Dubai: The owner of Atlas Jewellery hopes to pull in new investors to relaunch a retail presence in Dubai and revive operations elsewhere in the Gulf, which will be the first step to clear off the remaining debts on its books. In Dubai, the plan is to launch a single store and create a sustainable cash flow over the next two years, according to Ramachandran Nair, the founder.
Simultaneously, there is a plan to have a private placement to raise funds by selling shares in its India subsidiary, registered in Mumbai. The India operations are listed — the share is at Rs154.7 as against the original face value of Rs10. Nair hold 50 million shares of the 100 million issued. At the current price, a private placement should generate a decent amount and help with the raising of new funds.
The move comes as part of a “final settlement plan” involving Nair and more than 10 creditor banks. A meeting was held early this week, during which new funding options were raised. There will be monthly meetings to chart progress of the revival plan.
Nair was released from a jail in Dubai last month after being sentenced in 2015 over bounced cheques. It was one of the more high-profile cases as banks in the UAE tried to streamline their exposures to local businesses in a soft economy. At the time, Nair had debts of Dh400 million.
“We believe there is now a workable plan to get the business back on its feet — though in a much slimmer presence — and pay off all remaining debts,” said Nair in an interview to Gulf News. “There have been investors who have offered to come in and provide the funds to relaunch the business — it could be that they believe “Atlas” as a brand can still try and make a mark.
“These retail operations would create the funds that can pay off the banks. There are no pending criminal cases against me in the local courts. There are some civil cases, but parties have decided to put these on freeze as we work out a turnaround.”
if all goes to plan, Nair may have to pay off around Dh150 million. Some of the creditor banks have written off a portion of their exposures. Atlas had sales of Dh3.5 billion and profits of Dh50 million plus from its Gulf-wide operations in 2014. It operated more than 40 stores at the time.
Nair agrees that a relaunch under the current market circumstances is not the easiest thing to do. Gold and jewellery sales have declined in double-digit terms since the start of the year, and the only upturn was over the last few days when bullion prices dropped a bit.
“Despite my arrest, I maintain the brand has not been diminished — though our UAE operations were shuttered, we still kept a few outlets open in Saudi Arabia, Kuwait and Oman during these years,” said Nair. “I set up the business in 1991 and started with eight kilos of gold.
“There is no reason why with a certain amount of stock, it cannot be done again. I always look at the bright side — these days there is no need to pay key money for a jewellery store in Dubai.”
In 2015, and matters came to a head when some of Atlas’ lenders presented the cheques and which bounced for insufficient funds. Cases were filed and a judgement delivered that led to Nair’s subsequent incarceration at the Al Awir jail.
“One bank reduced its facility and others issued instructions to immediately pay up Dh10 million,” said Nair. “We were totally taken by surprise and there was no way I could have freed up that kind of money immediately.”
The group also operated two health care facilities, in Oman. These were conservatively valued at Dh510 million and a deal was struck recently to sell them off, for Dh105 million. But the new investors only released Dh35 million, much of which was used to clear off exposures with the banks.
“The investor only put up Dh35 million because of concerns they had about future liabilities against the health care facilities,” said Nair.
