Teak companies are all about broken promises
MONEY grows on trees, especially teak
trees. This concept made headlines in
the early 1990s in India. The idea was to
get people to invest in teak trees, which
would be harvested in 20 years. The
profit that would accrue from the harvested tree would then be shared with
the investor. "Teak companies", one of which was
Chermai-based Anubhav
Plantations, promised
investors with returns that
were much more than
what fixed (cash) deposits
or real estate had to offer.
This prompted thousands
to invest large amounts of
money in these projects.
Thus began the boom in
teak plantations.
However, with scores
of new companies coming
up and the teak trees not
maturing as promised, the
entire business of plantations came under scrutiny.
Experts in the plantation
business for a long
time suspected the activities of these companies.
"We suspected these people because they made
exaggerated claims and
promised phenomena]
productivity," says Sushil
Saigal of Centre for
Promotion of Wasteland
Development. "How can
get good quality tea
one
in 20 years, when a teak
tree usually takes at least 30-40 years to
mature?" asks V N Mishra, managing
director, Centre for Promotion of
Wasteland Development.
"It is a big racket. The operational
strategies of the plantation companies are
the same," says Mishra. "It is a two-way
exploitation. These new companies buy
degraded land from the poor villagers at a
throw away price through agents and
then sell the land to the investors. Both
ways they are in profit," he says.
Besides, says Saigal, the plantation
companies claim to use drip irrigation,
fertilisers and other scientific methods to
grow the trees. Even if these methods
help the plants mature by 20 years,
it would be sapwood instead of timber,
he says.
The quality of a tree depends upon
how close knit the rings in the main
body of the tree are. The tighter they are,
the better the wood. Dependence on
artificial methods lead to formation of
rings at a distance from each
other, affecting the quality of the wood.
Experts allege that many of these
plantation companies have actually
nothing to do with plantations.
According to Saigal, many plantations
are just cover-ups to get agricultural
income tax benefits.
"These people are more like a bank
than getting into real forestry," says
Saigal. According to Mishra, it is money
invested somewhere else in the name of
plantations.
December 15,1998 Down To Earth
Just when experts had started
questioning the modus operandi of these
teak plantations, the Rs 100-crore
Anubhav Plantations, a division of
the Anubhav Group of Companies,
was caught in the red. The crime:
not refunding matured funds to a large
number of its investors. Anubhav
group's managing director C Natesan
then did the vanishing act until he
was arrested in Chennai. Subsequently, offices of the Anubhav group
in several states were closed,
leaving thousands of investors in the
dark. Now, the group has proposed a
compromise scheme.
The company has promised that all
interim payments in the third and
fourth quarter of 1998, 1999 and
the first three quarters of 2000 will
be paid on October 1, 2000, with an
interest of 12 per cent per annum.
Whether or not Anubhav comes out
clean from this mess, it remains another
instance of robbing the citizenry of
their savings.
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