Subhiksha to vacate half its shops

Core properties to be retained; company plans to appoint seven independent directors.

Financially strapped Subhiksha Trading Services today said it would give up half its properties. The retail chain has around 1,600 shops across the country and is paying 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, said since he wasn’t able to pay lease rentals — he hasn’t done so for six months — the company is negotiating with property owners. Since the collapse of the property market, the company has been giving up places where it believes current rents could be lower than the contracted ones. He would, he said, re-hire properties at lower rates after the CDR.

By vacating half the properties, the company hopes to save Rs 3 crore monthly.

“The company is seeking the cooperation of the property owners for rent waivers and/or extension of time to pay rents. Where property owners have difficulty in acceding to our requests, we are mutually agreeing to the way forward,” he said.

Subramanian said “core properties” would be retained. Of the half he proposes to vacate, he expects to be able to rehire two-thirds after the CDR so that about 80 per cent stores can be re-opened.

As for the board, “Hiring directors from different backgrounds is something the company will do,” said Subramanian. “We are speaking to a 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 bring different perspectives. This is not a promoter-investor issue and is more an issue of more independent directors and people of a broader spectrum of interests than even what we had,” said Subramanian.