Subhiksha’s 600 stores and warehouses across the country looted
10 Feb 2009
India's largest chain of discount supermarkets, Subhiksha, had its 600 stores and warehouses all over the country looted and ransacked in the weekend after security guards abandoned the stores as liquidity crunch resulted in the retailer's inability to pay salaries.
As many as 600 of the retailer's stores including properties in northern states and parts of Maharashtra, including Nashik and Noida, and its warehouse at Ahmedabad were ransacked over the weekend.
The company says it is not aware as to who was responsible but suspects that either employees who have not been paid their salaries, or vendors whose payments have been delayed may have been involved in the attacks while anti-social elements, taking advantage of lack of security at the stores, could be responsible for the looting.
Owners of the premises, who had leased the stores, have also forcibly broken the locks and taken away some of the assets, it is reported.
The looters may have taken advantage of the stores were closed as the retailers operations had come to a standstill due to liquidity crunch and the company said that it was negotiating with financial stakeholders to pump in money to get its operations moving again.
The Chennai-based company runs India's largest chain of discount supermarkets, had been one of the most aggressive organised retail players in recent years and had a pan India presence of 1,600 stores as on September 2008.
Around 59 per cent of the company is owned by its promoters, 23 per cent by ICICI Securities Ltd and software billionaire Azim Premji of Wipro Ltd, owns a 10- per cent stake, which he had bought last year from ICICI Securities for Rs230 crore.
Subhiksha ran its operations mostly on cash basis. Its trade cycle collapsed in October resulting in no fresh purchases and was unable to pay salaries and vendor bills as well as rentals for various stores as banks refused to lend money. (See: Subhiksha on verge of collapse)
Its 15,000 employees have not been paid a salary since October 2008 and the retailer has piled up Rs20 core in unpaid salaries and owes suppliers and vendors nearly Rs45 crores.
Telecom service provider, Tata Teleservices has cut all fixed line and corporate mobile phone connections to Subhiksha offices and employees due to unpaid bills.
As of last month, it's net worth wasRs250 crore and liabilities stood at Rs750 crore and the company is talking with its lenders on restructuring its debt.
The double-digit growth of the Indian economy Indian created a large class of people in the middle-income bracket, who had enough money to splurge in big stores and malls and big names like Reliance, Bharti Enterprises and the Tata group opened chain of stores allover the country.
The world's largest retailer, Wal-Mart Stores of the US, Marks and Spencer, Tesco and Metro AG also joined in the booming Indian retail industry.
But with the Indian economy slowing down and economist predicting a single digit growth, the retail industry has also shown a downslide with Foodland Fresh, a Mumbai-based retail chain, closed 39 of its 42 stores across the city, last week.
Reliance Fresh is mulling closing 25 stores from its 590 stores at present while the UK online and catalogue retailer, Argos which has Shopper's Stop and HyperCITY as its franchisees, closed its operations in India last month.
Marks & Spencer, reduced their prices after it found out that Indian consumers were not willing to pay hefty prices on its premium brands while Tesco has still to test the friendly neighbourhood kirana shop, which it hopes to compete.
