Shriram, TPG Capital to buy Vishal Retail for Rs 100 cr

Source: BusinesslineBureau:New Delhi, Sept. 13

Debt-laden Vishal Retail has said its board has approved the sale of its retail trading business to Chennai-based Shriram Group and the wholesale business, institutional sales and franchise operation to private equity company TPG Capital.

The combined deal is estimated at Rs 100 crore.

The Delhi-based retailer operates chains such as Vishal, Vishal Retail, Vishal Megamart and Vishal Fashion Mart. It said its board has decided to conduct a postal ballot to seek shareholders' approval for the deal.

The Chairman and Managing Director of Vishal Retail, Mr Ram Chandra Agrawal, and its Company Secretary, Mr Arun Gupta, have been authorised to conduct the ballot. The results will be announced on October 25.

In a notice to the Bombay Stock Exchange, the company said that the asset sale does not include its freehold properties in Hubli, Kolkata, Dehradun and Jabalpur.

Slowdown-hit

Vishal Retail was hit by the downturn in the economy last year and ran up a debt of Rs 730 crore. In 2008-09, it had borrowed money to scale up its operations.

The asset sale proceeds will only partly meet the Rs 730-crore debt that the company has with lenders such as SBI, HDFC Bank, HSBC and ING Vysya Bank that are also part of the corporate debt restructuring process. The lenders had recently approved a revised offer from TPG to take over the assets of the firm.

Shriram is a diversified group, with focus on areas such as financial services, property and engineering services.

In June, Vishal had announced that it had signed a memorandum of understanding with private equity firm TPG. TPG has brought on board its other portfolio group, Shriram, that has among its businesses a retail finance firm, as foreign investors are not allowed to invest directly in multi-brand retail companies.

Earlier, the Kishore Biyani-led Future Group was also said to be in talks with Vishal for a possible buyout.

For the quarter ended June 30, Vishal posted a net loss of Rs 19.47 crore and net sales of Rs 334.63 crore.

It also noted that the sale will be subject to further orders of the Delhi High Court, which has restrained the retailer from selling its assets after a case was filed by some of Vishal's lenders, who were not part of the debt recast exercise.

bindu.menon@thehindu.co.in