R Subramanian, the founder and managing director of troubled Subhiksha Trading Services, had pledged shares with ICICI Venture and other lenders to borrow as much as Rs 205 crore to pay dues to banks last year.
Subramanian, who owns about 59 per cent stake of the cash-starved discount retailer, pledged the shares between September and December.
“This was done with a view to ensure that the banks support the company by providing extra funding, which was critically required by the company,” Subramanian said declining to give details on the quantum of pledged shares. He was responding to a question on non-payment of salaries to employees even while he was paying lenders.
Chennai-based Subiksha owed a little more than Rs 100 crore to its employees and vendors during that period.
The payment to banks were made “only in view of the money extended being stipulated for such use’’, and to gain support that the company needed, Subramanian said. “All the facilities of the financial investors were extended only against pledge of promoter shares.”
The company, partly owned by Azim Premji, is seeking fresh loans of Rs 300 crore from its lenders to restart business.
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ICICI Venture, India’s largest private equity firm, currently holds 23 per cent stake in the company. ICICI Venture initially held as much as 50 per cent of the company. ICICI prudential Mutual Funds owns 5 per cent equity and 3 per cent is owned by employees of the company.
ICICI Venture has substantial rights of control over the company, including the right to appoint majority of the board of the company. ICICI Venture’s control extends to all areas of audit, accounting and MIS and the complete operating metrics, Subramanian said.
Subramanian said that the recent changes in the foreign direct investment rules is expected to help Subhiksha raise foreign equity more easily and also raise funds through external commercial borrowings (ECB) “at a holding company level”. He declined to give a timeframe for the fund-raising plan or more details.