SDR to be invoked against Provogue

Apparel retailer Provogue (India) has been informed by bankers of their plan to invoke powers under strategic debt restructuring (SDR). Provogue had an outstanding debt of Rs 9,595.22 crore as of September. That quarter it reported a net loss of Rs 49.87 crores on net sales of Rs 131.71 crores.

Under SDR, banks have the power to convert a part of a defaulting firm’s debt to major equity and take operational control. Once this decision is taken, the bank has 18 months to find buyers for this equity. During the interim period, the account will not attract higher provisions due to the adverse asset classification. Nikhil Chaturvedi, MD, Provogue has said that such an invocation is the prerogative of the bankers. Now that the company has been informed, they will make their plan. He also added that the company had requested the bankers to support them in terms of restructuring the debt.

A joint lender forum meeting is scheduled on February 16 where the final decision will be taken. Provogue is in the process of rationalising the store count as well as shutting some stores. In the past Bollywood actors Fardeen Khan and Hrithik Roshan have endorsed the brand.

Recently, textile company Alok Industries said that its lenders had decided to convert debt to majority equity under the SDR provisions. The other companies against which SDR has been invoked include Ankit Metal and Power, Rohit Ferro-Tech, IVRCI, Gammon India and so on.