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Hotel Saravana Bhavan defaults on ESI, PF dues

The country’s best known south Indian food chain, Saravana Bhavan, has defaulted on statutory payments such as provident fund and ESI dues. Its founder P Rajagopal passed away in July after being convicted in a murder case.

During 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 ₹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 underway and it could be more than what the hotel chain has mentioned. The next hearing is scheduled for September 30.


Saravana Bhavan won’t lay off staff for now, but will curtail operation


“We have paid PF settlement of more than 1 crore last month. We intend to pay another 3 crore by March, 2020. We are simultaneously settling dues with Employees’ State Insurance Corporation and trying to bring down the default sum,” T Sivasankaran, Head-HR, Saravana Bhavan, told TOI after the PF hearing. 


The hotel chain has 3,190 employees (domestic) at present and is not looking at any lay offs 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,” the HR head said. Moves are afoot to restructure and redesign non-profit making branches, he said. The chain has also made changes in senior managerial positions including new auditors. “We are letting go some old hands and bringing in new ones,” Sivasankaran said. 


Saravana Bhavan, is a business story of rags to riches. Founded by school dropout Rajagopal, who ran a modest 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 the 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 the palm. In his last few years he had to take a step back, partly due to frail health and partly due to the murder case. People who stepped in found his shoes too big to fill,” said an industry insider. 


Today, Hotel Saravana Bhavan has 27 branches in India, with 20 of them in Chennai. It has branches in 23 countries including the UK, the UK and Australia, giving the diaspora a familiar taste of home.

Source: TOI