Home / Home-page / Subhiksha’s move raises questions

New Delhi / Chennai: While a Chennai high court verdict on the proposed merger between ailing retailer Subhiksha Trading Services Ltd and Blue Green Constructions and Investments Ltd is expected on 9 March, information sourced from Blue Green’s website raises fresh questions about prior relations between Subhiksha promoter R. Subramanian and the potential reverse merger target.

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In June, Subramanian had picked up a 40% stake in little-known Blue Green. Subramanian had then said the acquisition in the listed company would help it both enter the consumer durables area and access capital markets without going through a fresh listing process. “We want to enter the consumer durables space in a big way and Blue Green also had similar plans,’’ Subramanian was quoted as saying at that time.

According to documents released by managers to the merger offer Collins Stewart Inga Pvt. Ltd, Blue Green had reported a total income of Rs2.06 lakh and profit after tax of Rs19,000 “before prior period expense adjustment" for the year ended 31 March.

Blue Green’s director’s report for 2006, available at states that an “M. Rathinakumar" stepped down as a director of the firm on or before 10 April 2006, almost two years before the stake acquisition.

According to documents filed with the ministry of corporate affairs website by Subhiksha, the company secretary of Subhiksha happens to be one “M. Rathinakumar".

It is uncertain if both individuals are the same and when approached for a clarification, Subhiksha’s company secretary M. Rathinakumar asked us to route all queries through the managing director’s office. (Subramanian was repeatedly approached by Mint for clarifications on 5 and 6 March. He said that he was not in a position to respond and was waiting to hear from his IT staff.)

Information on domain name registrar Net4India Ltd further indicates that the email address to contact the owners of Blue Green’s web address is This information was added to the Net4India database on 10 June 2006. Vishwapriya Financial Services and Securities Ltd is the name of a non-banking financial company started by Subramanian in 1991, which would later be involved in an IPO (initial public offering) financing scandal. The controversy led Securities and Exchange Board of India to place a five-year ban on Viswapriya from dealing in the capital markets. In response to an emailed questionnaire, R. Ganesh, chief manager of Viswapriya, clarified that the firm currently had no relations whatsoever with Subhiksha.

Further, the telephone number shown on the Blue Green website is identical to those of two other listed companies: Aramusk Infrastructure Investments Pvt. Ltd and Beta-Kappa Investments Ltd. All three companies also have websites that are very similar in design, layout and uploaded information. Aramusk’s domain name was created on 11 June 2006, one day after Blue Green’s.

Beta-Kappa’s domain name registration information gives the administrative contact as a “Subramanian, Ramaswamy". In addition, Beta-Kappa’s board of director information shows a “M. Rathinakumar" as a member of the board since 3 July 1995.

It is clear from this information that directly and indirectly all three companies, including Blue Green, may have ties to Subramanian and key Subhiksha personnel that trace back to well before the June 2008 stake acquisition in the company by Subhiksha’s promoters.

Calls made by Mint to the identical phone number given on all three companies’ websites were automatically forwarded to a company called Matrix Financial Services Ltd. (Phone calls to confirm ownership of this company were not returned.)

These links with Blue Green raise fresh doubts about the merger and potential conflict of interest issues arising out of Subramanian’s ties to both companies involved.

Subhiksha Trading Service Ltd is a national chain of discount retail stores, promoted by Subramanian, and started in Chennai in 1997. From a base of less than 200 stores in 2005, the chain aggressively expanded till it had nearly 1,600 stores by January 2009. Prominent investors in the chain include ICICI Venture and Premji Invest. Subhiksha shelved plans for an IPO last year citing adverse market conditions. Subramanian initially denied reports of financial troubles in October before admitting in January that the chain was crippled by a lack of funds. All stores in the chain were subsequently shut down.

A spokesperson for ICICI Venture declined to comment for this story as the matter was still pending in court.

A person familiar with the terms of the proposed merger said that a large number of investors, lenders and creditors to Subhiksha have voiced opposition to the deal proposed by Subramanian.

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