New Delhi: Hit by the economic downturn, Subhiksha Trading Services has said that it will renegotiate rentals with real estate players, amid allegations, by some property owners, of default in rent payment by the retailer.
The retail major is also considering relocation of some of its stores from the 1,600-odd total, across the country due to low sales volume and high rentals.
“Yes, we would consider opportunity to lower rents, about 80-90 stores are under consideration of relocation,” Subhiksha Trading Services Managing Director R. Subramanian said.
Asked about the allegation of non-payment of rents for its stores in Noida and Ghaziabad, he said: “We do not comment on specific property transactions, we cannot comment on whether we have leased a property from anybody and whether any rent is due and what are the reasons for this.”
A group of property owners in Noida, however, claimed that Subhiksha has been defaulting on rent payments for the last five months.
“We had a meeting between ourselves to discuss our future course of action as our repeated requests to Subhiksha to clear our dues has not materialised. The company has been promising to either vacate or pay our dues but without any action,” a property owner said on the condition of anonymity.
Subramanian said: “After achieving high growths for the past few years, the company is now suffering the pangs of the economic slowdown.”
“The company has grown rapidly over last two years and like all high growth companies, the company has been in pain due to the sudden collapse of equity markets and tightening of the credit markets,” he added.
He said that the government’s stimulus package could prove helpful in raising debt to fund its financial requirements.
“With support from the government, banks are now loosening purse strings and companies such as Jet and DLF have recently raised debt our unbridged gap on debt should also get covered shortly,” Subramanian said.
The company is also slowing down its expansion plans and hopes to benefit from further falls in decline of retail rentals.
“Yes we are slowing down expansion as we expect realty rates to fall and it makes sense to defer expansion till realty markets stabilises,” he said.
The company had in June last year announced a Rs1,200 crore expansion plan which would have seen the retail player having 3,000 outlets by end of 2010.