The debt-ridden Vishal Retail announced on Monday that it wants to sell its retail operations to the Chennai-based Shriram Group and its wholesale business to the Indian subsidiary of US-based private equity firm TPG for R100 crore.
The announcement approved by the company's board is subject to shareholder's approval. The sale does not include the firm's properties at Hubli, Kolkata, Dehradun and Jabalpur. This deal size is, however, lesser than the company's market capitalisation of R121 crore.
Shriram Group that deals in property, finance and insurance would take over retail operations of Vishal Retail, while TPG would handle back-end operations. As part of the transaction, both entities will also take over majority of the liabilities of Vishal Retail.
"At this point our focus is on our talks with the strategic investors and ensuring that the decision taken should be in the best interests of everyone involved," said R.C. Agarwal, managing director, Vishal Retail.
Vishal Retail that owns and operates discount retail chains was caught in financial trouble a year ago due to economic slowdown that hit major businesses globally. The company had to undergo a corporate debt-restructuring programme to restructure around R730 crore debt.
The company's prime lenders that included SBI, HDFC Bank, HSBC and ING Vysya Bank approved a package which entailed the firm's promoters giving up control to TPG.
He refused to divulge what role would he assume in the company after the sale.