail points across 400 cities. While, leading retail chains like Central, Globus, Pantaloons, and Shopper’s Stop (which include Future groups chains as well) are already selling Turtle braded apparel, the brand has also set up over 30 exclusive stores under the Turtle World brand. These stores are located in Ahmedabad, Bangalore, Chandigarh, Chennai, Kolkata, Surat, Vadodara, Varanasi, among others.The company is also exporting its products to the middle East, while looking at entering into the lucrative European markets.With a view to increase cost competitiveness of its products, Turtle is also planning to set up a new manufacturing facility for making trousers at Howrah. Currently, trousers manufacturing is outsourced by the company.Conscious of its social responsibilities, Turtle embarked on the task of saving turtles in the country, particularly in Orissa and Gujarat.

]]> http://www.indiaretailbiz.com/blog/2009/05/18/turtles-strategic-sale-of-equity-stake-to-future-group-may-be-completed-within-a-month/feed/ 0 http://www.indiaretailbiz.com/blog/2009/04/15/pantaloon-to-bev-renamed-as-fmcg-ltd-board-approves-creation-of-subsidiaries-and-raising-of-resources-to-fuel-growth-plans-appoints-haribhakti-as-new-chairman/ http://www.indiaretailbiz.com/blog/2009/04/15/pantaloon-to-bev-renamed-as-fmcg-ltd-board-approves-creation-of-subsidiaries-and-raising-of-resources-to-fuel-growth-plans-appoints-haribhakti-as-new-chairman/#comments Wed, 15 Apr 2009 01:55:43 +0000 K http://www.indiaretailbiz.com/blog/2009/04/15/pantaloon-to-bev-renamed-as-fmcg-ltd-board-approves-creation-of-subsidiaries-and-raising-of-resources-to-fuel-growth-plans-appoints-haribhakti-as-new-chairman/

Pantaloon Retail (India), the country’s largest multi-product, multi-format, listed retailer, part of Kishore Biyani-led Future Group, is going in for a complete revamp of its operations.

Among the slew of measures approved by its Board on Monday, the company is not only re-christening itself as “Future Markets and Consumer Goods Limited (FMCG),” but is also mobilising funds to the tune of Rs 1,250 crore, through a combination of preferential allotment of shares to promoters and funding by private equity investors. The funds will be utilised to fuel its company’s ambitious growth plans. Pantaloon Retail, which occupies over 12 million sq ft of retail space, operates hundreds of retail stores in value and lifestyle segments across 65 cities/towns and 63 rural markets.

“We are looking at creating two separate companies– one in fashion and another in retail and logistics, and looking to raise Rs 750 crore and Rs 500 crore for the two companies, respectively through private equity,” said Kishore Biyani. The fashion company is likely to be called “Future Fashion Merchandising Ltd,” while the retail company is likely to be called “Future Consumer Enterprise Ltd.”

Raising of resources through subsidiary companies, while unlocking the value of its retail businesses, will  go a long way in lowering down the financial leverage, which has been rising through the year. Induction of equity capital in the business has become necessary to realise retail growth plans, which consequent to adverse impact of economic slowdown have in any case been reduced to nearly half of the original targets.

The company has also appointed noted Chartered Accountant Shailesh Haribhakti, an independent Director, as its new non-executive Chairman. An EGM (Extra Ordinary General Meeting) of the company’s share holders has been called on the 12th May, 2009 to ratify his appointment. Shailesh Haribhakti, Executive Chairman and Managing Partner of Mumbai-based Haribhakti & Co., is the only Indian member of the Standards Advisory Council (SAC) of the International Accounting Standards Board (IASB).

Pantaloon Retail, India’s largest listed retailer, part of the Kishore Biyani promoted Future Group, has called a meeting of its Board of Directors today (13th April) to approve revamp operations of the retailer by demerging it into three entitie, one each for consumer products (FMCG & Durables), retail, and fashion, according to an ET report.

In a notice sent to the Bombay Stock Exchange, Pantaloon has informed the Exchange that the company is considering to realign its business lines and create “separate legal entities.”

If approved, Pantaloon Retail will be renamed as Future Market & Consumer Group Ltd. While, the renamed company will be the operating company for the FMCG and consumer business, it will also be holding the two other entities being created for retail and fashion businesses. These subsidiary companies are likely to be named as Future Consumer Enterprise Ltd. (for retail) and Future Fashion Merchandising Ltd (for fashion).

The company will also be seeking approval of the Board for raising about Rs 1,500 crore ($300 million) through a combination of preferential issue of shares to promoters and private investors. While, PE players like Carlyle, Blackstone, Bain Capital, KKR and the Goldman Sachs have been approached by the investment bankers to bring in about Rs 1,200 crore through investment in the shares of the newly-created entities, the balance amount of around Rs 300 crore is expected to be brought in by the promoters via preferential allotment of shares in the company.

While, induction of new capital in the business will help the retailer to substantially bring down continuously rising debt equity ratio for the company, restructuring of the entities will enable the company to induct new partners. The group is said to be in advanced talks for setting up a joint venture with the world’s second largest French retailer Carrefour.

According to the projections made by the group for 2010, while the retail business may garner revenues of Rs 14,000 crore, the FMCG and consumer durables company is expected to contribute Rs 1,800-2,000 crore and the fashion company is expected to contribute another Rs 2,000-2,200 crore.

Pantaloon, as a consequence of economic slowdown, has been witnessing less than expected growth. It has already slashed its expansion plans for FY09 and FY10. Pantaloon, which occupies around 12 million square feet of retail space, has trimmed its targets for space addition from 4 million sq feet a year to 2.5 million square feet a year.

The Mobile Store, the mobile retail arm of Ruias’ led Essar group, which currently operates around 1,400 stores across the country, is going for an aggressive expansion of its retail network over the next three years, by 2012. The retailer is also planning this year to launch low-priced mobile phones under private label.

The Mobile Store, according to Rajiv Agarwal, its CEO, is likely to almost double the retail network from 1,400 stores to around 2,500 stores by March, 2012.  Meanwhile, the number of mobile stores will go up to 1,800 stores this fiscal by March, 2010.

The country has a very large mobile phones market as the number of new mobile connections despite near saturation in several metro markets is growing at a very fast pace with 1344 million new connections being added during February, 2009. The toatal number of connections has already topped 375 million mark and the country now is among the top two mobile connected countries.

Under such a scenerio, The Mobile Store, which has around 6 per cent share of the retail market, see is a great potential for mobile phones and related products and services business. The retailer, apart from selling mobile phones, is also engaged in selling accessories, mobile connections & recharges, as well as offer services like bill payments, mobile repairs and mobile exchange.

The Mobile Store is also beefing up its finances by raising about $75 million (around Rs 400 crore) in the company through private equity. The funds being raised will be utilised for acquiring Indian companies in the sector, besides funding expansion of the retail network. “We will soon start discussion with private equity players to raise upto $75 million and hope to seal the deal in three to four months,” said Rajeev Agrawal, while talking to media persons.

Kishore Biyani-led Future Group, which currently mainly operates multi-product, multi-format retail chains in value, lifestyle, and home retail segments under its listed company Pantaloon Retail (India), is looking at restructing its retail and other business in consumption space by creating four operating companies, says a CNBC TV-18 report.

Apart from Pantaloon Retail, which accounts for bulk of the group’s current turnover, the group is also operating Future Capital, another listed company. Future Capital provides credit to Pantaloon’s consumers besides being also active in providing other financial services like credit cards, etc.

The move to restructure the businesses comes in the wake of low valuations of its retail business and recent changes in the FDI policy. While, the group on the one hand is looking at making its retail business more valuable, on the other it is looking at making the same attractive to foreign investors.

According to the blueprint prepared for restructure, Future Group wants to carve out four separate operating companies, one each for lifestyle retail, value retail, financial services, and support services business.

The group, it may be recalled, had decided to split its retail business in the value and lifestyle segments by creating a separate company to manage its Big Bazaar and Food Bazaar chains in the ‘value’ segment. While nearly two third of the group’s retail turnover (over Rs 5000 crore in FY 2008) is contributed by the ‘value’ segment, balance turnover is contributed by the ‘lifestyle’ and ‘home retail segments. While ‘Lifestyle’ segment comprises retail chains like Pantaloons, Central, Ethnicity, etc, the Home Retail segment includes Home Town and e-zone chains.

Under the proposed restructure, while value retail will come under one company, lifestyle and home retail businesses will together be managed under another company.

Apart from financial services business already being handled by Future Capital, Future group is looking at creating a fourth company for support services business, which among others, will comprise Futures Logistics, Future Media, and Future Brands. Various joint ventures are also likely to become part of the fourth company.

Kishore Biyani has created a position of Director Strategy, Merger and Acquisition with a view to consolidate and organisee its verticals better.

Radhakrishna Hospitality Services (RKHS), India’s largest food and facilities management services provider, which also operates a food retail chain under the brand name of Foodland Fresh, in and around Mumbai, has been taken over by Sodexo, of France. The acquisition of the Raju Shetty promoted and owned company has been done for a price of $100 million (over Rs 500 crore).

Sodexo, the €13.6 billionn global food services and facility management major, which is present in 80 countries across the world, has been known for its food coupons among employees working with large corporate in India. The Rs 400-odd crore RKHS is believed to have around 20,000 persons working for it across the country.

The acquisition deal does not include Radhakrishna’s retail business as well as other logistics and supply chain businesses.

The deal values Radhakrishna’s business for around 1.2 times its annual turnover.

According to a Live Mint report, three of the Directors, namely, Rama Bijapurkar,  Kannan Srinivasan, and  S.B. Mathur resigned from the company’s Board of Directors to avoid legal problems that they may be required to face as the crisis at Subhiksha deepened further. In a related development ICICI Venture Capital’s Chief Executive and MD Renuka Ramnath as well as Joint MD Rajeev Bakshi are also reported have quit the the Subhiksha board.I-Venture together with group mutual funds still hold 23 per cent of the stake in the company’s equity, though 10 per cent of the stake was sold by I-Venture to IT czar Azim Premji’s investment company Zash Investments.

“Indian company law imposes a lot of penal obligations on board members even for mistakes committed due to inability rather than intent to default— non-payment of salaries, dishonour of cheques etc., are cases in point. Director resigning would only be related to that as they would understandably not want to get tangled in such issues. All resignations have stated personal reasons which we believe would be around avoiding penal legal liability,” said Subramanian.

In a stormy meeting of the board held in Mumbai on 22 November, 2008, members of the board are believed to have raised several questions on Subhiksha’s finances and its governance practices. Two of the three resignations followed this board meeting, says the report.

The company, as has been reported for several days, has been facing problems for over five months as it ran out of cash to keep operations running. The company has now sought a financial revival package of Rs 300 crore to get the operations of the retail chain back on the rails. The promoters are even willing to dilute their equity in the company, if it results in investors bringing the much needed cash to clear outstanding dues to employees, vendors, and property owners, among others, apart from cash required to replenish empty store shelves.

According to another set of disclosures, Subhiksha was provided with working and term loans aggregating to Rs 620 crore by ten banks until the beginning of May, 2008, and the company is believed to have issued at least 40 million convertible bonds to private equity funds.

The lenders have been identified as The Hongkong and Shanghai Banking Corp. Ltd (Rs85 crore), ABN AMRO Bank NV (Rs50 crore), Centurion Bank of Punjab Ltd (Rs40 crore), Yes Bank Ltd (Rs50 crore), Standard Chartered Bank (Rs25 crore), HDFC Bank Ltd (Rs65 crore), Development Credit Bank Ltd (Rs25 crore), Federal Bank Ltd (Rs50 crore), Bank of Baroda (Rs75 crore), ICICI Bank Ltd (Rs155 crore).
Tata Teleservices Ltd, in the meanwhile, has opposed the amalgamation of Subhiksha with Blue Green Constructions and Investments, that Subhiksha had bought over

with a view to help list the retailers’ shares on the stock exchanges. Tata Teleservices is demanding payment of over Rs. 10 crore against 10,000 or so telephone connections provided by the telecom service provider. “We are objecting to the scheme of amalgamation because we don’t want to become creditor to another company whose net worth is not known to us,” said A.K. Mylsamy, legal advisor of Tata Teleservices. According to sources Tatas have already disconnected all phone lines provided to the retailer.

Vishal Retail, the Delhi-based value retail chain of family mega stores, which for some time has been experiencing tight cash-flow conditions, has been forced to stop further expansion of its retail network for the rest of the current (last) quarter, of this financial year ending 31st March, 2009. The retailer, according to a BS report, will also fall short of revenue target of Rs 1,800 crore set for this financial year.

Vishal had achieved sales of Rs 1,013 crore last fiscal (2007-08). Although, no revised (scaled-down) target for sales has been announced, Manmohan Agarwal, CEO-Corporate Affairs, Vishal Retail, had in an an interview few days ago had indicated that despite economic slowdown the company may still end up with a revenue growth of 40 to 50 per cent during this year. As such, the company may achieve sales of between Rs 1,400 and Rs 1,500 crore during FY 2008-09.

The retailer, which had last year raised capital through a highly successful IPO, until recently was well on its way to expand its retail network. Apart from setting up 29 warehouses, measuring over one lakh sq ft of space, located at 8 cities across India, Vishal has also set up 181 stores and has already occupied trading space of 2.98 million sq ft. In view of the tight liquidity, it has decided to undertake further expansion through franchisee model only. Vishal though had set a target of setting up 200 stores before the end of March, 2009.

“Since we have frozen our expansion plans for the rest of the financial year, it is unlikely that we would be able to meet our revenue target,” said Ram Chandra Agarwal, Chairman and Managing Director, Vishal Retail.

Scoffing off market speculation on liquidation of a significant part of his company’s equity stake at about Rs 150-200 per share to a large corporate engaged in retail (read, Future group or Reliance Retail), Agarwal said, “We do not need to sell our stake to any retailer as we will not expand this fiscal and, we have enough working capital to run our daily business.”

It may not be out of context to mention here that due to economic downturn other big retailers like RPG group’s Spencer’s Retail have also been forced to shut down retail stores (nearly 60) and have also been forced to announce reduction in revenue target from Rs 1,800 crore to Rs 1,500 crore, this fiscal. Even Reliance Retail is believed to have recast operations of around 90 stores, while Subhiksha has shut down around 80 stores due to poor sales performance leading to cash crunch.

Retail sector in India, despite economic downturn during later half of the year, did not witness much of big-ticket M&A activity during 2008. Acquisition of Piramals-led Pyramid Retail to Indiabulls was, perhaps, the only big ticket, main stream acquisition during the year.

2007 was, however, little better with acquisitions of Andhra-based Trinethra chain by Birlas and Gujarat-based Adani Retail by Ambanis.Even Wadhwans of Spinach fame had acquired three chains in different regions of the country.

Things appear to be changing during the new year. 2009 may see a number of mergers and acquisitions as lot of players, who sensing a short term opportunity had entered the sector but found the going tough, may like to get out of the business.

Yesterday, we had carried media reports that had speculated possible sale of stake in Vishal Retail’s equity to a large corporate which is already engaged in retail business.

It now appears from a CNBC TV-18 (Newswire-18) report that Mukesh Ambani-led Reliance Retail or Kishore Biyani-led Future group could emerge as successful suitors. Both Reliance and Future a operate muli-format retail chains in lifestyle and value segments.

Although, the top management of Vishal Retail has outrightly denied any such report, according to sources, the company may end up offering enough shares, which may be enough to trigger open offer from the buyer.

According R C Agarwal, Chairman and Managing Director, Vishal has enough cash to take care of its day-to-day operations. It, however, requires cash only for expansion. The company, as such, has put all its expansion plans, on hold for the current year and is looking at expanding through franchisee operations.

It should be noted that, under present rules, 15 per cent or more holding in a company triggers public offer for purchase of up to 20 per cent shares from the general public. Thus, if the public offer is fully subscribed, the successful purchaser may end up with 35 per cent or more holding in the company.

CNBC TV-18 report has indicated likely sales price of between Rs. 150 and Rs 200 per equity share. Vishal Retail shares today closed 4.96 per cent higher at Rs 96.30 per share on BSE. This represents P/E ratio of 4.90 based on EPS (TTM) of 19.66 per share. Vishal Retail’s shares in the past 52 weeks have touched highest prices of Rs 1020 (NSE)/ Rs 1001 (BSE) and lowest prices of Rs 55 (NSE)/ Rs 55.60 (BSE).

Vishal is currently operating 181 supermarket and hypermarket format stores across the country in the value segment. These stores occupy nearly three million sq ft of trading space. Vishal was among the pioneering retailers who instead of metro cities had decided to focus on tier II and III towns.

Indiabulls Retail, part of Indiabulls group, which operates across infrastructure, real estate, financial services, and power sectors of India, is believed to have been defaulting on outstanding payments to a number of suppliers and service providers.

Indiabulls Retail, it may be recalled, had come in existence after Indiabulls Financial Services had decided to enter the business of modern retail  and had in December, 2007, acquired Piramals’ owned Piramyd Retail for Rs 208 crore. Indiabulls had then planned to set up wholesale business of ‘cash and carry’ format as well. Indiabulls was then, in fact, entering the retail business with a view to leverage on the agroup’s strength in real-estate business. India Retail had then become part of Indiabulls Real Estate (IBREL) Limited.

According to a recent Mint report, Indiabulls Retail is facing a number of vendor complaints against non-payment of outstanding amounts ranging between Rs 6 and Rs 45 lakh. Indiabulls Retail is facing rough weather on other front as well.

As reported earlier, Indiabulls has already shut down a number of its Megamart and Megastore outlets including all stores at Ahmedabad. Most of the Indiabulls outlets were actually operated earlier by Piramyd Retail under the brand names of ‘Megastore (lifestyle- large format) and ‘Trumart’ (convenience, grocery- small format) stores.

Indiabulls is holding “legacy issues” of taking over Piramyd’s business for non-payment of outstandings to vendors. According to Indiabulls a lot of payments have been put on hold because many of such claims are fraudulent. “Some liabilities are recorded and certain liabilities are not recorded. What do you do with the unrecorded liabilities?” asks Anil Lepps, who has recently been appointed as CEO of the retail business.

Lepps, though, concedes that some of the claims may be genuine as well and the company may require some time to clean up the “mess.”

One of the Mumbai-based vendor, requesting anonymity, told the newspaper that he has to receive outstanding amount of Rs 45 lakh. Indiabulls is not in a position to pay because the company, according to his information, is cash starved. “I stopped supplying to them three months ago, but now they are forcing me to resume supplies failing which they say they will withhold my payment,” he said.

It may be noted that Indiabulls while acquiring Piramyd Retail had agreed to take over the company’s liabilties also and, had over a year’s time since transfer of business in December, 2007, to reconcile vendor accounts.

Hindustan Thompson Associates Ltd (also known as JWT), according to sources, has filed a legal case against non payment of Rs 50 lakh for design, production, and release of adververtisement. Indiabulls, though, believes that the claim pertains to advertising work done by the agency for other Piramal Group companies.

Lepps concedes that some claims might be genuine but because of lack of records, it was taking the company a lot of time to sift out the fraudulent cases. “I won’t…say they are all wrong…whatever is genuine is getting reconciled. We are not a fly-by-night operator and we will not keep anybody’s money. Every genuine case will be taken care of,” he said.

Lepps hopes to sort out everything in the next couple of months, says the report.