The Enforcement Directorate has arrested Subhiksha Retail chain founder R Subramanian under PMLA for defrauding investors in a chit fund scam.
Subramanian is the promoter and Managing Director of Ms Subhiksha Trading Services Limited, a retail chain of stores which used to sell products under the category of Fast Moving Consumer Goods (FMCG), pharma, groceries, fruits and vegetables among others. The retail chain closed down in 2009 after it ran into a cash crunch.
In 2016, the ED had attached properties of Subramanian for defrauding Bank of Baroda to the tune of Rs 77 crore in 2007. The loan was among various facilities availed from various banks for the purpose of establishing the chain of stores with the brand name ‘Subhiksha’.
Failed Model: A Timeline
1997: Subhiksha Trading Services is set up as a private limited company. It becomes a public company in 2005
2000: ICICI Venturemakes its first investment in Subhikhsa, which has grown to a chain of 50 stores. It buys about a 15% stake for Rs 15 crore
2000: ICICI Ventures’Bala Deshpande joins Subhiksha’s board. Renuka Ramnath is nominated to the board 2 years later
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DEC 2007: IPO plans calledoff after legal firm Amarchand Mangaldass refuses to sign off
2008: Azim Premji’s Zash Investment acquires 10% stake in Subhiksha from ICICI Ventures for Rs 230 cr
JUNE ‘08 : Subhiksha proposes a reverse merger with Blue Green Constructions to get listed
MAY-SEP ’08: Complaints, reports appear in media about delay in payment of salaries, arrears in PF dues
OCT ’08 : Subhikshashareholders’ meet clears proposal for reverse merger, creditors also approve proposal
NOV ’08 : Story boardmeet called by shareholders and directors meet to discuss problems. Subramanian is asked to prepare accounts for 2007/08, appoint a CFO in consultation with the board. KPMG is asked to conduct a complete audit
DEC 08 : Premji Invest,lends Rs 50 crore to Subhiksha to tide over acute financial crunch
JAN ’09 : ICICI Venture andindependent directors resign from Subhiksha board. Most of company’s 1,650 shops are shut
JAN-MAR ’09 : Kotak MahindraBank files winding up petition
MAR ’09 : Madras high court appoints provisional liquidator
APR ’09 : Decision stayed: but proceedings of winding up can continue
JUN ’09 : Registrar of Companies, Chennai, orders a probe into Subhiksha affairs
NOV ’09 : Supreme Court asks Madras high court to dispose of reverse merger petitions
OCT ’10 : Madras highcourt rejects Subhiksha-Blue Green merger, paves way for winding up