V2 RETAIL - FROM Rs.1000 TO Rs.10 , WILL IT REVERSE FROM HERE ?

' Crisis' -  is a possibility both in life and business . Individuals /entrepreneurs approaching such situations in different ways .Some of us will try to run away from crisis and a minority will face such situations,learn from mistakes and came out with more success than ever.Let us look into business field .Last five years were very tough for entrepreneurs worldwide due to many reasons.Many well known industrialists shut their shops due to their inability to face challenges and we have many examples even from India for that in recent times .Let us look into an interesting story of an entrepreneur who is fighting for survival .

                                                                                     Vishal Retails ( Now V2 Retails)  , promoted by Ram Chandra Agarwal was a hot stock ever since its listing.Company  came out with an IPO  in 2007 @ Rs.270 which oversubscribed by a whopping 81 times.Stock hits a high of Rs.1001  in 2008 which now quoting around Rs.10. Reason for this sharp fall is very well narrated in the below link ,so I am not reproducing the same as such.

Reasons for Vishal Retai's Big Fall  ( Its is an old news item before sanctioning the CDR ,but it will help you to understand what has happened )  - LINK HERE

Read further only after reading the content of the above link.

 The Second Innings

What attracted me into this penny stock is the willingness of promoter to accept his faults and his confidence and hardwork  to succeed again . Company sold its old business to  TPG and Sriram Group in 2011 for Rs.70 Cr (liabilities to the extent of Rs. 823.20 Crores and assets of Rs. 393.78 Crores transferred in this deal )Ram Chandra Agarwal lost everything he had built over 24 years .But, like many others he is not ready to surrender.Now he is in the process of building brick by brick what he lost .He confesses that he had committed lot of mistakes in Vishal Retail ( Read it HERE : Ram Chandra Agarwal on What he learned from Vishal Retail's 10 big mistakes) . 

With the little corpus left after paying back major portion of debt and his personal savings he re started the same business with some differences and with lot of precautions to avoid his earlier mistakes.He changed the name of his company from Vishal Retail to V2 Retail ( V2 –Stands for value and variety).As on 31 October 2013,company opened 15 V2 retail outlets. Delhi (3),Himachal Pradesh (2),Bihar (5),Uttar Pradesh(1),Karnataka (1),Jharkhand(1) and Odisha(2). This time V2 store initially selling only textile items and aiming the middle class in Tier II and Tier III cities.If the recent sales figures are any indication ,he is doing the right thing this time .
 

 Click on the figure for a better view

In latest December quarter company reported a turnover of Rs.70 Cr which is an improvement over 100% compared with same period last year. On the bottom line company reported a profit of Rs.3.26 Cr v/s Rs 97 lakhs . Diwali and other festival sales falls in December quarter and this figure may not repeat in March quarter .But I strongly believe after a long gap of many years this company will report positive numbers in this full year. Promoters also exhibiting their confidence by pumping additional capital to the company . Board will meet on 21 March 2014 to consider the allotment of  3952720 shares to Mr.Akash Agarwal (son of Ram Chandra Agarwal ) who  just  completed  MBA from Luncaster University of UK and joined the company recently.

There is lot of negatives to avoid this stock  - history of failure in the same line of business,accumulated losses,pledged shares ( pledging of promoter holding  was a  pre-condition for sanctioning debt re-structuring package) ,contingent liabilities ..etc..etc,etc ).Against all these odds there is only one positive – attitude of promoter and his confidence and hard work to regain everything he lost.In a recent interview he express his confidence to make V2 among the largest 5 retail chains in India in next 5 years. Only time will tell the fortunes of Mr Agarwal in this second innings. If there is any truth in the proverb – “Well began is half done” ,this time he may succeed .I hope ,our B-school students will learn  the story of V2 and Agarwal  as a case study in few years down the line to understand the up and downs of business .

 Stock price appreciated recently  after the  declaration of its December quarter result ,but even now V2 is trading at the cost of a single glass tea or coffee.Whether to take the risk or not ,it is up to you .Stock is trading @ Rs.14  and listed in both exchanges.

 A must watch video in the below link

Rags to Riches  - LINK HERE

Link to Company Website HERE

 Suggested  Readings

1) The Second Innings -  LINK

2) V2 boss hopes to learn from Vishal mistakes, get second-time lucky - LINK

3) Vishal founder goes slow, steady with V2 Retail - LINK

Disc: I have vested interest in V2 Retail
# Information from publicly available documents have used to prepare this report  without extra verifications in some cases .So do own due diligence before acting on.