BIRLA INSTITUTE OF TECHNOLOGY

NOIDA CAMPUS

MSH 1109 ENTREPRENEURSHIP &

SMALL BUSINESS MANAGEMENT

 Assign. On :-

PRESENTED BY :-
IMBE/4502/12 NAVSHEEN
IMBE/4510/12 ANUNAY ANAND.
 About Subhiksha
The company was started by R. Subramaniam,
an IIM A & IIT Chennai alumnus in 1997
Subhiksha in Sanskrit means (prosperity) the
giver of all good things in life
Theme - Why pay more when you can get it
for less at Subhiksha?
Discount store at prices lower than other retail
outlets
500 outlets in early 2007
Set up 1,000 sq. ft. shops all across the city
 Vision & Mission
Vision

To emerge as the largest retailer in the food, grocery, pharmacy

segment in all the geographical regions we operate from.

Mission

To deliver consistently better value to Indian consumers , as

guided Subhiksha to deliver savings to all consumers on each &

every item that they need in their daily lives, 365 days a year

without any compromise on the quality of goods purchased.

Goal of the Company
Open store for every two

kilometer in Chennai.

550 store by 2009 in Delhi.

Plan to expand in other part of

India.
 Strategy adopted by the company
Focused on the lower & upper middle class
Offer a better ambience than typical general
store
Prices are 8% less than the MRP
Inform customers about promotional offers
Store keepers help buyers in purchase
decision.
Multiple Products
Residential Locations
Availing branded products
About Product Portfolio
 Expansion Time Line
In March 1997 opening of the first retail store in Chennai, with $ 1
million initial investment.
March 1999 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 2007 500 stores across country
Dec 2007 1000 stores across India
October 2008 1600 stores across India
 Fund Raising
In 2000, ICICI Venture invested in Subhiksha with 10% stake
at Rs15 Cr. & raised stake to 23 % by 2004
Subhiksha also raised a 15 Cr. debt from the market
2003 - Azim Premji took 10% stake from ICICI for Rs230 cr.
2004 2007 equity of Rs160 Cr., debt of Rs. 345 Cr. & bridge
loan of Rs.125 Cr.
2008- raised debt capital of Rs.600 Cr. from Enam Securities
Ltd, ICICI Ltd & Kotak Mahindra Bank
 Target Market
Expanding middle & upper classes has played a
big role in the expansion of existing modern
format stores & entry of new ones
Attract not the top end customer but the aam
aadmi
Target Market for different products:
Grocery & Vegetables Common man & specifically
Housewives
Mobile Youth
Medicines Old Age People
 Promotion & Advertising
TV Advertisements
Price Challenge
Campaign
Hoardings
Celebrities for promotion
EDLP approach
Subhiksha Card
 Pricing Strategy
EDLP Everyday Low
Pricing Approach
Prices below the MRP
Product Subhiksha MRP
Rice 5 kg Rs.102 Rs.119
Britannia Rs.21 Rs.24
Marigold 400
gm
Sugar 1 kg Rs.15 Rs.17
 Competitor
Brand Name Outlet Type Level of
Operation
Spencers Supermarkets National
Reliance Fresh Supermarkets National
Food Bazaar Supermarkets National
More Supermarkets National
Food World Supermarkets South India
Niligiris Supermarkets South India
Fabmall Supermarkets South India
Spar Supermarkets South India
 Retail Stores Scenario in
India
1000
900
800
700 2004

600 2005
500 2006
400
2007
300
200
100
0
 Failure of
Subhiksha..
 Why the decline?
Un-mindful expansion spree across the country
The company was thinking of going for an IPO in 2007
but shelved it in view of Uncertain Market Conditions
No consolidation- Tried to be first in every town
Poor inventory management
Private Labels
Operations came to a standstill due to non- payment of
salaries, huge debt burden & arrears to suppliers
Major competition by stores like Big Bazaar, Spencers
etc
 Why the decline?
Spending the debt raised money
Lack of Transparency
Liquidity crisis
Poor Management
Government Intervention
Lack of HR policies & staff
Wrong Assumption that telecom sector is
sound to invest
Over Confidence & Aggressiveness
Company Revival Strategies
March 2009- Undergone a corporate debt restructuring
exercise, with lenders reviewing its books
Subhikshas subsidiary Cash and Carry proposed
scheme
50% waiver and amalgamation with Blue Green
Construction & Investments
Reopened as Subhiksha Rice Wholesaler
 Why these strategies
failed
Madras high Court and creditors against the reopening
Petition filed by Kotak Mahindra & ICICI Ltd.
Debt burden
Tried to re open to fast to soon without clearing dues
Chose debt over equity for funding
Liquidity crunch
 SWOT
Strengths
AnalysisWeakness
Bulk purchase.
Lesser price than other Lake of adequate resources
Targeted middle class people Less attractive shop
Strong supply chain management Lack of employees

Opportunity
Planning in semi metro city.
Aimed to open 550 new shop by
2009
Threats
Wall mart is coming
Big bazaar expanding its outlets
 Recommended Survival Strategies
Specializations in products
Improved stores
Better Store Design & Interiors
Better management with suppliers
Raise funds in a systematic manner
Shut stores with low sales
Focus on quality instead of quantity
Invest more in R&D
Study target market well
Carry sales check on regular intervals
 Recommended Survival Strategies
Improve quality & after Sales service
Choosing Equity over Debt to be risk free
New Store Format
Open stores in malls or shopping complexes to increase
footfall
Diversify in products which are profitable
Products for which overall industry performance is
good
Products which are related to the current product basket
Customer Relationship Management
Better working conditions for employees
 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 is the most risky source of
finance.
Video of 6 April 2009
Founder Speaks.

We are a golden egg laying duck,

we are in trouble. We need their
(bankers and lenders) support and
upon getting it we will restart
operations and repay all debt. It is
not easy, but we have to make it
happen.