News

With the sudden collapse of the large Indian retailer Subhiksha Trading Services Ltd the 15.000 employees of the company are now without their dues, some of which have not been paid since October 2008. Should the retailer find a way to refinance its operations it looks like the workers will be the last to receive what is being owed since the collapse revealed a long list of debtors.

Though the collapse itself was sudden Subhiksha had been struggling for a while but the sheer number of debtors was a surprise to many observers and therefore UNI commerce suspects that the company had adopted a growth strategy based on the wishful thinking that the economy would continue to expand and therefore gave little consideration to consolidate its business. During 2008 Subhiksha opened its store number 1.600 which must be considered to be a very rapid expansion since the company as late as 2005 had less than 200 stores. As of to day 90 across India have been closed.



The fact that Subhiksha currently has shelved its plans to raise more capital through a public listing speaks further to the notion that the economy of the retailer is less sound than what is being claimed by its CEO Ramaswamy Subramanian.

The retail workers of India immediately faces a difficult time as the Indian economy overall is shrinking and even official estimates from the Indian Government unemployment figures are forecasting an increase in unemployment. UNI commerce concern is the fact that since the official statistics only operates with the formal organised part of the economy the real unemployment rate in India is likely to be vastly higher and with an already high ratio of the population living near the poverty line the irresponsible expansionist strategy of Subhiksha can prove very costly to the Indian commerce workers and their families.

The notion that Subhiksha may have acted irresponsibly on purpose is strengthened further by the fact that the retail chain is partly owned by the large Indian private equity fund ICIC Venture Capital which holds 24% of the stocks and thus is in a position to influence the company’s business strategies.



To UNI commerce global union the development in India and the sudden collapse of Subhiksha is of great concern as private equity recently has started to take a greater interest in the sector. 12% of the stocks of the world’s second largest retailer French Carrefour have been bought by the US based private equity fund Colony Capital in collaboration with French billionaire Arnault and already there has been pressure to sell off the properties in order to secure an easy profit in the short term.



UNI commerce will follow the development in Subhiksha as the company is one of the companies where an organising campaign is taking place run by the Indian affiliated union UNICOME.