Now Tata Capital drags Lilliput to court

If private investors, TPG and Bain Capital accusing Lilliput’s

founder and MD Sanjay Narula of fudging funds was not enough, now Tata Capital has filed a case against the retailer to recover its dues. This has happened after the troubled retailer defaulted on a payout to the finance company in October. Tata had filed a case in the Delhi High Court earlier this month to recover its Rs 10 crore that Lilliput defaulted in October along with another Rs 25 crores payout to Bank of India following banks refusal to disburse further loans to the company after tensions between the kidswear retailer and its foreign private equity investors brewed up.

While PE investors demanded a forensic accounting of the company through an independent auditor, Narula accused the PE firms of trying to gain control in the company. The stand-off came as Lilliput was preparing to raise Rs 850 crores through public offering. Now, the cash-strapped retailer is finding it difficult to raise money from banks as well as through the proposed IPO and is facing liquidity problem. Following the default, rating agency ICRA has downgraded Lilliput’s Rs 100-crores long-term bank funds to the high-risk ‘C’, down from the stable rating assigned in August last year.