Cash-strapped Lilliput plans to float IPO

Strapped apparel company Lilliput Kidswear plans to cash in on the booming stock market. It is in talks with merchant bankers to float an initial public offering (IPO) the next financial year. According to sources, the company has plans to raise Rs 400 crore through the IPO.

The company was in talks with a few private equity players, including Chinese ones, to raise another round of funds.

The company, with a debt of Rs 850 crore, had restructured Rs 586 crore last year. Lilliput founder Sanjeev Narula confirmed the plan to enter the public market, without giving further details. The retailer had hit the headlines after its battle with private equity investors Bain Capital and TPG. In 2011, Bain and TPG had accused promoter Narula of fudging the books and not providing auditors access to financials. Narula alleged the investors were trying to stall the IPO plans and seize majority control.

In October, Sanjeev Narula, who had approached the company law board, withdrew all the cases against the investors, after they sold their 45 per cent stake to Narula, with no returns. Bain and TPG had together invested $86 million in Lilliput in 2010.

Admitting the $4-million default by Lilliput Kidswear to Bangladeshi garment exporters, Narula said, "At the time, the dispute between the shareholders had occurred, due to which the banks had put on hold the banking facilities, and the letters of credit (LoCs) could not be honoured."

“We had a complete intention to pay, which is a reason why we accepted the documents under the expired LoCs also. The first thing we have done is to invite them to India for arriving at a repayment schedule," he added.

Narula said all disputes with foreign investors have been resolved and 100 per cent equity is with the promoter.

"After multiple audits by the bankers, we were fortunate enough to receive their full support. Of our total banking limits of Rs 850 crore, 85 per cent of debt is restructured and the rest is under the process, expected to be complete by February- end," he said.

Major lenders Allahabad Bank, Axis Bank and Oriental Bank of Commerce had agreed to pay Rs 100 crore as working capital with an 18-month moratorium.

"The banks have been supportive in releasing the additional limits to the company and it is currently working on positive cash flows," added Narula. As on date, Lilliput owns 240 stores across 165 cities with a retailing space of around 6,50,000 sq. ft.