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Subhiksha: Another Satyam in the making?


Sidin Vadukut writes at Mint, about the potential acquisition of “Blue Green Constructions and Investments” by Subhiksha, the ailing retailer whose IIM educated owner, R. Subramanian has been ranting and raving about how his stores need capital no one is willing to provide, dammit, and he’s entitled to at least a loan, dammit: (Okay, Sidin didn’t say all that, I did. What he said follows)

Blue Green’s director’s report for 2006, available at states that an “M. Rathinakumar” stepped down as a director of the firm on or before 10 April 2006, almost two years before the stake acquisition.

According to documents filed with the ministry of corporate affairs website by Subhiksha, the company secretary of Subhiksha happens to be one “M. Rathinakumar”.

It is uncertain if both individuals are the same and when approached for a clarification, Subhiksha’s company secretary M. Rathinakumar asked us to route all queries through the managing director’s office. (Subramanian was repeatedly approached by Mint for clarifications on 5 and 6 March. He said that he was not in a position to respond and was waiting to hear from his IT staff.)

Information on domain name registrar Net4India Ltd further indicates that the email address to contact the owners of Blue Green’s web address is This information was added to the Net4India database on 10 June 2006. Vishwapriya Financial Services and Securities Ltd is the name of a non-banking financial company started by Subramanian in 1991, which would later be involved in an IPO (initial public offering) financing scandal. The controversy led Securities and Exchange Board of India to place a five-year ban on Viswapriya from dealing in the capital markets. In response to an emailed questionnaire, R. Ganesh, chief manager of Viswapriya, clarified that the firm currently had no relations whatsoever with Subhiksha.
Further, the telephone number shown on the Blue Green website is identical to those of two other listed companies: Aramusk Infrastructure Investments Pvt. Ltd and Beta-Kappa Investments Ltd. All three companies also have websites that are very similar in design, layout and uploaded information. Aramusk’s domain name was created on 11 June 2006, one day after Blue Green’s.

Beta-Kappa’s domain name registration information gives the administrative contact as a “Subramanian, Ramaswamy”. In addition, Beta-Kappa’s board of director information shows a “M. Rathinakumar” as a member of the board since 3 July 1995.

It is clear from this information that directly and indirectly all three companies, including Blue Green, may have ties to Subramanian and key Subhiksha personnel that trace back to well before the June 2008 stake acquisition in the company by Subhiksha’s promoters.

Calls made by Mint to the identical phone number given on all three companies’ websites were automatically forwarded to a company called Matrix Financial Services Ltd. (Phone calls to confirm ownership of this company were not returned.)

These links with Blue Green raise fresh doubts about the merger and potential conflict of interest issues arising out of Subramanian’s ties to both companies involved.

ICICI Venture and Azim Premji have large investments in Subhiksha. That money is likely being used, and so would any loans if they were forthcoming, to fund this “acquisition”. Using someone else’s money to fund the buyout of a company you own (or you’re likely to have an interest in) – hey, wait, where did we hear that one before?

Scandals thrive in bad times. Given this is an especially bad time, isn’t ONE Satyam a little too less? Hopefully, this time, they won’t do stunts like getting a P.C.Gupta to replace the company board with smiling faces, doing press conferences and telling people that yes, we will “consider all options including a sale”, do a brouhaha about how they will “qualify” people who want to buy, and eventually offer a tender-coconut as the only remaining asset, with a reasonable degree of doubt it has already been mortgaged to a local vendor.

Let these companies die, darn it.


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