India : Provogue shuts over 60 stores as debts mount

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Provogue shuts over 60 stores as debts mount

07
Apr '16

Reeling under a cash crunch, Mumbai-based apparel retailer Provogue has closed down over 60 stores in the past one year and is delaying salaries of employees. Lenders are tightening the screws on the company's promoters and are contemplating invoking powers under strategic debt restructuring (SDR) provisions.

Provogue has a total stand-alone debt of around Rs 305.9 crore, The Financial Express has reported. In the December quarter, it reported a net loss of Rs 49.73 crore, on net sales of Rs 82.65crore. For the last couple of years the company has been consistently reporting losses almost in every quarter.

“Our main lender is Andhra Bank and it is true that they are trying to bring in new management under SDR. We are negotiating with them on the same and the final decision is expected by first week of April. We are trying to get our debt restructured and have requested the banks to support us,” Provogue's Managing Director, Nikhil Chaturvedi said.

Under SDR, banks have the power to convert a part of a defaulting firm's debt to majority equity and take operational control. Once the decision to invoke SDR is taken, banks will have about 18 months to find buyers for this equity.

Provogue is continuing with store rationalisation and plans to shut few more loss making stores across the country, Chaturvedi said.
In the last one year the company has rationalised store count and has only three stores operational in Mumbai and around 40 stores operational in the country compared to more than 100 stores across the country in 2014.

According to sources the company is delaying salaries of employees by around 2 to 3 months. Also it is no longer sending fresh stock to its stores and is selling stocks at around 30 to 50 per cent discount on most items. The company has around 60 employees across India, another senior official said. (SH)

Fibre2Fashion News Desk – India

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