After Vishal Retail debacle, founder focuses on e-commerce

Ram Chandra Agarwal is considering expanding the chain of 16 V2 Retail stores

Three and a half years after his company Vishal Retail was sold to a consortium led by private equity giant TPG, Ram Chandra Agarwal is planning big on his new retail business, V2 Retail.

Now, Agarwal is considering expanding the chain of 16 V2 Retail stores, which primarily sell apparel, in various states, including Uttar Pradesh and those in the North-east. He also plans to set up business-to-business and business-to-consumers e-commerce portals to focus on value fashion. “I want to make the e-commerce portal the country’s largest value-fashion portal,” he said on the sidelines of the India Retail Forum here.

He added he had learnt important lessons on managing cash flow, controlling expansion and not seeking short-term debt. In 2008, Vishal Retail ran into trouble after failing to raise equity, as rising debt levels crippled business prospects. As of June 2010, the company had Rs 730 crore of debt on its books.

In late 2009, lenders to the company had approached the corporate debt restructuring cell. Subsequently, lenders such as State Bank of India, HSBC and ING Vysya approved the debt recast proposal, which included promoters ceding control to investors. Some lenders such as Deutsche Bank, Barclays and DBS Bank moved court, urging Vishal Retail be liquidated.

For V2 Retail, Agarwal is opening stores of with an area of 12,000 sq ft, against Vishal Retail’s store size of 18,000 sq ft. “During the days of Vishal Retail, we opened 10,00,000 sq ft in a year. Today, we are opening 200,000 sq ft in three years,” Agarwal said. V2 Retail aimed to increase its revenue 30 per cent every year, he said, adding the company was eyeing sales of Rs 260-270 crore and a profit of Rs 9 crore this financial year.

However, retail consultants such as Prashant Agarwal, joint managing director of Wazir Advisors, are less enthusiastic. “In business, your background does not go away...Though there are opportunities, he could face challenges on competition and funding,” said Wazir’s Agarwal.

“Log chamatkar ko namaskar karte hai (people salute miracles). I have restarted the retail journey. The chamatkar will happen,” said Ram Chandra Agarwal.