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The statue located near the government hospital was found with the head dislodged and lying on the ground, they said.
Local leaders of the Dravidar Kazhagam noticed the damage caused to the statue Monday morning and informed police, demanding that the culprits be arrested immediately.
Officials said steps were being taken to repair the statue. DMK president M K Stalin condemned the desecration of the statue.
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Periyar, who launched the self-respect movement in the state, was a staunch atheist and had founded the Dravidar Kazhagam, the parent organisation of the DMK.