Rose Valley firm under Sebi lens

KOLKATA: Securities and Exchange Board of India (Sebi), the capital market regulator, has barred Rose Valley Real Estate & Constructions from raising public money and from launching any scheme.
In an interim order, Sebi has also ordered Rose Valley Real Estate (RVRE), the flagship of the group, not to divert funds raised from public, which is kept in the bank account or in the company's custody.
It may be noted that the Rose Valley Group of companies has interest in hospitality, films, amusement parks and finance. This has assumed significance because RVRE has already mobilised over `1,250 crore from the eastern region and a major portion of the fund is being mobilised from West Bengal. It has quite a few lakh investors in the state. Sebi, in its order on Tuesday,
has also instructed Rose Valley Real Estate not to dispose of any of the properties or delineate assets of the scheme.
When TOI tried to contact the Rose Valley Group, a spokesperson said that the chairman and top officials were not available for comment. "They can talk on Wednesday," she added.
In its order, Sebi has alleged that RVRE is running a collective investment scheme (CIS) without obtaining permission from Sebi. According to Sebi order, the firm has mobilised `1271.98 crore till March 2010 under a scheme called Ashirbad' and offered up to 21% returns.
Incidentally, another Rose Valley Group firm, Rose Valley Resorts and Constructions, had applied for CIS registration to Sebi but that was rejected by the regulator in 2003.
Sebi started investigating the activities of Rose Valley following a complaint by Economic Offence Investigation Cell of the state government in December 2009. Sebi in its interim order has refused to accept the argument of Rose Valley that the money was collected against allotment of land. "Documents were sought from the company vide separate letters dated January, March, May and July 2010 about raising of funds," the order says. Sebi has pointed out in the order that Rose Valley firm has claimed to have land bank in Rajarhat, Durgapur, Salboni, Jhargram, Bankura, Bagnan, Malbazar, Siliguri, Birbhum, Malda, Ranaghat (all in West Bengal), Agartala (Tripura), Orissa and Madhya Pradesh.
Commenting on the Rose Valley argument, Sebi pointed out that the number of plots allotted or
provisionally allotted stands at 5.08 lakh kathas. However, only 4045 kathas of land were actually handed over. "Thus it is observed that the scheme of allotment as purported to be real estate by the company is in fact a garb for collecting money for collective investment scheme," the order says.