Vishal lenders, promoters meet next week to break impasse

Vishal Retail promoters and lenders will meet next week to sort out the differences over management changes and other modalities of the corporate debt restructuring (CDR) process.

Vishal went in for CDR in November last year. Though lenders have been insisting that Ram Chandra Agarwal step down as chairman and managing director of the company, he is resisting, sources familiar with the developments said. Agarwal and other promoter group companies own 60 per cent in Vishal Retail.

According to norms, the entire CDR process has to be completed within 120 days. Though Agarwal told Business Standard he would “take all necessary steps in the interest of the company and the stakeholders”, the sources said the promoter is not ready to throw in the towel at this stage. Agarwal said that the current management was competent enough to run the company on profitable lines.

In a new twist, Agarwal also said an investor had given a proposal to put in money in the company, which the CDR cell was considering. He did not name the investor.

Vishal, which runs a chain of 147 stores across the country, ran into difficulty in late 2008 after it failed to raise equity amid an economic downturn, which also hit its sales. It owes Rs 730 crore to banks such as State Bank of India, HDFC, HSBC and UCO Bank, and to Life Insurance Corporation, among others.

Meanwhile, as already reported, Ambeek Khemka, group president of the company and who was involved in the CDR, quit amidst reports that he had a rift with the promoters. Khemka declined to comment.

A senior executive from a public sector bank said the company would need fresh infusion of over Rs 100 crore. “The existing promoter group may find it difficult to chip in entire amount and they may need a partner. Mere fund injection may not be sufficient, and restructuring may need a change in business models and working practices,’’ the banker said. He noted there had been significant attrition (of employees).