Arun Kumar Sharma: Glitz, glamour & defaults

Sharma, chief of Lotus Refineries, described by NSEL as a prime defaulter and in police custody, is surrounded by a lot of queries

When Lotus Refineries, embroiled in the ongoing National Spot Exchange Ltd (NSEL) crisis, came on the scene around three years earlier, others in the edible oil business found themselves besieged by marketing consultants.

“They would say, look at Lotus Refineries; why don’t you also advertise?” said a person who was witness to the blitz.

Advertising was unheard of in this business, which fetched margins of  one-two per cent. But Lotus was on a publicity overdrive. Bollywood stars performed at the launch of its products and the company presented the winning cheque to the Indian cricket team’s captain after a victory in August 2012.

The advertising blitzkrieg had brought to the limelight Lotus’ aggressive and ambitious chairman and managing director, Arun Kumar Sharma, who till then was not known beyond the edible oil business circles. Sharma, who could be in his mid-40s, is said to have been in the oil business for 20 years and to have always had a yen for branding. His previous venture in the north is said to have followed a similar approach towards creating brands in the edible oil business.

Sharma ran a company called Krish Refineries earlier, around Ludhiana. He attempted to grow quickly there, making at least one attempt at an acquisition, stymied by a lack of funds. The banks he tried to tie-up with weren’t convinced, according to conversations with industry insiders here, along with current and old associates.  A spokeperson for Lotus Refineries did not respond to email queries or text messages sent by Business Standard.

Seeking better business prospects, Sharma is said to have moved to Mumbai, the country’s financial capital. He set up an office in Town Centre-II in the suburbs, from which he switched to another swanky office in Boomerang, Chandivali, a year before. Pictures with various celebrities adorn the place.

To grow rapidly, Sharma is said to have started operations with Lotus by hiring out capacity, rather than operating out of his own set-up. He also launched a massive advertising campaign, where the glitz was never too far away and often grew brighter with every new venture.

As he announced plans to hit Rs 10,000 crore in annual turnover, he produced a Bollywood film (Satya 2) and hobnobbed with celebrities and Bollywood starlets. In between, he became a borrower on NSEL, a commodity bourse turned unofficial financing engine. Eventually, the engine sputtered and investors found themselves out of pocket by Rs 5,500 crore. Sharma was found to owe Rs 252.6 crore.

A slew of accusations and counter-accusations between NSEL and Lotus followed, with the latter claiming it was the exchange which owed them money. Lotus even filed a Rs 2,773-crore suit against NSEL in the high court here, for the exchange’s alleged failure to deliver goods stored in its warehouses. The city police’ economic offences wing began to investigate him. He was arrested earlier in the week and is in police custody, being interrogated.  In between all the questions about NSEL, perhaps Sharma will also reveal where he managed to find the money for all that advertising.  Or, perhaps, he won’t have to answer that when he’s done.