Lilliput Kids gets a breather

Friday, 11 November 2011

Lenders to the Lilliput Kidswear have granted extra time to repay debts that were due earlier this month. They have decided to extend short- term funds to run the business. In a recent development, the company had asked for an out-of-court settlement with its private equity (PE) investors, but the decision upon it is yet to be reached. After its PE investors Bain Capital and TPG raised an alarm against company founder Sanjeev Narula asking him to get the company accounts audited by an independent auditor, the New Delhi-based retailer moved court to prevent investors from exiting the company.

The lenders have now set a dead- line of November 30 for the independent auditor, Anil Agarwal and Co, to submit its report on Lilliput. They have granted time extension till November 1 to repay the outstanding Rs 35 crores, or risk a default. Lenders are being cautious about the alleged fudging of accounts as all the loans given to the company were based on its past audited accounts. The company’s lenders include Allahabad Bank, ICICI Bank and Oriental Bank of Commerce.

Though Lilliput doubled its showroom floor- space in the past year, its debt tripled to about Rs 500 crores and now there is no option left for the company to raise fresh money. Ratings agency ICRA had downgraded Lilliput’s rating after the company defaulted on its loan repayments due in October.