Mumbai/New Delhi: Seven months after a corporate debt restructuring (CDR) plan for Subhiksha Trading Services Ltd hit a dead end, ICICI Venture Funds Management Co. Ltd, the main investor in the troubled retailer, considers its investment in the company a “write-off" and is struggling to find buyers for its stake, according to a person familiar with the development.

Lost case?A file photo of a Subhiksha store. Private equity firm ICICI Venture, which holds about 23% in the beleaguered retailer, has been unable to find buyers for its stake and feels Subhiksha can’t be revived. Harikrishna Katragadda/Mint

ICICI Venture holds the largest non-promoter stake in Subhiksha, but a senior executive at a large consulting company said the private equity (PE) firm would not face any loss from writing off its investment.

“ICICI Venture rather made (a) profit on (its) investment while selling 10% stake to PremjiInvest," the consulting company executive said, requesting anonymity for himself and his firm citing business relations with the PE firm.

ICICI Venture, an arm of ICICI Bank Ltd—India’s largest private lender—currently holds about 23% in Subhiksha and has an estimated exposure of about Rs106 crore in it. ICICI Bank, one of the lenders to Subhiksha, was in charge of drafting the revival plan for the retailer.

The person familiar with the matter said ICICI Venture had approached strategic buyers to take over the defunct retail chain, but failed. “Buyers looked at the company on behest of ICICI Venture, but nothing worked out as they saw no value in buying it."

A spokesperson for ICICI Venture said in an email reply that the firm “would prefer not to comment on the issue".

R. Subramanian, Subhiksha’s managing director, did not respond to an email seeking comment sent on Tuesday. He did not answer phone calls or reply to text messages.

PremjiInvest, the PE arm of billionaire Azim Premji, had bought a 10% stake in Subhiksha from ICICI Venture in 2008 for Rs230 crore.

Trouble for Subhiksha began in late 2008 when the company ran out of cash, bringing its operations to a standstill.

The cash shortage eventually resulted in Subhiksha closing its nationwide network of 1,600 supermarket stores, and defaulting on loans, vendor payments and staff salaries.

Subramanian had attributed the collapse to the debt-led rapid expansion of the firm on a small equity base. He had said Subhiksha’s growth to 1,600 stores in 11 years and a nearly Rs4,000 crore annual revenue rate was achieved through a high level of debt.

ICICI Venture had earlier written to the Chennai office of the Registrar of Companies to investigate Subhiksha’s books, saying the retailer had not shared its audited accounts after June 2007. It also asked for an independent audit of Subhiksha’s accounts.

In August 2009, the Madras high court admitted two separate winding up petitions by Kotak Mahindra Bank Ltd and HCL Infosystems Ltd to recover their dues from Subhiksha.

Subhiksha owes at least Rs750 crore to ICICI Bank, HDFC Bank Ltd, Yes Bank Ltd and other lenders.

A consortium of lenders tried to revive Subhiksha with a debt restructuring plan, but failed to file a proposal to the CDR office by a July deadline.

Premji, chairman and managing director of India’s third largest software firm Wipro Ltd, has since termed the Subhiksha investment an “error".

In an interview with The Economic Times on 11 March, Premji had said there was an overstatement of accounts at Subhiksha, as well as fake inventory, bills and companies that money was transferred to.

When contacted about the Subhiksha investment, PremjiInvest declined to comment. “We are not at liberty to share anything due to legal proceedings in the court," said Prakash Parthasarathy, chief investment officer at the firm.

Last year, PremjiInvest sent legal notices to six serving and former directors of the retailer, charging them with not performing their duty and keeping investors in the dark about Subhiksha’s financial status.

ICICI Venture’s former managing director Renuka Ramnath and former senior director Bala Deshpande were among those to whom the notices were sent.

Meanwhile, Dow Jones Newswires reported on Monday that American PE company TPG Capital is set to take over Vishal Retail Ltd, another debt-laden Indian retailer.