May sell stake but no declaration of bankruptcy: Subhiksha

May sell stake but no declaration of bankruptcy: Subhiksha
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First Published: Mon, Feb 09 2009. 04 23 PM IST
Updated: Mon, Feb 09 2009. 04 23 PM IST
New Delhi: Cash-strapped retail chain Subhiksha Trading Services on Monday ruled out declaring bankruptcy and said it may consider selling stake to raise funds as it struggles to arrange Rs300 crore to meet immediate operational requirements.
The company is currently undergoing a corporate debt restructuring (CDR) exercise with lenders reviewing its books.
“No, not at all, as that (declaring bankruptcy) is not a solution. We have a viable business which is cash-starved and CDR will help us revive this,” Subhiksha Trading Services managing director said.
He said the company, which has a total debt of around Rs750 crore, may have to look to the equity route to raise money in order to find cash for preventing the company from stopping its operations. “If there is no money, we can’t run operations but if there is no debt, we have to look at options like equity,” he said.
The company’s lenders, including 12 foreign and Indian private sectors banks, have sought a review of its balance sheet to speed up fund raising process.
“As part of CDR, the banks would need to get a current balance sheet rather than a 31 March 2008 balance sheet and they also want to ensure that events of the kind that happened in the last three-four months do not recur,” he said.
The company would be able to raise Rs300 crore, required for meeting operational expenses, only after completion of the CDR process, managing director R. Subramanian said.
“We are coordinating this review as this helps us as well...We are wholly part and parcel of this review and the idea is to ensure that the revival plan (for the company) is well crafted with learnings from the review,” he said.
The company’s accounts are audited till 31 March 2008, and a review would take into account the period after it.
On the issue of payment of employees and property owners, he said the company was “trying for emergency cash”.
Subhiksha’s operations have come to a standstill for the past few weeks due to non-payment of employees salaries, huge debt burden and arrears to suppliers, and the company is seeking liquidity infusion to the tune of Rs300 crore to revive its operations.
In many parts of the country, the company’s stores and warehouses have been subjected to vandalisation and ransacking by unidentified elements for the past one week. Subhiksha had expressed helplessness in the matter saying non-payment of dues to security agencies have left its assets unguarded and vulnerable.
Subramanian said the company is taking steps to protect its stores and assets but it has been crippled due to shortage of staff.
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First Published: Mon, Feb 09 2009. 04 23 PM IST