IndiaRetailBiz

The growing spat between R Subramanian, Founder, Promoter, and Managing Director of Chennai-based beleaguered value retailer Subhiksha, who holds 59 per cent stake in the company, with the private equity partner and second biggest (23 per cent) equity holder I-Venture, is getting murkier every day.

Rubbishing reports of possible take over of control of management of the cash starved company by I-Venture, R. Subramanian said that there was no question of any greater control by the private equity firm than what it has been exercising currently.

Scotching the rumours of his departure from the company, R Subramanian confirmed that he was not looking at evading or escaping from his responsibilities towards the company until the ongoing process of Corporate Debt Restructuring is completed.

“As Managing Director of the company, I owe it all to these people…I won’t leave them in the lurch and walk out when the business is in trouble. We are not made that way and that liberty is possibly only with those people, who are purely financial investors…who have no concern other than the money they make,” said Subramanian in a statement. He was, perhaps, trying to point fingers at the roll being currently played by its minority partner I-Venture, a venture capital arm of the country’s largest private bank ICICI Limited. “We are sure that there are many sensible stakeholders who will work alongside us in the revival of the business, notwithstanding the views of others. We have neither time nor energy for any fight. We have to get the business on track, and we are sure they will join the cause, if not now, some time later.” added Subramanian.

“While we understand that management and ownership are two entirely different things, and actually it may appear tempting to become only a financial stakeholder who can earn profits without doing all the hard work and have no responsibility for trouble, everyone knows that there is a lot to do at this stage to get the CDR through and get the company back on track. While we understand that management and ownership are two entirely different things, and actually it may appear tempting to become only a financial stakeholder who can earn profits without doing all the hard work and have no responsibility for trouble, everyone knows that there is a lot to do at this stage to get the CDR through and get the company back on track.”

Subramanian was, perhaps, responding to a statement made a day earlier by Renuka Ramnath, I-Venture’s Managing Director. She had suggested the need for a professional management to take over. She was miffed at being kept in the dark until as late as September, 2008 about the liquidity problems being faced by the retailer.

“We found that the inventories were very low in stores and the fruits and vegetables vertical had stopped. By the end of October, it was clear that the liquidity problem was far more severe than what the MD had revealed in September, when he asked for the Rs 50-crore loan to tide over a temporary liquidity issue.”

In a clear vote of no confidence, I-Venture has asked for investigations in the financials of the cash strapped company. “The fund (I-Venture) has now approached the registrar of companies (RoC), Chennai, for an investigation into Subhiksha’s operations…We are talking to all the players concerned (ICICI Prudential MF and Azim Premji Investments) and trying to seek a possible solution which will be in the best interest of all, including the employees,” added Ramnath.

Despite, widening rift between the two, Subramanian is hopeful of getting the process of Cash Debt Restructuring getting completed in favour of the retailer, saying:

“We are not one-year wonder. We have been around for 11 years and have done well. It is only that there would be a need to restructure the balance sheet and seek debt re-scheduling and debt forgiveness as part of making the capital structure viable.”

The troubled retailer, which until a few months back was operating the largest number (over 1,600) of discount convenience stores across the country has already shut down all its stores at least until May, 2009. The company is also facing a large number of legal cases filed by vendors, service providers, and employees, among others.