Subhiksha founder held for money laundering

Sleuths from the Enforcement Directorate arrested Subhiksha retail store chain founder R Subramanian on Tuesday under the provisions of Prevention of Money Laundering Act,2002. 

He was earlier charge-sheeted in a bank fraud case by the Central Bureau of Investigation, (Bank Security & Fraud Cell), Bengaluru, for defrauding Bank of Baroda, Corporate Financial Services Branch to the tune of Rs 77 crore.

An alumnus of IIT- Madras and IIM – Ahmedabad, Subramanian had in 1997 launched Subhiksha Trading Services Limited, a retail chain that sold fast moving consumer goods (FMCG) products, pharma, groceries, fruits and vegetables among others. After running into trouble, the retail chain, of which Subramanian was the promoter and managing director, downed shutters in 2008. 

In March 2016, the ED had attached assets worth Rs 4.5 crore in the Rs 77-crore Bank of Baroda fraud case. The ED probe revealed that Subramanian had availed of a term loan and cash credit facility from the bank in 2007, which was sanctioned to establish stores. However, the funds were allegedly diverted and immovable assets were acquired in the name of various entities. The entire loan amount was at default.

Subramanian had also allegedly defrauded thousands of investors in a chit fund scam through his Viswapriya Investments to the tune of the Rs 150 crore. Subhiksha stopped operations in 2008 by closing down nearly 1600 stores amid a cash crunch. It also defaulted on staff salaries, vendor payments. 

During the course of ED investigation, it was also noticed that in the name of Subhiksha chain of stores, Subramanian had so far availed around Rs 790 crores from consortium of bankers, and had not repaid the loan amounts. The cases are pending before appellate authorities. 

The ED had already attached the immovable properties in his name and his family member’s name, valued at Rs 4.50 crores. He was remanded in judicial custody by the Chennai XIV Metropolitan Magistrate for 7 days on Wednesday.