Subhiksha Discount Store With a Difference

Presented By : Sophia Gonsalves. Ashwin Kamble. Urvashi Patel. Kushal Thakkar.

Subhiksha Profile

Subhiksha means PROSPERITY Chennai based grocery & pharmaceuticals and 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. 2. 3.
4. 5. 6. 7.

Chairman R Subramanian (IIMA Alumnus). Ms. Rama Bijapurkar (IIMA Alumnus),Board of Director. Mr. Kannan Srinivasan (a professor of marketing at Carnegie Mellon Universitys Tepper School of Business),Board of Director. Mr. S.B. Mathur, former LIC Chairman. Ms. Renuka Ramnath, Managing Director of ICICI Venture. Ms. Rajeev Bakshi, Deputy Managing Director of ICICI Venture and a former CEO of PepsiCo India. Mr. Ajem Premji as Board member.

Major Shareholder
1. 2. 3. ICICI Venture-23%. Ajem Premji (Wipro) - 10%. ICICI Prudential - 5%.

TIME LINE : THE RISE

1600 1400 1200 1000

2004: Change in principle. From consolidation to Expansion

2005: Recruits personnel across the country

800
600 400 200 0
End 2006 420 Store s

STORES

TIME LINE : THE FALL

October 2007 Subhiksha mulls a Rs.350 crore IPO to finance growth December 2007 Subhiksha shelves IPO in view of uncertain stock market conditions April 2008 Subhiksha plans private wholesale markets

Sep 2009 Reports on Subhiksha defaulting on vendor payments, employee salaries and Wipro takes 10% stake in Subhiksha Oct 2009 tabloids report problems in the cash flows at Subhiksha vendors cutting off supplies cause Subhiksha stores to go dry Subhiksha defaults on rents for the stores. Jan2009 R Subramanian admits Subhiksha needs Rs.300 cr to keep on. Subhiksha enters negotiations with property owners 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&Vs. - 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-martstyle- everydaylowprice (510% 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

E a r l e i r Manager

Vice President

Chief Manager

Operations

Stores

Manager

Manager

Store 1 N e w

Store 2

Store 3

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 different regions.

Current Scenario
Stores in INDIA
Year
1997 1999 2000 2003 2007 MARCH 2008 SEPTEMBER 2009

WC & TL offered to Subhiksha by Banks.

Bank Rs. Crores

No of Stores HSBC
0 19 50 140 670 1320 1650 ABN AMRO Centurion Bank of Punjab YES Bank

85
50 40 50

Development Credit Bank

Federal Bank Bank of Baroda ICICI Bank

25
50 75 155

Standard Chartered Bank

HDFC Bank

25
65

Contd
Subhiksha, which was forced to shut all its

stores as it ran out of cash, is in talks with over ten banks to restructure loans of nearly Rs 750 crore through a CDR (corporate debt restructuring) exercise. Its promoter R Subramanian has said that the company can resume operations after it gets cash of Rs 300 crore.

Thank you !!!!!