It is well known fact that in India, business rivals who have political clout have no hesitation in using it to have competitors raided, harassed and maligned by investigation and regulatory agencies. It happens fairly routinely. However, business entities rarely have the courage to stand up and fight, or even allege unfair targeting publicly for fear of being further damaged by powerful government agencies. Subhiksha, which has built enormous customer loyalty based on its discounted pricing was recently raided by the Food & Drug Administration in a move that was widely covered by the media. Here is its take on the episode that was geared to do maximum damage to its reputation. This website will be watching to see if the FDA can back up its claims with any real findings. Meanwhile here is what Subhiksha has to say -- Sucheta Dalal
Chennai, Tamil Nadu (IndiaPRwire.com)
On Saturday 26th July there was some media coverage based on a Question raised by a BJP member of the Maharashtra Legislative Council in the Council that day relating to FDA action in Mumbai against our company
The real facts relating to this were:
As everyone is aware we follow a lowest price strategy and offer 10% discount on all medicines and have been subject matter of boycotts and lots of harassment – at various times regulatory agencies have been instigated to act against us. The whole objective is to discredit our discounting and make it appear that we sell products at lower prices because we sell lower quality. The consumer base attests otherwise and also more importantly the inconvenient point for our detractors is that 80% of what we sell in our stores are products belonging to National brands sourced directly from them.
As part of this Discredit Subhiksha exercise there had been inspections of our Warehouse in July 2007 (1 year back) by FDA post which the FDA had after 8 months ordered a 10 day suspension of our Warehouse license in March 2008 – after administrative appeals the said orders had been stayed.
STS does not deal with Grocery buying in bulk or loose form and packing and the task of buying and packing groceries is done by select vendors and STS merely buys packed groceries from them. Some of these vendors are also provided space at our Distribution Centres for cost optimisation.
The Questions and replies on Saturday, July 26, made it appear that there were questions about the quality of goods sold by STS whereas the show cause notice raised issues like painting of walls and quality of flooring.
In its hurry to fix us, the process of law has been completely given the go by and no effort has been made even to make out a plausible case – Subhiksha which does not even have a packing license nor packs anything had been served with sale license suspension for offences committed by others. And the said Vendors who buy and pack grocery and sell them have had their licenses suspended without even a show cause notice issued to them - and these are the appeals being heard now as these suspensions had been earlier stayed though this fact was suppressed before the legislative Council on July 26.
We have been in business for over 12 years and all our millions of consumers are aware that our goods are of highest quality. As one of the oldest Organised Retailers, we operate an Unconditional Refund policy on goods sold by us and we have had no complaints from consumers relating to quality of products sold by us.
Sources within the FDA had themselves indicated that the actions by them were influenced by motivated interests and this is why the issue was surfaced in Higher forums also.
After this episode on Saturday, July 26, there has been further actions on this end – On 1st Aug we were informed that the hearing on this matter scheduled for 8th Aug had been advanced to 2nd Aug – this was notified on 1st Aug i.e. barely 24 hours before the new scheduled hearing –As stated the matter claimedly relates to July 2007 and after showing no urgency for 12 months (presumably as the case has no bearing in facts), the sudden urgency to pre-pone hearing at the last minute and decide the case behind our back clearly showed that the action was only to sully our reputation and was not based on principles of law or natural justice. This advancement coming on the backdrop of July 26 incidents clearly indicated a desire to take a premeditated course to satisfy vested interests.
As our Senior Counsels were not available at such short notice we expressed our inability to be represented at 24 hours notice and requested that hearing be conducted as originally scheduled. The request was accepted and the hearing was re-scheduled as per original date to 8th August.
It is quite sad that agencies saddled with the task of consumer protection can be used as tools by competition and vested interests to settle scores with Companies like us who make available products at sharply lower prices to the aam aadmi. It is notable that in these tough inflationary times when consumers have been even more focused on prices this attack is being carried out to dent consumer trust in us.
Subhiksha is India's largest supermarket, pharmacy and telecom chain. Started in 1997 as a single store entity in South Chennai, it is now present nationally with 1000 outlets and spread across more than 90 cities. ICICI Venture Capital has a 24% stake in Subhiksha.