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

In 2015, the Economic Offences Wing (EOW) of the Tamil Nadu Police had arrested Subramanian for allegedly cheating depositors to the tune of around Rs 1.50 billion

The Enforcement Directorate (ED) has arrested Subhiksha Trading Services promoter R Subramanian in an alleged bank fraud case. ED officials have confirmed the development and said the case was filed under the Prevention of Money Laundering Act. 

He was remanded in Puzhal jail by the Metropolitan Magistrate, says sources. “The ED arrests R Subramanian, promoter and MD of Subhiksha retail chain of stores under PMLA in a bank fraud case,” said the directorate in its twitter account.

In 2015 the Economic Offences Wing (EoW) of the Tamil Nadu police had arrested Subramanian on grounds of allegedly cheating depositors and the amount supposedly swindled was around Rs 1.5 billion. Subramanian started Viswapriya Financial Services in 1991. Earlier the CBI was searching and enquiring the promoter after a public sector bank filed a complaint on diverting funds.

A CBI official had earlier said the agency was investigating a fraud case of about Rs 700 million. “The loans taken from Bank of Baroda were diverted for purposes other than what they were meant for,” he said.

The official said searches were conducted at Subramanian’s residence in Chennai and the office of Subhiksha. The retail chain founded by Subramanian in 1997 decided to shut down in 2009. The firm also defaulted on loans of around Rs 7.5 billion to a consortium of banks, triggering litigation. The retail also got into trouble with investors such as Azim Premji’s private equity arm, Zash Investment.

Subhiksha suspended operations in 2008 after running out of cash and closed around 1,600 stores. In January 2009, Subhiksha approached the banks that had lent the retailer around Rs 7.5 billion to restructure its debts. It became the first major retail chain to be referred to the corporate debt restructuring cell.

An IIT and IIM product, Subramanian has worked with Citibank and Enfield India.