MUMBAI, Aug 17: The Securities and Exchange Board of India (SEBI) today cautioned investors against being misled by attractive promises by plantation companies and said those investing in such schemes would be doing so at their own risk. Stating that rating had been made mandatory for plantation companies before raising funds, SEBI said all plantation companies rated so far had been found to be below investment grade, which implied that there was a very high risk perception for investors contemplating investment in such schemes. SEBI which has been adopting a tough posture towards plantation companies is involved in a legal tussle with the plantation lobby.Responding to queries received by it from investors on the financial health of individual plantation companies, market watchdog said it had only limited information about the schemes floated by such companies and was not in a position to give any advice on their financial health.However, audit of many of those entities had revealed unsatisfactorystate of financial health, the regulator pointed out. SEBI informed that no plantation company had received any registration from it so far as the regulations for these companies were yet to be notified.SEBI started regulating fly-by-nigh plantation companies after the government announced a series of measures to protect investors in the plantation schemes. As plantation schemes were neither coming under the direct regulatory powers of the Reserve Bank of India (RBI) and SEBI, investors were taken for a ride by a number of fly-by-night operators who attracted ordinary investors offering very high rate of returns. Plantation firms have been keeping a low profile after SEBI made it mandatory to get their schemes rated by one of the recognised credit rating agencies and their accounts audited properly. While the rating and auditing of their accounts revealed a number of irregularities, plantation companies are again in the market with big advertisement campaigns. While they are advertising their schemesthey keep it a point to underplay the rating rationale given by the rating agencies.``If any investor reads carefully the rating rationale published along with plantation schemes, nobody will invest in such schemes. But ordinary people may not go through these details which are printed in very small letters compared to the rest of the matter'', said SEBI sources. As of now, not a single plantation company has been able to obtain a reasonably good investment grade credit rating.
