Vishal Retail caught between TPG and Shriram

Vishal Retail is in the news again and this time because of

the differences between its owners TPG Capital and the Shriram Group. The discount retail chain has already suffered heavily due to mounting debts and now the two owners are at loggerheads over fresh capital investment into the venture. The scuffle seems to be leading both the groups into parting ways with division of assets. The repercussions of global slowdown are being felt by the Shriram Group and they have expressed their inability to bring in funds into Vishal Retail due to slowing economy and rise in interest rates. Since the 100 per cent FDI regulation is yet to be approved, both parties involved have decided to split Vishal Retail’s operations. By this backend business is being looked after by the US-based TPG Capital and the front end store business is being handled by the Shriram Group.

The last global recession hit Vishal Retail’s business badly and its debt pressure mounted to crores of rupees, which led the lenders including State Bank of India, HDFC Bank and ING Vysya Bank among others to sell its assets to TPG and Shriram. After mutually acquiring the Vishal Retail assets, both agreed to revive and bring back the retail chain into healthy situation. While TPG decided to flow Rs 200 crores in the venture, Shriram backed out citing trouble at it financial arm Shriram Capital’s ability to provide funds.

Though both the groups are yet to confirm the development, the current situation may lead to both deciding to run a separate business module after dividing the assets. Shriram Group might independently run the stores, whereas TPG Capital might get into a cash and carry model that would supply to other retailers.