Dabur India is restructuring the finances of its wholly-owned retail subsidiary, H&B Stores, by writing-off the losses in the last three years of the beauty and wellness unit.
H&B Stores, that operates the New U branded chain, has approached the New Delhi office of the Registrar of the Companies with an application to write off almost R45 crore of the accumulated losses that the company incurred in the last three years.
This amount is equal to almost 90% of the firm’s total equity capital. The company approached the Delhi High Court last month and apprised it about its plans to restructure its balance sheet by cancelling almost 45 crore shares of R1 from its total 50-crore authorised share capital and, in the process, reducing its overall authorised share capital.
?We do not comment on our accounting procedures. As a public listed company, we have made the necessary disclosures to the authorities concerned,? said PD Narang, group director for Dabur India that is listed on BSE.
H&B Stores reported a loss of R9.9 crore for the fiscal year ending March 2011 on a total turnover of R20 crore. The firm had lost R9.4 crore in the previous fiscal year. According to a source, consultancy firm Ernst and Young was advising H&B Stores on the restructuring and the company has already received an approval on it from Delhi HC. The company currently operates 55 New U stores in several cities.
Like many other Indian corporate houses, including Reliance Industries, Aditya Birla Group and Bharti Enterprises, which entered the country’s lucrative retail sector in the late 2006, Dabur also forayed into the sector in the early 2008 with the beauty and wellness chain. However, the economic slowdown of 2008 dealt crippling blows to the country’s nascent retail sector.
The slowdown wiped off some of the organised retailers from the scene, including discount chain Subhiksha Trading Services, India franchisee of the US-based My Dollar Store Inc, a lingerie chain of Oswal Group and Superstore1, a stationery chain venture from Indo Rama Group.
Many of the chains who survived had to substaintially restructure their businesses.