The companys managing director, R Subramaniam, told FE, We have been recently approached by big corporates who have shown interest in buying significant stake in Subhiksha. Although the offers are really good, we are currently not looking at selling the stake. We may have to look at it in the near future if the market conditions worsen further. Between January to March 2009, Subhikshas sales are expected to dip 40%, over the previous corresponding period.
As for the rationale behind not selling stake, Subramaniam explained, This is because, although we have shut 8% to 10% of the existing 1,600 Subhiksha stores in India, we are not looking at shutting more significant number of stores in the near future. We will continue operating our existing stores at a very slow pace whereby in the process we hope the attrition will continue. If we had the equity we would not change the pace of expansion.
However, industry experts opine that in such a scenario, it indeed makes sense for Subhiksha to sell off the stake if the company has started getting good offers and thus tap the opportunity to maintain the business momentum. Between October and December 2008. Subhiksha has seen its employee strength drop from 18,000 to 15,500, Subramaniam said.
He further added, Actually, we have not laid off the employees but they have themselves opted to leave the organisation based on voluntary retirement schemes.
In certain areas where Subhiksha has shut down 8% to 10% of 1,600 stores, the company has decided to hand over the properties to the owners since closed stores were the leased properties. However, we will continue to keep our regional warehouses (which are also the leased properties) open and not shut them, Subramaniam added.