Subhiksha: An Indian Retailer in Trouble

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Case Details:

Case Code : BSTR333
Case Length : 15 Pages
Period : 2008-2009
Pub Date : 2009
Teaching Note :Not Available
Organization : Subhiksha Trading Services Limited
Industry : Retail
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The nub is that we were making Rs 1120-130 million of pre-tax profit and investing Rs500 million per month on expansion - we were to raise equity and then debt we did neither - that is the pain." 2

- R. Subramanian, Managing Director, Subhiksha Trading Services Limited, in February 2009.

"There has been a complete failure, resulting in an operational and financial loss. We have only 23 per cent stake in the company, we will do anything from our side that can be done to salvage the company. ICICI venture has a fiduciary responsibility towards its investor." 3

- Renuka Ramnath, Chief Executive Officer (CEO), ICICI Venture4, in February 2009.

"There was no prudence; (there was a mismatch) between what the real consumer demand was and the number of stores opened. Retailers have spread themselves too thin to benefit from scale." 5

- Pinakiranjan Mishra, Partner of Retail and Consumer Product Practice at Ernst & Young, in February 2009.


On February 11, 2009, Subhiksha Trading Services Limited (Subhiksha), India's largest retail store in terms of number of stores, announced that it was closing down all its 1600 outlets till May 2009.

According to R. Subramanian (Subramanian), Promoter and Managing Director of Subhiksha,

"We are in no position to replenish stocks in any of our stores at the moment; therefore, all the outlets will be non-operational."6 Subhiksha, which was started way back in 1997, was based in Chennai, India. It was operated as a discount store format.

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1] As of March 04, 2009, 1 US $ = Rs. 51.99.
2] Vinay Kamath and R. Ravikumar, "Subhiksha Revival Hinges on Speedy Debt Restructuring,", February 13, 2009.
3] "ICICI Stake Sale Not Discussed by Board: Subhiksha," http://www,, February 24, 2009.
4] ICICI Venture Capital Limited (I-Venture) is one of the leading private equity firms in India. They manage funds of over US $ 2 billion.
5] Vishal Krishna, "Subhiksha's Last Chance,", February 20, 2009.
6] Samidha Sharma, "Subhiksha's 1,600 Stores Likely to Remain Closed Till May,", February 11, 2009.

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