‘We mucked up big time, our reserves are nil’

Photo Courtesy: Business Standard

You have really messed the show, right?
I guess you are right. Our reserves are virtually nil. We have mucked up big time.

What is the immediate need?
I need Rs 300 crore. If I can get it, then I can swing back.

This is bankruptcy.
I would not call it bankruptcy. I could sell a stake to raise funds. We are, in fact, undergoing a corporate debt restructuring (CDR) exercise. Our lenders are reviewing our books. We have not declared ourselves bankrupt. Our business is cash-starved and CDR will help us revive this.

Your lenders have asked for a review of the balancesheet to speed up the fundraising process.
We have not run away from them. We are complying with whatever they are asking us to do. As part of CDR, the banks would need to get a current balancesheet rather than a 31 March 2008 balancesheet. I think they rightly want to ensure that we come out of the mess fast and events of the kind that happened in the last three to four months do not recur.

But can you raise that much? Also, why expand furiously on an equity base of Rs 32 crore?
I agree it was a big, big mistake. But I can tell you I am optimistic. I understand we did not raise enough equity and had to eventually pay the price. But I would again like to tell you here that in Subhiksha, we had a capital structure problem and not a business model problem. The Indian retail business is based on our model.

But what went wrong with your vision? Perhaps you spoilt the show by expanding rapidly — from 150 stores in 2006 to 1,655 last September.
I agree that was the biggest mistake. But I thought we would ride on the volume of sales. We had to eventually close down around 90 stores and some warehouses.

Your own staffers have vandalised your stores. You are offering cellphones as salaries.
I deny the second charge totally. Some of the staffers were offered some unsold handsets but it would be wrong to say it was to compensate for non-payment of salaries. We have not paid salaries for some months because of the crisis. We have a debt of Rs 750 crore and a monthly interest bill of Rs 9 crore. We have a serious crisis on hand. I think the staffers were frustrated and started looting their own stores. The properties became vulnerable targets.We are taking all steps to protect our assets. It is really sad that we have been unable to prevent the loot. In fact, it stopped after I appealed for sanity. I told them that they cannot do it to their own organisation.

What next? Exit and let someone take over?
Who will come with the funds? What value will they add? The market is at an all-time low. It is bad, so bad that my exiting the show will not help. I will have to stay put and slog it out. I am sincerely hoping our large investor pool and 13 bankers will support us. I am seriously discussing ways for a second round of fund infusion. We need Rs 300 crore to tide over the crisis. We must get a working capital-cum-cash base of Rs 200 crore and another Rs 100 crore for pending dues totalling Rs 85 crore and contingencies of Rs 15 crore. I am trying hard to get my company back on the rails.


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