Bengal's deposit-taking firms face the whip, sell the properties

Recently, Sebi was accorded with new powers to crack down on illegal money-pooling activities through options like search and seizure operations

Two months ago, Sahara India chief Subrata Roy was brushing aside media queries here about his group’s fund-raising activities. Now, several West Bengal-based deposit-taking firms are facing the heat.

In the past month, capital markets regulator Securities and Exchange Board of India (Sebi) has issued orders against two Kolkata-based firms, Vibgyor Allied Infrastructure and Prayag Infotech Hi-Rise, for raising money ‘illegally’. Sebi has been issuing orders to companies, including Rose Valley Real Estate and Construction, Alchemist and MPS Greenery Developers, to wind up collective investment schemes for three years, without much impact.

Recently, the regulator got powers to crack down on illegal money-pooling activities. Now the companies are scrambling to sell properties while entangled in court cases. But an embargo by the state government is coming in the way of their selling large land banks.

Sebi has asked Vibgyor Allied Infrastructure to refund money raised through optionally fully convertible debentures in three months, with 15 per cent yearly interest, from the date of receipt. Vibgyor is planning to move the Securities Appellate Tribunal for extended repayment. It is looking to sell properties not directly owned by it, according to a company spokesperson.

MPS Greenery, against which Sebi has passed multiple orders, is planning to sell a 30 per cent stake in its food processing unit, confirms P Manna, chairman, MPS Greenery. Earlier, Sebi had ordered attachment of its holding in eight group firms for failing to refund Rs 1,520 crore with interest to investors.

In a recent order against Prayag Infotech, Sebi found the company had raised raised Rs 341 crore from the public in 2010-11. The company had issued redeemable preference shares although it had earlier informed the regulator that the money was raised through private placement. According to Sebi, money was raised from more than 49 people, making it a public issue.

According to the Sebi order, the promoters and directors of the company cannot sell any of its properties. Prayag Infotech must also prove to Sebi it has refunded Rs 4 crore of the subscriptions received through issued shares.

Most of the state’s deposit companies raised money in the guise of advances for real estate projects, or for booking hotel rooms. The firms offered three options: fixed deposits, monthly interest schemes and recurring deposits. There was no stated rate of interest, only a promise of double the money in five years. After the Saradha scam, these companies are finding it difficult to meet redemption demands with fresh inflows nearing zero.