Gini & Jony to restructure debts

Wednesday, 23 February 2011

Upmarket kids wear retail chain Gini & Jony have failed to adhere to the repayment schedule of their debt and have thus approached bankers to restructure the payment schedule. The company has filed for corporate debt restructuring (CDR) with bankers including Punjab National Bank, State Bank of India, Bank of India and IDBI. CDR is a voluntary mechanism for troubled companies to negotiate re-organisation of their unmet obligations to avoid loan default and possible bankruptcy.

Owner and MD Prakash Lakhani is of the opinion that the problem started as they were not generating enough revenues from existing stores due to sluggish demand. Adding to that was the rising yarn prices that have hit their margins hard. He said they had informed the banks about their financial position last November itself. They are hopeful of meeting debt obligations, once CDR is approved on the term loan.

 Gini & Jony has a total debt of Rs 120 crores on its books and plans to restructure term loan worth Rs 20 crores that was due for repayment last December. Its lead banker, Punjab National Bank has a 35 per cent exposure. Lakhani revealed that the company plans to raise fresh equity next financial year either through a public issue or private equity placement to repay debt as well as expand operations.

Founded by the Lakhani brothers almost three decades ago, Gini & Jony sells apparel for kids under its own brand name through a mix of company-owned and franchised outlets. Anil Ambani’s Reliance Capital owns 22 per cent of Gini & Jony.