(PTI) NRI business leader Gopichand Hinduja has said scandals such as the one in Satyam Computer will continue to haunt developed and developing countries, although this particular scam may have happened because the IT firm's founder Ramalinga Raju managed to outsmart the regulators.
The Hinduja Group Chairman, who was here to participate in the World Economic Forum, however, noted that the incident might not have much impact on the reputation of India Inc in the eyes of foreigners, who are more used to such scams.
Speaking to PTI about India's post-Satyam image before the rest of the world, Hinduja said, "India Inc enjoys a good reputation. These types of things... What have happened to Satyam, no doubt one has to admit that it is a scandal, but whether it is a developed country or developing country or emerging markets, these types of things will happen...".
He further pointed out that the Satyam crisis was largely because the founder of the company outsmarted the regulatory framework of the country. "One has to understand that possibly he (Ramalinga Raju) was more genius than regulators."
The Satyam scandal came to light on January 7, with a confession from the company's founder B Ramalinga Raju that he had been cooking the firm's books for several years. Raju's confession not only shocked India Inc, but investors all over the world.
Such type of wrongdoings are more prevalent in the western world and foreigners are used to this kind of happenings, Hinduja said. "I don't think that this has any effect or impact on foreigners. They are used (to such things). These are found much more in the western world".
Monday, February 2, 2009
Subhiksha on virtual collapse, needs Rs 300 cr
Stating that its operations are "near standstill", retail chain Subhiksha Trading Services on Friday said it needs liquidity injection of up to Rs 300 crore to get the company back on track as it had run out of cash in October last year.
"(The company is at) a stage where operations are at near standstill. We are working with the financial stakeholders - lenders and investors - to inject liquidity and get company back on track," a company spokesperson said.
"We need a liquidity injection of up to Rs 300 crore, while we argue on whether it is debt or equity that really does not matter, the business can get back to near peak levels once this cash is available," he added.
The company's lenders, while supportive, were also unable to extend further lines unless the equity was raised. Net net it became a chicken and egg story with the company running out of cash by October, he said.
"We never took serious credit from suppliers, most purchases were on limited or nil credit. When we could not pay for fresh buying, the trade cycle collapsed in October and that is what brought us to a standstill," the spokesperson added.
He, however, insisted that the company was not closing shop. "No, we are in pain but we are not shutting down." Despite the issues of large employment at risk and a sound business model it is taking time to get the pieces closed as all stakeholders have to come to agreement and it is stressed time for many of them as well, he said.
The company is now engaging in getting the restart plan approved by the financial stakeholders and then get the liquidity so that it can continue from where it left, he said.
"(The company is at) a stage where operations are at near standstill. We are working with the financial stakeholders - lenders and investors - to inject liquidity and get company back on track," a company spokesperson said.
"We need a liquidity injection of up to Rs 300 crore, while we argue on whether it is debt or equity that really does not matter, the business can get back to near peak levels once this cash is available," he added.
The company's lenders, while supportive, were also unable to extend further lines unless the equity was raised. Net net it became a chicken and egg story with the company running out of cash by October, he said.
"We never took serious credit from suppliers, most purchases were on limited or nil credit. When we could not pay for fresh buying, the trade cycle collapsed in October and that is what brought us to a standstill," the spokesperson added.
He, however, insisted that the company was not closing shop. "No, we are in pain but we are not shutting down." Despite the issues of large employment at risk and a sound business model it is taking time to get the pieces closed as all stakeholders have to come to agreement and it is stressed time for many of them as well, he said.
The company is now engaging in getting the restart plan approved by the financial stakeholders and then get the liquidity so that it can continue from where it left, he said.
Retail majors' sales decline
Same-store sales at some of India’s biggest retail groups have slipped into negative territory for the first time in six years, forcing the fledgling organised retail sector used to heady growth rates of 35-40% to re-orient strategies to ride out the economic slowdown that is pinching customers’ wallets.
Future Group, the country’s largest retailer and the company behind brands such as Big Bazaar and Food Bazaar, reported a 9% year-on-year decline in its same-store sales for last quarter of 2008 against a 9% growth in the year-earlier period. Shopper’s Stop has reported a 3% decline for the October-December quarter against a 7% rise in the preceding quarter.
Similarly Vishal Retail, one of India’s top five retail groups, reported a decline in its sales growth for the quarter to December 08, which accompanied a decline in customers visiting its stores. This is alarming as the last quarter of the year is a festive season and traditionally a very busy period for retailers.
“The coming four quarters will be quite challenging for retailers and some recovery can only be seen in the next festive season,” said B S Nagesh, CEO and customer care associate of Shoppers Stop.
Same-store or like-for-like sales are sales generated by stores that have been open for a year and provide a more accurate picture of performance trends in the retail sector, unlike total sales which can be flattered by new store openings. Same-store sales are crucial since older stores bring in most of the business until the newer stores consolidate their position in new markets.
With the economic slowdown forcing customers to tighten their belts as the growth euphoria of the past five years fades, industry experts say retailers face increasing cannibalisation risks as several players vie to attract the same customer.
Future Group, the country’s largest retailer and the company behind brands such as Big Bazaar and Food Bazaar, reported a 9% year-on-year decline in its same-store sales for last quarter of 2008 against a 9% growth in the year-earlier period. Shopper’s Stop has reported a 3% decline for the October-December quarter against a 7% rise in the preceding quarter.
Similarly Vishal Retail, one of India’s top five retail groups, reported a decline in its sales growth for the quarter to December 08, which accompanied a decline in customers visiting its stores. This is alarming as the last quarter of the year is a festive season and traditionally a very busy period for retailers.
“The coming four quarters will be quite challenging for retailers and some recovery can only be seen in the next festive season,” said B S Nagesh, CEO and customer care associate of Shoppers Stop.
Same-store or like-for-like sales are sales generated by stores that have been open for a year and provide a more accurate picture of performance trends in the retail sector, unlike total sales which can be flattered by new store openings. Same-store sales are crucial since older stores bring in most of the business until the newer stores consolidate their position in new markets.
With the economic slowdown forcing customers to tighten their belts as the growth euphoria of the past five years fades, industry experts say retailers face increasing cannibalisation risks as several players vie to attract the same customer.
Retail chain Subhiksha in money, land trouble
Hanumant Rao, a senior official of retail chain Subhiksha was arrested in Nagpur on the basis of complaints from employees for alleged non-payment of salaries and creating fictitious PF accounts.
Police say that Rao was booked under Section 409 for criminal breach of trust and Section 420 for cheating under the Indian Penal Code
“Subhiksha employees complained that they were not paid salaries for the last four to five months. They allege that money was not credited in their PF accounts,” Madhav Giri, Inspector - Panchpoli Thana, Nagpur
However, the retail chain has denied the allegations. A Subhisha spokesperson said, "The allegations in the complaint are completely false. There are no fictitious pf accounts etc as alleged. Mr Rao was granted bail by the courts on consideration of the facts on the case. This was a coercive attempt to harm our employee on false grounds - it is unfortunate that the process of law can be so manipulated".
However, a team will soon be sent to Pune where Subhiksha's head office for Maharashtra is located.
But this not where the controversy ends.
The Subhiksha head office in Pune is locked with a notice from the landlord marked to the vice president of the company pasted on the door.
The landlord has urged the firm to vacate the premises at the earliest. It also states that after three emailed notices, this is the final warning. But company, in its response, claims that the owner has illegally attempted to prevent access using goondas and rowdy elements.
"As we believe in strictly complying with the law, we are not reacting to this by show of force and are only moving appropriate legal process including police complaint to handle this,” it said.
Police say that Rao was booked under Section 409 for criminal breach of trust and Section 420 for cheating under the Indian Penal Code
“Subhiksha employees complained that they were not paid salaries for the last four to five months. They allege that money was not credited in their PF accounts,” Madhav Giri, Inspector - Panchpoli Thana, Nagpur
However, the retail chain has denied the allegations. A Subhisha spokesperson said, "The allegations in the complaint are completely false. There are no fictitious pf accounts etc as alleged. Mr Rao was granted bail by the courts on consideration of the facts on the case. This was a coercive attempt to harm our employee on false grounds - it is unfortunate that the process of law can be so manipulated".
However, a team will soon be sent to Pune where Subhiksha's head office for Maharashtra is located.
But this not where the controversy ends.
The Subhiksha head office in Pune is locked with a notice from the landlord marked to the vice president of the company pasted on the door.
The landlord has urged the firm to vacate the premises at the earliest. It also states that after three emailed notices, this is the final warning. But company, in its response, claims that the owner has illegally attempted to prevent access using goondas and rowdy elements.
"As we believe in strictly complying with the law, we are not reacting to this by show of force and are only moving appropriate legal process including police complaint to handle this,” it said.
Sunday, February 1, 2009
Vishal Retail seeks rent re-negotiation, to relocate stores
Diversified retail player Vishal Retail today said the group is undertaking re-negotiation of rent agreements with property owners for a 25-50 per cent reduction in rentals and also plans to close down, relocate and resize stores to achieve economic viability.
The company's comments came close in the wake of its announcement last week to close down two of its stores in Mumbai and Jodhpur, respectively.
"We are in the process of re-negotiating rentals with many of our property owners and are looking at achieving 25-50 per cent reduction in rentals, in line with the downslide in realty prices," Vishal Retail Group President Ambheek Khemka told PTI.
"We are also planning to relocate stores, which are economically not viable or whose rentals are more than market rates and resize others to make them more profitable," he said.
He said the company is undertaking a study to look at economic viability and rental state of all its stores.
"We are identifying stores to find out where we need to resize them, close down or relocate to some other location. The process will take some time to complete," he said.
Vishal Retail's latest stand comes a few months after the retail giant cut down its turnover target to Rs 1,500 crore for the current fiscal, down from Rs 1,800 initially planned.
The company, which has currently around 185 stores, including hypermarkets and small-format stores across India, had clocked a turnover of just over Rs 1,000 crore in 2007-08.
When asked about plans to close down any more stores, Khemka said: "Not immediately. We will first finish the viability study and then look into the matter."
He admitted that the company's stores, specially the ones in metros and Tier I cities, have witnessed reduction in footfalls and sales.
The company's comments came close in the wake of its announcement last week to close down two of its stores in Mumbai and Jodhpur, respectively.
"We are in the process of re-negotiating rentals with many of our property owners and are looking at achieving 25-50 per cent reduction in rentals, in line with the downslide in realty prices," Vishal Retail Group President Ambheek Khemka told PTI.
"We are also planning to relocate stores, which are economically not viable or whose rentals are more than market rates and resize others to make them more profitable," he said.
He said the company is undertaking a study to look at economic viability and rental state of all its stores.
"We are identifying stores to find out where we need to resize them, close down or relocate to some other location. The process will take some time to complete," he said.
Vishal Retail's latest stand comes a few months after the retail giant cut down its turnover target to Rs 1,500 crore for the current fiscal, down from Rs 1,800 initially planned.
The company, which has currently around 185 stores, including hypermarkets and small-format stores across India, had clocked a turnover of just over Rs 1,000 crore in 2007-08.
When asked about plans to close down any more stores, Khemka said: "Not immediately. We will first finish the viability study and then look into the matter."
He admitted that the company's stores, specially the ones in metros and Tier I cities, have witnessed reduction in footfalls and sales.
‘Expansion of chains only in 2010’
Faced by a declining ‘same store’ sales across all formats, retailers would now look at operational efficiencies to take them through the first half of 2009, say retail analysts.
Mr Gibson Vedamani, CEO, Retailers’ Association of India, says that retailers would resort to shutting down some ‘unviable’ outlets, while at the same time cautiously opening new stores. “In my opinion, expansion of chains would only happen in 2010. Though some amount of new sales could come from newer categories and regions, the projections for the year are more or less stagnant.”
“Retailers would move to more sensible customer acquisition models,” says Mr Vijay Bobba, Founding CEO and Managing Director, i-mint. The target would be the spending consumer rather than footfalls or walk-ins.
Mr Arvind Singhal, Chairman, Technopak, foresees retailers spending more on promotions to retain existing customers.
The immediate strategy for Hindware Home Retail to beat the downturn is consolidation of different categories. “The market is witnessing a downturn and it will take a couple of quarters before it springs into normalcy. This means that large and hyper formats will pave way for smaller specialty categories,” says Mr D.K. Jairath, Vice-President and Business Head, Hindware Home Retail.
On increasing efficiencies in stores, Mr Bobba says retailers would integrate their supply chain and systems across all formats. Rental renegotiations are also high on the agendas of retailers. “There is an opportunity during slowdown as rentals can be negotiated. Unlike retailers in the food and grocery business, categories such as lifestyle and luxury stand to benefit as they can get good deals. In lifestyle retailing, ambience achieves significance,” said Mr Thorsten Allenstein, Managing Director, Triumph International (India and Sri Lanka).
But for the recession, the rural retail concept could have added value to the bottomlines of these retailers, feel retail experts. “But it will be a while before retail achieves what telecom has done,” according to Mr Bobba.
Mr Gibson Vedamani, CEO, Retailers’ Association of India, says that retailers would resort to shutting down some ‘unviable’ outlets, while at the same time cautiously opening new stores. “In my opinion, expansion of chains would only happen in 2010. Though some amount of new sales could come from newer categories and regions, the projections for the year are more or less stagnant.”
“Retailers would move to more sensible customer acquisition models,” says Mr Vijay Bobba, Founding CEO and Managing Director, i-mint. The target would be the spending consumer rather than footfalls or walk-ins.
Mr Arvind Singhal, Chairman, Technopak, foresees retailers spending more on promotions to retain existing customers.
The immediate strategy for Hindware Home Retail to beat the downturn is consolidation of different categories. “The market is witnessing a downturn and it will take a couple of quarters before it springs into normalcy. This means that large and hyper formats will pave way for smaller specialty categories,” says Mr D.K. Jairath, Vice-President and Business Head, Hindware Home Retail.
On increasing efficiencies in stores, Mr Bobba says retailers would integrate their supply chain and systems across all formats. Rental renegotiations are also high on the agendas of retailers. “There is an opportunity during slowdown as rentals can be negotiated. Unlike retailers in the food and grocery business, categories such as lifestyle and luxury stand to benefit as they can get good deals. In lifestyle retailing, ambience achieves significance,” said Mr Thorsten Allenstein, Managing Director, Triumph International (India and Sri Lanka).
But for the recession, the rural retail concept could have added value to the bottomlines of these retailers, feel retail experts. “But it will be a while before retail achieves what telecom has done,” according to Mr Bobba.
Spice (Hotspots Retails) buys Cellucom's India arm in share-swap deal
NEW DELHI: BK Modi-promoted Spice Group on Sunday bought 100% stake in the Indian arm of Cellucom, a Dubai-based mobile retail chain. According to the share-swap deal, Cellucom will take 26% stake in Spice Group’s mobile retail venture HotSpot while Spice Corp will buy 100% shares in Cellucom.
“It’s a cash-less deal in which we will swap shares. We are buying 100% stake in Cellucom. The CEO and CFO of HotSpot will retain the positions in the new entity. Spice Corp will invest Rs 100 crore in the retail chain this year,” BK Modi, chairman, Spice Group, said.
The new entity is expected to gross about Rs 1,000 crore in revenue by fiscal year 2009. Cellucom has about 120 mobile and IT product stores in the country. HotSpot has about 500 mobile retail stores, the second largest after Essar-promoted The Mobile Store that has 1,400 outlets.
For the time being, Cellucom stores may be renamed as HotSpot Cellucom. The Spice Group is expected to announce a new brand for the merged entity, which has over 2,200 employees. Commenting on the buyout, Mr Modi said: “It is a part of Spice Corp’s global acquisition strategy.
Last year, we saw a lot of M&A activity in the telecom sector in India. With this acquisition, we are the first company to begin a buyout spree in the retail space, which has been struggling under the pressure for margins for quite sometime now.”
The Indian mobile handset market is estimated to be worth about Rs 30,000 crore with most handsets being sold in the unorganised market. India has about 380 million mobile subscribers and figure is expected to reach the 500-million mark by 2010.
“It’s a cash-less deal in which we will swap shares. We are buying 100% stake in Cellucom. The CEO and CFO of HotSpot will retain the positions in the new entity. Spice Corp will invest Rs 100 crore in the retail chain this year,” BK Modi, chairman, Spice Group, said.
The new entity is expected to gross about Rs 1,000 crore in revenue by fiscal year 2009. Cellucom has about 120 mobile and IT product stores in the country. HotSpot has about 500 mobile retail stores, the second largest after Essar-promoted The Mobile Store that has 1,400 outlets.
For the time being, Cellucom stores may be renamed as HotSpot Cellucom. The Spice Group is expected to announce a new brand for the merged entity, which has over 2,200 employees. Commenting on the buyout, Mr Modi said: “It is a part of Spice Corp’s global acquisition strategy.
Last year, we saw a lot of M&A activity in the telecom sector in India. With this acquisition, we are the first company to begin a buyout spree in the retail space, which has been struggling under the pressure for margins for quite sometime now.”
The Indian mobile handset market is estimated to be worth about Rs 30,000 crore with most handsets being sold in the unorganised market. India has about 380 million mobile subscribers and figure is expected to reach the 500-million mark by 2010.
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