Subhiksha is an Indian retail chain with 1600 outlets selling

groceries, fruits, vegetables, medicines and mobile phones.

It was started and is managed by R Subramaniam, an IIM
Ahmedabad alumnus. Subhiksha plans to open 1000 outlets
by December 2008. He also plans to invest Rs.500 crore to
increase the number of outlets to 2000 across the country by
2009.its turn over was 2305 crore in financial year 2008.

The name Subhiksha means prosperity in Sanskrit. It opened its

first store in Thiruvanmiyur in Chennai in March, 1997 with an
investment of about Rs. 5 lakhs. The retail chain has seen a
considerable growth by offering goods at cheaper rates and there
by increasing its customer base. It is also dubbed as India's
largest retail chain , vision to deliver consistently better value to
Indian consumers, has guided Subhiksha to deliver savings to all
consumers on each and every item that they need in their daily
lives, 365 days a year, without any compromise on quality of
goods purchased.

Subhiksha now had the panned Indian presence with stores

across Delhi, UP, Punjab, Haryana, Gujarat, Maharashtra, AP,
Karnataka and TN. It had recently commenced operation in Kerala
also. It is a multi-locational, professionally managed and vibrant
organization. Subhiksha now has even opened Specialised Mobile
shops called Subhiksha Mobile where mobiles are sold at a
discounted price.
 Crisis and collapse

The management had committed some eventual mistakes which

had led the company towards the downward position. The first
and big mistake committed by the management of Subhiksha is
expanding the number of stores rapidly without sufficient funds in
hand. Consequently, the company ran out of enough funds to run
the organization .

1. Subhiksha believed to owe Rs 35 crore against goods, Rs 18

crore against wages, and Rs 20 crore against lease rents. The
company, according to the report,
is also carrying a debt of Rs 700 crore at an average interest cost
of 12 per cent per annum.

2. Expansion of Stores without adequate system control and IT

Support. That’s why there was a huge Audit and abnormal losses
in the system.

3. Lack of strong Hr policy and Staff--- Due to this Shubiksha was

not able to retain
the talent which initially bring into Junior, Middle and high level
management.

4. They were paying huge rentals for these stores, which was a
huge drain on the
company's finances.. There are huge frauds while entering in to
rental agreements by their own management people. There was
no proper check and
control on this cost though this is a very crucial part to defeat
competitors and to
gain profitability in future.
5. Maharashtra FDA, the state government’s regulatory authority
for food and
drugs, had asked Subhiksha to suspend operations as well as had
cancelled licences of three of its vendors, charging that they had
failed to maintenance health and hygiene norms as prescribed by
the regulator.

Thus sinking into unrepaired conditions Subhiksha has to compete

with its high profile competitors like RPG, Reliance retail and
Future group etc. Reliance Retail has set up 700-odd stores in the
past two years, almost at the rate of one store per day. The raise
of the company thus gradually started sinking down step by step
and now stands on the verge of collapse. The management
frankly admits that their over confidence and aggressiveness are
the main reasons for their loss.

Analysis and Suggestions

• I think they were concentrating more on expansion and were
not concentrating more on how to increase sales and profit.

• Their backup plan did not work properly.

• They were not taking decisions at right time some time they
were late and some time they were early.

• They were not getting new innovative scheme and ideas to

attract customer.
• They were not redefining their goals and objectives from
time to time keeping in mind the internal and external
environment.

• They were keep on expanding their business without

evaluating that they were making profit or losses on
expansion.

• The expansion of the company was done on debt which was

wrong.

• There was lack of communication among the company which

led to its downfall.