By: Shilpa RajMFM -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 ,women and kids wardrobe under the brand name Koutons les Femme and Koutons Junior and Chalie outlaw.

The growth:Initially when 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.

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. Interst 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 plan s 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.