Chennai / New Delhi: A year after shortage of cash forced Subhiksha Trading Services Ltd to close its nationwide network of 1,600 supermarket stores and default on loans, vendor payments and staff salaries, the Chennai-based discount retailer is trying to get back on its feet.
The seller of groceries, fruits, vegetables, medicines and mobile phones is planning to reopen a handful of outlets in Chennai, said two lawyers representing Subhiksha and a landlord whose property is also apparently being readied for the relaunch.
Getting set: The Subhiksha store under renovation in Chennai. Vidhya Sivaramakrishnan / Mint
But walking out of the woods may not be that easy for a company awaiting court orders that may result in its liquidation. Lender Kotak Mahindra Bank Ltd and vendor HCL Infosystems Ltd have filed separate winding up petitions against Subhiksha in the Madras high court to recover their dues.
R. Subramanian, the retailer’s managing director, and unnamed shareholders will fund the relaunch of four to five Subhiksha branded outlets, the lawyers said.
“Subramanian is contemplating to open some stores,” said Prakash Goklaney, one of its lawyers. The rollout, he added, could happen early next month.
N. Saravana Kumar, who owns the property in Chennai’s Thiruvanmiyur neighbourhood where Subhiksha opened its first outlet in 1996, confirmed witnessing “activities” at the store.
“Some work has been going on in that store for the last 15 days. I guess they are gearing up to reopen it,” Kumar said. “There is a board outside the shop that says ‘Wanted Salesmen’.”
Subramanian did not respond to questions emailed to him by Mint.
S.P. Mustafa, director of Zash Investment and Trading Co. Pvt. Ltd, which holds a 10% stake in Subhiksha, said he had no knowledge that the firm was planning to reopen some stores.
But a Mint reporter who visited Kumar’s property found some workers busy renovating the flagship store. A notice outside announced sales staff were urgently required for a “popular supermarket”, for salaries of Rs3,600-6,000 per month.
“Subhiksha is going to open this store... It will sell all (its usual) items,” said one of the workers, who did not want to be named.
Subhiksha’s move comes nearly a year after it asked lender banks to reduce interest rates and allow it more time to return their dues under a corporate debt restructuring plan. Subramanian had then said the firm would need about Rs300 crore to get back into business and open nearly 80% of its mothballed outlets.
But a consortium of banks, which included ICICI Bank Ltd, HDFC Bank Ltd and Yes Bank Ltd, was unable to file a proposal to revive the retailer before an extended July deadline. Subhiksha’s stakeholder then filed a compromise petition in the Madras high court, hoping to reach a settlement with creditors and vendors to whom they collectively owed Rs900 crore.
The court dismissed their plea and instead admitted winding up petitions against Subhiksha by Kotak Mahindra and HCL.
Another lawyer for Subhiksha, who did not want to be identified, said the pending court cases would have no bearing on the company’s plan to reopen some stores.
“There is no order against this. Until and unless an official or a provisional liquidator is appointed, the management can take such decisions,” the lawyer said.
ICICI Venture Funds Management Co. Ltd, an arm of ICICI Bank, refused to comment on the subject. But Rahul Balaji, a lawyer for HCL, agreed there was no legal bar to stop Subhiksha from reopening stores. HCL, he added, won’t oppose such a move.