The modus operandi, investors were lured to invest their funds in ‘Cattle and Ghee’, investment scheme. The company promised the depositors monies in Cattle and the returns were linked to the Ghee output from the cows!!
Yes, people fell for it, and the company could collect Rs745/- crores upto March 2011.
While going through the financials of the company and associated investorcomplaints, SEBI officials suspected something was amiss and an investigation started. In mid-2012, SEBI issued notices to the Group promoters to appear before the SEBI authorities for a detailed understanding of its investment scheme. But the Group directors did not respond to the summons, and also the later summonses were returned undelivered.
SEBI suspects that the company is running a ‘Collective Investment Scheme (CIS)’ without its approval. Any CIS has to have SEBI approval. SEBI approval is only granted when the scheme has adequate safeguards for the depositors. Hence, many companies run schemes which resemble CIS, burt do not prefer SEBI registration.
The publicity by SEBI with regard to Ponzi Schemes, is an attempt to educate Indian consumers about the risks involved in investing in dubious schemes.