According to Sebi, all the ratings assigned so far by the rating agencies to collective investment schemes were in the lowest rating category and the investors should note that the chances of default in these schemes were extremely high.

``It has come to our notice that some companies operating collective investment schemes are attempting to down play the importance of the ratings assigned to them and are questioning the methodology and the rationale for these ratings,'' Sebi said and cautioned the investors not to let their investment decisions be influenced by any misinformation received from non-authentic sources.

Sebi said plantation companies which rated their schemes got only Grade V rating, indicating high chances of default. Many companies are yet to go in forrating even though it is mandatory to get a credit rating for mobilisation of funds.

Among the 21 companies which got Grade V rating are: Swaranbhoomi Forests (Ind), Rose Valley Resorts and Plantations, Timber World Resorts and Plantations, Sparrow Agro Forests, Mahakaushal Plantations, Goldenland Development and UP Forest Plantations.

Other companies which got the Grade V rating are: Hariyali Plantations, LA Markfarms Ltd, Shivaji Estate and Livestocks Farms, Rajamudra Agrotech, Enbee Plantations, Maruti Krishi Udyog Ind, Southern Horticulture and Rubber Plantations, Supreme Forests Ind, Assured Agro Park, Mehna Plantations, Sonali Agro Ind and Resorts and Nisarga Forests Ind.

Duff and Phelps India which gave a Grade V rating for the Rs 14.9 crore collective investment scheme of Mehna Plantations Pvt Ltd, said the rating indicates high risk non-investment grade and poor ability to meet the stated obliteration to investors on time. ``The scheme can be expected to default on its stated obligations,'' itsaid.

The total amount collected by Mehna till February 1998 under its various scheme is Rs 14.9 crore against which the total liability is around Rs 182 crore. Mehna also carries a high financial risk on account of low level of capitalisation and greater reliance on funds from the investor to meet the repayment obligations in the short and medium term.

While giving the Grade V rating to Sonali Agro Industries & Resorts Ltd, Duff & Phelps said in view of the uncertainty linked to the cash flow emanating from the vagaries of climatic conditions coupled with insurance on the crops not adequately covering the investments, the financial risk associated with scheme is very high.

ICRA, another rating agency, said Assured Agro Park's current operations will not be in a position to generate adequate cash flows to meet its promised returns. ``As on date there is no activity on the 45 acres of the acquired land. Majority of the funds raised by the company for development of its Panchvati project is for durationof 1-2 years and repayment for these would be due in next two years,'' it said.

The rating of collective investment schemes were made mandatory following the government move to regulate the plantation business. Many of the plantation companies rushed to the rating agencies because they cannot continue in business without getting the rating. Now after getting the rating also they are not likely to get public deposits because of low level of rating assigned by credit rating agencies. Rating agencies which came under severe criticism following the CRB debacle and default by finance companies have been very selective in giving good rating to the risky schemes.