23 plantation cos told to wind up

23 plantation cos told to wind up
EEB & PTI

MUMBAI, DECEMBER 15: The Securities & Exchange Board of India (Sebi) on Wednesday ordered 23 plantation companies which have mobilised approximately Rs 2,050 crore but failed to register with it to wind up their collective investment schemes and repay their existing investors.

"These entities have been asked to send an information memorandum to their investors detailing the affairs of the scheme, the amount repayable to each investor and the manner in which such amount is determined," Sebi chairman DR Mehta told newspersons here.

Following an internal meeting at which the decision was taken, he said: "We are making efforts to see that the investors are repaid." He noted that 14 applications were received from entities which had earlier filed information with Sebi and had raised approximately Rs 225 crore. Another 10 entities, which had reportedly raised about Rs 24 crore, have approached Sebi with a view to wind up their schemes and repay their investors.

Meanwhile, he said, another four such entities(accounting for Rs 24 crore of mobilisations) had been directed by various high courts to initiate steps for winding up/repayment to the investors. As on September 1, 1999, 127 entities have replied that they have made a repayment of about Rs 185 crore to the investors, he added.

SEBI is planning to take severe action against around 690 plantation companies which have failed to register with the market regulator. Sebi has called a meeting of officials from across the country to assess the situation and get a clear picture about the unregistered companies.

Only 10 out of 700 plantations schemes have applied to the SEBI for registration till Tuesday, the last date while the rest are absconding. The schemes that have not got themselves registered would have to wind up as per SEBI regulations. ``Investors can kiss their money goodbye as there is no hope that they will get back their funds,'' said a Sebi official.

With this, the Rs 2,500 crore collective investment scheme industry is on the verge ofcollapsing. The SEBI norms were notified on October 15. The regulator had earlier said all such schemes should be registered with the SEBI within two months of the notification. As per the SEBI regulations, December 14 was the last date for registering with the SEBI. SEBI officials said not more than 10 schemes, mostly small companies, had applied for registration.

As Sebi's guidelines have asked for appraisals from Credit rating agencies for plantation companies, very few companies managed to pass the rating test and failed to comply with Sebi's regulations.

While SEBI officials have put money mobilised by plantation schemes at Rs 2,500 crore, various investor bodies like Investor Grievances Forum has estimated that over Rs 10,000 crore has been collected from investors. A Chandigarh-based plantation company called Golden Forest had collected over Rs 1,000 crore from investors. This company, which dragged SEBI to the court questioning its powers, stopped repaying investors almost two years ago.

In thenext meeting, the Sebi will take a decision on the steps to ensure that all the funds raised by these schemes are returned to investors. "We will get a final figure after the meeting. Action against the schemes that have not got themselves registered will be discussed shortly,'' says a Sebi official.

``As per the guideline, they have to wind up their schemes and pay off investors. However,an action plan against those who refuse to follow these provision will be formulated shortly,'' officials add.