Bear cartel at work in Pantaloon counter, says Biyani

Kishore Biyani, managing director of the country's largest listed retailer, Pantaloon Retail, on Thursday said a bear cartel was spreading rumours about finances of the company. Its stock touched a 52-week low of Rs 135.30 in intra-day trade on the Bombay Stock Exchange, before ending the day at Rs 142.65, up 0.42 per cent from yesterday’s close.

The stock has lost 24 per cent in the last five trading sessions, after the government put off plans to allow foreign direct investment (FDI) in multi-brand retail due to opposition from political parties.

Reports about a dilemma among the promoters to convert warrants issued to a promoter group company also led to losses in the stock, said analysts.

With a total debt of Rs 4,200 crore and debt equity of 1.3:1, the company is finding it difficult to manage its interest charge of Rs 100 crore a quarter, said an analyst from a Mumbai-based brokerage who did not want to be named.

"The company is in expansion mode, has a high level of inventory and interest charges require cash. But it is finding it difficult to generate cash when sales are falling," the analyst said.

However, Biyani denied this, saying: "There is no truth in it. We have not defaulted on a single rupee to any lender."

The company was selling stakes in non-core assets and banking on FDI in multi-brand retail; hence, the government retreat on FDI was a challenge, the analyst reasoned.

Biyani said the government deferring its plans to allow FDI has not had any major impact on operations.

"So what if the government has put off its plans? It does not mean the world has come to an end for us," he said.

Pantaloon posted one of the lowest same-store sales (SSS) in the September quarter in the value and lifestyle segments. SSS allows investors to determine what portion of new sales has come from growth, compared to the portion from opening new stores.

The analyst quoted earlier says the firm’s inventory levels are 40 per cent of sales per sq ft. one of the highest in its history.

"Same store sales have improved in the current quarter and winter wear is doing very well," said Biyani.