Indian and UAE based banks have approached the police and the UAE central bank against M M Ramachandran, owner of Atlas Jewellery chain with operations in the Middle East and India, following defaults of over Rs 1,000 crore to banks including Bank of Baroda.
While Ramachandran, who himself was a banker before setting up the jewellery store chain, has been at a detention centre in Bur Dubai for almost a week, his daughter has also been detained by the Dubai police over financial issues including bounced cheques. The group has 42 showrooms in GCC (Gulf Co-operation Council) area and three in India. The group diversified into health care and real estate segments nearly a decade ago.
Lenders have filed a complaint against Ramachandran at Rafaa, Naif and Bur Dubai police stations in Dubai on the issue of loan defaults, said an official of an Indian bank. Banks which informally met to chalk the future of action last week, will be meeting again this week, most likely on Tuesday.
What has upset banks is that they ended up extending another loan of 50 million dirhams (close to Rs 100 crore) last month, but only $ 20 million dirhams was used to purchase gold while the balance was suspected to have been diverted, a banking source who is in the know of the development said.
Bank of Baroda has extended a loan of 70 million dirhams (around Rs 125 crore) to the Atlas group over the years. Over 15 banks, including BoB, have formed an informal committee to chalk out measures for loan recovery. Banks are planning to move the UAE Central Bank for action under the willful default category.
BoB officials and Atlas group spokespersons were not available for comments. When the group started defaulting on repayments, banks launched an inspection of the inventory levels in its showrooms. However, the value of inventory levels were found to be very low when compared to the loans extended to the Atlas group, which is popular among the non-resident Malayali community.
A sales manager, who had worked at Atlas Jewellery in Dubai, said, “I had left the firm two weeks ago when it was sinking. When I resigned, the showroom where I had worked had only 1.5 kg of gold in its stock. The company had stopped acquiring new stocks in recent months. On reaching Kerala, I tried to contact senior colleagues and company executives, but none of them responded to calls or messages,” he said.
Sources said Ramachandran is reportedly in talks with banks in the Middle East to settle the debt. However, if these sources are to be believed, banks are not convinced as gold stocks with the group have come down steeply and cheques issued by him have bounced. The group’s diversification into healthcare in the Middle East is stated be to one of the triggers for the current crisis. Although the fall in gold prices in the last month has caused some jitters among jewellery chains, it is back to normal in the jewellery business.
The Atlas Group has been a prominent advertiser in Kerala’s media, particularly in TV channels. Sources in the advertising industry said the group has an outstanding bill of Rs 6.26 crore to TV channels and newspapers in Kerala. “For the last two months, advertising agencies were reluctant to take Atlas group’s bills. During the Onam festival last week, the group did not run any new advertisement in the Kerala media. With several bills outstanding, we had apprehensions about the financial health of the firm,’’ they said.
Ramachandran, a native of Thrissur, Kerala, began his career with Canara Bank in 1963. He moved to SBI in 1966 to become a probationary officer and later joined its subsidiary. In 1974, he joined the Commercial Bank of Kuwait where he continued until 1987.
Ramachandran ventured into the gold business in 1981 with the opening of the first Atlas showroom in Kuwait. He suffered a heavy loss in his business during the Kuwait war, but later emerged much stronger after he shifted operations to the UAE. He also produced several Malayalam movies and even directed one in 2010.
Early this year, the Income Tax Department had raided his business and residential premises in Kerala. The Department had detected evasion of tax running to several crores of rupees.