I am really pi**** at the way Mr. Subramanian is conducting himself. I seriously believe that his actions and representations to the media jeopardize the fragile VC-Start Up’s ecosystem that is being built in India. Unless some serious corporate governance action is initiated against him by ‘non interested parties’, VC’s will shirk away from getting their hands dirty with start up deals and first generation entrepreneurs. It is with this objective that I demand he answers my following 5 questions:
- Why are you objecting to another audit by ICICI Ventures?
- What are you hiding?
- Isn’t the lead investor in your company allowed to ‘reassure’ by hiring a professional agency that what you record in your books is really correct?
- Why are you legally challenging ICICI Ventures and investors about their rights and privileges?
- Any sensible entrepreneur who raises private equity understands that ‘risk’ capital will come with a set of safeguard measures that will only help investors safeguard their capital. Try raising money from money lenders or banks or financial institutions to understand how rigid and demanding their safeguard criteria can be.
- Of course ICICI Ventures will have a say in board composition, decision involving critical company affairs etc etc! Is Mr. Subramanian a child to think that he will be given all that venture capital without any questions asked? Also remember, no VC ever wants to control or run a company – they invest in entrepreneurs to do that. They only keep certain control mechanics in place so that any invested company doesn’t go haywire
- What were you thinking when you stopped paying Provident Fund dues?
- This is the most bizarre part of the Subhiksha debacle. How can anyone expect to renege on PF payments? Yes, I know cases where companies delay PF payments in terms of working capital bottleneck situations, but it cant be avoided! I guess tomorrow we will hear Subramanian asking for a ‘settlement’ with PF also
- Why did you wait for so long?
- Any businessman knows when the tide has turned against him and when the ship has begun to sink. If the ship is sinking, you gather your men and safely get out of the boat. Subhiksha was not struck by fire or a tsunami that caused overnight losses. In a paper thin trading business of groceries, if you sell at less than what you buy, it doesn’t take a Wharton MBA to tell you something stinks. I really question what Mr. Subhiksha was thinking?
- How dare you even propose a reverse merger of your company into some obscure unknown company?
- With the mess Subhiksha is in, shouldn’t the priority and time spent be on selling out non perished stocks, winding down rent agreements, recovering dues from consumers etc rather than concocting the hijack of your own company by some shell construction company who is a Chennai listed firm? This reminds me of those young kids who get their friends to kidnap them so that their parents can shell out some ransom money.
I would urge everyone who reads this to really pass it on and get as many people involved. We need to represent that as a country on the threshold of an entrepreneurship renaissance, cheats like Subramanian are not acceptable.
If someone can pass this on to him, all the better! I hope he has the courage and/or the ethics to answer
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Pingback: 5 Questions to man behind Subhiksha | India Business Blog
Hi Alok,
I really hope these questions reach him….they are very pertinent. I have reproduced them on my blog as well.. Here is the link.. http://trak.in/tags/business/2009/02/21/5-questions-to-subhiksha-aka-subramaniam/ also some interesting discussion going around on this post.. http://trak.in/tags/business/2009/02/10/the-rise-and-fall-of-subhiksha/
Alok,
I appreciate the points raised by you. But in all fairness, I think, these are reactions to the way that the media has painted the story.
No, certainly, there is a challenge in the business (and that may be an understatement), but at least the perception that I am carrying in this story (as against, say the Satyam one) is that here was an entrepreneur who was trying hard, in an extremely fast changing space, with lots of options (format types, kiranas vs organized, Indian corporate houses vs foreign big brands, etc.), and trying his best to find his sweet spot in all that chaos. And for a while, he might have thought to have “got it”, in the low cost, low prices, small format food format, where he would make money by trying to be efficient on costs. But then the retail real estate wars started, valuations of everything (real estate, people, supply chains, logistics) went up. And it became a tough game. By that time, Subhiksha was deep enough to not be able to make an exit, and then again, an entrepreneur is always optimistic, and keeps fighting on. Unfortunately, even losing battles.
Just to give him the benefit of doubt, in the media portrayal:
1. He comes out and speaks his side. And tells it like it is.
2. A LOT of companies delay payments like TDS, PF, and such, to use the capital as working capital. Hoping on certain events (better performance, fund raising, etc.) to generate enough capital and pay back, as soon as they can. In this case, the events did not happen, and he got cornered.
3. ICICI Venture is appearing to come out like a ‘holier than thou’ P/E partner. Were they not on the board all this while? Did they not see the sinking ship? What did they do all this while? Now, post Satyam, ICICI Ventures wants to appear that they were arm’s length away from all the happenings and want to get the new audit done. Other than saving their own reputation to an extent, I don’t see them having any other reason to suddenly make such a demand. So if another audit happens, all the process, cost and management time will go. Whose? Subhiksha’s! And for what benefit. None worthwhile, as far as I can see. I can see why Subramanian is resisting the same. I am sure that ICICI Ventures knows most of the goings-on, good, bad and ugly!
4. Like anything else, the reverse merger is just one of the options that he may be trying to somehow keep the organization afloat. When times are tough, all and every option needs to be tried by the company. If you survive, you can possibly think of better ideas. But survive first!
Of course, I am not condoning any of what happened at Subhiksha. And I am also equally interpreting the goings on, only on basis of media reports. But I believe there is another side to the story. And as many businesses go through tough times, one needs to understand their side of the story. A theoretical perfect solution is often just NOT a choice available to them!!
Alok, you can send him this link to his email. [email protected]
Chhavi – Many thanks for this. I have just mailed him the link – lets see if he replies!
Chhavi – the emial id bounced
ahh.. i came across this link very late.. but congratulate Alok for speaking his mind so strongly.