Subhiksha promoter R Subramaniam arrested by ED in money-laundering case

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Subhiksha Trading Services promoter R Subramaniam had been arrested by the Enforcement Directorate (ED) in relation to a case of alleged cheating and remanded in Puzhal jail by the Metropolitan Magistrate, according to sources.
ED officials have confirmed the development and said the case was filed under the Prevention of Money Laundering Act (PMLA).
In 2015, the Economic Offences Wing (EOW) of the Tamil Nadu Police had arrested Subramanian, who had started Viswapriya Financial Services Pvt Ltd in 1991, for allegedly cheating depositors to the tune of around Rs 1.50 billion.
Earlier, CBI had also been searching and enquiring the promoter after a complaint was filed by one of the public-sector banks for diverting funds.
While calls and messages to Subramaniam’s mobile did not elicit any response, a senior CBI official earlier said an enquiring was going on in a case related to a Rs 0.7-billion fraud case. “The loan, taken from Bank of Baroda, was diverted for purposes other than what it was meant,” he said.
The official confirmed that searches were conducted at Subramaniam’s Managing Director residence at Chennai and the Subhiksha office.
An alumnus of IIT and IIM and also a gold medalist, Subramaniam earlier had short stints at City Bank Mumbai and Enfield India.
Subhiksha, a retail chain founded by Subramaniam in 1997, had decided to shut down operations in 2008 amid a cash crunch. The company also made a Rs 7.5-billion default to a consortium of banks, triggering a host of litigation.
The retail chain also got into trouble with investors, including Azim Premji’s PE arm, Zash Investment. The lenders and investors had moved various courts.
Subhiksha had suspended operations in 2008 after running out of cash and closed around 1,600 stores.

It also defaulted on staff salaries, vendor payments and bank loans. In January 2009, Subhiksha approached banks which had collectively lent it around Rs 750 crore, to restructure its debt, citing falling demand as a reason for its inability to follow the original repayment schedule. It became the first major retail chain to be referred to the corporate debt restructuring cell.business-standard