Retail chain major Subhiksha Trading Services has decided to shed half of its leased properties on account of mounting lease rentals as the company is facing a severe financial crisis. The retail chain, which has around 1,600 shops in India and is spending around Rs 7 crore every month as rent, will save around Rs 3 crore through the cost cutting initiative.
The company has overdue rent arrears for six months and has entered into negotiations with the property owners to resolve the issue.
R Subramanian, managing director and founder, Subhiksha Trading Services stated that the retail major would expects to retain about 50% of its properties and re-negotiate nearly 30-35% after completion of corporate debt restructuring (CDR) so that it can open back about 80% of its stores post CDR.
In a related development, Subhiksha is also considering inducting more independent directors on the company’s board.