By: Shilpa Raj

MFM -2nd sem

Koutons was India's first Rs.
1,000 crore apparel brand .
It is the leading retailers of ready
made garment. USP has always
been “value for money” and high
fashion in 1991.
Company was launched as
Charlie creation was later
rechristened as KOUTONS
RETAIL Ltd.
The company primarily started
as a denim brand.
Today it manufactures and sells:
complete men - Koutons
Women- Les Fame
 kids- Junior and Chalie outlaw.
The growth:

 Initiallywhen started its business, the strategy was target

smaller cites, it gave an edge to koutons.
 They give concept of “family store” offering for the entire
family- a perfect solution for the mind set of the small town
consumer.
 The value proposition that kuotons offered was affordable
luxury through regular discount schemes.
 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.
According to MR.Balvinder Singh Ahluwalia.
President ,Koutons said that they able to manage cost
because they did everything from manufacturing to
retailing without involvement of middle men.

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

crore and utilized approximate Rs. 45 crore of the
entire amount for rolling out stores across the country.
It also forayed into a business of mall development
through its group klone infrastructure.
Wipro group picked up 2% stake in koutons retail for
about Rs.20 crore in 2008.
 Downslide:
Koutons opened 182 “family store” in 2009. the target
was to have 1,500 outlet by the end of march 2010.
It did not want to raise debt during economic slowdown.
 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.
It launched a product line of footwear, KZone 2 through
an additional 200 stores.
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.
They are facing a problem of operational management
i.e inventories were in the books for 2-3 yrs without
stock run.
They also borrowed heavily from banks.
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.
 50 to 60 stores are shut down because they are not
performing well within a period of 18 months by oct
2010.
Suppliers Berry Cott and RC Velvet moved the Delhi
high court to recover dues from koutons.
It was not true to its positioning and changed its strategy.
Therefore the retailer landed up no where.
Kuotons has a total debt of Rs.6.6 billion at an average
cost of 13-13.5 %.
Payment of two monthly installments ,totaling Rs160
million in principal ,was delayed to Allahabad bank.
Interest payment to banks was also delayed by 10-15
days.
According to Mr.Kohli the delay is due to “mismatch of
cash flow” and the company had a “slow first quarter”.
Kuotons has no plans to restructure its debt with the
banks. So seeking help of private equity players and
other institution to raise funds through share sales.
 The decline of well –known brand is bound to send
negative vibes in the industry.
Prospective investors will become wary about
investing.
They did the unimaginable once when they become
the first Rs.1000-crore brand.
 Will Koutons be able to rise like phoenix and
surprise everyone?
Source: Business Images of Fashion/December 2010