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28727159 anubhav-plantation-scam

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Vatsal Chauhan
Vatsal Chauhan

The document summarizes the Anubhav Plantation Scam which was established in 1992 by C.Natesan and consisted of 11 companies. Natesan's main growth strategy was mobilizing funds from investors for teak plantation projects, but problems arose in 1996-1997 as the company's liabilities exceeded assets and loans amounted to Rs. 25 cr. Investigations later found that Natesan had inflated returns and the costs of planting teak trees, committing fraud against investors. The scandal highlighted the need for mandatory regulation of plantation companies.

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Anubhav Plantation Scam Presented By: Ankush Shinde Jithish Rajan
Introduction ? C.Natesan is the chairman of the Anubhav group. ? Established in the year 1992. ? Anubhav group of companies consisted eleven companies Anubhav house , Anubhav communication, Anubhav finance, Anubhav resorts etc.. ? Anubhav was present nationwide with infrastructure of 91 offices and over 1800 employees.
About Natesan ? Was a commerce graduate from Chennai and CA dropout. ? Started his career in 1983 by starting the consultancy firm ?Yours Faithfully Consultancy.? ? In 1984 he entered into constriction business with 3 partners.
Growth Strategy ? Natesan had plans to forward integration from teak into furniture. ? However his main growth strategy was mobilizing funds from investors. ? The group raised money from public in the form of fixed deposit, teak units and combination of both. ? Natesan was associated with World Wide fund for Nature (WWF).
Growth strategy (contd..) ? He used to deal with land at the lower cost and hence charging the investors at higher rate.
Problems ? In 1996-97 plantation income was amounted to 38 cr but net profit was 38 lakh. ? Anubhavs current liabilities exceeded its currents assets by 6.40 crores. ? The company paid up capital was 36 lakh while their borrowing was amounted by 2.64 cr. ? Loans advances amounted to Rs 25 cr.
Contd.. ? In October 1998 admitted that Anubhav had serious liquidity problem. ? Natesan blamed SEBI and rating agency for Anubhav problems. ? Investors filed complaint against Anubhav group in mid 1999. ? CRISIL found out that on an average 35 lakh was contributed from the promoters side and more than 300 cr from the investors.
Contd? ? NABARD found out that the teak trees that were sold by the plantation companies were at Rs 1500- 2000, it was normally costed at Rs 10-15 higher. ? Maharashtra Revenue and Forest Department (MRFD) found that for plantation of these trees costed only Rs 400. ? Natesan projected the return on investment was seven times more than actually it was.
Contd? ? Analyst analyzed that even if one uses quality soil the timber yield of the trees with a girth of 60 cm and above in 15 years would be about 5.1 cubic feet per tree. ? Natesan disagreed with the above statement. ? Plantation companies predicted there will be same or marginally higher than the current price. ? These claim was refuted by experts.
? Plantation companies procedures were also flawed. ? SEBI was invited by the ministry of finance to work out mandatory regulation for these companies.
Conclusion ? Before investing in any business an investor should always go through the company reports. ? An investor should not invest in the company by seeing its popularity but by proper investigation of the records. ? There should be transparency of the information.

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28727159 anubhav-plantation-scam

  • 1. Anubhav Plantation Scam Presented By: Ankush Shinde Jithish Rajan
  • 2. Introduction ? C.Natesan is the chairman of the Anubhav group. ? Established in the year 1992. ? Anubhav group of companies consisted eleven companies Anubhav house , Anubhav communication, Anubhav finance, Anubhav resorts etc.. ? Anubhav was present nationwide with infrastructure of 91 offices and over 1800 employees.
  • 3. About Natesan ? Was a commerce graduate from Chennai and CA dropout. ? Started his career in 1983 by starting the consultancy firm ?Yours Faithfully Consultancy.? ? In 1984 he entered into constriction business with 3 partners.
  • 4. Growth Strategy ? Natesan had plans to forward integration from teak into furniture. ? However his main growth strategy was mobilizing funds from investors. ? The group raised money from public in the form of fixed deposit, teak units and combination of both. ? Natesan was associated with World Wide fund for Nature (WWF).
  • 5. Growth strategy (contd..) ? He used to deal with land at the lower cost and hence charging the investors at higher rate.
  • 6. Problems ? In 1996-97 plantation income was amounted to 38 cr but net profit was 38 lakh. ? Anubhavs current liabilities exceeded its currents assets by 6.40 crores. ? The company paid up capital was 36 lakh while their borrowing was amounted by 2.64 cr. ? Loans advances amounted to Rs 25 cr.
  • 7. Contd.. ? In October 1998 admitted that Anubhav had serious liquidity problem. ? Natesan blamed SEBI and rating agency for Anubhav problems. ? Investors filed complaint against Anubhav group in mid 1999. ? CRISIL found out that on an average 35 lakh was contributed from the promoters side and more than 300 cr from the investors.
  • 8. Contd? ? NABARD found out that the teak trees that were sold by the plantation companies were at Rs 1500- 2000, it was normally costed at Rs 10-15 higher. ? Maharashtra Revenue and Forest Department (MRFD) found that for plantation of these trees costed only Rs 400. ? Natesan projected the return on investment was seven times more than actually it was.
  • 9. Contd? ? Analyst analyzed that even if one uses quality soil the timber yield of the trees with a girth of 60 cm and above in 15 years would be about 5.1 cubic feet per tree. ? Natesan disagreed with the above statement. ? Plantation companies predicted there will be same or marginally higher than the current price. ? These claim was refuted by experts.
  • 10. ? Plantation companies procedures were also flawed. ? SEBI was invited by the ministry of finance to work out mandatory regulation for these companies.
  • 11. Conclusion ? Before investing in any business an investor should always go through the company reports. ? An investor should not invest in the company by seeing its popularity but by proper investigation of the records. ? There should be transparency of the information.