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Bombay HC orders closure of S Kumars

Jul 25, 2016
Bombay HC orders closure of S Kumars

The fight for survival of the once well-known name in stitching suits—S Kumars—has come to an end at the High Court, which has ordered its closure. The Bombay High Court has ordered liquidation of S Kumars’ nationwide assets and ordered the banks to appoint an official liquidator to recover debt. The company owes Rs 4,500 crore to 134 banks, including State Bank of India and ICICI Bank, and other financial institutions.

Passing the judgment on July 1, Justice BP Colabawalla gave four weeks’ time for the company to appeal against the order, and in the meanwhile, directed the banks to appoint the official liquidator to take charge of all the assets, properties, stock-in-trade, books of accounts and bank accounts of the company.

The court was hearing a winding up petition filed by ICICI Bank, Australia and New Zealand Banking Group, Edelweiss Asset Reconstruction Company, L&T Finance, IL&FS Financial Services, among others. As of September 2015, promoters own just 3.59 per cent in S Kumars, while foreign and domestic institution and retail investors hold 96.41 per cent in the company.

Nitin Kasliwal, the promoter of debt-ridden S Kumars Nationwide, shot to fame in 2009 when he acquired leading US brand Hartmarx, which was best known for dressing President Barack Obama for $119 million. He also acquired several global brands to mark his presence in the global luxury segment.

In India, SKNL retails international luxury brands such as Alfred Dunhill and Escada and owns Stephens Brothers, Carmichael House and Belmonte. In 1998, the company introduced the 175-year-old Scottish brand Reid & Taylor to India and marketed worsted and poly viscose suiting fabrics produced at its Mysuru plant in Karnataka and Dewas in Madhya Pradesh. The company took advantage of huge subsidiary offered by the government to set up textile units.

Everything was going well for company till 2012 despite its unsuccessful attempt to raise Rs 1,000-crore through initial public offering of Reid & Taylor. From its peak of registering net profit of Rs 471 crore in FY-12, the company started crumbling under its debt burden and huge interest outgo.

The subsequent economic slowdown and cut down on luxury spends by consumers led to downfall of the company. It last reported a net loss of Rs 209 crore on a revenue of Rs 544 crore in the June quarter of 2014.