The rise and fall of Subhiksha


It is only a week since I blogged about Indian retail in for a heady mix. Now, we have the case of Subhiksha which is battling for survival. Subhiksha which was started with 1 store in 1999 has grown to more than 1000 stores by the end of 2007.

Its founder R Subramaniam is a IIT Chennai and IIM Ahmedabad alumnus. That the best combination of pedigree from India there can every be.Subhiksha has ICICI Ventures and Wipro’s Aziz Premji as its investors.Subhiksha

Everything seems to be in the right place. What could possible go wrong?

There are several things which went wrong in Subhiksha’s case but 2 points are staring at me:

  1. Expansion against consolidation : With the availability of free capital and the irrational exuberance of the markets, people tried anything and everything to just expand without actually looking back at what they have become.
  2. Lack of Focus : This to me is the biggest thing every other company in India faces. Once they see profits they quickly put on their Ambani/Tata hat and try to become a conglomerate. It is just not one company they will run but they will create offshoots, Strategic Business Units, what have you and do all kinds of stuff. In the end they forget what they really want. Satyam is the best example for my case against conglomerization. That is the reason why I like Infosys for their extreme focus. In Subhiksha’s case though, it is not conglomerization but the lack of focus on the product mix they are offering.

I know retail is a different thing which might be confusing for anyone to focus on. But, before opening the 500the store shouldn’t they be checking whether people are buying medicines from them or going to the medical shop round the corner. Before opening the 1000th store shouldn’t they be checking whether people are buying a mobile from them or from a specialized mobile store.

On both occasions they answer is yes. I would rather go to a store which has a specialization for the thing I want to buy. I just don’t want to waste my time in a shop which offers me everything and anything only to find that they don’t offer a thing (which I want).

That to me is the bigger issue ailing Indian retail not just Subhiksha. Subhiksha happens to be a case study for the future and current retailers.

Enjoy this great presentation by Manas Ganguly

The Anatomy Of A Bust

View more presentations from Manas Ganguly.

Presentation dugg via

PS : I just coined a new word : conglomerization. This is a bug, the whole India Inc is suffering with. This is where I want to recommend everybody a book called Small Giants by Bo Burlingham. If you have to choose between being big and being remarkable – choose remarkable. If you look at any Indian company it is bound to have a subsidiary in a totally different vertical.

  1. pawan.sachdev says

    Failure of subhiksha was obivous due to many reasons but as such if it would have gone with consolidation and much customer centric in every outlet so the business model must have done well but rapid expansion with debt raised funds and minimal cash inflow would obvious land the promoter in trouble. Although he was much decided to go public in 2007-08 but he expected much more value so atlast didn’t had ipo.

  2. Sagar Unagar says

    Can I Use the same Punchline for my shop?
    Or should I buy?

  3. Sonali says

    Thanx, as i m an MBA student & appearing for my exams this article help me in understanding case study.

  4. Rakesh Rana says

    good work

  5. Abhishek Kumar says

    taxila b school,,,,,,,,,,,,,,,,,,,,,,, jaipur.

  6. Ramprakash Jakhar says


  7. Ajju Singh says


  8. puneet singhania says

    i actualy dont know what to say about subhiksha, but the fact is that i was a vendour of subhiksha, i have a big outstanding amount in this organisation,and they didnt cleared our payments, after october 2008, there is no any office and any concerned person for this organisation.

  9. Rajiv Ahuja says

    The key to everything in article is not to take one’s eye off the ball.Interesting comments.Now Vishal Retail has also sold out.

  10. Rahul Verma says


    I was just going through the Thhiru’s statement about epf money recovery.

    As far Subhiksha team is concern not a single office or person is traceable.They all have hided their face.

    Not a single phone no or e mail id is in function.No contact of any office which is in force.

    In this how come an employee request for their ef money for which they deserve for.

    Can any body revert on it.

    Thanks and Regards,


  11. Thiru says

    @ Goel & Chakleshwar

    To get your PF amount, kindly get in touch with the EPF department where Subiksha had it’s registered office. Subiksha’s rise and Fall has nothing to do with the PF money you have accumulated. Just close your PF account over there. All you would need, is your service letter, and confirmation from Subiksha HR that they have closed your PF account.

  12. chakleshwer singh says

    any hope of getting atleast PF money from subhiksha plz give any positive answer and we are waiting still

  13. Ankur Goel says

    Is tehri any hope of getting atleast PF money from subhiksha

  14. sitaram gurjar says

    Dear sir/madam,
    I was employee of your company in 2008-2009, but i have not received my full & final payment and PF amount. Please tell me the procedure of refund amount.
    Name :- Sita ram Gurjar
    Post :- Commericial Exutive
    City :- Jaipur (Rajasthan)

  15. Sankt Ingen says

    Does anybody have any information how the finances were arranged.

  16. Amitbh says

    Its very amusing to read this blog. What I find most surprisng is that people have still not realised what has really happened.

    This is not a case of bad business model or high leverage. Its quite painly a case of the promote siphoning off huge funds from the company. There is an Economic Offense Wing investigation against RS,and I really hope they hang him. It is rumored that he has siphoned off Rs 500 Crores from the company!!

    All of us are middle class people. We are used to working 12 hours a day, take our salary and live life within our means. What we have to realise is that one Raju or one RS really challenges all our effort. Why do we work hard and let one thief like RS get away with our hard earned money? Make no mistake….all of us have lost something when RS or Raju defaulted. It comes back either through job losses (like in Satyam) or due to higher interest rates (since the bank lost money lending to Subhiksha and hence need to charge us more on our housing loan or car loan). Please rise and stop taking this nonsense from these people

  17. sireesh says

    Hi All,

    gud 2 c this thread running…I feel what Mr. Raghav has said is right. There is a flaw in the execution but not in the business model.

    I appreciate Manas’ work, but it shows Subhiksha in a very poor light and I totally disagree this. It is very easy to throw a comment at one’s failure. So, what do you think about reliance, more, spencer’s et al..their huge cash reserves are making up/hiding up the losses they are incurring.

    after all, business is a place where risk has to be taken, and some get away, and others get caught…in light of the entry of gaints like reliance, birlas, bharti-walmart, tatas, RS had to take that risk to show his presence pan India…

    Failure is not defeat my friend…I am not interested at his personal behaviour..more the competitors, more the customers get benifitted..lets hope he (RS) regains his strength and gets back to where he was..

  18. Raghavs says

    Dear Manas,

    I will give you due credit for stating the obvious facts but rest of the analysis is pure bullshit to the core.
    1. High pace of debt-ridden expansion was surely a mistake that Subhiksha made and they are currently suffering the consequences of the same.
    2. However, you discard the whole business as if it can’t be turned around. Subhiksha’s cash problems haven’t really come from a bad business model but over enthusiasm on expansion.
    3. After corporate debt restructuring, I do expect Subhiksha to start crawling, if not walking or running, again.
    4. Most imp point about the business model – It is perhaps the only business model on small store format that can be successful in India. It doesnt has A/C, it requires minimal decoration or interiors and feels like kirana to traditional Indian consumers. So, with lower cost structure than Foodbazaar or spencer’s, this business model has more scope of making money in India.Yes, there’s always a scope for improvement.

  19. naresh says

    what about store owner’s, they were stuck with this fiss.
    with non paying of dues for the past 8months can anybody have the information
    pls post,thnx…

    1. kedia says

      Since you have the deposit, adjust the rent against it, then serve a notice to the company’s local office (which i m sure must be shut down for ever, hence ur notice will come back unattanded) Then break the lock, and take back your property, no issues, the company is now resting in peace, it can do nothing..

  20. Kedar says

    If we see all the players involved in this SCAM, be it Subhiksha/RS, or ICICI/ Renuka Ramnath + Mr. Bakshi or Azim Premjee/his Consultant (read FINANCIAL EXPERT / INVESTMENT BANKER or call him just a plain FART)…it just goes to prove one thing, there is nothing called as MIDAS TOUCH. We gullible people tend to extrapolate ONE TIME SUCCESS into LIFE LONG CAPABILITY of the so called successful individual. Without realising that EVEN A WATCH THAT DOESNT WORK, IS RIGHT TWICE A DAY!!!!

    In all three parties named above, they made the classic mistake of TAKING THEIR EYES OFF THE BALL. And MY OH MY didn’t we see their stumps cartwheel from here to their inflated egos (hopefully puncturing them once and for all).

    I am surely using this as an exercise to internalise within myself….WHAT NOT TO DO. Thank you all the great people named above.

  21. P Suryanarayanan says

    I could see the anger in the words of Mr.Kedar.RS is known for his haste in everything he does.In his previous avatar as a Finance company man, he promoted one company called Viswapriya and even till date he has been having probs with RBI which has questioned his motives behind various so called innovative credit instruments akin to infamous investment bankers of wall street founded.Actually had RS been in Wall street it would have done him proud to join the select band of Lehman,Freddie Mac and Fennie Mea and the like.Even just before its untimely death, subiksha unleashed a spate of advertisements for its mobile sales featuring its competitor Univercell in poor light.This has shown the calibre of the management of subhiksha and the end is natural

  22. Namrata says

    Subhiksha is the one of the store which never attracted the customer.They never focused on the cost efficency neither have a good scm which plays a important role to save the cost as done by walmart and carrefour.And I am actually confused what was Azim Premji’s consultant doing before investing in Subhiksha.

  23. kedar says

    Please google Subhiksha and read the founders statements and quotes which are nothing but a combination of LIES, MISPLACED AMBITION, UNNECESSARY AGRESSION, COMPLETE IGONRANCE, LACK OF CLASS, VISION AND FORWARD THINKING. As they say Lies, Bloody lies and STATISTICS!!!!!

    Bhiksha means begging in Sanskrit…Wonder what made the man choose this name….Yeh Founder Neeyat se hi Bhikari hoga. But knowing such people he would have already externalised a lot of Company / Investors funds while those who are suffering are his Employees, Vendors and Landlords….

    Such guys are what I call BUSINESS PERVERTS, PEEPING TOMS AND PEDOPHILES who deserve to be put away in a MENTAL ASSYLUM for the sanity of the Society at large.

    SUBHIKSHA we really dont need you. Remove those ugly signboard of yours atleast the founder can use them to make a temperory dwelling for himself. As he deserves.

  24. kedar says

    This is the great Indian Business rope trick which earns our country a bad name. While I have no respect whatsoever for the likes of the founder of Subhiksha, what was ICICI doing? They had the MD and the Jt M.D of ICICI Venture on Board (with a sunrise clause that even if their holding was diluted to 2% they would have a say in the Mgmt of the Co). Now they have resigned from the Board (escapism) and claim that they had no clue of what the co was doing for last 15 months. I mean was everyone high on Bhang at board meetings? And what business did they have diluting 10% of the co to Azim Premjee and what was his highly paid financial expert doing? It just goes to show that a PROMOTER is a very dangerous animal who plays the game of MULTIPLES with the intent of cashing out with the mantra of numbers, expansion and extrapolation. Very rarely do they stop to think whether the BUSINESS MODEL ITSELF CAN PAY FOR THE COSTS OF RUNNING THE OPERATION. Unfortunately the INVESTORS also tend to ignore this andd buy the GROWTH stroy. Subhiksha is a burning example of a con game where the Founder conned ICICI, who in turn conned AZIM PREMJEE and all of them would have collectively conned the gullible INVESTOR has they have been listed. Subhiksha REST IN PEACE!!!

  25. Inigo says

    What about subhiksha’s capital structure? i means its going through this because it could not raise any equity plus they had way too much debt.

  26. Manas says


    Thanks for the encouraging words. The more i think about it, the more i am convinced that RS and Subhiksha are destined to fall and fall big time.

    The failure range from management’s inability to control its own expansion to bad management of store and ineffective supply chain and a USP that is not a long haul. Now with fraudulent implications on finances, i certainly think that no equity buyer is going to touch Subhiksha with a barge poll.

    The last investor standing Azim Premji, has now taken Subhiksha to court over alleged take over of Blue Green constructions. This would have made a second Satyam if Subhiksha had been listed. Thankfully it is not.


  27. shilpa says

    hey!! i just went through the ppt!! its excellent!! i think it pretty much summarizes all the reason for the fall of Subhiksha concisely!! thanks Manas!!

  28. shilpa says

    hello!! Subramanian’s arrogance and all is ok!! but i cannot quote leadership issues and over confidence as the reason for the downturn of a well oiling retail chain in my project !! subhiksha is under big time loans and it defaulted a lot of due payments..there should have been a supply side..operational or process failure too!!

  29. Sriram Vadlamani says

    @Shilpa : It is not my slideshow but that of Manas. I am trying to use that excellent ppt to make a point.

    @Manas : I have checked your second slideshow and a good feed for my next post.

  30. P Suryanarayanan says

    Subhiksha’s fall is something to do with the DNA of its founder,the self styled Sam Walton of Indian Retail(!!!!!)I know this guy right from the days when he was an executive in Enfield.His arrogance was stunning even in those days.And when such a person by hook or crook establishes a company then it will be a manifestation of his arrogance and the end is very natural.In Subramanian’s dictionary there is no word as Humility

    1. Kutub says

      You are right. His arrogance is phenomenal, especially from someone who should shown utmost humility. I think what keeps saving him is the utterly inefficient judicial system in India which always favour the wrongdoers with the interminable delays. Justice rarely, if ever, catches up with such persons in India.

      Though a fallen man in the business world his brazen hubris is his astounding hallmark.

  31. Manas says


    Thanks for patronizing my thoughts on your website. I would also invite you to read and leave your comments on the sequel to the Anatomy or a bust presentation that i have put up some time back Follow the link and leave me a few comments.

    Thanks again.

  32. shilpa says

    hey!! ur ppt threw quite a light on that topic!! actually i m a B-school student and was doina project on retail outlets and back hand operations on stores of this kind with speacial reference to subhiksha…there is very little material available on the internet which is authentic…Subhiksha’s site seem to have gone corrupt!! i cant find Subhiksha outlets here in delhi..but ur blogs did help me a bit!! thank you!!

  33. Joel says


    First of all I like to thank you for your blog. As a young entrepreneur from Germany living and working in India since 2006 I have quite a lot of own thoughts about India’s growth and possibilities.

    Like I always say: I can blame India for so many things like the waste, the lack of management and services etc. but I still love India for what it stands for and overall that it gave me a chance!

    Anyway since I am in Chennai I have seen so many issues of Subhiksha that it’s hardly to describe them just in a small comment. But one thing which stands out is the complete lack of management and skilled trained staff. Unorganised, messy and completly lacking a sense of customer needs and demands.

    One of my very simple sayings is that when you want to develop a company in a large and fast scale all you need is an idea, money and more important the right people. You cant just open shops with your 3000 INR payed “village” people which would never be able to by for themself anything in the place where they work. Let the people grow with your success…

    Sorry for the little longer statement but I am facing often the question how I could manage to build up so many companies in such a short time as being a foreigner. Like you mentioned: always keep an eye on the real demands of your customers and dont provide services you dont understand.


    Joel Dunand

    Dunand and Ramachandran Associates

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