Zero revenue, growing partners: The inside story of LLPs linked to Boby Chemmanur

In Kerala, there are more successful and wealthy businessmen than him, but none commands the fame and unique attention he has. This heir of a family jewellery business has built a massive personality cult, fueled by social media and the insatiable appetite of 24/7 television for the absurd.

His public persona, defined by philanthropy, spectacular displays of wealth, flamboyant parties, eccentric stunts, irreverent interviews, and misogyny, all play out across thousands of videos scattered across the internet.

At the centre of this attention economy stands a man in a white mundu, a white t-shirt, and a shock of unruly hair – Chemmanur Devassikutty Boby – BoChe to his fans and the entities he promotes.

On the surface it seems like he is famous because he is rich and loud. But a deeper investigation into his finances suggests the opposite. Being famous might actually be the basic pillar of BoChe’s business model.

How else can one explain the rationale behind 11,879 partners investing a total of Rs 764 crore in eight loss-making Limited Liability Partnership (LLP) companies linked to him? These eight entities, which have his relatives and employees as designated partners, recorded a net loss of Rs 68 crore in 2022-23 and Rs 92 crore in the financial year 2023-24.

In the first instalment of this four-part series by TNM and Azhimukham, we investigate the dealings of the eight firms that were registered as LLPs. Interestingly, these firms were supposed to be in the business of trading in gold, but that appears to be a cover.

The rest of the series will look at the operations of the Malankara Multistate Cooperative Credit Society, a multi-state cooperative society promoted by Boby and Phygicart, a hybrid entity engaged in direct selling and e-commerce.

The eight entities

The eight LLPs we investigated are financially on thin ice.

These include Chemmanur International Jewellers LLP (CIJ), Thiruvathira Gold Palace LLP (TGP), Orelia Jewellers LLP (OJ), Marathakam Gold and Diamonds LLP (MGD), Caroline Jewellers LLP (CJ), Vishakham Jewellers LLP (VJ), Anna Boby Jewellers LLP (ABJ), and Aayilyam Jewellers LLP (AJ).

The network of LLPs seems to run like a collective investment scheme, where the promised returns are collected from new, incoming partners, rather than from legitimate business profits. This setup requires a constant flow of new investments to survive.

What is clear is that the present model was designed to bring investments through thousands of partners after the first model of deposit collection was flagged as illegal by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI).

Chemmanur International Jewellers (CIJ), an LLP in which Boby is a partner, first came under the RBI scanner in 2012. Four employees from its Vashi branch in Mumbai were arrested for running illegal deposit schemes. In 2016, a series of searches by Income Tax officials revealed that deposits were being collected by offering interest rates as high as 13% per annum. 

Gold advance schemes, where buyers pay in advance for gold to cover for inflation, are a common business practice among jewellers. But Boby was collecting deposits without selling gold. This violated SEBI and RBI rules. The RBI said that Chemmanur was “running a deposit scheme in the guise of gold purchase”.

In 2017, SEBI found that CIJ collected close to Rs 1,000 crore from the public in five years, under the head ‘advances towards gold purchase’, but the total gold sales of the firm during the period was a mere Rs 66.3 crore.

In the 2012-13 period, CIJ received nearly Rs 400 crore as gold advance deposit. In 2013-14 it was around Rs 250 crore and Rs 360 crore in 2014-15. However, the actual sale of gold recorded during this period was only around Rs eight crore, Rs 18 crore and Rs 40 crore, respectively. The inspection also found that the company's gold stock was too low. In the three years from 2012-13, the inventories were worth around Rs 10 crore, Rs 13 crore and Rs 11 crore. 

As any deposit scheme over 12 months would invite RBI scrutiny, the business plan seems to have been changed. Multiple LLPs were registered with Boby’s relatives and employees as ‘designated partners’, responsible for overseeing daily operations and legal compliance.

An LLP is a business structure that offers the benefits of limited liability of a company and the flexibility of a partnership. Unlike a private limited company, which could have a maximum of 200 shareholders, there is no limit to the number of partners in an LLP as long as there are a minimum of two ‘designated partners’ in charge. There is also no bar on paying interest to the partners for their capital investments, which is called share capital.

These clauses seem to have been used to collect deposits from thousands of people by adding them as partners rather than as depositors. 

While CIJ began operations in 2011, the rest of the LLPs were registered between 2017 and 2019, after the RBI’s intervention.

Four of these LLPs – Chemmanur International, Thiruvathira, Orelia, and Aayilyam – together hold 88% share of the group’s flagship company, Chemmanur Gold Palace International Ltd.

These LLPs invested crores in Chemmanur Gold Palace International Ltd. Two auditors we spoke to said that while the investments made by the LLP into the gold company are not illegal, the system was questionable. Moreover, even LLPs with negative reserves and surplus have transacted crores in loans to each other over the years.

Boby’s wife, Smitha, her cousin Jisso Baby, her brother Lijo Moothedan, and former driver Devadasan hold just a few shares in Chemmanur Gold Palace International. Boby directly holds only 11.73% stake in the company as per March 2024.

The designated partners in the LLPs are also his wife, brother-in-law or close associates. 

All eight LLPs are currently loss-making. Curiously, five of these LLPs show no revenue, though three of them have sales. 

Boby was a former designated partner of Chemmanur International Jewellers LLP. Now his brother-in-law, Lijo Moothedan, and former driver Devadasan are designated partners. Devadasan is also a designated partner of Anna Boby Jewellers, formed in the name of Boby’s daughter. 

Chengacheri Anil, director of Boby Chemmanur Nidhi Limited, is also the designated partner of LLPs like Orellia Jewellers LLP and Vishakham Jewellers LLP.

Designated Partners of some of the LLPs are staff of Chemmanur Group. For example, Parambath Ebrahim and Jopaul, partners of Orelia Jewellers LLP, are staff of Chemmanur Jewellers, while another partner, Chengacheri Anil, is a general manager of Chemmanur Group. Jose Jojee, a designated partner at Orelia Jewellers LLP, is a public relations officer.

Where it began

The Chemmanur group’s business history dates back to 1863, with a small jewellery shop in Thrissur’s Varandarappilly, as per the company's website. In the 2000s, the group ran gold deposit schemes, offering 11-13% annual interest for years until the RBI began a series of market inspections.  

Advance gold deposit schemes are not illegal if the tenure is within 365 days. Jewellers allow their customers to pay equal monthly instalments for up to 12 months, and at the end of the tenure, the customer can buy gold ornaments worth the accumulated amount for one year. Many big jewellery store chains have such schemes. 

In an interview with Asianet News in 2016, Boby claimed he introduced the gold deposit scheme 25 years ago and the concept was adopted by all jewellery groups. The interviewer then asked him whether he had partnered with banks to offer guarantees for deposit schemes. He replied, “We are our guarantee. People join our schemes because of the trust in us”. 

The entrepreneurial journey of Boby, now 63, began in the 1990s when he inherited his family business. With Boby at the helm, Chemmanur International Jewellery grew into a diversified group encompassing non-banking financial companies, real estate, travel and tourism, plantations, etc. Boby’s approach to raising funds for his ventures set him apart from the typical businessmen in Kerala. It all started with small deposit schemes that were later flagged as illegal by the RBI. Most of his businesses,  whether multi-level marketing or multi-state cooperative society, are run by collecting money from the public. 

A former associate said that Boby began collecting small deposits from the public to expand his business in 2006. The idea was to open a new jewellery outlet and announce new deposit schemes. "The debt was around Rs 44 crore at that time. Till then, Boby used to run the business on loans with hefty interest rates. Soon, it hit Boby that collecting money from the public was a good idea. Initially, he used the money to stock gold. Later, it was rolled to other businesses," he said. 

A complex network

The CIJ LLP, founded in July 2011, has recorded a loss of Rs 12 crore in FY-2024. The company has reported significant losses in each of the past 4 financial years. The company’s Reserve and Surplus was in the negative ( – 86.60 crore) as of 31 March 2024. Yet, 1936 partners have contributed a total of Rs 100 crore to it. Interestingly, the financial documents of CIJ LLP for the 2023-24 period do not record any gold sales. 

The documents show that the LLPs have partners who contributed hefty amounts. Some individuals invested nearly Rs 1.5 crore in these LLPs. Yet the company documents show that it has not transferred any money to its partners' accounts. Compared to its partners, the contributions of two designated partners, Boby’s brother-in-law Lijo Moothedan and his former driver Devadasan, are a minuscule Rs 20,000 and Rs 30,000, respectively. 

Thiruvathira Gold Palace LLP, registered in July 2017, has a total partner contribution of Rs 136 crore. It has 2929 partners and booked a loss of Rs 16 crore in FY-24, and its Reserve and Surplus stood at – 78.51 crore due to cumulative losses over many years.

The LLP Act of 2008 came into effect on March 31, 2009. Prior to that, jewellery stores linked to Boby were private limited companies, which had higher regulatory compliance obligations. 

The names of eight LLPs, whose documents TNM analysed, sound like jewellery stores, but five of them reported no revenue or turnover over the last three years.

Out of the eight LLPs, all except Marathakam Gold Deposit are listed as wholesale trade firms. Our investigation found that most of these jewellery LLPs were non-existent in the address provided. 

However, Chemmanur International Jewellers had showrooms at the LLP addresses in Pattambi, Perumbavoor, Triprayar, and Mananthavady.  

In Shoranur, the address hosts an office of Chemmanur Credits and Investments. The showroom at the CIJ LLP address on Mavoor Road remains closed. 

A small showroom of Orelia Jewellers LLP in Nadakkavu, Kozhikode, was shut down when we checked a few months ago and on Google Maps it still says ‘permanently closed’. However, two days after we sent the questionnaire to the Chemmanur group, Orelia was found to be open.

At the end of FY-2024, the combined Reserve and Surplus of these eight companies stood at –422.5 crore, indicating continuous losses in operation over the years. While Reserves are funds companies earmark for future use, Surplus is where profits reside. The deficit is an indicator of poor financial health. 

Five entities did not show any revenue/turnover, had no inventory, no salaries or staff expenses, and no expenses for purchasing raw materials, yet reported crores under “administrative expenses.”  

However, all the partners we spoke to said that the LLPs were prompt in paying interest.

Other People’s Money

The LLP Act 2008 does not restrict an LLP from paying interest of up to 12% per annum to its partners. 

As these companies are not making any profit to share with partners, other than interest, what else will attract so many people to invest their hard-earned money in such companies? As these companies are loss-making, from where are they finding huge sums regularly to pay the partners?

We spoke to some investors who were listed as partners in these LLPs. A Kannur-based businessman said that the Chemmanur group has been depositing monthly interest in his bank account for the past seven years. He, however, refused to disclose his deposit or the interest rate. He was not aware under which scheme or company his money had been deposited. Our document showed that the deposit was Rs 80 lakh in Anna Boby LLP. 

"I have trust in Boby Chemmanur. There might be risks in such investments. But losing money in a business and purposefully cheating someone are different. Boby has never cheated his investors, even during the economic slump during Covid. Some of my friends who deposited have withdrawn their investments without any difficulties. Just one month's prior intimation was enough," he added. 

A Wayanad native who deposited Rs 5 lakh with Vishakham LLP said he was earning 11% interest per month. He, too, expressed trust in Boby and the Group's regular payment of interest as reasons for investing in the firm. 

A Malappuram native who runs a Hajj travel agency has invested Rs 22.5 lakh in Anna Boby LLP, as per documents available. However, when we called him, he denied any investment in the Chemmanur group and stated that his wife had previously participated in gold schemes.

‘Ponzi scheme’ allegations

Three years ago, the Sachet Portal of the RBI received a complaint which alleged that the Chemmanur International Group has been running around 8 LLPs to facilitate large-scale deposits of unaccounted money. 

The RBI shared copies of complaints with various departments, including the Enforcement Directorate (ED) and the Competent Authority under the Banning of Unregulated Deposit Schemes Act (BUDS Act) in Kerala.

The complainant had attached certain documents as proof of the allegations. For example, a receipt of one of the cash deposit certificates is an order estimation form that does not specify the firm's name. It showed an advance receipt of Rs 5 lakh. Other bills show deposits collected - ranging from Rs one lakh to Rs 30 lakh - in the name of the LLPs. Sources said the complaint was later withdrawn.

During a market intelligence visit to Thazhepalam, the Tirur branch of Chemmanur International Jewellers in 2022, the RBI observed that 'the jeweller was involved in unauthorised deposit acceptance activities for which the depositor is provided with a share certificate as a receipt'. 

"The deposits are also accepted in cash. It was observed that an interest of Rs 916 would be paid monthly on deposits of up to Rs one lakh. If the amount to be deposited is more than that, in addition to Rs 916, an extra amount will be given based on the company's sales turnover, all over Kerala. On maturity, the amount would be repaid in cash,” the RBI said in a letter sent to ADGP Crimes on March 15, 2022. According to government sources, no state agency has investigated this further. 

Mounting losses

The financial distress is not limited to LLPs. Chemmanur Gold Palace International Limited, the flagship company of Boby, is operating at a considerable loss. The firm saw a massive increase in sales volumes from Rs 412.6 crore during the Covid-affected market slump in 2021 to Rs 1764.5 crore in 2022. During 2023, sales peaked at Rs 3396.9 crore, a 92.5% increase from the previous year. 

Curiously, this revenue growth did not increase the company's profitability. It started booking losses. From a profit of Rs 22 crore in 2021, it reported a loss of Rs 5.5 crore in FY-2022, and in 2023, the net loss widened to Rs 35.7 crore. The company’s liability increased from Rs 727.5 crore in 2021 to Rs 1691.6 crore by 2023. 

Many complaints, no record of investigations

After analysing reports on the sale of gold and the amount collected from the public in 2017, SEBI concluded that the firm's major source of funds was gold advances. It was also noted that part of the collected funds was invested in sister companies, such as CCIL. The regulator noticed that regular interest payments in the name of 'profit share' were mainly in cash and began a separate probe into the allegations of public issues deemed by companies belonging to the Chemmanur Group. 

This led to the issue being raised at the 38th meeting of the state-level coordination committee (SLCC) chaired by the then chief secretary Nalini Netto in 2017. SEBI informed the SLCC that Chemmanur International Jewellers was running a deposit scheme in the guise of an advance payment for gold purchases, in violation of section 45S of the RBI Act. It said the scale of operations was around Rs 1000 crore.

The then ADGP (Crimes), Nitin Agarwal, advised the RBI to examine the issue and forward the case to the police department. Despite this, Kerala police have not investigated the firm’s alleged irregularities. H Venkatesh, who is currently ADGP (Law and Order), told one of the reporters that there are no records of investigation by the Crime Branch against the Chemmanur Group. 

While replying to the RTI queries filed by one of the reporters, the RBI refused to disclose the information regarding the investigation into the operations of Chemmanur Group. “The findings of the market intelligence visit to Chemmanur International Jewellers has been shared with the Law Enforcement Agency to whom provisions of the RTI Act, 2005 do not apply in terms of section 24 of the RTI Act, 2005. Disclosure of such information would prejudicially affect the economic interest of the state," it said while refusing to disclose the information.

In 2016, social activist Joy Kaitharath filed a petition with SEBI and the CBI, demanding a probe into the financial activities of Boby Chemmanur. Copies of the complaint were also sent to the Central Vigilance Commissioner, the Enforcement Directorate, and the Reserve Bank of India. In the complaint, Joy alleged that the Chemmanur group submitted fabricated financial statements to the RBI to substantiate the flow of funds from Boby. 

Four years later, Attingal-based lawyer Niyaz Bharati filed a petition with the DGP, Kerala, seeking an investigation into Chemmanur International Jewellers' operations for accepting deposits under its gold purchase scheme. Niyaz said that he had not received any update from the police on his complaint. 

In 2024, the Registrar of Companies (ROC) Kerala imposed penalties totaling ₹1,35,500 on Chemmannur Gold Palace International Limited for violating the Companies Act (Section 90(4)) by failing to timely disclose its seven Significant Beneficial Owners (SBOs) including Boby Chemmanur. 

The Ministry of Corporate Affairs (MCA) has now mandated the identification of SBOs for LLPs also through the SBO Rules, 2023.

It is not clear whether LLPs linked Boby have made the identification of SBOs as mandated. 

CPI(M) leader and former chief minister of Kerala, VS Achutanandan, while serving as the leader of the Opposition, was the first leading politician to raise a public warning against Boby Chemmanur. In a press meet held on June 4, 2015, Achutanandan alleged that the then home minister of the UDF Government had received a complaint against Boby Chemmanur. He said Boby was collecting money from the public, in violation of SEBI and RBI rules. The Left leader also alleged that Boby had influenced the then Chief Minister and state Home Minister to sabotage the police investigation.

In subsequent years, Achutanandan filed complaints against the Chemmanur Group with the then-SEBI chairman, along with the petition and documents he received from the Kerala State Human Rights Protection Centre and its general secretary, Joy Kaitharath. Once the CPI(M) came back to power, Achutanandan reiterated his complaints, but without apportioning blame to the CPI(M). 

All the allegations eventually died down. 

We sent a detailed questionnaire to Boby Chemmanur and Chemmanur group PRO. Though Boby Chemmanur met our team, he did not want to react on record. He said that his business was only aimed at serving the people.

To our questionnaire on LLPs, the reply was a general statement on the operations of Chemmanur group. It had only one reference to the losses incurred. “Even if a few companies face temporary losses, we work diligently to bring them back to profitability,” the reply said.

Full statement by Chemmanur group

"Boby Chemmanur International Group is an organisation with a trusted legacy of 163 years. Boche belongs to the fourth generation of this business family and he has been leading the Group since 1990. From then until today, all our institutions have been functioning with utmost honesty and integrity. Not even a single investor or shareholder failed to receive the profit or interest due to them.

We operate 23 vertical businesses, all of which run profitably. Even if a few companies face temporary losses, we work diligently to bring them back to profitability. Our Group records an annual turnover of around ₹10,000 crore. Boby Chemmanur International Jewellers has 56 showrooms in India, UAE and USA.

Chemmanur Credits & Investment Limited, our NBFC operating under the brand name Boche Gold Loan, and licensed by the Reserve Bank of India, has 310 branches offering secured gold loans.

The Malankara Credit Society, which operates with recognition from the Central Government, has 1,45,000 members. For the first time in India, this society has introduced diamond jewellery loans, similar to gold jewellery loans. These loans are available at the society’s 24×7, 365-day functioning branch in Ulloor, Thiruvananthapuram, as well as at the Ernakulam branch and the head office branch in Thrissur.

Nearly one lakh staff, directly or indirectly, is associated with the Group. Boche serves as Director and Chairman in several companies, some of which also have his family members, trustworthy, well-wishers and senior staff as Directors. The Group is active in the real estate sector as well, with projects underway in the Boche 1000 Acre property at Wayanad and the 112-acre Boche Hills property at Thrissur where a four-star hotel is expected to open this coming March.

Additionally, the initial works of the new Boche Homes – Rent to Own project have begun across the districts of Thrissur, Malappuram, Kozhikode, and Wayanad.”

This report was republished from The News Minute as part of The News Minute-Newslaundry alliance. Read about our partnership here and become a subscriber here.

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