Speaking to The Financial Express, SA Dave, chairman of the committee, said that the panel should be able to finalise the draft report shortly. According to Dave, the critical issue is how liquidity can be provided to investors of plantation companies and how an evaluation of these schemes can be made on a continuous basis.

``Investors of plantation companies are hard pressed for liquidity whenever the need arises. On the other hand, whenever plantation companies need to give money to investors, they go in for fresh collections and this money is then used to pay off their commitments,'' added Dave, indicating that this is not a very healthy practice.

``Investments by these plantation companies are expected to provide returns only inthe long term and thus, do not generate any fresh cash flows leading to a situation where these companies pick up money from one and give it to the other. This is leading to a situation whereby no new money is being generated by investments of plantation companies,'' said Dave.

The Dave committee is currently debating whether liquidity can be provided to investors through listing of these companies on the stock exchanges. ``This is a possibility,'' said Dave.

``Sebi will be the sole regulator of collective investments schemes with all these schemes coming under the purview of Sebi,'' said Dave. There has been immense confusion about who should regulate these entities, despite the government having made it clear that it should be Sebi. This has forced Sebi to file public interest litigations in court to seek action against defaulting companies as some of these have questioned the jurisdiction of Sebi in regulating them.

Dave said that in the case of mutual funds, the real worth of assets can beascertained on a continuous basis through its net asset value (NAV) while this facility is not available in case of plantation companies.

``In order to provide continuous evaluation of performance of plantation schemes, we have appointed a committee of chartered accountants to work on the mechanism in which plantation companies can be evaluated on a continuous basis,'' said Dave.

He said that like credit rating, there is also a need to do a project appraisal of these plantation companies, as they are quite similar in structure to any other project in terms of their investments being unidirectional and illiquid.

``These companies should undergo project appraisal procedure before embarking on raising monies from the market. Just as financial institutions undertake appraisal of industrial projects, appraisal of these companies should be done on the lines of an agricultural project through bodies like NABARD and others,'' said Dave.

``Thus, with proper disclosures, credit rating of these companies inplace, and an element of project appraisal, there will be increased investor confidence and soundness of schemes,'' said Dave. Once these systems are in place, then liquidity and valuation are the most important elements in regulating these companies, he said.

``We feel that plantation companies can play a very important role in the development of Indian economy by utilising a lot of Indian wasteland and we recognise this. We will give the existing companies at least 2-3 years to comply with the new norms, procedures and guidelines,'' said Dave.

The Dave committee will release the final report once the committee working on bringing out guidelines and procedure for accounting norms has submitted its report to the Dave committee and the new norms have been incorporated.