Vishal Retail has received in-principle approval for corporate debt restructuring.

  
 Nov 23, 2009
According to reports, the corporate debt restructuring cell of
Reserve Bank of India (RBI) has approved Vishal Retail's
proposal for debt recast. The terms of the debt restructuring will
reportedly be finalised over the next 60 days.

The Delhi-based retailer is saddled with a mounting debt
burden of Rs 730 crore. The State Bank of India is one
the main lenders to the retail chain with a loan of Rs 170 crore.
The company has 13 lenders in all including HSBC and 
HDFC Bank, ING Vysya Bank, UCO Bank and Bank of India.

One of the conditions for the corporate debt restructuring 
(CDR) proposal is that the company has to get in an investor
on board. RC Agarwal, the promoter, holds a 62.30% stake 
in the company (As on September 2009).

The objective of the CDR framework is to ensure a timely and
transparent mechanism for restructuring of the corporate debt
of companies affected by internal or external factors,
outside the purview of Board for Industrial & Financial 
Reconstruction, Debt Recovery Tribunal and other legal proceedings.

Vishal Retail has been going through a tough time over the
last 12-15 months, led by declining sales and slowdown in
demand along with the credit crunch. Recently, Employees
Provident Fund Organisation was reported to have 
claimed Rs 11 crore from the company for provident fund violations.

Meanwhile, the company announced after market hours on
Friday, 20 November 2009, that its board approved the merger
of Vishal Water World with the company.


Vishal Retail sells ready-made apparels (including its own brands)
and a wide range of household merchandise and other consumer
goods such as footwear, toys, watches, toiletries, grocery items,
sports items, crockery, gift and novelties.

Promoters have pledged 20.03 lakh shares
representing 8.95% of the equity capital of the company.
Total promoters shareholding in the company is 62.30% as on September 2009.