Rose Valley to challenge Sebi's order on deposit schemes

Yesterday Sebi issued an order barring Rose Valley group from raising public deposits through 'holiday membership' scheme

Kolkata-based Rose Valley Group on Thursday said it would take legal action against  the Securities and Exchange Board of India (Sebi) order against the company's deposit-taking schemes through a holiday membership plan.

The order was issued on Wednesday. The company has raised about Rs 1,000 crore through the scheme.

The group’s real estate unit, Rose Valley Real Estates and Constructions, also has a pending case against Sebi at the high court here, on commissioning of collective investment schemes (CIS).

In a statement, Rose Valley said, “There is also speculation in the group that this might be the consequence of the arrest of R P Singh, ex-AGM of Sebi by the anti-corruption department in 2010 on account of seeking a bribe from Rose Valley.”

On Tuesday, Sebi had barred another Kolkata-based company, Sumangal, from raising funds through potato bonds. On June 21, the regulator passed an order against another company called Alchemist  Infra Realty, to wind up all such deposit-taking activities and refund the money collected from public investors, amounting to Rs 1,000 crore, within three months. Alchemist has been raising money as advances against booking for township projects. Earlier, Sebi had also directed MPS Greenery to deposit Rs 1,169 crore in an escrow account of a public sector bank and stop running its CIS.

Today, Rose Valley said it had 22 self-owned hospitality properties across India, of which 360,000 room nights were sold through this scheme every year. “We also have a tie-up with various other properties in India for 14,000 room nights a day. Which means we have a total capacity of 54,70,000 room nights available for our Holiday Scheme members in a year,” it said.

Adding: “Several other companies raise money through a Holiday Membership Plan, and Sebi should have come out with similar orders against them, too.”

Earlier, Gautam Kundu, chairman of Rose Valley, had said the company paid  Rs 120 crore to depositors and the company’s board had earmarked Rs 500 crore  for meeting redemption needs. The company has been deducting 10-20 per cent from the principal for early withdrawals.’
LEGAL TROUBLES

• Kolkata-based Rose Valley Group said it would take legal action against  the Securities and Exchange Board of India (Sebi) order against the company's deposit-taking schemes through a holiday membership plan
• The order was issued on Wednesday. The company has raised about Rs 1,000 crore through the scheme
• The group's real estate unit, Rose Valley Real Estates and Constructions, also has a pending case against Sebi at the high court here, on commissioning of collective investment schemes
• On Tuesday, Sebi had barred another Kolkata-based company, Sumangal, from raising funds through potato bonds