Commerce Dept intervenes in Lilliput, Bangladesh vendors’ issue

In an unusual case of intervention by the Indian

government on business concerning two private parties, the Commerce Department has now stepped in to put pressure on cash-strapped Lilliput Kidswear for payment of an alleged 4 million dollars (Rs 21 crores) it owes to Bangladesh vendors. The company hopes to clear the payments soon but has said that it owes half the claimed amount. A Commerce Department official has said, they stepped in after the Bangladeshi government sought assistance to help its vendors retrieve their payments from Lilliput.

Lilliput, established in 2003, faced problems when its PE Investors Bain Capital and TPG accused the company’s founder Sanjeev Narula of not providing auditors access to financial documents and fudging of company’s books. Bain and TPG had invested 86 million dollars (Rs 469 crores) in Lilliput in 2010. Narula worked out his differences with the investors last October after they sold their 45 percent stake to him. The company has a debt of Rs 850 crores, of which Rs 586 crores has been restructured. Lilliput continues to run 260 stores in the country in 165 cities.

Narula explained to the Commerce Department that the default to Bangladeshi vendors by Lilliput was unintentional as payment was due at the time when the dispute between the shareholders was on-going and the banks had put on hold all payments. That is why the letters of credit could not be honoured.