subiksha's journey from zero to hero and hero to zero

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Objective:

To share key learning insights of SubhikshaJourney from Zero to Hero and vice versa

Giver of all good things…

Author’s 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…”

• Down to earth personality

• Father was in Government Service

• IIT & IIM Alumnus

• Resign Citibank ?

“Citibank was Golden Cage”

Background

Mr. R. Subramaniam

1989-90 Enfield – Mr. Vishwanathan

1991 Vishwapriya Financial Service

1994-95 Vishwapriya Growed & Boomed Golden Pot they’ve lend nearer to 1500. cr.

1996 Market Crashed - Unused Money & Staff

What NOW?

Software or Retail?

R. Subramaniam Before Subhiskha

Invested in Land – It fetched returns – But meaningless work

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 hadn’t 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 – It’s 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 they’d 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 they’ve 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 aren’t 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 wasn’t 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 didn’t 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

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