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Tina Edwin
NEW DELHI, Aug 25: The Securities and Exchange Board of India (Sebi) has asked Department of Company Affairs (DCA) to prosecute eight plantation companies for conducting activities in contravention of the Companies Act. This is the first instance of the market regulator approaching the Department of Company Affairs for taking the plantation companies to task.
In a communication to the Department of Company Affairs on Monday, Sebi has requested prosecution of Southern Horticulture & Rubber Plantation Company Ltd, Green Country Agro Foods Ltd, Phenomenal Investment Plantation Ltd, Endowment Investment India Ltd, Shivaji Estate and Livestock Farms Ltd, Enbee Plantations Ltd, Adventure Orchards Ltd and Green Agro Products Ltd for violation of various sections of the Companies Act. Official sources told The Financial Express that the Department of Company Affairs has already issued orders on Tuesday to Registrars of Companies (RoCs) and regional directors to initiate prosecution against these companies. Sources said that the government would be filing cases against the companies involved in the courts.
The Sebi request comes close on heels of reports received from independent auditors on the collective deposit schemes run by these plantation companies. The auditors, appointed by Sebi to inspect the affairs of scores of plantation companies, had reported many gross violations by these companies. The audit of many of these entities have also revealed an unsatisfactory state of financial health. Sebi has been investigating a large number of plantation companies following complaints from investors.
The board is likely to recommend more names for prosecution in future, sources said. Some plantation companies have raised amounts running into hundreds of crores from small investors promising unsually high yields on their investors. The Chandigarh-based Golden Forest, which is also facing Sebi investigation, is reported to have raised over Rs 1,000 crore.
Meanwhile, Sebi has recently released ratings of plantation companies operating in the country. Almost all the companies were found to be below investment grade, thereby implying very high risk perception. For instance, four of the companies against which action is sought to be taken - Shivaji Estate & Livestock Farms, Enbee Plantations, Southern Horticulture and Rubber Plantations and Endowment Investment - have been given grade 5 rating by various rating agencies. Additionally, the board had also issued guidelines to alert investors from falling into trap spread by such companies.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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