No cash; Subhiksha in deep trouble
By siliconindia   |   Tuesday, 03 February 2009, 01:38 IST   |    22 Comments
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No cash; Subhiksha in deep trouble
Bangalore: The 11-year-old retail chain Subhiksha Trading has run out of cash, revealed the company Managing Director R Subramanian. However, shutting any shop, according to Subramanian, is out of question. In an interview with Business Standard, Subramanian said that the company was close to raising equity in September last year when credit crunch shook global markets. As the lenders were unable to extend further lines unless equity was raised, the company ran out of cash by October. He said that the company's expansion and lack of fresh funding (equity or debt) coupled with a constant build-up of unpaid bills since August made things tight. "Everyone was waiting for equity to be raised and then bank debt to come. But when the equity raising didn't happen, we were caught flat-footed. In September, banks were not even lending to each other; forget lending to us," Subramanian said. The lack of fund has delayed the payment of salaries to the employees. "Arrears are getting accumulated. Not because we do not want to pay but because we can't pay. Since August- September, our focus has been on paying our creditors and banks. This led to employee payments and rentals getting delayed," Subramanian said. The company has more than 15,000 employees (direct and contractual). Subhiksha is working with the financial stakeholders, lenders and investors to inject liquidity and get the company back on track. The company needs a liquidity injection of up to Rs 300 crore (Rs 3 billion). However, Subramanian asserted that though the company is in pain, it is not planning to shut down its operations. "We expanded rapidly and the growth to 1600 stores and nearly Rs 4,000 crore (Rs 40 billion) annual turnover this year was achieved through a high level of debt," Subramanian said.

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