SBI Capital to draft Koutons’ debt recast

Friday, 04 March 2011

Koutons Retail has appointed SBI Capital Markets to draft a debt recast scheme as it is unable to repay short-term debt. The continuous downfall in the stock price led to an inordinate delay in raising equity for the company and because of this, it’s unable to meet the repayment obligations of short term loans. The New Delhi-based retailer, valued at Rs 866 million, has lost about 91 per cent in market capitalization in the past six months as concerns mounted about the company’s dipping sales and fears of default. Koutons Retail reported net loss of Rs 317.10 crores in Q3 December 2010 compared with a net profit of Rs 15.80 crores in Q3 December 2009. Net sales plunged 59.6 per cent to Rs. 108.77 crores in Q3 December 2010 over Q3 December 2009. The huge loss was because the company had written off debtors and advances aggregating Rs 103.86 crores in Q3 December 2010. The company had also provided for Rs 150 crores in Q3 December 2010 towards possible impairment in value of inventories. At the time of announcing the third quarter results, Koutons Retail had said a detailed exercise of critical evaluation of realisable value of inventories will be undertaken by an independent stock auditor. Final decision on inventory write-off will be taken after the completion of the exercise in Q4 March 2011, it had said.

Koutons was born in 1991 as Charlie Creations. It started primarily as a denim brand but is today manufacturing and selling complete men’s, women’s and children’s under the brand name Koutons, Les Femme and Koutons Junior respectively. Another brand from the stable of Koutons is Charlie Outlaw, which caters to teens with jeans, T-shirts, jackets etc. Koutons caters to the upper and upper middle classes with a target age group between 18 to 60 years.