The Anubhav Plantations Scam



Themes: Corporate scams / Controversies
Period : 1992 - 1998
Organization : Anubhav Group / Anubhav Plantations
Pub Date : 2002
Countries : India
Industry : Agriculture / Farming & Fishing / Financial Services

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Case Code : FINC009
Case Length : 09 Pages
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The Anubhav Plantations Scam | Case Study

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"You are giving deposits because you trust me. Leave it at that."

- C. Natesan, Chairman, Anubhav Group, in 1998.

The Anubhav Plantations Scam: The Doomed Depositors

On 2nd December 1998, thousands of people from places like Shimla, Trichy, Sangli and several other Indian cities and towns converged at the New Woodlands Hotel in Chennai. All of them were investors in the collapsed Anubhav group's teak plantation schemes, and a majority of them were on the brink of bankruptcy1. They had come to Chennai in response to a letter from an advocate inviting them to come and check all the records and the balance sheet of the company. The investors could be seen everywhere - sitting on the pavements, standing around the building, walking up and down the roads - all of them tense and worried.

The investors had sensed wrong doings at Anubhav when the cheques issued to some of them bounced in mid-1998. Many depositors, who went to the group's offices to collect their deposit amount after maturity, found the doors locked and lodged complaints with the police. Later, thousands of investors demonstrated in front of the company's headquarters in Chennai. But the main accused, C. Natesan, Chairman, Anubhav Group (Natesan), had already gone underground.

The Anubhav group of companies was eventually found to have duped investors of over Rs 400 crore. As details about the 'Great Plantation Scam of the 1990s' were revealed in the media, Natesan's modus operandi shocked those who held the Anubhav group in high regard.

Planting the Dream

A commerce graduate from Chennai's Vivekananda College and a chartered accountancy course dropout, Natesan was a man who dreamt big. His 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 started his career in 1983 by launching a consultancy firm, 'Yours Faithfully Consultancy.' In 1984, he entered the construction business with three partners. Three years later, he closed this venture and set up the Anubhav Foundation. In 1992, Anubhav Plantations Ltd. (Anubhav) was floated as a public limited company. Over the years, the Anubhav umbrella expanded to include various other companies such as Anubhav Homes Ltd., Anubhav Resorts Ltd., Anubhav Finance & Investments, Anubhav Communications & Advertising (Pvt.) Ltd., Anubhav Royal Orchards & Exports, Anubhav Hire Purchase Ltd., Anubhav Green Farms & Resorts (Pvt.) Ltd., Anubhav Agro, Anubhav Security Bureau, Anubhav Interiors and Anubhav Health Club. By 1998, Anubhav had become a Rs 250 crore group which, apart from its teak-plantation schemes, was involved in the timeshare, finance, and real estate businesses. These companies were backed by a nationwide infrastructure of 91 offices and over 1,800 employees.

Natesan had plans to forward-integrate from teak into furniture and to get imported machinery to make it. However, his growth strategy was focused mainly on mobilizing funds from investors. The group had already raised vast sums of money from the public in the form of fixed deposits, teak units, and a combination of fixed deposits and teak units. Natesan was extremely secretive about the financial performance of his group.

In the plantations business, Anubhav was the market leader. It operated through four companies: Anubhav Agrotech, Anubhav Green Farms & Resorts, Anubhav Plantations, and Anubhav Royal Orchards Exports.

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1] In a plantation scheme, a company invited people to invest money in 'teak-units,' and assured them a specified quantum of teak (or cash) as returns after a specified lock-in period, which was usually very long. Typically, an investment of Rs 1275 in a teak tree fetched Rs 62,000 or 37.5 cubic feet of teak at the expiry of 20 years. There were slight variations in the offers made by different teak plantation companies. Some companies offered interim returns also, usually after a 5-6 year gap.