Wednesday, June 03, 2009

Satyam and Subhiksha! The two have a deeper connect than just the alliteration effect.

The former is a case of malfeasance and the latter may be driven by negligence, but both represent failures of India Inc. in these troubled times, says Pawan Chabra...

It’s like the lull after the storm. The two-storey structure in Delhi’s Neb Sarai district wears a deserted, gloomy look. On the ground floor, a big, rust-eaten lock has shut the door to the Subhiksha discount store that services the area, telling a tale of gross mismanagement and misplaced ambitions of R. Subramanian, the 40-something managing director of the now floundering retailer. The top floor residence converted into an office is home to the north zone headquarters of Chennai-based retailer. But that was till a few weeks ago. Employees on the retailers’ rolls (who incidentally have not been paid their salaries since October) have stopped coming to work because vendors and the landlords’ goons hound them for unpaid bills. The empty cubicles here today tell another poignant tale of the more than 20,000 direct and contractual employees of the disgraced retailer...

“You can’t trust RS (R. Subramanian),” a senior manager at Subhiksha’s Delhi office laments on condition of anonymity. “In our last telecon, he told me he’s sending October-November salaries for the entire office. The cheques did arrive by post, but only to bounce the next day,” he adds disgustedly. It’s not just the employees at the beleaguered retailer, investors, banks and sundry other creditors who are chanting a similar mantra: overnight, the dapper IIM and IIT educated entrepreneur, R. Subramanian has turned from being a hero to a big zero. To be fair, his business model was indeed outstanding and arguably even copied by the likes of Kishore Biyani and Mukesh Ambani. Those who once recognised him to be a dynamic, intelligent man and hailed his ability to talk on two mobile phones, use the laptop and still have a business dialogue with those sitting across the table from him; are now on a fault-finding spree. “Subhiksha was a firm centralised in R. Subramanian. There was never any management committee that we knew of; the CFO could not sign a Rs.5 cheque; and there were no balance sheets available for the last one year,” says another hapless Subhiksha employee. For the year ended March 31, 2007 (there were no accounts audited after June 2007), Subhiksha’s profit before tax was Rs.18.36 crore on a turnover of Rs.839.56 crore.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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