The Anubhav Plantations Scam

The low profitability was attributed to the group's high, non-productive, expenses. In March 1997, Anubhav's current liabilities exceeded its current assets by Rs 6.40 crore. The company's paid-up equity capital was just Rs 36 lakh while its borrowings, both secured and unsecured, amounted to Rs 2.64 crore. Loans and advances amounted to Rs 25.95 crore, of which Rs 10.75 crore had been lent to Anubhav Foundations, Anubhav Green Farms & Resorts, Anubhav Resorts and Anubhav Communications. In the schedule explaining the loan provisions, it was mentioned that the funds had been used for the purchase of residential apartments (Anubhav Foundations) and farmland (Anubhav Green Farms), and to meet the expenses incurred on advertising and marketing (Anubhav Communications)...

Most of these companies did not even have sufficient crop insurance. Also, the offer documents of these companies did not highlight the risks involved. The lack of industry regulation made it virtually impossible for the average investor to distinguish between a fly-by-night operator and a genuine player. Most of these companies were reluctant to provide information about themselves. During investigations conducted by Business India, officials at Parasrampuria Plantations refused to even talk to the magazine. However, when the magazine sent people posing as investors, the response was extremely enthusiastic. Investigations regarding the schemes being offered by various companies across the country indicated that things were definitely out of joint...