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Objective:
To share key learning insights of Subhiksha
Journey from Zero to Hero and vice versa
 Giver of all
good things
 Authors 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
 Mr. R. Subramaniam

Down to earth personality

Father was in Government Service
IIT & IIM Alumnus
Resign Citibank ?
Citibank was Golden Cage
Background
R. Subramaniam Before Subhiskha

1989-90 Enfield Mr. Vishwanathan

1991 Vishwapriya Financial Service
1994-95 Vishwapriya Growed & Boomed Golden Pot
theyve lend nearer to 1500. cr.
1996 Market Crashed - Unused Money & Staff

Invested in Land It fetched returns But meaningless work

What NOW?
Software or Retail?
 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 hadnt 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 Its 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 theyd 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 theyve 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 arent
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 wasnt 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 didnt 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
 Thank You !
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