Scam of teak wood plantation

Introduction of Teak Wood

y

Teak (Tectona grandis) is the primer high value furniture wood being grown in plantations around the world. Teak is relatively easy to establish in plantations and, because of the enduring global demand for teak wood products, it has good economic prospects as a plantation species for fine woods. Teak is indigenous to India, Myanmar, Thailand and Laos.

Introduction of Anubhav group

y y y

C.Natesan is the chairman of the Anubhav group. Established in the year 1992. Anubhav group of companies consisted 11 companies Anubhav house , Anubhav communication, Anubhav finance, Anubhav resorts, , Anubhav Hire Purchase Ltd, Anubhav Agro, Anubhav Security Bureau, etc.. Anubhav was present nationwide with infrastructure of 91 offices and over 1800 employees.

About Natesan
y y y y

Was a commerce graduate from Chennai and CA dropout. Started his career in 1983 by starting the consultancy firm Yours Faithfully Consultancy. In 1984 he entered into construction business with 3 partners. Natesan was associated with World Wide fund for Nature (WWF).

SCAM OF ANUBHAV PLANTATION

y

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 had sensed wrong doings at Anubhav when the cheques issued to some of them bounced in mid-1998. y 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. y 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.
y

Growth strategy
y

y y

Natesan had plans to forward integration from teak into furniture and to get imported machinery to make it. However his main growth strategy was mobilizing funds from investors. The group raised money from public in the form of fixed deposit, teak units and combination of both. He used to deal with land at the lower cost and hence charging the investors at higher rate.

Problems
y y y y y

In 1996-97 plantation income was amounted to 38 cr but net profit was 38 lakh. Anubhavs current liabilities exceeded its currents assets by 6.40 crores. The company paid up capital was 36 lakh while their borrowing was amounted by 2.64 cr. Loans advances amounted to Rs 25 cr. In October 1998 admitted that Anubhav had serious liquidity problem.

Investors filed complaint against Anubhav group in mid 1999. y CRISIL found out that on an average 35 lakh was contributed from the promoters side and more then 300 cr from investors. y NABARD found out that the teak trees that were sold by the plantation companies were at Rs 1500-2000, it was normally costed at Rs10-15 higher. y Maharashtra Revenue and Forest Department(MRFD) found that for plantation of these trees costed only Rs 400.
y

Natesan projected the return on investment was seven times more than actually it was. y Analyst analyzed that even if one uses quality soil the timber yield of the trees with a girth of 60 cm and above in 15 years would beab out 5.1 cubic feet per tree. y Natesan disagreed with the above statement.
y

PANAMA TEAK PLANTATION SCAM

PANAMA TEAK PLANTATION SCAM

Prime Forestry Panama units certificate of plantation was suspended by Smart Wood. y Smart Wood said that Prime Forestry doesnt provide any evidence related to the certification required. y Issue raised in 2003. y Certificate cancelled in the year of 2006 after the full flezed investigation.
y

ABOUT PRIME FORESTRY PANAMA

Operating from Zurich, Switzerland. y It has $60 million from Investors into its activities. y It serves its Teak in International markets like Italy, United Kingdom, France, Norway, New Zealand and Australia y Kurt Emil Meier is the CEO of Prime Forestry.
y

SCHEME
Salesman give unclear promise to investors. y They said that Company do not buy land but Company has right to grow trees on the land of Panama. y They charge investor twice as compare to the actual market rate. y The return on investment they count was after 7 years investor will get three times more return compare to investment.
y

Prime Forestry has raised 1.1 billion pounds from the investor within five years. y Chartwell a broking firm was raised fund in this time period was 16.5 million pounds. y Kurt E. Meier was the president of Chartwell Broking Firm.
y

PROBLEMS
Firstly Swiss Financial Authorities have stop the sale of Teak in Switzerland. y Prime Forestry CEO has found in fraud cases and have force to resign. y CEO had ties with Mafia was another reason which makes him guilty. y Barmuda Police has declared Prime Forestry as Fraud Company.
y

Quiene, mafia, was arrested in France. y Meier has spent some time in prison.
y