subhiksha - final

8/3/2019 Subhiksha - Final

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Subhiksha

Discount Store With a Difference

Presented By :

Sophia Gonsalves.

Ashwin Kamble.

Urvashi Patel.

Kushal Thakkar.



Subhiksha Profile

Subhiksha means “PROSPERITY” Chennai based grocery & pharmaceuticalsand mobile store.

Founded by R. Subramanian, an IIT-IIM alumni in 1997.

The first venture was in grocery.

First outlet in 1997- Thiruvanmyur, Chennai.

The branding strategy for this retail store was low-cost and no-frills.

Subhiksha sold all its products all the time below MRP.

Quickly, diversified into medicine retail as well.

The USP of these stores were the discount pricing.



People Associated

1. Chairman ‐R Subramanian (IIM‐A Alumnus).

2. Ms. Rama Bijapurkar (IIM‐A Alumnus),Board of Director.

3. Mr. Kannan Srinivasan (a professor of marketing at Carnegie MellonUniversity’s Tepper School of Business),Board of Director.

4. Mr. S.B. Mathur, former LIC Chairman.5. Ms. Renuka Ramnath, Managing Director of ICICI Venture.

6. Ms. Rajeev Bakshi, Deputy Managing Director of ICICI Venture and aformer CEO of PepsiCo India.

7. Mr. Ajem Premji as Board member.

Major Shareholder1. ICICI Venture-23%.

2. Ajem Premji (Wipro) - 10%.

3. ICICI Prudential - 5%.



0

200

400

600

800

1000

1200

14001600

TIME LINE : THE RISE

STORES

End2006 – 420Stores

2004: Changein principle.

From“consolidation

” to

“Expansion”

2005: Recruitspersonnelacross the

country



October 2007Subhiksha mulls a Rs.350 crore IPO to finance growth

December 2007Subhiksha shelves IPO in view of uncertain stock market

conditions

April 2008Subhiksha plans private wholesale markets

Sep 2009Reports on Subhiksha defaulting on vendor payments, employee

salaries and Wipro takes 10% stake in Subhiksha

Oct 2009tabloids report problems in the cash flows at Subhiksha vendorscutting off supplies cause Subhiksha stores to go dry Subhiksha

defaults on rents for the stores.

Jan2009R Subramanian admits Subhiksha needs Rs.300 cr to keep on.

Subhiksha enters negotiations with property owners

TIME LINE : THE FALL

CLOSED



Reasons for failure of

Subhiksha Unmindful expansion.

Growth without consolidation.

Bad retail management.

Balance sheets.

Mastering the supply chain.

Lack of system support & IT control.

Vendor Management.

No competitive edge. Poor management system.

Lack of focus.

Lack of maintenance of stores.

Small format grocery store.



Relaunch of Subhiksha.



Merchandise Mix of Relaunched

Wipro - Subhiksha.

Relaunched Subhiksha will have a wide range of products in its store.

- Groceries.

- Toiletries.

- Cosmetics (like Face Cream, Powder, Grooming

products etc).- F&V’s.

- Domestics Fixtures.

- Baby care products.



Positioning of Relaunched

Subhiksha.

Low Prices

Trust

Savings



Strategy

Cut Price Strategy

Focus on the lower & upper middle class.

Wal-mart‐style- everyday‐low‐price (5‐10% less

than MRP). Inform customers about promotional offers.

Store keepers help buyers in purchase decision.

We will avoid intermediaries. Separate branded godowns to stock branded, non

branded & pharmacy items.

All stores connected through internet.



Management

Operations Stores

Vice President

Store 3Store 2Store 1

Manager

Chief Manager

Manager Manager

Earl

eir

New



The Retail Strategy

Subhiksha will focus on 5 factors for its model.

1. Criticality of cost.

2. Home Delivery.

3. Lease rental system for stores.

4. Centralized Purchasing.

5. Customization is required in stores of differentregions.



Current Scenario

Stores in INDIA WC & TL offered to Subhikshaby Banks.

Year No of Stores

1997 0

1999 19

2000 50

2003 140

2007 670

MARCH 2008 1320

SEPTEMBER 2009 1650

Bank Rs. Crores

HSBC 85

ABN AMRO 50

Centurion Bank of Punjab 40

YES Bank 50

Development Credit Bank 25

Federal Bank 50Bank of Baroda 75

ICICI Bank 155

Standard Chartered Bank 25

HDFC Bank 65



Contd

Subhiksha, which was forced to shut all its

stores as it ran out of cash, is in talks withover ten banks to restructure loans of nearlyRs 750 crore through a CDR (corporate debtrestructuring) exercise. Its promoter R

Subramanian has said that the company canresume operations after it gets cash of Rs 300crore.



Thank you !!!!!

subhiksha - final

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