The gold and jewelry retailer based in Dubai that defaulted on its loans worth over 500 million Dhs or $136 million has requested that banks give it time to put a repayment plan together, said news reports on Thursday.
Officials from Atlas Jewelry, which has over 50 branches across India and the Gulf, met with representatives from its creditors Wednesday, said banking sources.
A spokesperson for Atlas said the company has assured the banks it would pay all its debts and will present up to three options to the banks who can select what is the best one for them.
This is the most recent scandal that has hit the jewelry industry in Dubai, a big center for trading of gold. In March of 2010, the Financial Services Authority in Dubai sanctioned a group of three brothers from Damas International over withdrawals that were unauthorized by the company of cash and gold worth more than 365 million Dhs.
The default by Atlas affects 15 or more banks, said sources close to the matter and two bankers have said that reaching a payment deal would prove tricky unless the creditors can meet M.M. Ramachandran the founder who is in police custody.
He was arrested August 23 due to suspected bounced checks.
Atlas Jewelry was founded in 1981 in Kuwait by Ramachandran and was moved to Dubai after trading was suspended due to the Gulf War.
The company has real estate and healthcare interests and owns as well as manages two hospitals in Muscat the capital of Oman.
One banker said that the company has a number of assets, but until the creditors can meet Ramachandran and talk about ways that can be used to repay them, nothing can be settled.
Another banker said certain banks were working with the jewelry company to have Ramachandran released on bail or to have charges suspended to enable talks to start.
One of the options that banks have is the seizing and subsequent selling of assets located in Oman or two companies located in India that Ramachandran owns stakes in, though that is difficult due to the assets being located overseas.