Citizens' Issues
Will Rose Valley’s clones, flourishing with CPM’s help, come under the lens now?

SEBI has stopped Rose Valley from accepting deposits, but it is just one of the several dubious conglomerates flourishing in the communist-ruled states of West Bengal and Tripura, thanks to a combination of financial illiteracy and political protection

It was more ubiquitous than Coca-Cola and Pepsi and could almost vie with the ruling party's logo. Over the past five years, if you looked at hoardings and watched TV channels, you could not have spent more than a few minutes without coming across the name Rose Valley. As sponsors of prime time news, at every major event and finally as the promoter of a brand new channel, Rose Valley was in your face. Now it has got into the national media for the wrong reasons. Suddenly this week, the market regulator Securities and Exchange Board of India (SEBI) clamped down on Rose Valley Real Estates and Construction Limited for raising funds from the public, without a registration certificate for 'collective investment schemes'.

But Rose Valley is just one. In the last couple of years, West Bengal has seen the emergence of quite a few chain-marketing companies and homegrown business conglomerates. Amazingly, these groups are all Bengali-owned, but they're hardly an example of Bengali entrepreneurship of any kind.

Among them, Rose Valley, Icore Group MPS Group and Saradha group are the most visible. They are all about a decade old and claim to be highly diversified conglomerates today. Collectively, chain-marketing schemes are whispered to have raised over Rs10,000 crores, mostly from lower-middle class people in West Bengal and Tripura, both communist-ruled states. With that money they have bought media space and acquired legitimacy. Rose Valley has been a big advertiser with Ananda Bazar Patrika (ABP) group. ABP has gone out of its way to promote them and celebrate their "entrepreneurship".

MPS Greenery Developers Limited, the flagship company of the MPS group, is based in Jhargram, and deals in agro-products and food processing. Rose Valley started as some kind of insurance and small-savings scheme, but it has now expanded into a long list of sectors such as hotels (Hotel Rose Valley), foods (Taste Me), amusement parks (at Agartala and Kolkata), resorts, media (Ruposhi Bangla, a Bengali entertainment channel, and News Time, a news channel) and garments (RV Fashions). Rose Valley's representatives claim that the company has 10,000 acres of land all over India, 14 regional offices, 500 branch offices, 5,000 employees, and so on. Rose Valley claims it is setting up many housing projects, hotels and hospitals. But its website is down since SEBI clamped down on its schemes.

Nobody knew exactly where the money was coming from for these companies, but everybody suspected that it was some kind of a pyramid marketing scheme, made infamous 30 years ago by the failed Sanchaita Investments. SEBI says, Rose Valley does not have the required registration and appears to be raising funds through collective investment scheme(CIS), by collecting money from people on the promise of land. As the SEBI order points out, Rose Valley's application was rejected in 2003, and the company was unable to produce the required documents about deals with customers.

The CID and state finance department officials had once raided Rose Valley's office in Tripura, but to everyone's surprise no arrests were made. Many people have attributed the outcome to the group's soy relations with the Left Front.

In internet complaints forums, many people have raised questions about the company's credibility and asked for financial details, which its representatives have ignored. Interestingly, one of the agents claimed that Rose Valley has all the required certificates, including a SEBI registration.

Under its 'Ashirvad' scheme, Rose Valley mobilised Rs1,207 crore by selling 508,792 plots, but handed over only 9,045 plots. While the company claims to have a land bank in several upcoming and industrial areas of West Bengal,  the question is, how did they get access to all those vast stretches of land that are traditionally used for agriculture?

As Moneylife has reported earlier, Rose Valley Chain Marketing System Ltd, which is a corporate agent for LIC since 2002, has openly violated rules of the Insurance Regulatory and Development Authority. As for the company's insurance business, there is no answer to the question about who will be responsible to the investors if the company collapses. Their media connections have ensured that no details are leaked out about their goings-on. Rose Valley group is not rated by a credit rating agency either.

Let's look at the other 'big' company, MPS (Multi Purpose Scheme - the name is self explanatory). MPS's website features praises by several Left Front ministers for its Jhargram-based fisheries/hatcheries/piggery, etc. Among these government figures are land and land reforms minister Abdul Rezzak Mollah, environment minister Shailen Sarkar and food and civil supplies minister Paresh Adhikari. It also lists a number of certificates, some of them ISO certificates.
What it does not list is a SEBI certificate for any collective investment scheme. According to SEBI, the application of MPS Greenery Developers Private Limited was rejected in 2003 (simultaneously with that of Rose Valley) and a wind-up order was issued. As is apparent from their flourishing business and their 'impressive work in Jhargram' (courtesy Mr Mollah), they have carried on pretty well despite these hurdles. So here is a huge company, collecting money without SEBI registration, which the Left Front government is endorsing. The MPS project and plantation in Jhargram did not make any headlines, but the importance of the location cannot be overlooked. It is in the very heart of a Maoist-controlled stretch in West Bengal and adivasis claim it as their inheritance.

Now, the Icore group, whose source of funds is a mystery to onlookers, as is its meteoric rise. It has declared that it will invest Rs5,000 crore in a steel plant and a cement unit in Orissa. Even insiders are clueless about the source of the cash. Its website lists garments and jewellery, cement, e-services and steel as its businesses. Nobody is certain about the real status of these businesses. The key question that remains is where does the money come from?

The same goes for Rose Valley, whose resorts have bookings, but it's nothing phenomenal. And the media business is certainly losing money. Prayas, a newcomer in this area, is becoming increasingly prominent, with equally dubious resources.

Finally, there is the Saradha group, which is not seen to be a collective investment scheme but has seen a meteoric rise over the past decade. In just 12 years it has got into sectors such as cement, chemicals, wires and cables, snacks, wool and carpets. The group also owns The Bengal Post and Sokalbela, two news dailies, and a news channel called Channel 10. What is not so well known is that the owners were once booked for selling used disposable syringes and medicines past the expiry date.

The West Bengal government has tried to attract investments from large and reputed companies, but the only thing that has flourished in the state is a peculiar brand of pyramid schemes and real estate schemes backed by state power. These groups have also rapidly 'diversified' their businesses, even entering media, to acquire legitimacy. It would be interesting to see whether they can also cosy up to Mamata Banerjee if and when she comes to power.



Dipak Kumar Adhikari

3 years ago

The Incharge of the Department Date:03/01/2014

Respected Sir/Madam,

Sub.:- Policy payment related information case reply me as soon as possible.

I have a policy and also my mother have one in your company. My application No: 061125583. Application Date: 25/11/2008 Credit Date:25/11/2013. And my mother application No: 064786245. Application Date: 11/12/2008 Credit Date:11/12/2013. BARASAT R.O.
All two MCode: 063076792 (My agent name is: Anup Kundu). Our two policy maturity date over but we do not received our credit value.

So please informed me about it - are you send me any cheque or where I received this cheque or where I informed about this case????. I wait for your kind response reply me as soon as possible.

Thanks with kind regards,
Dipak Kumar Adhikari.
S/O:- Late Biswanath Adhikari


My Mother: Shibani Adhikari (Biswanath Adhikari)
W/O:- Late Biswanath Adhikari.

Tegharia, Dhali Para, Nandan Kanan.
P.O.:- Hatiara, P.S.:- Baguiati, Kolkata-700157/700059, Dist.:- North 24 Parganas, West Bengal, India.
Phone No: 9874389190. Email: [email protected]


4 years ago

Sunrise medicorp Solution Pvt Ltd is now business investment Plan guaranteed Income .


5 years ago

thanks again,only we can raised quiestion but we know well there is no ans,it is the big play?the ministers,political leaders all r involved in this big game.but who will be the losser? only the lower middle class because there is no option to earnings.poor become poorer,and who will die? the agent.

vijay kumar

5 years ago

pla povied a branch in dibai bulandshahr (u.p)

pranjal pal

6 years ago

i would like to know the details of saradha group. Is there any relation between Mr. Sudipto Sen, CMD of Saradha Group with Sanchaita Investments ? And in SEBI website CIS Schemes : MPS is showing Provisional, means what ?

prince sobka

6 years ago

sir,thanks for all the details which could light a lot of people and concious them in their future investment . what documents to see from the agents before there investme it also need to be clear in next comment.and must alert about fake investment , next my question is if govt knows all about so they do not take action against this fraud

amit kumar roy

6 years ago

if rose valley company continue their business after 2003. so sebi that time was sleeping

supriya banerjee

6 years ago

see about mps in sebi web site register cis company..


6 years ago

is rose valley collecting money from market with out SEBI's required registration after 7th jan.2011?

seth moloy

6 years ago

As mentioned in the articale that all these Chain Mkt. Co. working in W.Bengal from over a decade, i.e. 2 assemble elections have passed. but only they come under SEBI's lens this time before "parivartaner hawa"! No one have been chited by those companies in last 2 decades(atleast no news). But they have given employment to lacks of people & dependent by pyramid carrier structure. No govt. central or state able to create so many employment in a decade. In the otherhand SEBI, who's main duty is to protect the invester in share market, failed to do so. Middle class people attracted by share mkt and loosing there last peny. Don't forget, Mr. R. Gupta, eastern regional asst. gen. manager of SEBI was arrested by CBI, last year when he was taking brave from the chairman of one chain mkt. group. Is it a revenge taken by SEBI! God knows. We are hopefull that all these co. should return all the money collected from us. If govt. shutdown those co. who will refund us the money. "Parivartan"(the change) does not mean, we the lower middle class will lose our last pany.

sanjoy chatterjee

6 years ago

can it be possible without help of the rulling party the so called groups cullecting money and fraud the general and poor after day ?the state government take no action, what is the story behind it.

naru deb

6 years ago

CIS is the main business of company once stoped collection from market company can,t discharge payment liability

Govt may not raise taxes, streamline international taxation in upcoming budget

New Delhi: The government is likely to plug loopholes in international taxation to swell its kitty, since it does not have too many options to raise taxes in the upcoming budget due to proposed rates in new direct and indirect tax regimes and high inflation, reports PTI.

Rising inflation is not only hitting the common man, but will also make the task of the government to increase its tax-GDP ratio difficult, sources said.

Facing this difficult task, the government may try to strengthen its international taxation rules like Mutual Agreement Procedures (MAP), transfer pricing, revision in double taxation avoidance agreements to make its exchequer richer in 2011-12.

This will also be done because the government is also not expected to get windfall from non-tax revenue next fiscal, as it received this fiscal from the sale of spectrum for high speed mobile and broadband services. The Centre received Rs75,000 crore more than the budget estimates on this count.

With a target to bring down fiscal deficit to 4.8% of the gross domestic product (GDP) during 2011-12 from the estimated 5.5% this fiscal, the government has to see for more revenues or cut its expenditure.

On revenue front, the hands of the government are tied since it has already proposed new tax slabs in the Direct Taxes Code (DTC) bill, currently with the standing committee of Parliament.

In the DTC bill, introduced by Union finance minister Pranab Mukherjee last year, the government seeks to widen tax slabs to levy 10% rate on income between Rs2 lakh and Rs5 lakh, 20% on Rs5-Rs10 lakh and 30% above Rs10 lakh.

Currently, income between Rs1.6-Rs5 lakh attracts 10% tax; Rs5-Rs8 lakh 20% and beyond Rs8 lakh 30%.

The government is likely to retain these rates and wait for DTC Act to come into force from 1 April 2012. However, it may tinker with threshold limit, sources said.

Since it is also in talks with states to bring Goods and Services Tax (GST) from the same date, the government might also not change indirect tax rates.

The Centre has proposed higher 10% tax on goods (each from the Union and state governments’ side) and lower 6% tax. Besides, it suggested that services should attract 8% rate by the Centre and states each. All these rates are suggested to move to 10% over a three-year period.

Though not much breakthrough is happening on negotiations with states on GST, the government is likely to keep indirect taxes unchanged to give a signal about its commitment to the new indirect tax regime, sources said.

However, it should be noted here that GST would not replace customs duty. Here also the government is likely to refrain from raising the rate because of high inflation.

In fact, most food items already have nil customs duty, the source said. The government has recently removed 5% customs duty and 4% countervailing duty on onions after its retail prices skyrocketed to Rs75-Rs80 across the country. Since then, prices have eased a bit.

High inflation is also likely to send the government plans to increase its tax-GDP ratio into a tailspin.

This is because the tax-GDP ratio is calculated on nominal size of the economy. It means that if the economy grows by say 9% and inflation by 10%, the nominal GDP would be 19%, making it difficult to raise the tax-GDP ratio.

The sources said rising GDP would not yield so much on taxes front to raise tax-GDP, if inflation continues to be at high levels.

The tax-GDP ratio had risen to over 11% during 2007-08 from 8.2% in 2001-02, but has since then declined to about 10% last fiscal.

As such, the government will try to settle more cases under MAP, seek consultations from those who have specific knowledge of transfer pricing and revise double taxation avoidance agreement with countries to seek details of money evasion, the sources said.

MAP refers to a dispute settlement mechanism of MNCs having offices in India.

The sources said more than Rs7,000 crore was received under MAP in the last one year, and this amount may increase manifold in the coming years.

Recently, India and the United States signed a memorandum of understanding for resolving cases under MAP.

The resolution of disputes under MAP basically relates to transfer pricing rules. Transfer pricing rules refers to calculation of taxes of MNCs in different countries.

The sources also said India is currently renegotiating 65 double taxation avoidance agreements out of total 79 to revise secrecy clause, so that tax evasion could be checked.

DTC also has proposals like controlled foreign corporates and general anti-avoidance rule (GAAR) to plug in loopholes in international taxation.


Weekly Market Report: Further decline?

Large investors seem to have come back from the holidays in a mood to sell. The Sensex has lost 869 points in four days and may go down further by 1,000 points

Although the year and the week began with the opening gap of 112 points on the Sensex, suggesting that the market will continue with the rally that began on 10th December 2010, 3rd January was the only day in this week when the market ended positive. It seems that the large investors came back from the holidays in a mood to sell. So, while on Monday the market was up, the next four days saw relentless selling pressure. Beginning 4th January 2011 till today, the Sensex has lost 869 points, the bears finishing off in style with a 493-point loss on Friday, the last day of the week.

The big selling is coming from foreign institutional investors. They broke the trend of continuous buying between 24th December 2010 and 4th January 2011 (net inflow Rs4,694.25 crore) by turning massive sellers for the next three days. Throughout this period, from 24th December till 6th January, domestic institutions were net sellers on each day, (net outflow Rs2,871 crore).

Today, the Sensex fell 493 points, to a 16-day low of 19,691.81 (the Nifty fell 143.65 points), easily breaking multiple supports along the way. The next support is at 19,500 (Nifty 5,850), but it is unlikely that this would hold. The last time when the market went down, the Sensex lost 2,000 points. We have lost 1,000 points so far and more losses are in store.

On the first day of the week, the Indian market opened with smart gains, touching the day's high in initial trade. However, range-bound trade amid bouts of profit booking at higher levels resulted in a tepid close in the green. The market opened in the green on Tuesday, tracking the Asian markets. The Sensex and the Nifty touched their intra-day highs in early trade, but soon slipped below the neutral line, as investors resorted to profit booking.

The absence of any major triggers and a sell-off by institutional investors resulted in the key indices falling on Wednesday. Profit-taking, along with a steep rise in the weekly food inflation numbers, kept the indices range-bound and they closed lower for a third day on Thursday.

Today, the indices slid below their crucial levels in late morning trade. Analysts attributed the trend to concerns over the sharp rise in food inflation. There was no respite and the market continued its southward journey and ended the session with a deep cut.

Overall, the market tumbled 4% during the week, with the Sensex losing 817.28 points and the Nifty declining by 229.90 points.

Tata Motors (up 2%) and Reliance Industries (up 1%) were the only gainers on the Sensex during the week. Bajaj Auto (down 15%), Tata Motors (down 9%) and ICICI Bank (down 8%) were the major decliners.

All sectoral indices ended in the red with the BSE Auto, BSE Realty (down 7% each) and BSE Bankex (down 6%) ending as the top losers.

The seasonally adjusted HSBC Purchasing Managers' Index (PMI)-a headline index designed to measure the overall health of the manufacturing sector-stood at 56.7 in December, slightly lower than the November reading of 58.4. The latest number pointed to a marked improvement in business conditions in the manufacturing sector. While the rate of growth slowed, it remained above the long-run series average.

December data signalled a marked rise in new business received by manufacturers in India. However, the latest expansion in new order volumes was slightly weaker than in the previous survey period. Growth of new business received from overseas markets also eased marginally at the end of 2010, but remained strong and comfortably above the historical trend.

India's exports in November rose by 26.5% to $18.8 billion compared to $14.9 billion in the corresponding month a year ago, and the government is confident that outbound shipments will touch $215 billion this fiscal. Imports grew by 11.2% in November to $27.7 billion, while the trade imbalance for the month was $8.9 billion.

During the April-November 2010 period, outbound shipments were worth $140.2 billion compared to $110.6 billion in the previous corresponding period, while imports stood at $221.9 billion in the period, against $179 billion in the corresponding period in the year before. The trade deficit stood at $81.6 billion during April-November this fiscal.

India's service sector growth declined in December from a four-month high in the previous month, according to the HSBC Markit Business Activity Index, based on a survey of nearly 400 companies. The index fell to 57.7 in December from 60.1 in November, its strongest reading since July 2010. The December reading marked the 20th consecutive month that the key index of services in Asia's third-largest economy has been above the 50 mark.

Soaring vegetable prices led to a sharp rise in food inflation at 18.32% for the week ended 25th December, from 14.44% in the previous week. This has set off speculation that the Reserve Bank of India (RBI) could step in by tightening monetary policy to check further escalation of commodity costs. The number is close to the high of 19.90% a year ago.

On the global front, manufacturing purchase manufacturers' indexes (PMIs) for December indicated that the rate of expansion in the global manufacturing sector is accelerating. On the flip side, France, India, China, Greece and Australia reported weaker growth.

In the Eurozone, the manufacturing sectors in France and Germany continue to be robust, while Ireland, Italy and Spain surprised on the upside. The manufacturing sector in the UK accelerated to a very buoyant 58.3. The US manufacturing sector grew in December for the 17th straight month. The Institute for Supply Management's (ISM) purchasing managers' index rose to 57 from 56.6 in November, slightly below analysts' expectations.

In Asia, Japan's PMI improved slightly but the manufacturing sector remains in the grip of a recession. The acceleration in the tigers in Asia-China and India-has moderated somewhat, while growth in Taiwan is accelerating. Emerging Europe continues be robust.


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