Subhikshas failure. Why?

Presented By:
Team Serendipity.
The Assam Kaziranga University- School of Business.
Indian Organized Retail Industry
Subhiksha-The Introduction
Largest retail value chain in India with 1600
outlets started in 1997 .
From 150 stores in Sept 2006 all of which were in
Tamil Nadu the company grew rapidly to over
1600 stores by Sept 2008 across the country.
The companys investors included Wipros Azim
Premji and ICICI Prudential Mutual fund apart
from the ESOP Trust.
Started with $8-10000. Turnover in 2008 was
$451 million.

1. SUBHIKSHAS DOWNFALL.
FACTORS:
EXPANSION TIME LINE
In March 1997 opening of the first retail store in Chennai,
with $ 1 million initial investment.
March 99 14 stores in Chennai.
June 2000 50 stores in Chennai, ICICI ventures joins
Subhiksha.
June 2002 120 stores in whole of Tamil Nadu.
June 2006 420 stores in other big states in India namely
Gujarat, Delhi, Mumbai, Andhra Pradesh and Karnataka.
Feb 2007500 stores across country
Dec 2007 1000 stores across India
October 2008 1600 stores across India

RAPID EXPANSION VIA DEBT CAPITAL.

Reasons for failure of
Subhiksha

Expanding the number of stores rapidly
without sufficient funds in hand.
Expansion of Stores without adequate system
control and IT Support.
Government Intervention.
Lack of strong HR policy and Staff.
Strong Competition.
Over confidence and Aggressiveness.


Learning Outcomes:
Never be too aggressive with your expansion
and growth plans unless you have enough
finances.
Know your competitors inside out.
Understand your Strengths and Weaknesses
and use them efficiently to gain and learn.
Debt Capital though profitable, is the most
risky source of finance.