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Objective:
To share key learning insights of SubhikshaJourney from Zero to Hero and vice versa
Giver of all good things…
Author’s Curiosity:
Subhiksha use to be at every street corner
News: 100 new stores being opened
News: Rejected buy offers by reliance
“Yeh kaun hai jo haste haste reliance ko na bolta hai…”
• Down to earth personality
• Father was in Government Service
• IIT & IIM Alumnus
• Resign Citibank ?
“Citibank was Golden Cage”
Background
Mr. R. Subramaniam
1989-90 Enfield – Mr. Vishwanathan
1991 Vishwapriya Financial Service
1994-95 Vishwapriya Growed & Boomed Golden Pot they’ve lend nearer to 1500. cr.
1996 Market Crashed - Unused Money & Staff
What NOW?
Software or Retail?
R. Subramaniam Before Subhiskha
Invested in Land – It fetched returns – But meaningless work
1997
Subhiskha Started
Organized Retail Store Concept
Model – The Indian Store
Subhiskha Journey
1998-99 Subhiskha struggled a lot with 10 store
2000 50 store- ICICI VC 10% stake at 15. cr. (Expand to 120)
2002 Nightmare -Organization & System were keeping pace
2003 Streamlining all the Business Process
2005 Expansion plans for Guj., AP, Karnataka, Mumbai & Delhi
2007
1,000 Stores…
By end of 07 they arouse to 1381 Stores.
With Sale Volume 2500 Cr.
2.5 % Profits
Vision for next year 2000 Stores.
Key Challenges During Growth Phase:
• Initially they hadn’t hire anyone more retail industry because they want to do they retail in their own style
• First two years were tuff and struggle some.• During Expansion – Managing High qualified
people was a challenge• Chaos – It’s Fun • Initial 50 store were tuff than next 1000 stores
because their base was zero at beginning, they were learning new things each day – Progress Company
Expansion Magic
After 7-8 years they’d 150 Store after 2 more years more 1000+
1. Readiness of Market to absorb you
2. Readiness of Market to finance you
2008
It was announced that the company would be investing 500 cr. To increase number of outlet
to 2000 across the country by 2009
Critics?
Was the target too aggressive looking at the fact that the company could only start 150 store in
initial 9 years in Business.
Invested 230cr. For 10% stake from ICICI
Subhiksha Collapsed ’2009
It was a chain of 1600 Stores that collapsed
To raised money they’ve made:• Fake bills
• Fake inventory
• And fake company to which money was transferred
The Satyam of Indian Retail
Industry
What actually happened with Subhiskha?
• Rapid Expansion without consolidation and focus
• Correct format & wrong strategy or correct strategy & wrong format (Store aren’t supermarket)
• Dangerous intention to become conglomerate as fast as possible(Like of Satyam)
• Economic Slowdown
• Slow response to crisis( Lack of Crisis Handling Skills)
What actually happened with Subhiskha?
• Debt-Equity ratio was wrong since expansion began.
• Accelerator of company depends on the debt and on working capital.
• Company kept hiring more and more against which condition was such that it wasn’t able to pay existing employee.
What they might have done?
• Efficient Inventory Management
• Scaling Supply Logistic Management (Empty Selves)
• Calibrated expansion plans
• Mr. R. Subramaniam didn’t diluted his stake and kept raising secured and unsecured debts
• Expansion should have been delayed once they had started facing such issues
• Monitoring process that have altered them for draining working capital
• Expansion should not be made at the working capital
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