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About two months after the Saradha crisis broke out in West Bengal, many companies continue taking deposits. A few are also buying assets.
Last week, Alchemist Township India, a Delhi-based real estate developer, bought 20 acres in Aerotropolis, the airport city being developed at Durgapur. The company is part of the Rs 10,000-crore Alchemist Group, founded by K D Singh, a Trinamool Congress Member of Parliament in the Rajya Sabha.
Recently, Alchemist Infra Realty (part of the Alchemist group), had come under the scanner of the Ministry of Corporate Affairs for alleged money laundering and money circulation. Through the last few years, the company has been raising deposits from the public.
Recently, Vibgyor Group, a West Bengal-based company raising deposits, had bought land, said its spokesperson. Last year, the company was hauled up by the Securities and Exchange Board of India (Sebi) for allegedly issuing securities to the public, in breach of rules. Vibgyor Allied Industries was in the list of companies alleged to have carried out Ponzi or multi-level marketing schemes, according to a Lok Sabha document.
“There is absolutely no problem with Vibgyor. In fact, the company has been buying land to increase its asset base,” said a Vibgyor spokesperson.
“We can raise deposits, according to the company law. We have no problems due to the Saradha crisis, as our investments are backed by our projects, which are all running fine,” said Raja Bhadra, chairman, Vibgyor Group.
According to a company spokesperson, Rule 3(2)(ii) of the Companies Acceptance of Deposits Rules, 1975, allowed Vibgyor to raise funds, subject to conditions.
Some companies have come up with innovative ways to raise deposits. ICore E-Services, which had been raising funds through debentures, had defaulted on repayment obligations for the last two months. Now, the company is planning to launch gold schemes, through its retail outlets. Several small companies have also sought licences to start cooperative societies to raise deposits.
For companies such as MPS Greenery Developers, warnings from regulators did little to reduce deposit-taking, at least on paper. The company has been running collective investment schemes and has been involved in a legal tussle with Sebi for about a year. It has been mobilising funds through instruments such as teak bonds, orchard bonds and agro bonds. Last year, the regulator had ordered MPS Greenery Developers to deposit Rs 1,169.39 crore in an escrow account of a state-run bank and desist from raising any new deposits. Last month, the regulator had issued an advertisement cautioning the public against investments in the company.
P N Manna, chairman, MPS Group, said the company had secured court orders that allowed it to run collective investment schemes. “We can continue to raise deposits as long as the issue is in court,” he said. For Rose Valley, too, there is no legal hurdle in raising deposits, against advances for resorts or hotel rooms. “We have no problems in our company, and we can still raise deposits,” said Gautam Kundu, chairman, Rose Valley.
“The state government should have taken stringent action to stop these companies from operating,” says Mamata Binani, past chairman (eastern region), Institute of Company Secretaries of India.
Kolkata-based chartered accountant Alok Ghosh said, “The government could have done many things such as seizing the properties of such companies, but nothing has been done.”
Most companies raise deposits in the disguise of advances for real estate projects or booking hotel rooms. The companies offer three options — fixed deposits, monthly interest schemes and recurring deposits.
There is no stated rate of interest, only promises to double the money in five years.
After Sebi’s crackdown on companies raising money through debentures and collective investment schemes, this route emerged as a popular instrument for raising funds by small, agent-driven companies.
