Feels the heat of global credit crunch; cuts down staff base by 70%.
To centralise operations in Delhi to trim costs.
Seven of 27 stores in Western Zone closed down.
Profit declines by 86% in December quarter.
Mumbai, Feb. 5 Delhi-based Vishal Retail is planning to close down about one third of its 172 retail outlets and downsize its staff across the country due to slowing sales.
A source familiar with the development said of the 27 stores the company has in the Western Zone, seven have already been shut and another 10 will be closed down in the next few months.
As a strategy to trim cost, the company also plans to centralise its operations in Delhi. At present, they have four zonal offices with around 140 employees each looking after the operations, distribution and sales in respective zones. “Now, these offices will only have two employees — business head and area manager,” the source said.
The number of staff in the stores has been reduced by 70 per cent. “On an average, we have 200 employees managing each store but now we have only 60-70 staff doing double shifts,” said a company official. The retailer employs around 11,000 people.
Expansion on hold
However, Mr Manmohan Agarwal, CEO of Vishal Retail, said, “So far we have closed only two stores. We are planning to relocate stores which are economically unviable or have expensive rentals.” The company has also put all expansion plans on hold and is undergoing a major restructuring and redistribution process, he said.
The global credit crunch seems to have dramatically turned Vishal Retail’s fate in the last one year.
The company’s share plunged to a low of Rs 47.45 in January 28 on the BSE after reaching a peak of Rs 1,001 in January last year.
On Thursday, the stock closed at Rs 49.60 on the BSE. For the December quarter, Vishal Retail’s net profit declined by 86.17 per cent to Rs 2.15 crore.