IndiaRetailBiz

The Madras High Court, on Friday the 28th, dismissed a scheme of arrangement filed for revival of Chennai-based food & grocery discount retail chain Subhiksha. The scheme was filed by N Srinivasan of Cash and Carry Wholesale Traders Private Limited. Srinivasan is a director of the subsidiary company of Subhiksha Trading Services.

In another blow of sorts to the retailer, the court has also allowed Kotak Mahindra Bank to seek objections, if any, from Subhiksha’s stakeholders for winding up of its operations. The bank, which was a part of consortium of 13 lending banks led by ICICI Bank, has been allowed to invite objections of the stakeholders by publishing advertisements in national dailies in English and Tamil for this purpose.

The latest orders of Justice P Jyothimani of the Madras High Court are seen as beginning of the end of a retailer, which in the heydays of retail boom just a few months ago, was presented as a role model of growth in the retail sector.

Subhiksha was, however, forced to suspend operations of its retail chain in January, 2009, as it could not arrange cash for operations of 1,600-odd stores most of which sold food & grocery across the country at discounted rates.

Subhiksha, according to financial position submitted to the court for 31st March, 2008, was owing Rs 928 crore against liabilities and provisions, while carrying a cash balance of Rs 18 crore.

As per Scheme of Arrangement submitted by Cash & Carry, the retailer wanted to settle the secured outstandings as in October 2008 at 50 per cent of the principal amount and payment of balance over a period of 10 years.

Apart from Kotak Mahindra, the retailer is also facing several court cases for recovery of dues from erstwhile creditors including vendors, service providers, employees, and property owners, among others.

Undetered by adverse decisions of the court, R Subramanian, promoter, founder, and managing director of Subhiksha Trading is confident of reviving the operations of Subhiksha. In a statement, he says, “The company is confident that the order admitting the winding up petitions for hearing by the (Honorable) Court has no bearing whatsoever on its revival plans.”

Subramanian is likely to appeal against the court’s orders, once copies of the judgment are received by the company.