Vishal Retail, Subhiksha feel market squeeze
About 10-15 Subhiksha stores each in Delhi and Mumbai have been shut, while many FMCG companies have stopped supplying goods on credit to both these retailers, the industry sources said. Saurabh Turakhia reports.business Updated: Jan 22, 2009 00:13 IST
Vishal Retail and Subhiksha, which took off quite well in the retail space in the last few years, is facing some problems. About 10-15 Subhiksha stores each in Delhi and Mumbai have been shut, while many FMCG companies have stopped supplying goods on credit to both these retailers, the industry sources said.
“We are relocating 10 to 15 stores each in Delhi and Mumbai, which have seen property corrections and will come up in the same catchment in the next 30 to 45 days,” a company spokesperson said.
Sources also said the employees have faced problems in getting their salaries from Subhiksha.
A store in Kandivli is yet to clear outstanding dues to the tune of Rs 4 to Rs 5 lakh as per sources in the industry, but these problems may be related to the stores that are in the process of being relocated. “We do not comment on specific property or staff related issues except to say that unless there are specific covenant breaches we would be compliant on all our obligations,” said R Subramanian, managing director, Subhiksha.
An analyst who didn’t wish to be named said, “Most FMCG companies are supplying goods to Vishal and Subhiksha only on an advance basis and no longer on credit.”
He added that Vishal was heavily debt ridden, with the debt equity ratio being 3:1.
“There has not been any kind of shortage in supplies from any of the branded manufacturers,” said Ambeek Khemka, group president of Vishal Retail, in response to queries sent by Hindustan Times.
“Also there has been no delays in supplies whatsoever at any of the stores of Vishal Retail across the country,” he said.