But what happens to Citrus Check Inn?
The Securities & Exchange Board of India (SEBI) has issued another decisive order against Royal Twinkle Star Club, a massive collective investment scheme (CIS), which has been luring people with the promise of high returns. Moneylife has been tracking Royal Twinkle for over a year. While SEBI’s reiteration of its 2014 notice to Royal Twinkle is welcome, it would appear that this is still half an order and may require quick further action to really protect investors.
SEBI’s order of 21st August was made public through a press release on 25th August. It has asked Royal Twinkle and its directors—Omprakash Basantlal Goenka, Prakash Ganpat Utekar, Venkatraman Natrajan and Narayan Shivram Kotnis—to wind up its existing CIS and refund the money collected from investors within three months. Royal Twinkle has also been asked to submit a winding up and repayment report to SEBI, including the trail of funds claimed to be refunded, bank account statements indicating refund to the investors, and receipts from the investors acknowledging refunds. The promoters have been told not to alienate or dispose off or sell any of the assets of Royal Twinkle except to make refunds to investors and to provide a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/securities, if held in physical form.
Interestingly, on 6 March 2014, Moneylife’s website wrote that Royal Twinkle had simply changed its name to Citrus Check Inn and was continuing to collect funds. Earlier, on 3rd March, we had written to SEBI to alert it that Royal Twinkle had changed its name to Citrus Check Inn. SEBI’s 2014 action followed immediately thereafter but made no mention of Citrus Check Inn. This order does not mention it either. However, on 3 June 2015, in a separate order, SEBI barred the promoters of Citrus Check Inn from raising funds from the public. It said that Citrus had collected over Rs777 crore from investors through its various holiday plans which were really nothing more than a collective investment scheme.
Action against Citrus Check Inn is at the first stage and the company is likely to appeal SEBI’s orders. Moneylife will continue to track this through investor feedback.
Royal Twinkle claimed to have 234,000 rooms across the country and had raised Rs668 crore from nearly 370,000 people by 2014. In this respect, Royal Twinkle is vastly different from Sahara and Alchemist, who seem to have funds, but are hard pressed to establish their existence and identity. Both, Royal Twinkle and Citrus Inn, have been specifically targeting less financially literate persons such as drivers, domestic helpers, small traders and vendors across Mumbai.
SEBI’s interim order of 2014 is more or less similar to its order of 21 August 2015 barring Royal Twinkle from collecting funds. That order noted that, although the company claimed to sell holiday plans, a majority of investors were attracted by its offer of high assured returns and less than 2% had availed the so-called holiday packages.
This amounts to ‘illegal deposit mobilisation’ with “guaranteed returns of 1.5 times in 4 years, 1.7 times the investment in 5 years, double in 6.5 years and 3 times in 9 years.” Moneylife had pointed out, in 2014, that some investors misunderstood the plan as a recurring deposit and had paid Rs500 every month into the scheme. Some others claimed that they were promised returns of 13% to 14%. One agent posted a complaint on a website that Citrus Inn sold its plans variously—as a recurring deposit, fixed deposit or a pension plan and money back term plan—in fact, whatever it took to lure the investor.
In Royal Twinkle’s case, as soon as SEBI’s latest order uploaded on our website (on 25th August), worried investors began to ask how they should apply for a refund. SEBI will help and reassure people if it allows investors to write directly to the regulator in order to seek refunds. This will help it verify the number of investors as well as track whether Royal Twinkle has actually refunded the money. Interestingly, the money collected from Royal Twinkle investors is apparently funding some popular fast-food chains in Mumbai.