Sebi cracks whip on new 'cattle and goat farms' scheme
http://articles.economictimes.indiatimes.com/2013-10-31/news/43561376_1_beetal-livestock-sebi-today-sebi-probe
(In a fresh crackdown on fraudulent…)
MUMBAI: In a fresh crackdown on fraudulent investment schemes promising huge returns from 'cattle and goat farms', Sebi today barred their operators from raising funds from such schemes and began further proceedings.
The company Samruddha Jeevan Foods India Ltd as well as its promoters and directors have also been asked to submit full details of assets owned by them through investor money and not to divert any funds or dispose any properties.
The crackdown against Samruddha group follows actions by the capital markets watchdog against similar schemes launched by at least two other entities HBN Dairies and Beetal Livestock, which were found to be raising money through unauthorised schemes with returns linked to 'cattle and ghee investments' and 'goat-rearing business', respectively.
Asking Samruddha and its three directors to reply within 15 days, Sebi said in an order that it began investigating the case after receipt of complaints about the company agents promising "more than 12 per cent fixed returns and other unusual returns on investments in cattle and goat farms".
Subsequently, Sebi had sought details from the company, which submitted that it was engaged in the business of "trading in livestock and other allied products, the consideration for which is received either in installments or one-time (payment) at the option of the buyer".
Meanwhile, Sebi also received a reference from the Economic Offences Cell, CID Panaji (Goa) regarding an inquiry into activities of Samruddha, wherein it was found to be operating a cumulative investment scheme with the concept of livestock buying, rearing and paying the returns.
Besides, a CBI investigation also found that the company had a livestock of only 16,876 as against a total of 6,48,406 customers, which indicated that it was not buying cattle against every deposit made by the investors.
Sebi probe further found that the company was collecting money from the public in order to carry out the business of "purchase and rearing of goats/buffaloes' and also of sheep farming. Under its various schemes, the company was offering to double the money in five and half years, while also promising an amount equivalent to 1.5 times of the contract value as 'accidental death help'.
Its financial statements showed that 'advance from customers' in fiscal year 2011-12 stood at over Rs 331 crore, at over Rs 163 crore in 2010-11 and Rs 36 crore in 2009-10.
It spent over Rs 56 crore towards 'advertisement and sales promotion (including commission)' in 2011-12, Rs 39.5 crore in 2010-11 and Rs 22 crore in 2009-10.
There were also several fund transfers between group companies and Sebi's probe found that the company was running illegitimate collective investment schemes.
"The protection of interest of investors is the first and foremost mandate of Sebi and therefore, steps have to be taken in the instant matter to ensure that only legitimate schemes are carried on by Samruddha Jeevan Foods India Ltd and no investors are defrauded," Sebi said in its order
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