Who is Joy Alukkas and why has ED attached his assets worth Rs 305 Cr?
Alukkas Varghese Joy aka Joy Alukkas, whose assets worth more than Rs 305 crore were attached by the Enforcement Directorate (ED) on Friday (February 24), is the chairman and managing director of the conglomerate, Joyalukkas Group.
The group runs around 151 jewellery showrooms across India and 10 other countries apart from owning other businesses such as money exchange, luxury air charter, fashion, silk, and malls. According to the Forbes magazine, Joy is the 69th richest man in India and ranked 950th among billionaires across the globe, as on February 26, 2023, with a net worth of USD 3.1 billion.
Legacy of Alukkas Group
The legacy of Alukkas jewellery group dates back to the formation of the state of Kerala. It was founded as a small gold shop in Thrissur by AH Varghese, a small-time business man who had been running an umbrella manufacturing unit along with a stationary store in his hometown. Joy is the fourth of five sons of AH Varghese, who had 10 daughters too. Joy was born in the same year that his father started the jewellery shop out of a 200-sqft room in Thrissur.
Joy Varghese, a school dropout, went into the gold industry when he was merely 14, helping his father with the business. He did not complete his pre-degree as he entered business full time in the early Seventies. By 1976, AH Varghese handed over his gold business to his five sons. The brothers — Jos, Paul, Francis, Joy, and Anto — ran it under the common name of Alukkas Jewellery until the turn of the millennium.
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In 1986, when Joy landed in the UAE and decided to launch his business in the Middle East, his father was not very keen on it, as the Iran-Iraq war was underway. But Joy managed to convince the patriarch and started his first outlet in Abu Dhabi in 1987. He never looked back. He established a second showroom in Dubai in the same year and a third in Sharjah in 1991, soon after the Gulf War. The five brothers’ decision to split the family business and go their separate ways in 2000, however, was his first significant breakthrough.
“While most of the goldsmiths were Gujaratis, the Malayalis took the lead in sales and marketing in the Gulf countries and most of the customers were from God’s Own Country, Kerala, as it was a fad for them to buy gold from the Gulf countries. It did not take long for young Joy to put two and two together to realize that there was a goldmine for him there to explore. He thought if Malayalis were the big customers in the Gulf, it absolutely made sense for a businessman from Kerala to commence operations to serve the Malayalis,” observes R Roshan in his 2022 book, God’s Own Entrepreneurs: The Success Secrets of 21 Entrepreneurs from Kerala.
Rebranding of company
The rebranding of the company, from “ALUKKAS” in all caps to the sentence-cased “Joyalukkas” did the trick for Joy.
“One day, while I was driving near Shindaga Tunnel, I came across a Majid Al Futtaim billboard. Al Futtaim company, which split like ours, had been renamed as Majid Al Futtaim and that prompted me to go for the rebranding,” he had explained in an interview to Gulf News in 2019. Two decades later, Joy Alukkas has come a long way ahead in the game compared to his brothers.
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Joy did not have a smooth ride with the financial law enforcement authorities in the country, although his foreign business was left unscathed. In 2018, the Kochi Income Tax department carried out an I-T raid across 130 showrooms and premises related to the group and unearthed unaccounted-for sales of gold jewellery to the tune of Rs 500 crore. The case involved allegations that the jeweller was buying used gold jewellery from customers and showing more wastage, evading taxes amounting to crores of rupees in the process.
Now, it is the Enforcement Directorate’s turn to raid the conglomerate’s Trissur office and related establishments. According to the ED’s press release, it has attached assets worth more than Rs 305 crore of the owner of Joyalukkas. The release further stated that a “huge amount of cash transferred to Dubai from India through hawala (illegal money transfer) channels and subsequently invested in Joyalukkas Jewellery LLC, Dubai, which is 100 per cent-owned company of Joy Alukkas Verghese, who was the ‘beneficial owner’ of the funds invested.”
Gold retailers’ hawala operations
“The hawala operations by Kerala-based gold retailers is well-known,” says senior business journalist KP Sethunath. “Almost all major Kerala gold retailers have shops in all Middle Eastern countries. They send gold ornaments to these shops from Kerala and show them as exports. In lieu of these exports, they import gold without the mandatory customs duty, taking shelter under the import-against-export window. Generally, they inflate the export quantity so that they can make more imports. Gold and jewellery makers across the country are engaged in such a racket. Kerala is no exception,” adds Sethunath.
Immediately after the ED raids started on February 22, the Joyalukkas Group had postponed its announced initial public offering (IPO). This was the company’s second postponement of a share sale after submitting papers to the Securities and Exchange Board of India. It had filed an IPO filing for Rs 650 crore in 2011, but it was rejected.
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“Though the brand Joyalukkas might not make it to the list of frontrunners of Kerala-based jewellery business, Joy Alukkas Verghese has made some formidable foes in the industry, who are well connected to the rulers of the country,” feels a journalist who is privy to the inside stories of the gold business. “With the track record of the agency in question, there could be more to what we see on the surface,” said the journalist on condition of anonymity.
Interestingly, no media is keen to dig deep into the issue aside from rehashing the ED’s press release.
