Indian Retailer

Vishal Retail, which is undergoing a Rs 730 crore debt restructuring exercise, is exploring all revenue channels, including renting out shop-in-shop space to regional food and beverages players in its hypermarket stores across the country. The retail chain, while is in no mood for expansion for obvious reasons, will be relocating a few stores in hinterland which failed to deliver according to expectations.

It is looking at Rs 50-100 crore working capital for the next one year, which it hopes to mop up through its corporate debt restructuring (CDR) proposal.

Vishal is also putting on hold all its small-format stores. It has closed all its around 12 Corner Marts set up within HPCL petrol pumps and kept plans for speciality stores in apparel, footwear and electronics on the backburner, according to group president Ambeek Khemka.

"Hypers are our focus area as of now. We are putting all our speciality store formats on hold," Khemka told DNA.

The company had started with a couple of speciality stores including Fashion Marts in Delhi but these have also been closed down, said a company insider.

Out of 204 stores across northern and western India, about two dozen have been closed. Only 171 are in operation, Khemka said.

Vishal started going through a rough patch July-August 2008 onwards when it planned to open 100 additional stores with bank funding.

For this, the company had undertaken merchandise purchase from vendors when the slowdown set in.

"While there was an inventory pile-up in its warehouses because the new stores did not start rolling out, bank funding started drying up. They also wanted to recall their funds.

The markets looked gloomy and Vishal had to drop plans for a follow-on issue," said a source.

Khemka said that losses in the last two quarters amount to Rs 150 crore.

Other plans in the pipeline are stake sale to a strategic investor and, if a good deal comes then the promoter, R C Agarwal, is open to selling out his 64% stake, Khemka hinted.

"All options will be studied and the best one will be opted for," he said. But, under the corporate debt restructuring exercise, the company has time till mid-February to finalise its proposals. Khemka said that the company wants the average interest rates reduced to around 7% from the current 12%, the tenure of repayment at 9-10 years and a moratorium period of up to four years. The repayment was supposed to have happened this year. Lenders to Vishal include the State Bank of India, HDFC, ING Vysya, Bank of India and Uco Bank.