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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Please note:
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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Excerpts Contd...
The Trouble Begins
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Toward the end of September 2008, Subhiksha asked for a Rs. 500 million loan from I-venture. According to I-venture, the retailer said this loan was required to address a short-term liquidity problem. The management did not inform I-venture about the true financial condition of the company...
What Went Wrong?
Analysts blamed Subhiksha for its rapid store expansion strategy for which it had hired many sales personnel. This had resulted in huge cash outflows. Although the company was able to increase its turnover, its expansion was completely funded by debt...
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The Restructuring
On February 24, 2009, I-venture announced that it was working together with all shareholders including Zash Investments Limited to revive Subhiksha. Ramnath said,
"We would have our own limitations, because we are not promoters or managers...
Exhibits
Exhibit I: Key Players in India's Grocery Retail Sector
(March 2007)
Exhibit II: Logo of Subhiksha
Exhibit III: Advertisement of Subhiksha
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