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MSH 1109 – ENTREPRENEURSHIP & SMALL
BUSINESS MANAGEMENT
PRESENTED BY :-
IMBE/4502/12 – NAVSHEEN
IMBE/4510/12 –ANUNAY ANAND.
Assign. On :-
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
“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.”
Open store for every two
kilometer in Chennai.
550 store by 2009 in Delhi.
Plan to expand in other part
of India.
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
PRODUCTS
Fruits
Vegetables
GroceryMedicines
Mobiles
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
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
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
TV Advertisements
Price Challenge
Campaign
Hoardings
Celebrities for promotion
EDLP approach
“Subhiksha” Card
EDLP – Everyday Low
Pricing Approach
Prices below the MRP
Product Subhiksha MRP
Rice 5 kg Rs.102 Rs.119
Britannia
Marigold 400
gm
Rs.21 Rs.24
Sugar 1 kg Rs.15 Rs.17
Brand Name Outlet Type Level of
Operation
Spencer’s Supermarkets National
Reliance Fresh Supermarkets National
Food Bazaar Supermarkets National
More Supermarkets National
Food World Supermarkets South India
Niligiri’s Supermarkets South India
Fabmall Supermarkets South India
Spar Supermarkets South India
0
100
200
300
400
500
600
700
800
900
1000
Subhiksha RelianceFresh
FoodBazaar
FoodWorld
Spencer'sDaily
2004 142 0 23 94 0
2005 150 0 37 46 0
2006 450 22 63 55 140
2007 1000 325 110 70 250
2004
2005
2006
2007
Failure of Subhiksha…..
Un-mindful expansion spree across the countryThe 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 townPoor inventory managementPrivate LabelsOperations came to a standstill due to non-
payment of salaries, huge debt burden & arrears to suppliers
Major competition by stores like Big Bazaar, Spencer’s etc
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
March 2009- Undergone a corporate debt restructuring
exercise, with lenders reviewing its books
Subhiksha’s subsidiary Cash and Carry proposed
scheme
50% waiver and amalgamation with Blue Green
Construction & Investments
Reopened as Subhiksha Rice Wholesaler
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
Strengths
Bulk purchase.
Lesser price than other
Targeted middle class people
Strong supply chain management
Weakness
Lake of adequate resources
Less attractive shop
Lack of employees
Threats
Wall mart is coming
Big bazaar expanding its outlets
Opportunity
Planning in semi metro city.
Aimed to open 550 new shop by2009
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
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
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.
“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.”