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ICICI stake sale not discussed by board: Subhiksha
Wednesday, 25 February 2009, 15:51 IST |
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Chennai: The decision of private equity fund ICICI Venture, a minority shareholder in Subhiksha Trading Services, to sell 10 percent stake in the retail chain had not been discussed at Subhiksha's board meetings.
"We understand that for various compelling reasons of the financial investor (ICICI Venture), we were clearly told that we had no choice on taking the money. We were promised that money would be raised for us in the next few months going forward," said Subhiksha promoter and managing director R. Subramanian in a statement Tuesday.
ICICI Venture sold a portion of its holding in the cash-strapped retail chain to Zash Investment - the private equity fund owned by Wipro's Azim Premji - for 
2.3 billion (230 crore) in March last year.
Subhiksha, with a debt burden of over 7.5 billion (750 crore), is looking for a 3 billion (300 crore) cash infusion to stay afloat.
This month, two ICICI Venture executives - chief executive Renuka Ramnath and joint managing director Rajeev Bakshi - also resigned from the Subhiksha board.
According to Subramanian, it was wrong to say the valuation expectation of Subhiksha promoters was the reason for Zash not investing in the retail chain.
"If the board is there to take the strategic decisions and provide high level advice, it would have intervened in this issue and told us to take the money into the company if it had felt that we were unreasonable in not taking money into the company for reasons of over expectation on valuation," he said in the statement.
"The deal between ICICI Venture and Zash happened on March 26 last year when Bear Stearns had already collapsed and Indian stock markets were 30 percent down in 60 days from the January 2008 highs."
Subramanian said given the fact that ICICI Venture has invested in the company for eight years and made profits in selling stake in Subhiksha only go to prove that the retail chain's business model is not wrong.
"We are not one-year wonder. We have been around for 11 years and have done well. It is only that there would be a need to restructure the balance sheet and seek debt re-scheduling and debt forgiveness as part of making the capital structure viable."
He reiterated that not capitalising on the company strongly enough was the only sin committed and that had to be set right.
ICICI Ventures Monday said there was "complete" operational failure at the retail firm, and a few days ago, had filed a complaint against Subhiksha with the Registrar of Companies (RoC) in Chennai.
"There has been a complete failure, resulting in an operational and financial loss," chief executive Ramnath told reporters at a press conference in Mumbai.
"We have only 23 percent stake in the company, we will do anything from our side that can be done to salvage the company. ICICI ventures has a fiduciary responsibility towards its investors," she added.
Ramnath said she does not know the extent of the crisis at Subhiksha and has therefore petitioned the RoC for an independent auditor, amongst other things.
ICICI ventures has an exposure of about 1.06 billion (106 crore) in the retail company.
Source: IANS
2.3 billion (230 crore) in March last year.
Subhiksha, with a debt burden of over 7.5 billion (750 crore), is looking for a 3 billion (300 crore) cash infusion to stay afloat.
This month, two ICICI Venture executives - chief executive Renuka Ramnath and joint managing director Rajeev Bakshi - also resigned from the Subhiksha board.
According to Subramanian, it was wrong to say the valuation expectation of Subhiksha promoters was the reason for Zash not investing in the retail chain.
"If the board is there to take the strategic decisions and provide high level advice, it would have intervened in this issue and told us to take the money into the company if it had felt that we were unreasonable in not taking money into the company for reasons of over expectation on valuation," he said in the statement.
"The deal between ICICI Venture and Zash happened on March 26 last year when Bear Stearns had already collapsed and Indian stock markets were 30 percent down in 60 days from the January 2008 highs."
Subramanian said given the fact that ICICI Venture has invested in the company for eight years and made profits in selling stake in Subhiksha only go to prove that the retail chain's business model is not wrong.
"We are not one-year wonder. We have been around for 11 years and have done well. It is only that there would be a need to restructure the balance sheet and seek debt re-scheduling and debt forgiveness as part of making the capital structure viable."
He reiterated that not capitalising on the company strongly enough was the only sin committed and that had to be set right.
ICICI Ventures Monday said there was "complete" operational failure at the retail firm, and a few days ago, had filed a complaint against Subhiksha with the Registrar of Companies (RoC) in Chennai.
"There has been a complete failure, resulting in an operational and financial loss," chief executive Ramnath told reporters at a press conference in Mumbai.
"We have only 23 percent stake in the company, we will do anything from our side that can be done to salvage the company. ICICI ventures has a fiduciary responsibility towards its investors," she added.
Ramnath said she does not know the extent of the crisis at Subhiksha and has therefore petitioned the RoC for an independent auditor, amongst other things.
ICICI ventures has an exposure of about 1.06 billion (106 crore) in the retail company.
Source: IANS