Cattles sold for 'ghee' investments; Sebi sees ponzi at play
New Delhi: A bizarre investment scheme has come under market watchdog Sebi's scanner, wherein hundreds of crores have been raised through public deposits for purchase of cattles with a promise of more than doubling the money through returns linked to the ghee produced by them.
As per the latest financial details accessed by Sebi, the scheme named 'Cattles & Ghee' had mobilised a total amount of Rs 745 crore as on March 31, 2011. Further funds could have been garnered from the depositors since then.
Fearing a 'Collective Investment Scheme (CIS)' being run without its approval, Sebi began probing the case after receiving investor complaints but its show-cause notices sent to many directors of the company operating this scheme has remained undelivered for many months.
The latest summons in this case were issued by Sebi last month, wherein the regulator had asked the directors of this company, named HBN Diaries & Allied Ltd, to appear before it on May 29. However, the summons could not be delivered to at least three of the directors.
Emailed queries sent by PTI in this regard to the company and phone calls made to the numbers given on its website remained unanswered.
As per its website, New Delhi-based HBN claims to be in dairy business since late 90s with dairy farms in Samalkha (Haryana) and Gannaur, among other places.
However, Sebi said in its show-cause notice that the company was raising money from public depositors in the name of purchasing cattles with a promise of money getting double or even more at the time of maturity.
The company claimed to link the promised maturity amount to the expected price of cattle and ghee at that time and promised to secure the actual investment even if it was withdrawn in a month's time. The schemes were offered for periods ranging from one month to nine years.
"As per the balance sheet for the year ended March 31, 2011, an amount of Rs 745 crore is being shown under Advance from customers. The corresponding figure for the year ended March 31, 2010 were Rs 529 crore.
"The advances from customers appear to be deposits taken from customers, thus you have mobilised funds to the tune of Rs 216 crore in the year 2010-11 and have total mobilisation of Rs 745 crore," Sebi said in its notice to the company.
Sebi had issued notices last year to another company named Beetal Livestock & Farm (P) Ltd, which was collecting public money in the name of a goat-rearing scheme.
Sebi regulates CIS, which involves pooling in of money from multiple investors for a specific objective.
HBN Diaries & Allied Ltd and Beetal are not registered as CIS entities with Sebi and therefore, the investment schemes run by them are in contravention of Sebi rules.
Beetal business model involved paying a few thousands of rupees to become owner of a goat, to be reared by the company, which told the investors that as each goat gives birth to four kids a year, the new goats would be sold to other investors ? giving up to four-fold appreciation in the first year itself.
Sources say such schemes are being run across various states including Delhi, Madhya Pradesh, Haryana and Rajasthan.
After Sebi first began probing HBN case and sought information from the company, HBN first sought to register itself as a CIS entity with the regulator.
However, when Sebi sought some more details, the company shifted its address and the communications sent to it returned undelivered for some time.
At a later stage, HBN showed its disinclination towards registration as a CIS entity and started seeking more time to replying to Sebi's notices.
Sebi has found it to have violated various regulations, including those forming part of the Sebi Act and CIS Regulations, for running Collective Investment Schemes without its approval and other offences.
It had accordingly issued show-cause notices to the company and its directors as to why appropriate action should not taken taken against them.