New Delhi/Chennai: Subhiksha Trading Services Ltd, the discount retailer whose financial troubles led to the closure of its around 1,600 stores earlier this year has assets worth Rs800 crore, its lawyer has said—a claim that, if true, provides a new twist to a so-called winding-up petition against it.
The number attains significance because it owes around Rs750 crore to several banks including ICICI Bank Ltd, and is working with them on a corporate debt restructuring (CDR) package which is expected to be finalized by June.
Chain of defaults: A file photo of a Subhiksha outlet in New Delhi. Harikrishna Katragadda / Mint
Information on the company’s assets was disclosed to the Madras high court on 5 May, said Saravana Kumar G., one of the lawyers. A winding-up petition is one filed by a creditor asking courts to liquidate a defaulting debtor’s assets.
Kotak Mahindra Bank Ltd had filed a winding-up petition to recover Rs40 crore owed it by the retailer. On 31 March, the Madras high court appointed an official liquidator to liquidate Subhiksha’s assets, but stayed this appointment till 20 May at the retailer’s request on condition that Subhiksha would submit detailed accounts of its balance sheet for the last three years by that deadline.
Kumar said Subhiksha has provided the court details of its accounts up to November 2008, when the company’s problems first came to light. He declined to share these details with Mint.
A second lawyer, who also represents the firm, however, said that Subhiksha was yet to submit its accounts to the court and would do so only on 20 May. He also said the company’s assets were unlikely to be worth Rs800 crore. This lawyer did not want to be identified.
Kumar also claimed that ICICI Venture Funds Management Co., the largest investor in Subhiksha is likely to infuse capital into the beleaguered discount retailer.
“ICICI Venture is interested to fund more. The discussions are going on.” Kumar, however, declined to divulge how much money ICICI Venture could invest.
“We continue to work with lenders and other stakeholders to examine the prospects of reviving the company,” said a spokesperson for ICICI Venture.
“We are working on the CDR package—all infusions by lenders and shareholders would be part of the restructuring,” R. Subramanian, Subhiksha’s managing director, said in an emailed reply.
“We will issue formal media updates as and when there are facts to update.”
Once the company behind the country’s largest chain of discount stores, Subhiksha closed its around-1,600 stores earlier this year after aggressive expansion resulted in a severe cash crunch.
Subhiksha has previously said it needs around Rs300 crore to get on its feet.
The second lawyer said that once the CDR package is finalized, the company could look to downsizing its chain by 300-500 stores located in high-rent neighbourhoods and, subsequently, look at other locations for these.