Mumbai: Lenders to the troubled S. Kumars Nationwide Ltd need to step up and take control of the company In the absence of institutional shareholders, Institutional Investors Advisory Services (IiAS) said in a report on Thursday.

“The lenders have withdrawn their board nominees and institutional shareholders have exited the stock, leaving retail shareholders to hold the baby," the report said.

The report notes that a recent notice by a group of shareholders, representing 21% ownership of the company, has called for an extra-ordinary general meeting (EGM) on 27 April. The agenda of the meeting is to remove the entire board, including the promoter, and install a new board.

This move, IiAS believes, will prove detrimental for the company.

“Motives aside, their ability to bring improvement in the business is unclear. No one, and certainly not the bankers, will like to see the company being led out of the frying pan, and into the fire," IiAS said.

Retail investors own 91.46% of the company, while the promoter owns about 3.6% as on 31 December, 2014, data available with the Bombay Stock Exchange (BSE) showed.

“The meeting has been wrongly called for. We are taking all possible legal steps as we can to stop it. I cannot say anything more as the matter is sub judice," said S. Kumars Nationwide chairman and managing director Nitin Kasliwal.

S. Kumars owes 4,500 crore to 13 banks, the IiAS report said. It has defaulted on repayment of its loans and is currently undergoing a debt restructuring, its second in 10 years.

To be sure, in May 2013, Kolkata-based UCO Bank had published advertisements in leading newspapers, naming Kasliwal a wilful defaulter.

The report said banks continued to lend to the company and the number of lenders to the company also increased, even when it reported negative cash flows during the financial year 2009-10.

The textile and apparel company owns suiting and shirting brands like Reid & Taylor, Belmonte and World Player. It also owns Baruche Superfine Cottons, which exports cotton fabrics for shirts.

The report pointed out that the company has also been falling behind on regulatory announcements and disclosures over the last few months.

“S. Kumars’ last annual report (for the year ended 31 March 2013) is over two years old. Its last AGM was held almost 24 months ago. Directors have been appointed and a few have resigned since—stock exchanges have not been informed of some of these appointments and resignations," the report said.

Performance deterioration aside, auditors have qualified the last audit report – for lack of confirmations of receivables, inadequacies regarding the physical verifications of inventory and fixed assets, and internal controls that are not commensurate with the size and complexity of the business—the report noted. Receivables aggregated 60% of 12-month standalone revenues ended 31 March 2014, which shows that most sales are not backed by actual receipt of cash, it said.

As on 30 June 2014, the company’s loss widened to 209 crore, higher than the 62 crore it reported in the same period a year ago.

On Thursday, the S. Kumars Nationwide stock ended at 3 on the BSE, up 4.9% from its previous close.