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The Economic Times

Hotel Saravana Bhavan defaults on ESI, PF dues

Chennai: The country’s best known South Indian food chain Hotel Saravana Bhavan has defaulted on statutory payments such as provident fund and Employees’ State Insurance (ESI) Corporation dues. Its founder P Rajagopal had died in July after being convicted in a murder case.

At an inquiry on Thursday, senior managers of the restaurant chain are understood to have admitted to the Provident Fund Commissionerate that they owe more than Rs 20 crore to the PF department. They promised to clear the dues in a phased manner. PF department officials told TOI that calculations of dues were under way and it could be more than what the hotel chain has mentioned. The next hearing is scheduled for September 30.

“We have paid PF settlement of more than Rs 1 crore last month. We intend to pay another Rs 3 crore by March 2020. We are simultaneously settling dues with ESIC and are trying to bring down the default sum,” Saravana Bhavan head (HR) T Sivasankaran told TOI after PF hearing.

The hotel chain has 3,190 employees (domestic) at present and is not looking at any layoffs for now, but would restrict its business. Some of the branches, including the one in Pondy Bazaar in Chennai, have closed down.

“Our lease in Pondy Bazaar was over and we didn’t get enough parking space. So we shut that down. We are revamping the whole network and we will bounce back pretty soon,” HR head said. Moves are afoot to restructure and redesign branches not making a profit, he said. The chain has also made changes in senior managerial positions including new auditors. “We are letting go of some old hands and bringing in new ones,” Sivasankaran said.

Saravana Bhavan is a story of rags to riches. Founded by school dropout Rajagopal, who ran a grocery store in KK Nagar in Chennai, it became a synonym for quality vegetarian food across the world. Rajagopal, who came to be known as ‘Annachi’, decided to open a restaurant in 1981 and grew the chain from strength to strength on back of providing clean and tasty food in an era where vegetarian dishes were doled out in dingy joints. He died in July this year after a court convicted him in a murder case.

His two sons, Shiva Kumar and Saravanan, have been running the business for the past few years. “Annachi was a phenomenon. He knew the trade as the back of his hand.
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