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| title | chunk | source | category | tags | date_saved | instance |
|---|---|---|---|---|---|---|
| Anubhav Plantations | 2/3 | https://en.wikipedia.org/wiki/Anubhav_Plantations | reference | science, encyclopedia | 2026-05-05T14:10:55.825330+00:00 | kb-cron |
== Modus operandi == Anubhav investors were offered teak certificates or teak shares for investing anything upwards of ₹1,000 (US$11). These investments were marketed under different confusing and complicated schemes that started to give returns each year of ₹1000 and bumper returns after 20 years to the tune of ₹50,000 (US$530). While NABARD stated that only ₹20–30 was actually required to plant a teak tree, plantation firms such as Anubhav justified their charging nearly ten times this amount by including costs for security de-weeding and fertilisers. Further, Anubhav inflated the expected yield of timber by nearly twenty times the standard that had been generally observed by previous NABARD studies. In return, a teak plant would be planted on their behalf, which could be sold 20 years later. During these 20 years, the certificate would yield around 20% interest for the depositor, yielding returns of around ₹50,000 after 20 years. This was nearly triple the return offered by bank deposits. The company claimed that it owned teak plantations spread over 1,000 acres (400 hectares) of land, and floated attractive advertisements and plush offices, thus encouraging confidence among investors. Anubhav was not the first group to do this. During the early 1990s, teak plantations mushroomed in southern India, with 40 such companies registered in Madras and eight in Bangalore from January to September 1992. Most of these companies did not have adequate crop insurance and none of them were able to live up to their promises. All of them had skewed capital structures. The first attempt to promote private investment in teak plantations occurred in 1991, when a Hyderabad-based company, Sanghi Plantations, introduced a scheme offering investors teak trees at a nominal cost of ₹1,261 with what later turned out to be an unrealistic return of ₹50,000 after 20 years. Teak plantations typically take 50–60 years before yielding returns and are extremely susceptible to weather and the subtleties of the agricultural industry. They have rarely given dependable returns in India. However, in the light of general ignorance on the part of most laypeople, Anubhav entered this foray of marketing lucrative teak plantation schemes along with companies such as the Parasrampuria group, DSJ group and the Cochin-based "Sterling Tree Magnum", all of whom promised similarly large yet unrealistic returns. After the 1998 scam and subsequent investigations, CRISIL subsequently reported that on average, these teak plantation companies collectively had a promoter's contribution of just ₹35 lakh (US$37,000) for every investor's share of ₹300 crore. Meanwhile, in interviews and announcements in news papers, Natesan unveiled future plans to forward-integrate from teak into furniture and to import machinery to make it. This led to a further increase in small investors. However, his growth strategy was focused mainly on mobilizing funds from investors rather than actually investing in plantations, plants, land and factories. The group had already raised vast sums of money to the tune of more than 400 crore rupees from the public in the form of fixed deposits, so-called "teak units", and a combination of fixed deposits and teak units. Natesan was extremely secretive about the financial performance of his group and this was never revealed to investors, who were happy as long as they received regular interest payments. Subsequent examinations of the company's accounts revealed that it was posting far higher incomes than its real profits. For example, in 1996–97, the company posted a net profit of ₹38.69 lakh (₹3,869,000) while its plantation income amounted to ₹35.32 crore (₹353,200,000). A total of nearly 3,500 teak plantation-based companies were set up in the 1990s in India, all promising interests to the tune of 21–24% when bank deposits gave an interest of just 5–7%. During its height in the mid-1990s, the Anubhav group was often described by the media as an example of a successful company (thus becoming a role model for about 530 other teak- and agro-based companies listed by SEBI that arose during that time and also subsequently defaulted, including Ballarshah teak plantations). The media also portrayed a larger-than-life image of Natesan himself. An ambitious man, Natesan's ostentatious lifestyle, his cars, and his plush office in Chennai's up-market Royapettah area were frequently cited by the media as examples of his lavish tastes. Natesan had also associated his company with the World Wildlife Fund (WWF), thus garnering a positive image for his company.