Subhiksha: A Perfect go Bust (Part II)

When i blogged the first time on the unsustainable business model at Subhiksha (September 5th, 2008), which would cause it to go burst, i had not imagined, that i will be doing a second blog on that story.

This is the First Blog Link:
http://newspaper-posts.blogspot.com/2008/09/subhiksha-perfect-go-bust.html

6 months later, my predictions are born true. http://economictimes.indiatimes.com/articleshow/4053575.cms
http://www.livemint.com/2009/01/30180828/Subhiksha-on-virtual-collapse.html?h=A4

The Interesting bit about Subhiksha's roll out strategy is somewhere R Subramaniam, Founder CEO, also believed that if the retail model didnot live upto his expectations, he had make money on the real estate of the 1000 odd outlets. The Recession and the Real estate meltdown has now seen to it that he wouldnot be making as much money in reselling the stores as well.

I also find the statement by the company official on zero credit being the reason for the fall to be difficult to comprehend. Till not so long ago, Subhiksha had 1/2/3 months credit running from vendors who eventually then, turned off the supply taps. I have been privy to Vendor management systems in Subhiksha to bear out on the same. Subhiksha employees had not been given 2/3 month salaries even during the times of festival months. It has shut all expansion plans in east India! Majority of employees are out of their jobs and demanding salary arrears. In fact the Delhi Head office of Subhiksha has been locked by the owners of the property on account of non payment of the rents!

A convenient bet gone wrong and a business which never ran right for the lack of adeherence to fundamentals. I give Subhiksha another1 month before it goes belly up!

So long Mr Subramaniyam!