Move to help it emerge from a Rs 735-crore debt pit.

The crisis-ridden Vishal Retail chain today said it had received approval from lenders for inducting a strategic investor into the company to help it emerge from a Rs 735-crore debt pit.

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"Prima facie, approval has been granted to the proposal regarding induction of a strategic investor into the company. The proposal had been developed on the basis of intensive discussions with all concerned," Chairman and Managing Director Ram Chandra Agarwal said.

He said the decision to approve induction of a strategic investor was taken during a meeting of the CDR panel in Mumbai today.

Vishal had sought a debt restructuring exercise last November to bring the company back on its feet after being hit by falling sales and debt of Rs 735 crore. It proposed a series of steps, including infusion of fresh liquidity through a strategic investor and deferment of its debt payment before the CDR panel.

Today's decision by the CDR panel clears the way for private equity group TPG Capital, which has reportedly shown interest in buying a stake in the debt-ridden firm. However, TPG Capital India Managing Director Puneet Bhatia refused to speak on the matter.

Vishal Retail currently operates around 170 large format stores, including 149 company-owned outlets. A year ago, it had halted its expansion plan due to mounting debts and then was forced to pull down shutters on 10 stores, citing fall in footfalls.

Meanwhile, Vishal Retail has withdrawn the merger of Vishal Waterworld with itself. The High Court of Delhi had granted permission for the withdrawal, Vishal Retail said in a filing to the Bombay Stock Exchange. However, the company has not disclosed the details on the withdrawal of its merger plans.

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