Goats as investment cash cows: Sebi smells foul play

A company promising hefty returns on investments made for rearing goats has come under the scanner of the Securities and Exchange Board of India (Sebi) and action may be initiated against it as early as next week.

Claiming to have large goat-rearing farms in the northern parts of the country, Beetal Livestock & Farm (P) Ltd had solicited investments from the public with a promise of two per cent monthly returns, and doubling of money in three to four years.

Suspecting an unregistered Collective Investment Scheme (CIS) being run to milk investors, Sebi served show-cause notices to the company and its four directors, but these were returned undelivered.

Consequently, Sebi has now issued a public notice asking the company and its four directors to collect the show-cause notices by November 10, failing which the regulator has warned to begin ex-parte proceedings against them.

Sebi regulates CIS, which involves pooling in of money from multiple investors for a specific objective.

The company, which was not registered as a CIS entity with Sebi, had solicited investments in the goat-rearing business through newspaper advertisements a couple of years ago. The business model involved paying a few thousand rupees to own a goat, to be reared by Beetal. Investors were told that as each goat gives birth to four kids a year, the new goats would be sold to other investors — giving up to four-fold appreciation in the first year itself. The investments could give big returns in subsequent years, said Beetal, with each of the four goats giving birth to three to four kids the following years.

Suspecting a ponzi scheme in the name of goat farming, Sebi began enquiry into the matter following several complaints received by it. However, the show-cause notices served by Sebi to the company and its directors remained undelivered, giving rise to suspicion that the persons involved in the scheme might have fled.

“SCN (show-cause notice) dated May 10, 2012 and reminder dated June 21, 2012 issued to the notices through speed post returned undelivered and/or were not responded to,” Sebi said in a public notice dated November 1.