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Subramanian created over 80 shell companies to divert Rs 137 crore from 587 investors, misappropriating funds. Subhiksha shut down in 2009, ending his credibility
CR Subramanian was sentenced to 20 years in prison and fined Rs 8.92 crore, while his companies were fined Rs 191.98 crore. (News18 Bangla)
The dramatic rise and fall of CR Subramanian, reminiscent of a Bollywood film, culminated on November 20, 2023, when a special court in Chennai convicted him of fraud. Subramanian, an alumnus of IIT-Madras and IIM, was a talented engineer and banker who saw his dreams turn into a nightmare.
In 1991, Subramanian founded Vishwapriya Financial Services, a non-banking financial company (NBFC) that raised money through high-return investment schemes. Popular among these were Prime Invest, Asset Backed Security Bond, Liquid Plus, and Safety Plus. These schemes promised significantly higher returns than traditional bank deposits or other investment options, with assurances of safety, profitability, regular income, and capital protection.
Attracted by these claims, 587 investors—mostly middle-class individuals, small business owners, and retirees—invested over Rs 137 crore in the company, lured by the prospect of unusually high returns.
Retail Chain ‘Subhiksha’ Shines
In 1997, Subramanian launched a retail chain, Subhiksha, envisioned as an affordable and convenient option for the common man. With a strategy of low prices and high sales, Subhiksha quickly expanded, offering groceries, fruits, vegetables, medicines, and FMCG products at affordable prices. The chain grew to over 1,600 stores across India, with a company valuation reaching Rs 3,500 crore. High-profile investors such as Azim Premji, ICICI Ventures, and Kotak Mahindra Bank supported Subhiksha.
However, the success of Subhiksha masked the troubled reality of Vishwapriya. Subramanian had raised huge sums of money from numerous investors through Vishwapriya. Using aggressive marketing and personal contacts, he promised returns of up to 15-20% without disclosing that the funds were invested in the Subhiksha retail chain and other ventures with no guaranteed returns. When it came time to repay investors, new investments were used to pay old investors, resembling a Ponzi scheme.
The situation worsened in 2008 when Subhiksha faced a severe cash crisis. Employee salaries and Provident Fund payments were stopped, while supplier dues piled up. In response, Subramanian set up over 80 shell companies to divert investor funds, swindling more than Rs 137 crore from 587 investors, money that was never returned. Using these shell companies, he misappropriated investors’ funds and concealed his assets. Subhiksha ultimately shut down in 2009, and Subramanian’s credibility collapsed.
In 2015, the Economic Offences Wing (EOW) registered a case against Subramanian after investigations uncovered an unpaid loan of Rs 77 crore from the Bank of Baroda. In 2018, the Directorate of Enforcement (ED) arrested him on charges of money laundering. On November 20, 2023, a special court in Chennai convicted Subramanian and his associates under the Tamil Nadu Protection of Interests of Depositors Act (TNPID). He was sentenced to 20 years in prison and fined Rs 8.92 crore, while his companies were fined Rs 191.98 crore. Of this amount, Rs 180 crore has been allocated to compensate the investors.
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