New Zealand's biggest furniture store cost millions more than budget, was dogged by defects and delays and ultimately led to the collapse of its founder's construction company.
Those are the findings of the first liquidators' report of Vijay Holdings, an insolvent company hitherto directed by Fijian Indian migrant, civil engineerand owner of one of NZ's Mitre 10 Mega stores Vinod Kumar, who developed Auckland's vast new Nido store.
He founded the Nido concept here, which was said to be set to rival European giant homeware store Ikea, with an entire house within the store to show room-by-room decor and interior design choices.
Unable to pay creditors or refinance the building business, Vijay was tipped into liquidation last Friday, causing an outcry from creditors worried about whether they would be paid for major subcontracting work and told previously payments would be drip-fed.
Nido is the 2.7ha Henderson big-box retailer the size of four-and-a-half rugby fields which opened in late May, drawing long queues as curious shoppers flocked to 158 Central Park Dr off Lincoln Rd.
Kumar yesterday said Vijay had completed $122m of building work.
Liquidators Daran Nair and Heiko Draht of Greenlane Chartered Accountants said the 20-year-old company's sole current project was the development of the Nido building and 650-car carpark "for a fixed price of $37.8m. We were informed that to date, a total amount of $44.6m has been spend on the project." but the shareholders could not raise further funding so they decided to liquidate the company.
Blockhouse Bay's Suresh Chandra and Sunita Patel jointly own Vijay. Kumar has no stake in the company but is its sole director.
Vinod Kumar, founder of Nido, at the site last year. Photo / Anne Gibson
But the store opened nearly a year late.
"The project was initially delayed due to weather and changes to building plans to meet requirements from the council. We understand that one of the main reasons for the delay to obtain the required permission from the council, to occupy the building, was due to defective work," the report said.
Nido was further delayed due to the Covid-19 pandemic lockdown.
"The cost of the additional remedial work was unforeseen and the company could not progress the project to a stage where it is entitled to a further progress payment. Based on the information cost overruns of approximately $6,859,000.00 million was experienced," the liquidators wrote.
They found building materials, sprinkler pipes and various steel items on the premises. Piles of steel structures were also located at a different address.
Nido, Italian for "nest", was a name the family came up with for the new venture.
Unsecured creditor claims are yet to be quantified but a scaffolding and building subcontractor yesterday told the Herald they were owed $150,000 each.
Fletcher Steel, Fletcher Concrete and Infrastructure trading as Firth Industries, Mico New Zealand, Royal Wolf, Carters Building Supplies, Kiwi Hire and Sales are just some of the creditors registered on the Personal Properties Securities Register.
Humes Pipeline Systems, Sarsfield Engineering trading as Equipmentshare, Portacom New Zealand, APL Kiwiform, Steel Building Products (Northern), Ramsetreid Tools & Equipment and R&S Trade Group are others.
Nido under construction last year. Photo / supplied
Kumar has had a meteoric rise in business, migrating from Fiji in 1975, graduating in engineering then putting his family home up as collateral to borrow to afford his first shop, Mitre 10 Henderson.
Banks encouraged him to think small but he did the opposite to the point where he said last year Nido was a $60m project. He rejected banker advice.
"I told them 'I did that before'," said Kumar, 62.
He made millions developing, owning and running three successful Mitre 10 stores and told of building a 500sq m Mitre 10 which was quickly outdated, replaced by a 2500sq m store, then by a half-hectare outlet.
"I'm running out of time, I'm 61," Kumar said in June last year.
His entire fortune is in Nido: "I've sold everything. I've put everything into this."
Kumar said he paid $25m for the 31,700sq m site, purchasing from a Mitre 10 entity which had bought it from the pioneering winemaking Collard family.
"I bought it in 2012 when it was planted in grapes."
Chris Wilkinson of First Retail Group said Kumar was "a pioneer, a visionary. People are sick of the sameness in retail. Nido is something different."
Maat Group said it bought 156-160 Central Park Dr, Henderson for $59m last March, paid investors 8.5 per cent annually pre-tax and leased to tenant Magsons Hardware, trading as Nido.
Vinod Kumar
• Position: Founder Nido (Italian for nest), new 2.7ha shop opened in May; • Migrant from Fiji, arrived here 1975 to study engineering; • Sold house to buy first Mitre 10 Henderson; • Eventually owned three Mitre 10s; • Lives in Lynfield, family help run Nido; • Vijay Holdings, which built Nido store, now in liquidation; • No projections on creditor claims or any payout.
