The blame game between ICICI Venture Ltd. and Subhiksha Trading Services, an emerging retailing company, has reached at the extreme level. The private equity firm has written letter to Registrar of Companies seeking inquiry into Subhiksha's financial affairs.
The ICICI Venture (I-Venture), which holds only 23% stake in Subhiksha and claims having no management control or golden stake in the beleaguered firm, has accused Subhiksha’s promoter and Managing Director R Subramanian to keep I-Ventures and other lenders in dark in terms of company’s financial condition.
Mr. Subramanian who holds 59% stake in this retail firm has refuted this by stating that management has informed the lenders and stakeholders about the gloomy condition of the company and I-Venture was sharing the liquidity crisis with them since August-September 2008.
“We had sought a loan from I-Venture because of liquidity crunch and the crisis was widely shared both with the banks and the financial investors since August-September till now. To say that there was no awareness of liquidity issues is completely wrong,” he said.
The Managing Director (MD) and Chief Executive Officer (CEO) of I-Venture Renuka Ramakanth had said that I-Venture had no doubts about the liquidity problems at Subhiksha till September-end but after October, venture received outstanding legal notice and came to know about this crisis.
I-Venture in September end had granted Rs.50-crore loan to Subhiksha on its demand in the condition of repaying it before December end. But, after getting outstanding legal notice since October onwards, I-venture came to know about the severe liquidity problem at Subhiksha, Renuka added.
For probing the situation, the officials of I-venture then visited to several stores of Subhiksha and found very few inventories there. Analyzing the critical situation of liquidity problem, I-Ventures then convened a meeting with Subhiksha board where Subhiksha had admitted first time about severe liquidity problem, she said.
I-Venture then enquired about the financial aspects about the retailing firms and asked questions about the quarterly results that were published with pleasing figures.
I-Venture has now written a letter to the Registrar of Companies (ROC), Chennai seeking an inquiry into the financial affairs of the Subhiksha for the period beginning April 1, 2007 to till date, and also appealed for appointment of independent auditors for re-auditing the accounts of the retail chain.
However, Renuka has also shown interest to sort out the Subhiksha’s problem as soon as possible and for this she has reportedly appealed to all lenders and stake holders to cooperate I-ventures in seeking solutions of this relentless economic crisis.
Meanwhile, as reports are coming, ICICI Venture Funds Management is holding talks with larger investors like Azim Premji to revive Subhiksha.
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