Unable to match the discounts or the convenience offered by e-retailers, smaller brick and mortar stores are left with no choice but to shut down. After Mumbai’s Rhythm House, the multi-brand apparel chain The Loot will also shut shop soon. The Loot (India) was operating 145 outlets in 2010-11 in 82 cities. The company plans to shut all its stores within next 10 days, as the company failed to repay loans to the lenders, a senior company executive told FE.
The Loot was incorporated in 2003, and the company had taken a loan of more than Rs 100 crore from 10 banks and non-banking financial companies (NBFCs). The State Bank of India was the main lender.
State Bank of India had given a loan of about Rs 40 crore to the company. The company has also taken a loan from Sidbi but since the retailer defaulted on payments Sidbi had filed for liquidation and the matter is in court.
Jay Gupta, managing director, The Loot (India), however, claimed that the company has manged to pay most of its lenders in the recent past. He declined to comment further as the matter is still in court.
Most of the Loot outlets have already been closed and the remaining stores will also be shut down soon as the founder is set to quit the business.
According to Registrar of Companies data the company reported a total revenue of Rs 107 crore and a net profit of Rs 3 crore in FY10. Since the company is under liquidation, financials post 2011 are unavailable.
According to a Sidbi official, the loans offered to the company became non-performing-asset (NPA) because of which they have filed for liquidation. He declined to provide details of the exact outstanding amount the retailer has to pay but said that typically Sidbi offers loan to the tune of R3 crore to R5 crore and charges interest of around 15% to 16 %.
The Sidbi official also said that the company is trying for an out of court settlement but as of now nothing has been decided. On acquiring the assets of the retail chain the official said that it won’t be easy as there are other lenders too who are trying to recover the money they had given to the retailer.