Anubhav Agrotech Anubhav Green Farms & Resorts Anubhav Plantations Anubhav Royal Orchards Exports
Anubhav Plantations was an Indian Chennai-based plantation company founded in 1992.[1] It sold shares in teakplantations on guaranteed interests and later diversified to other schemes through four principal companies: Anubhav Agrotech, Anubhav Green Farms & Resorts, Anubhav Plantations, and Anubhav Royal Orchards Exports.[2]
The company suddenly closed down in 1998 when it could no longer pay its depositors, leaving its thousands of investors in the lurch and unpaid. Its chairman, C. Natesan, went underground and the other directors claimed ignorance and innocence.[3] The incident became a major financial scandal in India. The company was subsequently revealed to have been a scam based on fraud, as teak, being an agriculture-based commodity, could not promise sure returns. Anubhav was found to have defrauded its depositors of nearly ₹400 crore (equivalent to ₹18billion,US$220million or €220million in 2023) through Ponzi schemes.[4] The Anubhav case is often termed by the Indian media as "The Great Plantation Scam of the 1990s".[5]
History
The Anubhav group of companies was founded by C. Natesan, a commerce graduate from Chennai's Vivekananda College and a chartered accountancy course dropout. Natesan started his career in 1983 by launching a consultancy firm called Yours Faithfully Consultancy. In 1984, he started a construction company with three partners. Three years later, in 1987, he closed this venture and set up the Anubhav Foundation, which became the mother company of his future enterprises.[6]
Formation
In 1991, as part of its post-liberalization process, the Indian government allowed firms within India to be formed as financial entities. Investment in agricultural commodities, which previously had only been permitted to the National Bank for Agriculture and Rural Development (NABARD), was opened up to the private sector. In this environment, Anubhav Plantations Ltd. (Anubhav) was floated by Natesan as a listed public limited company in 1992. Over the next six years, the Anubhav umbrella expanded to include various other companies including Anubhav Homes Ltd., Anubhav Resorts Ltd., Anubhav Finance & Investments, Anubhav Communications & Advertising (Pvt.) Ltd., Anubhav Royal Orchards & Exports, Anubhav Hire Purchase Ltd., Anubhav Green Farms & Resorts (Pvt.) Ltd., Anubhav Agro, Anubhav Security Bureau, Anubhav Interiors and Anubhav Health Club. Under these companies, the Anubhav group owned and operated 254 finance firms, including 95 firms of Anubhav finance investments, 169 firms of Anubhav dhan varsha and one firm each of Anubhav Agro and housing developers. Furthermore, the plantation companies themselves had several companies under them. For example, Anubhav plantation had six companies operating under it, including Anubhav Good Earth Unit II, Anubhav Teak Deposit and Anubhav India Limited.[7]
By 1998, Anubhav group was worth ₹250 crore (US$30million), and, apart from its teak-plantation schemes, was involved in other enterprises including finance, real estate and timeshare – a popular enterprise in the recently liberalized Indian economy of the 1990s. These companies were well-structured and backed by a nationwide infrastructure of 91 offices and over 1,800 employees. This included a young, aggressive and highly effective sales force.[8]
Modus operandi
Anubhav investors were offered teak certificates or teak shares for investing anything upwards of ₹1,000 (US$12). These investments were marketed under different confusing and complicated schemes that started to give returns each year of ₹1000 and bumper returns after 20 years to the tune of ₹50,000 (US$600). While NABARD stated that only ₹20–30 was actually required to plant a teak tree, plantation firms such as Anubhav justified their charging nearly ten times this amount by including costs for security de-weeding and fertilisers. Further, Anubhav inflated the expected yield of timber by nearly twenty times the standard that had been generally observed by previous NABARD studies. In return, a teak plant would be planted on their behalf, which could be sold 20 years later. During these 20 years, the certificate would yield around 20% interest for the depositor, yielding returns of around ₹50,000 after 20 years. This was nearly triple the return offered by bank deposits.[2] The company claimed that it owned teak plantations spread over 1,000 acres (400 hectares) of land, and floated attractive advertisements and plush offices, thus encouraging confidence among investors.[9]
Anubhav was not the first group to do this. During the early 1990s, teak plantations mushroomed in southern India, with 40 such companies registered in Madras and eight in Bangalore from January to September 1992. Most of these companies did not have adequate crop insurance and none of them were able to live up to their promises. All of them had skewed capital structures. The first attempt to promote private investment in teak plantations occurred in 1991, when a Hyderabad-based company, Sanghi Plantations, introduced a scheme offering investors teak trees at a nominal cost of ₹1,261 with what later turned out to be an unrealistic return of ₹50,000 after 20 years.[10] Teak plantations typically take 50–60 years before yielding returns and are extremely susceptible to weather and the subtleties of the agricultural industry. They have rarely given dependable returns in India.[11] However, in the light of general ignorance on the part of most laypeople, Anubhav entered this foray of marketing lucrative teak plantation schemes along with companies such as the Parasrampuria group, DSJ group and the Cochin-based "Sterling Tree Magnum", all of whom promised similarly large yet unrealistic returns.[12] After the 1998 scam and subsequent investigations, CRISIL subsequently reported that on average, these teak plantation companies collectively had a promoter's contribution of just ₹35 lakh (US$42,000) for every investor's share of ₹300 crore.[13]
Meanwhile, in interviews and announcements in news papers, Natesan unveiled future plans to forward-integrate from teak into furniture and to import machinery to make it. This led to a further increase in small investors. However, his growth strategy was focused mainly on mobilizing funds from investors rather than actually investing in plantations, plants, land and factories. The group had already raised vast sums of money to the tune of more than 400 crore rupees from the public in the form of fixed deposits, so-called "teak units", and a combination of fixed deposits and teak units. Natesan was extremely secretive about the financial performance of his group and this was never revealed to investors, who were happy as long as they received regular interest payments.[4][14] Subsequent examinations of the company's accounts revealed that it was posting far higher incomes than its real profits. For example, in 1996–97, the company posted a net profit of ₹38.69 lakh (₹3,869,000) while its plantation income amounted to ₹35.32 crore (₹353,200,000).[15] A total of nearly 3,500 teak plantation-based companies were set up in the 1990s in India, all promising interests to the tune of 21–24% when bank deposits gave an interest of just 5–7%.[2]
During its height in the mid-1990s, the Anubhav group was often described by the media as an example of a successful company (thus becoming a role model for about 530 other teak- and agro-based companies listed by SEBI that arose during that time and also subsequently defaulted, including Ballarshah teak plantations).[15] The media also portrayed a larger-than-life image of Natesan himself. An ambitious man, Natesan's ostentatious lifestyle, his cars, and his plush office in Chennai's up-market Royapettah area were frequently cited by the media as examples of his lavish tastes. Natesan had also associated his company with the World Wildlife Fund (WWF), thus garnering a positive image for his company.[16]
Scam of 1998
In January 1998, cheques issued by Anubhav to its investors began to bounce. Some investors reported that other than the first two payments, all the cheques had bounced. Most of these investors were middle class and retired Indian working-class people who had invested their savings in Anubhav. Their amounts varied between ₹15,000 and ₹50,000 per person.[17] They included Indians from large commercial centers such as Mumbai as well as smaller cities and towns such as Pune, Shimla, Trichy and Sangli. On 2 December 1998, a letter was sent to all the investors of Anubhav group to come to the Woodlands hotel in Chennai to receive their long-due payments. When some of the investors landed at Anubhav's offices in Royapettah, they were met with locked doors. The company had closed down, with Natesan absconding.[4][14]
Some of these small investors were themselves on the brink of bankruptcy, having invested their life savings in the Anubhav group and its schemes. The letter that they had received had actually been sent by an advocate from a law firm that was following up the Anubhav group in response to court cases that had been filed against it. The letter invited them to come and check all the records and the balance sheet of the company. The event was covered by newspapers who reported that "...investors could be seen everywhere - sitting on the pavements, standing around the building, walking up and down the roads - all of them tense and worried."[18]
Many depositors who went to the group's offices in Chennai and other cities to collect their deposit amount after maturity found the doors locked, and so lodged complaints with the police. Later, thousands of investors demonstrated in front of the company's headquarters in Chennai; however, by then, the main accused, Natesan, had already gone underground.[9]
Aftermath
Anubhav was eventually found to have duped investors and depositors of over ₹400 crore. As details about what became known as the "Great Plantation Scam of the 1990s" began to be unveiled in the media, and it turned out to be a Ponzi scheme, Natesan's modus operandi shocked those who had held the Anubhav group in high regard.[18]
A government enquiry was subsequently launched into the Anubhav group. Its investigations revealed that the company had defrauded its investors through various plantation schemes, paying initial interests to old investors by simply channeling them from new investments by new investors.[4] A liquidator, M. Ravindran, was appointed by the Madras High Court to try and repay its depositors at least in part.[15] A number of investors formed their own city-based support and action groups to send in their claims, once such group being "The Pune Anubhav Investors' Action Committee (PAIAC)", formed by the 750-odd depositors of Pune who had collectively deposited ₹6 crore.[18]
Natesan, the chairman and managing director of the Anubhav Group of Companies, was subsequently caught by the police and placed in judicial custody, while the filing of the final chargesheet in his criminal case (No. 20501 of 1999) was delayed. The Madras High Court meanwhile issued a non-bailable warrant against S. Shreenivas Rao, one of the directors of the Anubhav Group of Companies. Rao had earlier moved court, requesting that the non-bailable warrant issued by additional chief metropolitan magistrate in Chennai be recalled, as he was director of Anubhav Agrotech and had nothing to do with Anubhav Plantations Ltd.[18] In its proceedings, the High Court observed that Anubhav Agrotech Ltd. was one among the Anubhav Group, which, in January 1999, became Anubhav Agro Developers. The court observed that there was proof that Anubhav Plantation funds were diverted.[2]
The Anubhav teak plantation scam (often simply referred to as "The Teak Plantations Scam of the 1990s") is often included in the list of scams that occurred in post-liberalized India in the 1990s and has been called "The Great Plantation Scam of the 1990s". However, plantation-related frauds continue to occur in the country, with unsuspecting people lured by promises of high interests. A more recent case, that of Timber World Resorts and Plantations Ltd., which had been launched by a catering college graduate Ashwani Sud from Delhi, turned out to be a similar scam in 2009.[19] Similarly, in 2012, hundreds of Gujaratis lost their money in a similar tree-plantation scam floated by the Ellisbridge (Ahmedabad)-based company "Golden Trees Plantation Ltd."[20]
While the first to be unearthed, the Anubhav scam was not the largest agro-based scam in India. As per the SEBI, in the subsequent Pearls Agrotech scam, Pearls Agrotech Corporation Limited (PACL) collected ₹49,100 crore (US$5.9billion) from 5.85 crore (58,500,000) customers over 15 years by offering ambiguous investments linked to agricultural land and its development over a certain period of time.[9]
After seven years of judicial custody, Natesan was released on bail in 2007. Of the ₹1,071,233,696 (US$13million) invested by small investors, the company ultimately refunded ₹1,004,464,461 (US$12million) to 31,431 depositors. About ₹7 crore (US$838,732) has still not been refunded to 2,044 depositors.[21]
Related Research Articles
The Securities and Exchange Board of India (SEBI) is the regulatory body for securities and commodity market in India under the administrative domain of Ministry of Finance within the Government of India. It was established on 12 April 1988 as an executive body and was given statutory powers on 30 January 1992 through the SEBI Act, 1992.
BSE Limited, also known as the Bombay Stock Exchange (BSE), is an Indian stock exchange which is located on Dalal Street, known as the Wall Street of Mumbai, in turn described as the New York of India. Established in 1875 by cotton merchant Premchand Roychand, it is the oldest stock exchange in Asia, and also the tenth oldest in the world. The BSE is the world's 7th largest stock exchange with a market capitalization exceeding US$5 trillion as of May 2024.
National Stock Exchange of India Limited (NSE) is one of the leading stock exchanges in India, based in Mumbai. NSE is under the ownership of various financial institutions such as banks and insurance companies. It is the world's largest derivatives exchange by number of contracts traded and the third largest in cash equities by number of trades for the calendar year 2022. It is the 8th largest stock exchange in the world by total market capitalization, as of May 2024. NSE's flagship index, the NIFTY 50, is a 50 stock index that is used extensively by investors in India and around the world as a barometer of the Indian capital market. The NIFTY 50 index was launched in 1996 by NSE.
Sahara India Pariwar is an Indian conglomerate headquartered in Lucknow, Uttar Pradesh, India. The group operates business sectors such as finance, infrastructure & housing, real estate, sports, power, manufacturing, media & entertainment, health care, life insurance, educational institute, offline online education (edunguru), retail, E-commerce, electrical vehicle, hospital, artificial intelligence, hospitality, and co-operative society. The group has been a major promoter of sports in India and was the title sponsor of the Indian national cricket team, Indian national hockey team and Bangladesh national cricket team, Force India Formula One team among many other sports.
The Madras Stock Exchange (MSE) was a stock exchange in Chennai, India. The now defunct MSE was the fourth stock exchange to be established in the country and the first in South India. It had a turnover (2001) of ₹ 3,090 crore, but was a fraction of the turnover generated by the Bombay Stock Exchange and National Stock Exchange of India. The turnover of the stock exchange was 19,907 Crore as of the financial year 2012.
Yes Bank is an Indian private sector bank founded by Rana Kapoor and Ashok Kapoor. It is headquartered in Mumbai, catering to retail customers, MSMEs, and corporate clients. Its network is spread across 300 districts in India and comprises 1,198 branches, 193 BCBOs and 1,287+ ATMs.
The first introduction of a mutual fund in India occurred in 1963, when the Government of India launched the Unit Trust of India (UTI). Mutual funds are broadly categorised into three segments: equity funds, hybrid funds, and debt funds.
IIFL Finance Limited d/b/a IIFL and India Infoline Finance Limited, is an Indian diversified financial services company headquartered in Mumbai. The organisation was founded by Nirmal Jain. IIFL and its group companies are backed by Canadian investor Prem Watsa, private equity firm General Atlantic and CDC Group, the UK Government's private equity arm. IIFL is ranked among the top seven financial conglomerates in India and as the top independent financial services firm in India in terms of market capitalisation. Nirmal Jain is the chairman of the group, while R Venkataraman is the group managing director and co-promoter.
The Saradha Group financial scandal was a major political scandal caused by the collapse of a Ponzi scheme run by Saradha Group, a consortium of over 200 private companies that was believed to be running collective investment schemes popularly but incorrectly referred to as chit funds in Eastern India.
Sai Prasad Corporation Ltd . (SPCL), is an Indian real estate developer headquartered in Pune. It is engaged in the business of construction, energy, food, media, townships, housing projects, commercial premises and other related activities. The company is also engaged in processed foods, agro-products and farms, finance, media, infrastructure, energy and property projects. It is primarily focused on residential and contractual projects.
Dr Kanwar Deep Singh, also known as K. D. Singh, is an Indian businessman turned politician and Member of Parliament (MP), Rajya Sabha representing the All India Trinamool Congress, but first elected to the Indian parliament as a nominee of the Jharkhand Mukti Morcha. He is the founder and the former chairman of the Indian business group called Turbo Industries, whose name was changed and rebranded as the Alchemist Group in 2004. He was elected to lead the Indian Hockey Federation (IHF) between 2013 and 2014.
National Spot Exchange Limited (NSEL) case relates to a payment default at the National Spot Exchange Limited that occurred in 2013 involving Financial Technologies India Ltd, when a payment default took place after a commodities market regulator, the Forward Markets Commission (FMC), directed NSEL to stop launching contracts. This led to the closure of the Exchange in July 2013.
The Sahara -SEBI case is the case of the issuance of Optionally Fully Convertible Debentures issued by the two companies of Sahara India Pariwar to which Securities and Exchange Board of India had claimed its jurisdiction and objected on why Sahara has not taken permission from it.
Madhavpura Mercantile Cooperative Bank (MMCB) was a Gujarat-based interstate cooperative bank that became defunct and lost its licence after it was unable to pay back the money it owed public depositors. Reserve Bank of India cancelled its licence in June 2012 under section 22 of the Banking regulations Act, 1949.
Karvy Group is a financial services company in India. It was involved in financial services like equity, commodities trading, depository and wealth services and distribution of other financial products. It has its headquarters in Hyderabad. It also had branch offices outside India in Bahrain, Dubai, Malaysia, Philippines and the United States.
Alchemist Group is an Indian conglomerate which has a presence in multiple sectors, including healthcare, pharmaceuticals, food-processing, real estate, infrastructure and tea estates. It was founded by businessman turned politician K.D. Singh. The flagship company of Alchemist Group – Alchemist Limited is a publicly traded at NSE & BSE. Multiple central and state government agencies in India including SEBI has barred many companies of Alchemist group for multiple violations. Securities Appellate Tribunal had earlier ordered Alchemist group to comply with SEBI orders that had asked the company to refund an estimated Rs 1,000 crore collected from public through unauthorised collective investment schemes (CIS). On August 7, 2015, Alchemist Capital was told to refund 165 crore with 15% interest for issuing 16.52 crore RPS of Rs 10 each amounting to Rs 165.21 crore up.
The Adarsh Credit Co-operative Society (ACCS) is a Ponzi scheme fraudulently registered under the MSCS Act w.e.f. 1986. It opened in 1999, primarily to bluff the public in Rajasthan, and all money has been siphoned off by the family members of the owners to buy properties and dupe investors of funds worth Rs. 8,000 Crore.
I Monetary Advisory (IMA) was an Indian investment company, with headquarters in Bangalore. Its collapse was one in a long line of similar collapses over the preceding few years, of companies purporting to be Islamic banking companies, with investors in India and the United Arab Emirates, that investigating authorities afterwards stated to have been Ponzi schemes, including: Heera Group; Morgenall, Capital Plus, and Capital Infrastructure ; Injaz International, Ajmera, Aleef, Aala Ventures, Ambidant, and Burraqh; and Sunfeast Infotech, SpeakAsia, MMA Forex, Gold AE, Ferryland Tourism, UT Markets and Exential Group. Total losses to investors over 14 such companies have been conservatively estimated at ₹5,000 crore (US$600 million) with the loss due to IMA alone estimated at ₹2,500 crore (US$300 million)
References
↑ Aiyar, VS (2 November 1998). "Now a Green Scam". India Today.
1 2 3 "Press release by SEBI - 31 October 2003. Status of Collective Investment Schemes (CIS) and List of defaulters". www.watchoutinvestors.com. SEBI - Securities and Exchange Board of India.{{cite web}}: Missing or empty |url= (help)
↑ Jain, A (24 August 1998). "Finance company officials disappear after fraud". Hindustan Times.
This page is based on this Wikipedia article Text is available under the CC BY-SA 4.0 license; additional terms may apply. Images, videos and audio are available under their respective licenses.
