fln. koutons

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BY: SHILPA RAJ

MFM -2nd sem



y Koutons was India's first Rs.1,000 crore apparel brand .

y It is the leading retailers of ready made garment. USP hasalways been ³value for money´and high fashion in 1991.

y Company was launched asCharlie creation was later

rechristened as KOUTONSRETAIL Ltd.

y The company primarily startedas a denim brand.

y Today it manufactures and

sells:y complete men - Koutonsy Women- Les Famey kids- Junior and Chalie

outlaw.



The growth:

y Initially when started its business, the strategy was targetsmaller cites, it gave an edge to koutons.

y They give concept of ³family store´ offering for the entire

family- a perfect solution for the mind set of the small town

consumer.y The value proposition that kuotons offered was affordable

luxury through regular discount schemes.

y This strategy worked vary well to tap the aspiring middle and

lower ±middle in Indian men. And manage to convert 80- 85

percent of the footfall sales annually.



y According to MR.Balvinder Singh Ahluwalia.President ,Koutons said that they able to manage cost

because they did everything from manufacturing toretailing without involvement of middle men.

y In feb 2008 company floated an IPO above Rs. 100

crore and utilized approximate Rs. 45 crore of theentire amount for rolling out stores across thecountry.

y It also forayed into a business of mall development

through its group klone infrastructure.y Wipro group picked up 2% stake in koutons retail for

about Rs.20 crore in 2008.



y Koutons opened 182 ³family store´ in 2009. the target

was to have 1,500 outlet by the end of march 2010.

y

It did not want to raise debt during economic slowdown.y Koutons also added a new range ±Feel Me, which was

positioned at a higher category in the price range of Rs

1,999- Rs 2,999.

y It launched a product line of footwear, KZone 2 throughan additional 200 stores.

DOWN SLIDE :



y The total store count is around 13.51 lakh sq.ft to 16 lakh

sq.ft. announced target figure of retail space to 21.5 lakh

sq.ft by 2011.

y They are facing a problem of operational management i.e

inventories were in the books for 2-3 yrs without stock

run.

y They also borrowed heavily from banks.

y The company paid Rs.30 crore in march 2009 to

Edelweiss Capital Ltd and freed 18% of the pledged

equity. Company debt was pared down to Rs 89 crore.

y 50 to 60 stores are shut down because they are not performing well within a period of 18 months by oct

2010.



y Suppliers Berry Cott and RC Velvet moved the Delhihigh court to recover dues from koutons.

y It was not true to its positioning and changed itsstrategy. Therefore the retailer landed up no where.

y Kuotons has a total debt of Rs.6.6 billion at anaverage cost of 13-13.5 %.

y Payment of two monthly installments ,totaling Rs160million in principal ,was delayed to Allahabad bank.Interest payment to banks was also delayed by 10-15

days.y According to Mr.Kohli the delay is due to

³mismatch of cash flow´ and the company had a³slow first quarter´.



y Kuotons has no plans to restructure its debt with the

banks. So seeking help of private equity players andother institution to raise funds through share sales.

y The decline of well ±known brand is bound to send

negative vibes in the industry.

y Prospective investors will become wary about

investing.

y They did the unimaginable once when they become

the first Rs.1000-crore brand.

y Will Koutons be able to rise like phoenix and

surprise everyone?



Source: Business Images of Fashion/December 2010

fln. koutons

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