A bizarre investment scheme has come under market regulator SEBI’s scanner. Hundreds of crores of rupees have been raised from the public for purchase of cattle, with the promise of more than doubling the money by selling ghee from milk produced by them.
According to the latest financial details accessed by SEBI, the scheme — ‘Cattle & Ghee’ — had mobilised Rs 745 crore as on March 31, 2011. Further funds could have been garnered from depositors since then.
Suspecting that a ‘collective investment scheme (CIS)’ was being run without its approval, SEBI began probing the case after receiving investor complaints but its show-cause notices sent to many directors of the company operating the scheme have remained undelivered for many months.
The latest summons were issued by SEBI last month, and the regulator had asked directors of the company, HBN Dairies & Allied Ltd, to appear before it on May 29. However, the summons could not be delivered to at least three of the directors.
However, SEBI said in its show-cause notice that the company was raising money from public depositors in the name of purchasing cattle with a promise of doubling their money at the time of maturity.
The company claimed to link the assured maturity amount to the expected price of cattle and ghee at that time. The schemes were offered for periods ranging from one month to nine years.
“Based on the balance sheet for the year ended March 31, 2011, an amount of Rs 745 crore is being shown under ‘advance from customers’. The corresponding figure for the year ended March 31, 2010 was Rs 529 crore. Advances from customers appear to be deposits taken from customers; thus you have mobilised funds of Rs 216 crore in the year 2010-11 and have total mobilisation of Rs 745 crore,” SEBI said in its notice to the company.
SEBI had issued notices last year to another company named Beetal Livestock & Farm Ltd, which was collecting public money in the name of a goat-rearing scheme. SEBI regulates CIS, which involve pooling of money from multiple investors for a specific objective.
HBN Dairies & Allied Ltd and Beetal are not registered as CIS entities with SEBI and, therefore, the investment schemes run by them are in contravention of SEBI rules.
The Beetal business model involved customers paying a few thousand rupees to become the owner of a goat, to be reared by the company, which told investors that as each goat gives birth to four kids a year, the new goats would be sold to other investors — yielding up to a four-fold appreciation, even in the first year.
Sources say such schemes are being run across various States, including Delhi, Madhya Pradesh, Haryana and Rajasthan.