A SEBI probe has found irregularities in the functioning of Kerala-based Chemmanur International Jewellers, which was running a deposit scheme in the guise of advance payment for gold purchase in violation of the RBI Act.
The company’s chairman is Boby Chemmanur and football legend Diego Maradona is its brand ambassador. The alleged illegal operations of the jeweller have been under the scanner of various financial agencies in the recent years.
SEBI reported to the Kerala State Level Bankers Committee last month that Chemmanur, an unincorporated firm, was found to be running the deposit scheme in violation of Section 45 (S) of the RBI Act, 1934. The scheme was spread across several states and the scale of operations was reportedly to the tune of Rs 1,000 crore.
The report found that in 2012-13 to 2014-15, the group collected Rs 998.4 crore from people as advance payment for gold purchase. “However, the total gold sale of the firm during the corresponding period was only Rs 66.3 crore. The inventory is also negligible vis-à-vis the amount raised,’’ said the report.
SEBI has noticed that there was no actual sale of gold in most cases. There was largescale accumulation of funds from a very large number of persons in two bank accounts maintained by the firm. “Gold advances appear to be a major source of funds for the jewellers and the quantum of advance is no way comparable with the sales figures and the inventories in stock,” said the report.
Besides, part of the money was invested in or advanced to sister companies or firms, among these NBFC-Chemmanur Credit and Investment Ltd. There are allegations of deemed public issues by the companies belonging the group, which is being still probed by the SEBI.
Quoting the SEBI report on Chemmanur, former Chief Minister and chairman of administrative reforms committee V S Achuthanandan said the government should take strong action against the financial fraud of the firm.