Subiksha, the Chennai-based retailer, is in bad shape. That's not a big deal in itself. The retail story has gone awry with the downturn and also because of firms having overextended themselves when real estate prices were sky high.
The big deal, if any, is about the accounts of Subiksha. Business Standard reported yesterday that ICICI Venture, which has a 23% stake in Subiksha, has written to the RoC asking for an independent audit of the company's accounts.
Subiksha MD R Subramaniam holds 59% of equity but he apparently contends that the company is actually controlled by ICICI Venture because the latter has the right to appoint a majority of directors. This is an interesting twist because it would imply that if there were accounts or audit issues at Subiksha, ICICI Venture would be responsible.
Incidentally, four of the high-profile directors resigned last week- Renuka Ramnath and Rajiv Bakshi of ICICI Venture, Rama Bijapurkar and Kannan Srinivasan (a Carnegie Mellon prof). What do these resignations imply? We do not know. That is why I have argued that when independent directors quit, they should be asked to furnish reasons.
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6 comments:
Subhiksha's an unlisted company. I had read it was planning a reverse merger with a listed company, but I don't think that went through. Please correct me if I am wrong. In this case, it is not required to be clause 49 compliant. and considering it is a closely held company between RS, ICICI ventures and Azim Premji (lead PE firm), who do nominee directors owe explanations to?
Sir,
Do you think stating the reasons would actually make the difference?
I mean one could escape stating other commitments or maybe personal reasons.
Do you think it'd be better if independant directors are also held accountable for the functioning of the company?
Surely questions which seem procedural in nature be made more pertinent
Sir,
I am not sure about the liabilities of independent Directors of a company, but why should an independent director give reasons for his leaving a company?
this will only lead to directors looking like Indian netas before n after the polls.
Subiksha'a failure is a classic case of the state of indian retail "myth". All major retail chains have "empty" footfalls - no billing. They are all bleeding and are packaging and snowballing their losses with fake valuations that some fools fall for head over heels.
their shelves, are the right dipstick and tstimony to their health- they all stock stale, unclean stock, thinly staffed billing counters and non susainable aircons.
On th e profitability of the retail space, these large chains must all learn from home grown native retailers who are sharp business persons and have grown their 1 shop brands globally and achieve larger turnovers with 1 mega outlet. Profitability is prime in these models. In chennai alone, there are atleast 20 such super big outlets ( remember they are all native and limited educated) and not from IIM. They clock 1000 crore + sales and huge profits. Many of them are debt free, they have plughed back profits.
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