Life seems to have come full circle for TR Pachamuthu, founder of the multi-crore SRM conglomerate – a group with interests in businesses as diverse as education, transport, media, energy and technology. The doyen of the educational industry in Tamil Nadu was arrested on August 25 – two days after his 75th birthday – on charges of cheating students.

Pachamuthu’s career graph is one of a steady rise from humble beginnings. Born into a modest farming family in the little village of Thandavarayapuram in Attur, near Salem, in Tamil Nadu, Pachamuthu began his career teaching mathematics in school.

Education entrepreneur

Over the years he set up coaching centres in Chennai and Salem for diploma holders from polytechnics who wanted to sit for the Associate Member of Institute of Engineers exam, which would put them at par with those holding engineering degrees. The coaching centres flourished. In 1969, Pachamuthu set up the Florence Nightingale Primary School in KK Nagar in Chennai, which was upgraded to a Higher Secondary School 12 years later.

Pachamuthu subsequently hitched himself onto the wagon of popular cine star and politician MG Ramachandran.

MGR, as the actor-politician was popularly called, broke away from the Dravida Munnetra Kazhagam party in 1972 to launch his All India Anna Dravida Munnetra Kazhagam. MGR’s new party swept the 1977 elections and he became chief minister of Tamil Nadu. A person close to Pachamuthu, who spoke to on condition of anonymity, said that the SRM Group chairman built his empire on the back of MGR’s rise.

During MGR’s time, the government began encouraging private colleges in the state. “Some of Pachamuthu’s relatives were in the new AIADMK party,” said the family friend. “One in particular, a man called Kovai Thambi, was close to MGR. Kovai Thambi and Pachamuthu belonged to the same Udayar caste. This man was instrumental in helping Pachamuthu get government land on long-term lease in Potheri to start his SRM college. Pachamuthu bought some land, added it to the government’s leased land and started the college. From there, there was no looking back.”

Rise and rise of the SRM group

The SRM College of Engineering was launched in Potheri in Kancheepuram district in 1985 followed by nursing and pharmacy colleges in the early 1990s. The hotel management college and the arts and science college followed in 1993-’94.

In 2002, the engineering college was recognised as a deemed university by the University Grants Commission. Today SRM University is a force to be reckoned with, and recently set up campuses in Sikkim and Noida in Uttar Pradesh.

The family’s many businesses are handled by Pachamuthu and his sons.

“His elder son Ravi Pachamuthu handles the businesses that have large liquid cash flows,” claimed the family friend. “Pachamuthu handles the transport, catering and real estate businesses. His younger son Sathyanarayana handles the technology, media and software businesses.”

In 2010, Pachamuthu floated his own political party, the Indhiya Jananayaga Katchi (Indian Democratic Party), and in 2011, he launched Tamil news channel Puthiya Thalaimurai (New Generation) with an investment of close to Rs 200 crore. The channel went on to top the ratings chart very quickly, pipping industry leader Sun TV, owned by the Maran brothers from the top slot.

The friend said that in 2011, the group started a film distribution company to enable the cash collected from the group’s education and other businesses to be utilised.

Enter S Madhan, a young aspiring politician from a middle class family in Tirunelveli, who joined the newly-launched Indhiya Jananayaga Katchi. “Madhan, on paper, was producing the films but the company was called Vendar Movies, named after Pari Vendar [Pachamuthu’s political pseudonym],” said the person close to the family. “First they began distribution of films and then got into production. Vendar Movies was the distributor for Rajinikanth’s Lingaa, which flopped in the box office, but they also produced some films which did very well.”

Trouble begins

In 2013, Income Tax officers conducted raids on the premises of SRM Group companies reportedly following complaints by parents who alleged they had been asked to pay capitation fees for seats for their wards in SRM Medical College.

“Capitation fees are never directly collected by any university or college,” said the friend. “The college directs students to an intermediary who collects the money and gives a piece of paper with a code. On presenting this code to the college or university, the seat is allocated to the student.”

In SRM’s case, this intermediary was believed to be Madhan. “Madhan was doing just this job for Pachamuthu until things began to sour between him and Pachamuthu’s elder son Ravi,” said the man who knew the situation. “Things went downhill once Ravi started asking Madhan to report to him instead of directly to Pachamuthu.”

In May, the Supreme Court ruled that admissions to medical and dental colleges across the country would be on the basis of NEET – the National Entrance cum Eligibility Test conducted by the Central Board of Secondary Education. This is when trouble began for SRM medical college.

From June 2 onwards, parents of students seeking admission to SRM's medical courses began to file police complaints, accusing the institute and Madhan of cheating them out of capitation fees they had paid. The amount for a seat in the management quota of the medical college is believed to have ranged from Rs 50 lakh to Rs 1 crore. The parents filed a total of 16 complaints demanding their money back.

Madhan has been missing since May 27, and his family filed a complaint to this effect with the police on May 29.

Said Infant Dinesh, the lawyer representing the 16 parents as well as Madhan’s mother regarding the missing person’s complaint: “Upto May 27, these parents were asking Madhan for confirmation of seats, but he kept putting them off saying he would get back to them soon.”

Dinesh added: “Madhan went out of town on May 27 but did not return by May 29. His wife Sumalatha and mother Thangam filed a ‘man missing’ complaint in the Virugambakkam police station in Chennai but no action was taken.”

A letter, allegedly written by Madhan, has been found in which he claimed that despite his loyalty to Pachamuthu, the SRM chairman’s son Ravi was harassing him and suspected him of siphoning off funds. In the letter he also said that he was going to commit suicide by drowning in the Ganga in Varanasi.

On June 6, Madhan’s mother, Thangam, filed a petition in the Chennai High Court in which she said that she feared her son was being held illegally by the SRM management. On August 18, the Madras High Court came down heavily on the Chennai police, asking them why they had not questioned Pachamuthu in the case so far. On August 25, the Central Crime Branch of the Chennai city police interrogated Pachamuthu and subsequently arrested him. He has been charged under Sections 420 (cheating), 406 (criminal breach of trust) and 34 (common intention) of the Indian Penal Code.

“They [the SRM management] have used Madhan as an intermediary to get capitation fees,” said lawyer Dinesh. “If not him, someone else would have done it. If in case they had any difference of opinion [with Madhan] they should have issued a notice in the papers stating that no one should approach Madhan, but no such thing was done.”

Dinesh added: “A lot of IJK members have acted as brokers for SRM management seats. Parents who approached the college directly for admissions were told specifically to go meet Madhan. These parents have slips of papers given to them by Madhan after paying the huge capitation fees.”

SRM University did not respond to emails for its comments on the matter.

On August 27, the Indhiya Jananayaga Katchi issued a statement saying: “SRM Group and our leader Pari Vendar are caught in a conspiracy hatched by enemies and betrayers to malign them…our leader will legally prove that he is innocent and will successfully take up the reins of the party and the educational institutions very soon.”

A media war rages

Meanwhile, a war between Sun News and Puthiya Thalaimurai channel broke out. Sun News launched a two-month-long campaign to pressurise authorities to arrest Pachamuthu in the Madhan case. Sources within the channel said that the management decided to get aggressive against the competition as it was miffed that Puthiya Thalaimurai had eaten into its market share, and at the channel’s coverage of the cases against the Maran brothers who own Sun Network. In turn, Puthiya Thalaimurai hit out at the Sun Network by accusing its cable distribution arm, Sumangali Cable Vision, of indiscriminately hiking carriage fees and of blacking it out in key areas in Chennai. A case filed by Puthiya Thalaimurai against Sumangali Cable Vision to this effect is also pending in court.

Neither the Sun Group, nor Puthiya Thalaimurai officials were available for comment on the issue.

As the SRM group battles fires on myriad fronts, decision makers at the helm of its various businesses seem to be in shock. “There is no one really taking a decision or giving direction on the way forward,” said another person close to the Pachamuthu family.