Maxworth Orchard investors set to take over land

Maxworth Orchard investors set to take over land
SURESH P IYENGAR

MUMBAI, SEP 3: After a six-year long battle, investors of closed plantation firm Maxworth Orchards (India) Ltd can at last breath easy. The Maxworth Orchards Investor's Welfare association, formed by investors who have been running from pillar to post for recovery of their investments, has now signed an agreement with the court-appointed advisor to recover the original land sale documents and register them in the name of investors.

After establishing the ownership, physical possession of the land would be given over to the rightful owners. The association, which now charges a registration fee of Rs 810 per member, has already enrolled over 5,700 members. Like many other bogus plantation companies, Maxworth had managed to sell their expensive dreams to gullible investors in the form of fixed deposit and equity issues and walked away with over Rs 160 crore from the market in 1994. Like today's infotech public issues, plantation companies like Maxworth sold their schemes like hot cakes and investors put their hard earned money without realising that such projects would never take off. Many employees had invested their retirement benefits with a dream to own an orchard in Nagpur or a vineyard in Nashik. The company sold trees and land as a kind of equity like the IPOs (initial public offerings). The difference is that instead of equity shares, investors would have held trees and land.

Lured by the Chennai-based company's promise of alloting an acre or so of land to all the investors, the Western region alone - comprising Mumbai, Pune, Nagpur, Nashik, Goa, Ahmedabad, Raipur and Baroda - had invested over Rs 60 crore. The investors' dreams were shattered after the company's expensive plans came to the implementation stage. "We realised very late that the company mismanaged our funds. The company management squandered away our money... even money was siphoned away for private use of promoters. This is not restricted to Maxworth alone. Investors of hundreds of other plantation companies are facing a similar dilemma,'' said J Crasto, an investor who put nearly Rs 2 lakh in Maxworth.

After possession of the land from the promoters, the association is planning to form co-operatives for collective farming ventures with modern scientific methods, thus providing employment for rural masses and generating agro revenues. However, one would have to wait and see how successfull this move would be. "We simply fail to understand how the Sebi or the Department of Company Affairs is allowing such companies to enter the market. We have now put the Sebi along with the promoters as defendants in the case filed in the law of court," said Dinkar Mehta, who is leading the association's fight against the company. The association now has 5700 members from the Western region alone, out of which Mumbai alone contributes a good 3,772 members followed by Ahmedabad 918, Pune 558, Goa 119, Baroda 109, Bhopal 113. As many as 40 projects of the company are spread all over the Maharashtra state alone.

"Several important documents are still locked up in the company's regional manager's office in Pune. Attempts by the association to break open the lockers failed as the building society where the office is located refused to give access to the locker claiming that Maxworth has to pay huge dues. But even then the society has agreed to co-operate," said Mehta.

R Subramanium, managing director and chairman of the company, owned 66 per cent of the company's equity stake while the rest was with other directors and public. Even after the trouble started, the company came out with a public issue and mopped up another Rs 12 crore in 1996. While the Maxworth scam is in the court, investors would be satisfied with at least recovery of land.

Over 100 such plantation companies were floated by shady promoters, promising huge returns. While they collected over Rs 2,500 crore -- the maximum being Golden Forest of Chandigarh which collected over Rs 1,000 crore -- the funds were misused and diverted for other purposes like real estate and stock market investment. The government also failed in bringing such companies under prudential regulation at the right time. Sebi came into the picture much later and closed their doors, but the horses had fled by that time.