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| Subhiksha to give up 50% of leased properties |
| BS Reporter / Chennai Mar 05, 2009, 20:00 IST |
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 Subhiksha Trading Services, which earlier said that it would renegotiate rentals with real estate players, today said it would give up 50 per cent of its properties. The retail chain has around 1,600 shops across the country and is spending around Rs 7 crore every month as rent. The company is also planning to appoint seven independent directors after corporate debt restructuring (CDR).
R Subramanian, managing director and founder, Subhiksha Trading Services said that in view of non payment of lease rentals, the company is working out mutually agreeable way forward with the property owners. Since the collapse in property markets, the company is giving up properties in markets where it believes current rents could be lower than the contracted rents. He added that it would re-sign properties at lower rates post CDR.
However, the company was paying around Rs 7 crore a month. By giving away 50 per cent of the properties, the company is hoping to save Rs 3 crore. He added rent dues currently is for six months and the company is talking to owners to resolve.
“The company is seeking the cooperation of the property owners for rent waivers and for extension of time to pay rents and where property owners have difficulty in acceding to our requests we are mutually agreeing the way forward.”
Subramanian said core properties will be retained and others where easy lower cost alternates can be found are exited with maximum forbearance from the property owners. Subhiksha expects to retain about 50 per cent of its properties and re-sign about 30-35 per cent on completion of CDR so that it can open back about 80 per cent of its stores post CDR.
Meanwhile, the company is planning to add more independent directors on its board. “Directrors from different backgrounds that is something the company will do,” said Subramanian. The company will try and have seven directors in all, we are speaking to few people and will induct post CDR, he added.
“The company could always face various challenges – as we have said we missed managing the balance sheet sanely by not raising enough Equity. A wider board would prevent against group think by bringing different perspectives. This is not a promoter's investor issue – more a issue of more independent directors and people of a broader spectrum of interests than even what we had,” said Subramanian.
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