DCA seeks SEBI help to trace plantation cos

A letter to this effect was sent by DCA secretary P L Sanjeev Reddy to SEBI chairman D R Mehta last month-end, sources said. The schemes through which instruments such as plantation and agro bonds have been put under the broad category of CIS and SEBI was made the regulator to monitor the activities of these companies by the government in 1997.

During that period, a large number of companies duped investors, who were lured into the schemes by offering high returns, forcing government to ask SEBI to put in place a regulatory framework for these companies.

DCA sources said that all the details regarding these companies were with the SEBI and it was necessary to collect the entire details from the capital market regulator to trace the promoters of erring companies.

Earlier, an expert committee set up by SEBI under former UTI chairman S A Dave has put in place guidelines for CIS companies, which made it mandatory for them to get credit rating on its schemes.

Though detailed guidelines on CIS companies are in place, DCA sources pointed out that the rules did not help in recovering the funds, that have already been taken away from the investors.

Currently, SEBI does not have the power to "search and seizure" and hence the move to trace the erring companies and its promters through the DCA, officials said.

MUMBAI: The court of designated judge, Mumbai, has issued summons to the directors of Vatsa group to appear before it on September 22, on a complaint filed by a group of investors in the company, accusing it of failing to pay any interest or principal on its various deposit schemes.

The complaint lists 17 persons, including the chairman of Vatsa Group Bimal Bhatt and vice-chairman (Vatsa Music) Ravi Burman, while George Cheng, one of the directors, was not traceable and hence, the summons could not be served to him.

The financial structure of Vatsa Group has been presented to depositors as very strong. The balance sheet published by Vatsa Music on January 31 shows the net paid-up equity capital at over Rs 522 crore. The total income stands at Rs 21.90 crore while reserves stand at 3078.46 crore.

In August 1999, the company had agreed in writing to investors to pay a sum of Rs 1.19 crore. The company issued cheques worth Rs 10 lakh to the broker, so as to be given to the investors, out of which only an amount of Rs 2 lakh could be withdrawn and the cheques for the balance bounced with the remark "insufficient funds". A case has now been registered against the company for this offense.

The total outstanding fixed deposit liability which has been acknowledged by the chairman of the Vatsa group Mr Pradeep Vakil as on April 30, 2000 stands at Rs 1.5 crore.

Earlier, Sebi had also filed criminal complaints in the metropolitan court against Vatsa Corporation and four of its officials for non-redressal of investors complaints. Last week, the company was delisted from the Bombay Stock Exchange.