Subhiksha: 'The Giver of Good Things' in Financial Trouble - ICMR Case Studies and Management Resources

Details

Case Code : CLBS062
Publication date : 2009
Subject : Business Strategy
Industry : Retail
Length : 04 Pages
Price : Rs. 100

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Key words:

Financial crisis, corporate debt restructuring, business model, initial public offering, IPO, retail, Subhiksha

Note

* This caselet is intended for use only in class discussions.
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Abstract:

Subhiksha was India's largest retail chain based on number of stores. In December 2008, it shut down over 90 stores around the country. Subhiksha, which had started as a single outlet in Chennai grew rapidly and in a span of 11 years, the company had over 1,600 outlets throughout the country. The company had been facing a financial crunch which it revealed publicly only in January 2009 though it was not in a position to pay rents or employee salaries or other outstanding bills. The management of Subhiksha said that the problem faced by the retail chain was due to its inability to raise enough equity and was not because of its business model, which was very efficient. Experts too felt that the crisis faced by the retail chain was due to the management's decision to not opt for an Initial Public Offering.

Issues:

» Business model
» Financial crisis
» Corporate debt restructuring

Introduction

In a single month - December 2008 - Subhiksha Trading Services Ltd. (Subhiksha) shut down over 90 stores. The country's largest retailer, in terms of the number of stores, had earlier closed down many of its stores in Delhi and the National Capital Region (NCR) which included Delhi, Gurgaon, Ghaziabad, Noida, and Faridabad. The company had gradually stopped selling fresh fruits and vegetables and also reduced its supply of pharmaceutical products...

Questions for Discussion:

1. Critically analyze Subhiksha's business model. Do you think this model would be a success in other industries? Name the industries and give reasons.
2. Critically assess the reasons for Subhiksha's financial crisis. How could it have been prevented? What should it do now?

Subhiksha: 'The Giver of Good Things' in Financial Trouble*