Efforts are on to revive the closed neighbourhood retail stores chain, Subhiksha, but it is unlikely that its founder and managing director, R. Subramanian would be at the helm of the resurrected operations. Subramanian owns 59 per cent of the retail chain.
“(It) doesn’t look feasible,” said Renuka Ramnath, managing director and CEO of ICICI Venture, which has a 23 per cent stake in Subhiksha Trading Services, when asked by Hindustan Times if the shareholders would be open to continuation of Subramanian as the chief executive of the retail chain in the event of a possible restart of operations.
A team from ICICI Venture, the private equity arm of ICICI Bank, is in Bangalore working with officials of Premji Invest, the personal investment vehicle of Wipro chairman Azim Premji, to solve the problems and possibly revive the retail chain on a smaller scale.
Subhiksha had a network of 1,600 stores before it got entangled in a liquidity crisis and stopped operations at the beginning of January 2009. Premji Invest owns a 10 per cent stake in Subhiksha, which was bought for Rs 230 crore in March 2008.
At a hurriedly-called press conference, Ramnath said the venture fund’s nominees and independent directors including Rama Bijapurkar, a leading management consultant, resigned from the board of Subhiksha on January 8, 2009 after the management at the retail chain failed to implement the decisions taken at a board meeting on November 22, 2008.
The management failed allow an independent review of the operations of Subhiksha, to appoint a chief financial officer and conclude the audit of accounts from April 2007 to June 2008.
“KPMG, on January 12, 2009, had informed that in the absence of cooperation from the management, they were unable to conduct the independent review mandated by the board,” said ICICI Venture in a statement.
Ramnath also refuted allegations that it did not provide all the information to Premji Invest when it sold part of its stake. “The buyer had done the due diligence on the company and it had all the wherewithal to do it,” she said.
ICICI Venture has written to the Registrar of Companies in Chennai urging it to conduct an investigation into the financial operations and managerial affairs of Subhiksha, and appointment
of KPMG or any other credible agency to conduct an audit for the period April, 2007 till date.