What Happened to Subhiksha?

 Once a favorite model of retail success, now a study of financial failure

It was in 1996 that the idea of Subhiksha (prosperity in Sanskrit), organized retail services came to the mind of Subramanian, and IIT Madras and IIM Ahmedabad alumnus. He opened the first shop in Chennai in March 1997. By March 1999 there were 10 Subhiksha shops in Chennai. Its unique discounting model enraged the retail trade in Chennai

By 2000 Subhiksha grew to nearly 50 shops in Chennai retailing groceries and medicines. ICICI Venture's decision then to pick up a 10 per cent stake in Subhiksha for Rs 15 crore gave the retailer enhanced credibility in the market. This money was used to expand outside Chennai, into the rest of Tamil Nadu. By 2002-03, Subhiksha had 140 stores across 30 towns in Tamil Nadu. Sales grew steadily. Cash flows were reasonable and debt, at Rs 15 crore against the net worth of Rs 23 crore, was comfortable.

Tamil Nadu was not enough for the growth of Subhiksha. Subramanian wanted to expand it all over the nation. There was two choices- expand Subhiksha in one state by one and expand many states at a time. The subhiksha model proved to be successful. He choosed second option. Between late 2004 and early 2007, Rs 160 crore worth of equity was raised. That apart, a debt of Rs 220 crore and a bridge loan of Rs 125 crore (for pending raising of equity from capital markets) was arranged to fund the national rollout.

On an average, 60 to 70 stores were added in a month. The pace of rollout is evident from the fact that till September 2006, Subhiksha had a store count of just 160, but by March 2007 it had shot up to 670 and by March 2008 to 1,320. By September 2008, it was 1,650-in all 1,500 stores were added ih just 24 months. 2006-07 and 2007-08 Subhiksha doubled the stores, tripled revenues and almost quadrupled profits

At the time of tough retail competition with the entry of Reliance, Tata and Aditya Birla group into the field Subhiksha had become the country's largest mobile phone retailer with an annual turnover of Rs 1,000 crore. The performance of Subhiksha attracted the investors. Wipro Chairman Azim Premji, in March 2008, picked up the 10 per cent stake in Subhiksha that was offloaded by ICICI Venture for Rs 230 crore, pegging the company's valuation at Rs 2,300 crore.

That was the time for Subhiksha to capitalize Premji’s interest in the company. Company kept postponing the IPO. It did not want to dilute the shareholders interest. So it continued to raise money through debts. During September 2008, people lost their interest in share markets. There was a complete collapse of equity market. At the time when liquidity was tight, Subhiksha needed Rs 125 crore in cash to repay the loan.  It was due for Subhiksha to repay the bridge loan. The working capitals were diverted to rescue and expand Subhiksha with the hope of IPO in the confidence of success of the model. Working capital eroded. Many shops were closed as a rescue measure. Suppliers stopped supplying. Shops’ stands became empty. The security guards did not turned to the work. These all happened in less than 3 months. And finally in February 2009 there were not a single Subhiksha faced even cheque bounce case. Ajim Premji accused him for financial fraud. ICICI asked for detailed investigation of financial mismanagement. And he and his company became defaulter for over Rs 750 crore to 13 banks.

Probably, if IPO was done instead of postponement, equity could have been used to reduce the debt and Subhiksha would have survived.

Adopted from a case study in IGNOU MBA question paper.

An MD who does not work on Sudays

We always tend to think of highly successful people, who are the top in their line of activities. Many a times we never look into the news makers who make the news in our daily read newspapers. There are people at the top positions of the companies we know; who are inspiring and leading their life interesting. One of such news maker grabbed my attention was Mr. Y M Deosthalee, Chairman and MD of L&T Finance Holding, featured in a small column of the Business Standard recently.

Mr. Yeshwanth Moreshwar Deosthalee was at in the lead stories of business magazines with L&T Finance for an acquisition exercise by which it acquired Fidelity in India. Mr. Y M Deosthalee was CFO of the L&T earlier to his present assignments as Chairman and MD of L&T Finance Holding. He never went to a business school. But the nation has been served by his talent. He was at the committee set up by the government of India to address the liquidity crisis during the 2008 economic downturn.

To be an achiever, that too a successful CEO, one may thinks he should be a workaholic. But BS writes he is not. He goes home by 6.30. He does not work on Sundays. He also believes that one should not stick to the chair thinking he is irreplaceable. He believes there is life beyond work. He learnt Hindustani Music for three years and now music has become his passion. Shouldn’t we try to follow him?

The Best Brand Manager of 2011-12: Poonam Pandey

Poonam Pandey Full Covered

Nobody knew Poonam Pandey before the ICC Cricket World Cup 2011. Though, few had seen her in bikini in Kingfisher calendar or some Santa Banta like sites, no one bothered about her. Within a year, she marketed herself in such way that news magazines now publish her interviews. Apart from Google search which bring thousands of pages, you can also see the way she is making news by searching her in Google news. Poonam Pandey became the well known brand name for hot and bold Bikini Model in India.

During ICC Cricket World Cup 2011 she made a statement in Twitter that she will strip all her clothes in the stadium if India wins in the final. This grabbed the headlines in the TV channels and the news papers. It also made her to face the court case and protests from the women organizations at the age of 19 years. But she did not stopped making such statements and uploading hot photos in the Twitter. She concentrated on building a strong brand ‘a hot, sexy and bold Poonam Pandey’. She used cricket at the most to make a presence in the twitter. She offered sexy pictures when Kohli made 183, she uploaded her hot pictures when Tendulkar hit 100 centuries. Now she has 145399 followers in twitter and she claims google titled her as most downloaded model in the internet.

Poonam Pandey, not even a graduate from college, uses the best tactics of social media to be in news. She also makes the cricket analysts and the youngsters to quote her quotes. One of her non sexy decent tweet reads like this “Thanks to Rahul Gandhi for Tendulkar’s 100th 100. Had his grandmother not created Bangladesh, Sachin would not have got his ton”. She posted some hot photo in the Twitter and asked her followers to retweet it to encourage her post more and more pictures with lesser clothes. Her followers did it and she also kept her promise.

Don’t think she just uses her Twitter account to post some hot bikini pics of her own. Poonam Pandeey also tweets like a philosopher. If you want to follow a sexy philosopher, Poonam Pandey is there onTwitter. All her efforts of publicity worked well to make her in the top 10 of the Google Zeitgeist 2011 list of fastest rising celebrities in India, alongside Katrina Kaif and Anna Hazare.

Why Poonam Pandey can’t be considered as the Best Brand Managers of 2011-12?

Also read Pooja Gandhi topless for a Kannada film

A Non IITian Success Story

A M Naik, Chairman and MD, Larsen & Toubro (L&T) 

Success never asks for the certificates given by an institution. It is an inspiring story of Mr A M Naik (See Wikipedia), who struggled to speak in English climbed the top position in L&T, one of the prestigious corporate group of the country. This story by Shyamal Majumdar was published in Business Standard .

Consider what A M Naik has achieved in terms of making Larsen & Toubro (L&T) one of the most respected engineering conglomerates in the country. Now, consider his initial experience at L&T. Apart from the fact that he was not from any of the Indian Institutes of Technology (Naik did his mechanical engineering from Birla Vishvakarma Mahavidyalaya Engineering College in Vallabh Vidyanagar in Gujarat), his poor knowledge of English led him to make seven to eight mistakes in the first employment form he filled.


When he applied to L&T, he got a job, but the company reduced its initial offer by Rs 90 to Rs 670 a month and offered him a lower designation than what it had initially promised — all because the final interviewer thought he was a bit arrogant. Years later, Naik attributes this to a communication gap between him and the Englishman, who was the final interviewer. “I used to think in Gujarati and then translate it into English; the Englishman perhaps misunderstood what I had intended to say,” Naik said.


Naik could have easily given up on the L&T job, but didn’t, just to prove a point. He joined L&T on March 5, 1965, and became the workshop in-charge within one and a half years of joining the company. When he was not even 25, some 800 people reported to him. The rest is all too well known.


By the way title of the article was Opportunity in failures.

Big Bakra of Big Bazar

Big Bazar Great Exchange Offer

A fat lady wearing posh saree entered the Mall with an old damaged bag. It was obviously some mismatch between the how she looked and the bag she was carrying. She walked to the Big Bazar counter; instead of baggage counter she gave the bag to the person sitting in front of a computer in between the old useless household materials. He opened the bag and counted old clothes, shoes, and few books, then printed and gave her a voucher. It raised my eyebrow and I saw a board “Exchange Offer!” Exchange anything for extra 25% off. I have never seen Big Bazar doing any charity by taking your old jeans for Rs 300 or a kg of Newspaper for Rs 30 and give you something new. Kishor Biyani can never be a fool. Conditions obviously apply. The only question was what are those stars making us blind?

First I should tell how an exchange offer should work. One has an old Alto a/c car. Now he wants to buy a new Swift. He visits True Value shop. After negotiation he agrees for exchange at a price say Rs 2 lakh. This amount plus bonus if any will be deducted from the new car price say Rs 5 lakhs and he pays only Rs 3 lakhs to drive the car home. They never tell you to buy car with the price tag Rs 8.00 lakhs to get the benefit of Rs 2 lakhs so that the amount reduced does not exceed 25%.

Come back to Big Bazar. The lady exchanged the old jeans for an exchange voucher of Rs 300. To get the complete benefit she has to make the bill worth Rs 1200. Only then bill amount will be reduced to Rs 900. That means she got 25% discount. This is the maximum benefit scenario. What if she buys an item worth Rs 600? She will get a discount of 25% or Rs 150 only. To get the full benefits she fills her kart. She can’t make it exact Rs 1200. It becomes Rs1500. Then She doesn’t get 25% off, it will be Rs 300 only, i.e. 20%. Also, not all the items are under the 25% off offer, this is the maximum discount offered by them. If she had done a five-minute pre purchase research I can bet this same material would have cost less than this at some other shop. She lost old jeans and spent few bugs for this exchange offer. She ended up in purchasing 4 times the value of her old stuffs as evaluated by the Big Bazar in their convenience, without a second thought whether she is in need of what she is buying.

Congrats, Big Bakra of Big Bazar.

What’s Right Isn’t Always Popular…

I was going through an online course developed by my organisation on decision making and found this story very interesting on making decision. I'm giving it as it is I found somewhere in the internet.

A few children were playing on two railway tracks, one still in use while the other disused. Only one child played on the track not in use, the rest on the operational track. The train is coming, and you are just beside the track interchange. You can make the train change its course to the disused track and save most of the kids. However, that would also mean the lone child playing by the disused track would be sacrificed. Or would you rather let the train go its way? Also remember that you don't have time to inform either the children playing there or the locomotive pilot to stop the train. You have to choose from the only above two option.

Before going further please take a pause, make your answer ready.

Let us see the decision you took is right or not.

If you have taken the decision to divert the train to unused track, to save most of the children at the expense of only one child you have definitely taken a popular decision as most of others take.

But, have you ever thought that the child choosing to play on the disused track had in fact made the right decision to play at a safe place? Why should he had to be sacrificed because of his ignorant friends who chose to play where the danger was? The kids playing on the operational track should have known very well that track was still in use, and that they should have run away if they heard the train's sirens. If the train was diverted, that lone child would definitely die because he never thought the train could come over to that track! Moreover, that track was not in use probably because it was not safe. If the train was diverted to the track, we could put the lives of all passengers on board at stake! And in your attempt to save a few kids by sacrificing one child, you might end up sacrificing hundreds of people to save these few ignorant kids.

"Remember that what's right isn't always popular and what's popular isn't always right."