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Koutons Retail -Yet another disappointing quarter…
Koutons Retail (Koutons) reported yet another set of disappointing
numbers in Q3FY11. Sales continued to decline, falling 33.1% and 59.6%
QoQ and YoY, respectively. It reported an operating loss of | 31.3 crore
(against an operating profit of | 49.2 crore in Q3FY10) on the back of
heavy inventory pile-up. Further, a higher interest outgo (on account of
higher debt) made matters worse. Koutons reported a net loss (before
extraordinary item) of | 63.1 crore during the quarter. Over the last few
quarters, the company has been grappling with issues of inventory pileup
leading to higher working capital requirements. This further
impacted cash flow generation and has led to defaults in interest
payments to banks. The pledged portion of the promoters’ stake (~50%
of the promoter holding) was also liquidated during the quarter.
Consequently, the promoter holding has come down from 59.5% in
September 2010 to 32.0% in December 2010. The promoters have also
considered selling 15% of their stake to reduce the debt burden.
The year thus far…
For the nine months ended December 2010, sales dipped 47.2% to
| 431.9 crore. The EBITDA margin slipped from 19.5% in 9MFY10 to
7.8% in 9MFY11. It reported a net loss (before extraordinary items)
of | 51.2 crore for the nine months ended December 2010.
View
We have been vigilant about the developments in the company owing to
declining sales and profitability. The unfolding of negative news one after
the other has led to a steep correction in the company’s share price in a
span of four to five months. The management’s efforts to reduce debt and
revive the business need to be closely tracked before taking any position
in the stock.
Other developments
During the quarter, the company has proposed to write off debtors and
advances to the tune of | 103.9 crore. It has further considered to provide
| 150.0 crore towards possible impairment in the value of inventories.
However, a final decision on the same will be taken in Q4FY11. Therefore,
in the results for this quarter, the write-offs and provisions have been
treated as an extraordinary item.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Koutons Retail -Yet another disappointing quarter…
Koutons Retail (Koutons) reported yet another set of disappointing
numbers in Q3FY11. Sales continued to decline, falling 33.1% and 59.6%
QoQ and YoY, respectively. It reported an operating loss of | 31.3 crore
(against an operating profit of | 49.2 crore in Q3FY10) on the back of
heavy inventory pile-up. Further, a higher interest outgo (on account of
higher debt) made matters worse. Koutons reported a net loss (before
extraordinary item) of | 63.1 crore during the quarter. Over the last few
quarters, the company has been grappling with issues of inventory pileup
leading to higher working capital requirements. This further
impacted cash flow generation and has led to defaults in interest
payments to banks. The pledged portion of the promoters’ stake (~50%
of the promoter holding) was also liquidated during the quarter.
Consequently, the promoter holding has come down from 59.5% in
September 2010 to 32.0% in December 2010. The promoters have also
considered selling 15% of their stake to reduce the debt burden.
The year thus far…
For the nine months ended December 2010, sales dipped 47.2% to
| 431.9 crore. The EBITDA margin slipped from 19.5% in 9MFY10 to
7.8% in 9MFY11. It reported a net loss (before extraordinary items)
of | 51.2 crore for the nine months ended December 2010.
View
We have been vigilant about the developments in the company owing to
declining sales and profitability. The unfolding of negative news one after
the other has led to a steep correction in the company’s share price in a
span of four to five months. The management’s efforts to reduce debt and
revive the business need to be closely tracked before taking any position
in the stock.
Other developments
During the quarter, the company has proposed to write off debtors and
advances to the tune of | 103.9 crore. It has further considered to provide
| 150.0 crore towards possible impairment in the value of inventories.
However, a final decision on the same will be taken in Q4FY11. Therefore,
in the results for this quarter, the write-offs and provisions have been
treated as an extraordinary item.
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