GICS Industry: Multiline Retail l Sub Industry: Department Stores l Website : www.vishalmegamart.

net

Vishal Retail Ltd

Key Stock Indicators

NSE Ticker: VISHALRET CMP (as on 15 Apr 2011—Rs/share): 31.9 Shares outstanding (mn): 22.4
Bloomberg Ticker: VISH:IN 52-week range up to 15 Apr 2011 (Rs) (H/L): 71.70/25.35 Free Float (%): 42.8
Face value / Share: 10.0 Market Cap as on 15 Apr 2011 (Rs mn): 715 Average daily volumes (12 months): 205,354
Div. Yield (%): 0.00 Enterprise Value as on 15 Apr 2011 (Rs mn): 8,273 Beta (2 year): 1.2
Div. Yield (%): 0.0

Established in 2001, Vishal Retail Limited (VRL) was promoted by Ram Chandra Agarwal under the
name Vishal Retail Pvt Ltd. The company is engaged in the retail industry. It offers a range of Key Financial Indicators
products, including apparel, non-apparel and fast moving consumer goods. The company has 171
stores across the country and seven subsidiaries. Mar-08 Mar-09 Mar-10
Re ve nue (Rs mn) 9,579.6 13,310.7 11,181.3
KEY HIGHLIGHTS
EBITDA ma rgi ns (%) 13.3 0.6 -9.2
Business sold off to Shriram group and TPG for Rs 700 mn PAT (Rs mn) 344.0 -944.9 -4,153.1
VRL sold its retail trading business to the Chennai-based Shriram group and the wholesale PAT ma rgi ns (%) 3.6 -7.1 -37.1
division to the private equity (PE) firm TPG for Rs 700 mn. Airplaza Retail Holdings, a company Ge a ri ng (x) 2.1 4.4 n.m
owned by the Chennai-based Shriram group, will now manage the retail stores. TPG has
EPS (Rs /s ha re ) 15.4 -42.2 -185.4
announced that it is planning to invest Rs 2 bn to fund the turnaround of VRL’s business and
PE (x) 54.1 n.m n.m
future growth.
P/BV (x) 6.9 0.4 n.m
Approaches CDR cell for debt restructuring RoCE (%) 15.7 n.m n.m
During FY10, the company closed down 15 unviable stores and added 11 new ones. The company RoE (%) 17.4 n.m -
had 171 stores as of FY10, and reduced 0.78 lakh sq ft of retail space in the year. VRL has now
adopted the centralised warehousing system. The number of warehouses has been reduced to 4 EV/EBITDA (x) 18.6 102.6 n.m
from the previous 26. The company has also closed down all manufacturing set-ups. The company n.m. : Not meaningful
is also restructuring its debts through corporate debt restructuring mechanism. In FY10, the Shareholding (As on December 31, 2010)
company submitted its proposal under corporate debt restructuring mechanism to the CDR cell for
restructuring secured as well as unsecured debts.
Others
Variety of products offered in its stores 43%
The company offers a variety of products, including apparel, non-apparel and fast moving
consumer goods. The company sells readymade garments, household merchandise and other
consumer goods like footwear for men and women, watches, toys and games, toiletries, electronics
and home appliances, mobile phones, grocery items, sports items, crockery, novelties and gift
articles.

KEY RISKS

• Competitive market conditions and entry of new players into the market
Promoter
• Risk of terrorist attacks
57%
• High cost of rentals and mall availability in top cities
• Debt burden and rise in interest rates Indexed price chart

(index) ('000)
Stock Performances vis-à-vis market 140 6000
120 5000
100
4000
YTD 1-m 3-m 12-m 80
3000
60
VISHALRET -42 -17 3 -41 2000
40
NIFTY 12 7 3 11 20 1000
0 0
Apr-10

Jun-10

Jul-10

Aug-10

Sep-10

Oct-10
Nov-10

Dec-10

Feb-11
May-10

Jan-11

Mar-11

Note:
1) YTD returns are since Apr 01, 2010 to Apr 15, 2011.
2) 1-m, 3-m and 12-m returns are up to Apr 15, 2011
Volumes (RHS) VISHALRET NIFTY

CRISIL COMPANY REPORT | 1

 Vishal Retail Ltd
BACKGROUND

Vishal Retail Pvt Ltd was incorporated on July 23, 2001. VRL is engaged in the retail industry. Its products are categorised as apparel, non-apparel (consumer durables, home
furnishing and furniture) and fast moving consumer goods. The company sells readymade garments, household merchandise, and other consumer goods such as footwear,
watches, toys, toiletries, grocery items, sports items, crockery, novelties and gifts. As of FY10, the company has 171 stores and four warehouses, down from 26 warehouses
earlier. The company closed down 15 unviable stores and added 11 new ones across different locations. The company also focused only on retail business and closed down
all manufacturing set-ups. The company’s registered office is located at New Delhi.

The company has seven subsidiaries —VRL Foods Ltd, VRL Movers Ltd, VRL Consumer Goods Ltd, VRL Fashions Ltd, VRL Infrastructure Ltd, VRL Retail Ventures Ltd and VRL
Knowledge Process Ltd. The company has a tie up with the State Bank of India and has launched the “SBI Vishal Mega Mart Card”.

COMPETITIVE POSITION

Peer Comparison
Shoppers Stop Pantaloon Retail
Vishal Retail Ltd. Trent Ltd. Limited. (India) Limited.
PeriodEndsOn Mar-10 Mar-10 Mar-10 Jun-10
Re ve nue (Rs mn) 11,181.3 10,521.5 15,447.9 98,211.4
EBITDA ma rgi ns (%) -9.2 0.9 7.5 8.9
PAT (Rs mn) -4,153.1 -310.5 358.0 608.8
PAT ma rgi ns (%) -37.1 -3.0 2.3 0.6
Ge a ri ng (x) n.m 0.6 0.9 1.4
EPS (Rs /s ha re ) -185.4 -15.5 10.3 3.0
PE (x) n.m n.m 31.0 91.7
P/BV (x) n.m 3.8 4.6 1.8
RoCE (%) n.m n.m 16.8 9.4
RoE (%) - n.m 17.3 2.1
EV/EBITDA (x) n.m 226.0 11.5 11.2
n.m: Not meaningful

FINANCIAL PROFILE Key Financial Indicators

Reduction in revenue, de-growth in EBITDA margin in FY10 Units Mar-08 Mar-09 Mar-10
Revenue Rs mil li on 9,579.6 13,310.7 11,181.3
The company registered ~16% de-growth in top line, largely on account of reduction
in sales and consequential rise in expense burden. EBITDA ma rgins Per cent 13.3 0.6 -9.2
PAT Rs mil li on 344.0 -944.9 -4,153.1
It reported operating losses of Rs 1 bn in FY10 vis-à-vis Rs 80.3 mn in FY09. This was
on account of overall increase in cost of goods sold as a percentage of sales in FY10. PAT ma rgi ns Per cent 3.6 -7.1 -37.1
Revenue growth Per cent 67.1 38.9 -16.0
The company reported a net loss of Rs 4.15 bn in FY10, against Rs 944.9 mn in FY09.
Increase in net loss was mainly on account of write-off for an amount of Rs 3.4 bn, EBITDA growth Per cent 89.8 -93.7 n.m
which has been identified as non-moving, slow moving, obsolete, damaged, PAT growth Per cent 37.2 n.m n.m
shortages due to pilferage in all the categories. The company also incurred a loss of
inventory of Rs 507.89 mn due to fire at a warehouse at Gurgaon. Gea ri ng Ti mes 2.1 4.4 n.m
RoCE Per cent 15.7 n.m n.m
RoE Per cent 17.4 n.m 0.0

INDUSTRY PROFILE

Organised retail
Organised retailing refers to the format wherein consumers buy goods in a similar purchase environment across locations. Verticals such as food and grocery, apparels,
furniture and furnishings etc, comprise the entire basket of retail offerings. Macro-economic changes and demographic factors have stimulated the growth of the retail
industry during 2004-2007. While the total retail market grew at a compounded annual growth rate (CAGR) of 10 per cent during 2004-2007, the organized retail market
grew at a much faster rate of 28 per cent during the same period on the back of aggressive expansions by new entrants as well as existing players. However, post
September 2008, the macroeconomic slowdown adversely impacted the overall retail industry. While the weak consumer sentiment impacted the top line of players, high
operating costs impacted the bottom line. Post September 2009, with a revival in consumer sentiment, there has been resurgence in consumer demand. Coupled with this,
players have also reinitiated their expansion plans resulting in an improvement in organised retailers’ revenues.

CRISIL COMPANY REPORT | 2

Vishal Retail Ltd
ANNUAL RESULTS

Income Statement Balance sheet

(Rs million ) Mar-08 Mar-09 Mar-10 (Rs million ) Mar-08 Mar-09 Mar-10
Net Sales 9,529.7 13,232.3 11,054.6 Equity share capital 224.0 224.0 224.0
Operating Income 9,579.6 13,310.7 11,181.3 Reserves and surplus 2,464.0 1,524.5 -2,555.2
Tangible net worth 2,688.0 1,748.4 -2,331.2
EBITDA 1,270.0 80.3 -1,025.3 Deferred tax liablity:|asset| 22.0 -448.0 -2,626.9
EBITDA Margin 13.3 0.6 -9.2 Long-term debt 2,533.4 2,899.9 2,082.8
Short-term-debt 3,020.1 4,723.6 5,587.4
Depreciation 276.0 488.1 465.7 Total debt 5,553.5 7,623.5 7,670.2
Interest 389.9 983.6 913.8 Current liabilities 911.1 1,364.3 2,397.3
Other Income 27.8 15.4 -33.3 Total provisions 65.8 27.1 35.1
Total liabilities 9,240.4 10,315.3 5,144.5
PBT 569.5 -1,403.7 -6,332.0 Gross block 2,585.3 3,683.9 3,592.0
PAT 344.0 -944.9 -4,153.1 Net fixed assets 2,270.6 2,754.5 2,212.3
Investments 0.0 0.0 0.0
PAT Margin 3.6 -7.1 -37.1 Current assets 6,969.7 7,560.8 2,932.2
Receivables 0.0 28.6 29.2
No. of shares (Mn No.) 22.4 22.4 22.4 Inventories 5,574.7 6,670.8 2,199.6
Cash 550.0 151.9 111.3
Earnings per share (EPS) 15.4 -42.2 -185.4 Total assets 9,240.3 10,315.3 5,144.5

Cash flow Ratio

(Rs million ) Mar-08 Mar-09 Mar-10 Mar-08 Mar-09 Mar-10
Pre-tax profit 631.9 -1,376.0 -2,438.1 Revenue growth (%) 67.1 38.9 -16.0
Total tax paid -221.5 -11.1 -0.1 EBITDA growth(%) 89.8 -93.7 n.m
Depreciation 276.0 488.1 465.7 PAT growth(%) 37.2 n.m n.m
Change in working capital -2,745.7 -574.7 5,629.0
EBITDA margins(%) 13.3 0.6 -9.2
Cash flow from operating activities -2,059.3 -1,473.7 3,656.5 Tax rate (%) 38.9 -0.8 -0.0
Capital Expenditure -1,487.9 -961.6 86.4 PAT margins (%) 3.6 -7.1 -37.1
Investments and others 0.0 0.0 0.0
Dividend payout (%) 0.0 0.0 0.0
Dividend per share (Rs) 0.0 0.0 0.0
Cash flow from investing activities -1,487.9 -961.6 86.4 BV (Rs) 120.0 78.1 -104.1
Equity raised/(repaid) 1,037.6 3.8 45.1 Return on Equity (%) 17.4 n.m 0.0
Debt raised/(repaid) 2,908.0 2,069.9 46.7 Return on capital employed (%) 15.7 n.m n.m
Dividend (incl. tax) 0.0 0.0 0.0
Others (incl extraordinaries) 0.1 -36.4 -3,875.4 Gearing (x) 2.1 4.4 n.m
Interest coverage (x) 3.3 0.1 n.m
Debt/EBITDA (x) 4.4 94.9 n.m
Cash flow from financing activities 3,945.7 2,037.3 -3,783.6
Change in cash position 398.5 -398.0 -40.7 Asset turnover (x) 4.9 4.2 3.1
Opening cash 151.5 550.0 151.9 Current ratio (x) 1.7 1.2 0.4
Closing cash 550.0 151.9 111.3 Gross current assets (days) 266 207 93
n.m : Not meaningful

QUARTERLY RESULTS

Profit and loss account

Dec-10 % of Rev Dec-09 % of Rev Sep-10 % of Rev Dec-10 % of Rev Dec-09 % of Rev
No of Months 3 3 3 9 9
Revenue 3,053.0 100.0 3,041.2 100.0 2,727.8 100.0 9,154.9 100.0 8,590.6 100.0
EBITDA 31.2 1.0 (1,476.9) (48.6) (135.4) (5.0) (84.5) (0.9) (2,802.9) (32.6)
Interes t 227.0 7.4 220.8 7.3 230.6 8.5 666.8 7.3 675.7 7.9
Depreci a ti on 91.1 3.0 120.0 3.9 90.7 3.3 271.4 3.0 351.2 4.1
PBT (291.0) (9.5) (1,827.6) (60.1) (456.6) (16.7) (1,041.1) (11.4) (4,349.5) (50.6)
PAT (193.7) (6.3) (1,209.2) (39.8) (307.1) (11.3) (695.7) (7.6) (2,857.9) (33.3)

CRISIL COMPANY REPORT | 3

Vishal Retail Ltd
FOCUS CHARTS & TABLES

Rs mn Quarterly sales & y-o-y growth Per cent Rs mn Quarterly PAT & y-o-y growth Per cent
4,000 30 200 500
3,500 0 0
20
3,000 -200 -500
10
2,500 -400
0 -1,000
-600
2,000 -1,500
-10 -800
1,500 -2,000
-20 -1,000
1,000
-1,200 -2,500
500 -30
-1,400 -3,000
0 -40

Dec-08

Jun-09

Sep-09

Dec-09

Jun-10

Sep-10

Dec-10
Mar-09

Mar-10
Dec-08

Jun-09

Sep-09

Dec-09

Jun-10

Sep-10

Dec-10
Mar-09

Mar-10

Sales Sales growth y-o-y (RHS) Net Profit Net profit growth y-o-y (RHS)

Rs/share EPS Per cent Movement in operating and net margins

20 20
10
0 0
-10
-20 -20
-30
-40 -40
-50
-60 -60
-70
-80
-80
Jun-08

Sep-08

Dec-08

Jun-09

Sep-09

Dec-09

Jun-10

Sep-10

Dec-10
Mar-08

Mar-09

Mar-10
-100
Jun-08

Sep-08

Dec-08

Jun-09

Sep-09

Dec-09

Jun-10

Sep-10

Dec-10
Mar-08

Mar-09

Mar-10

OPM NPM

Shareholding Pattern (Per cent) Board of Directors

Mar 2010 Jun 2010 Sep 2010 Dec 2010 Director Name Designation
Promote r 57.3 57.2 57.2 57.2 Ram Chandra Agarwal (Mr.) Executive Chairman & Managing
FI I 0.2 0.3 0.2 0.2 Director, Promoter-Director
DI I 0.2 0.0 0.0 0.1 Uma Agarwal (Ms.) Promoter-Director
Othe rs 42.2 42.5 42.6 42.6 Bharat Jain (Mr.) Non-Executive Director
Seema Kukreja (Mr.) Non-Executive Director
Sandeep Kumar (Mr.) Non-Executive Director
Jay Prakash Shukla (Mr.) Wholetime Director

Additional Disclosure
This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).

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CRISIL COMPANY REPORT | 4