Business Case Studies, Leadership Case Study, Tata Group,Ratan Tata

Code :BSM0054

Year : 2009

Industry : Retailing

Region : India

Teaching Note:Available

Structured Assignment :Available

Abstract: This case study's primary objective is to analyse all the facts responsible for the downfall of an Indian fledging retail chain, Subhiksha. Having been started by the alumnus of the prestigious B-school, Indian Institute of Management Ahmedabad (IIM-A), the long-term success, survival and profitability of Subhiksha was expected. In the light of India's promising retail potential, huge investments were made by several big corporate houses of India, jacking up the prices of all the related parts of the industry.

Being a pioneer in the organised retailing in India, Subhiksha became India's largest retail chain with 1,665 stores across the country. In the process it succeeded in building a sound brand name over years with its no-frill, discount format. With Indian organised retail industry blooming under the economic liberalisations and attention from the global players, Subhiksha was expected to grow bigger, but as global recession set in, credit markets froze and Subhiksha stumbled as its capital structure could not support the requirement. Lack of liquidity and overexpansion troubled Subhiksha as it failed to pay rent to the landlords and salary to its employees. Operations came to a standstill. However, Ramaswamy Subramanian (Subramanian), the managing director of Subhiksha expressed confidence that the chain will emerge from the crisis.