Subhiksha shelves electronic store plan
Neighbourhood store chain Subhiksha, caught in a financial mess, has buried its consumer durables and information technology retailing plans as it faces a flight of senior managers and employee wrath.business Updated: Feb 12, 2009 10:24 IST
Neighbourhood store chain Subhiksha, caught in a financial mess, has buried its consumer durables and information technology (CDIT) retailing plans as it faces a flight of senior managers and employee wrath and action over its failure to pay dues for 15,000 workers.
The directors of Subhiksha Trading Services, the company that owns the Subhiksha chain, have been summoned by the provident fund office for failing to pay PF dues for the past four to five months, which could amount to over Rs 5 crore. Employees of the CDIT business have also not been paid salaries since October 2008.
Delhi-based employees, who have been without salaries for four months now, have filed complaints with the office of the Additional Labour Commissioner, Gurgaon for recovery of their dues, company sources said.
In an internal email dated 23 December 2008, which R Subramanian, managing director Subhiksha, sent to senior employees of the CDIT business-N Raja, Nilesh Mazumdar, K V Ramachandra Jeevendra Prasad, Subramanian said, “We need to be clear that appetite to bear large losses would be lower in such weak economy times – we need to tighten belts”.
From the long email, made available to Hindustan Times, it also becomes clear that the company’s intention was to have 125 to 150 stores for this business.
Subramanian, in an e-mail response to Hindustan Times, said he would be open to bringing down the number of stores from 1,600, which are now all shut, if it helps in reviving the business. “We are not dogmatic about the store count. We are dogmatic about getting business back on track.”
Lenders to Subhiksha have already taken up their exposure of about Rs 700 crore for restructuring, which could involve extending the repayment period, putting a moratorium on repayment and lowering interest rates.
The mail also states that the CDIT business, which would have competed with formats such as Infinity Retail’s ‘Croma’ and Biyani led Future Group’s ‘e-Zone’ and ‘Electronic Bazaar’, would have had 3 to 5 per cent higher costs than competitors.