When the first flock of emus — flightless birds native to Australia — landed at Perundurai in Tamil Nadu’s Erode district in 2006, they drew the attention of only curious onlookers. Then they drew the attention of investors, enabling firms and businessmen offering schemes on the birds to rake in huge money. Six years on, the emus and the investors have been left in the lurch and the businessmen have allegedly taken flight with the invested money as emu contract farming joined the list of dubious investment schemes after a few years of roaring business.
Perundurai, the hub of emu farms, is now crowded with anguished investors who swallowed the bait of big returns. A conservative estimate by district officials points to a scam worth Rs. 300 crore. But traders in the poultry business claim over Rs. 500 crore might have been lost in this business. The police have said Susi Emu Farms India Private Limited might have swindled investors of around Rs. 200 crore; most of these are from Tamil Nadu.
Promised staggering financial returns, more than 20,000 people invested in these firms. “People thought only about the financial returns. They did not think where this would lead them to,” said Lower Bhavani Farmers’ Association president S. Nallasamy.
In 2006, M.S. Guru, hailing from Perundurai, founded Susi Emu Farms and introduced a buy-back scheme that promised lucrative returns on investment in contract emu farming. For an initial investment of Rs. 1.5 lakh, he promised a return of Rs. 3.34 lakhs within two years. Under the scheme, the company provided investors three pairs of chicks on the payment of Rs. 1.5 lakh as caution deposit. It also provided the infrastructure to rear the birds and offered Rs. 6,000 a month for the maintenance of the birds, besides a yearly bonus of Rs. 20,000. Thus, the investor was offered around Rs. 1.44 lakh. As per the scheme, the company would take back the birds after two years and return the deposit too. When word got out that Susi Emu Farms made prompt payments, the investments poured in; in no time the company’s presence spread all over Tamil Nadu.
Soon after, the firm introduced a VIP scheme, taking advantage of the lack of awareness among people about the birds. Under this scheme, the investor had to deposit Rs. 1.5 lakh. But unlike the regular scheme, the firms promised to rear the chicks and pay the investors Rs. 7,000 a month and an annual bonus of Rs. 20,000.
Quick profits lured investors like S. Kasinathan of Pallathur in Sivaganga District, who put Rs. 15 lakh in the regular scheme. “I was misled by advertisements. I trusted the firm as it was doing business for seven years,” he said.
R. Jayammal of Tiruchengode invested Rs. 4.5 lakh in the VIP scheme six months ago. “My neighbours and relatives invested and got monthly returns. So I too invested all my savings,” she said.
Endorsed by popular film personalities, it expanded business to Andhra Pradesh, Karnataka and Kerala. Mr. Guru even opened a chain of restaurants in Bangalore, New Delhi, Puducherry and Erode, among other places, inviting State and Central Ministers and famous personalities for inaugurations.
Mushrooming of emu firms
The success of Mr. Guru’s business model led to the mushrooming of emu firms, which advertised heavily in the Tamil media. Some even promised a return of Rs. 2 lakh a month for an investment of Rs. 10 lakh.
Oblivious to the fact that there are no processing facilities for products derived from emus, the investors bought these firms’s claims that they exported emu meat and that everything from an emu was marketable. Many firms reportedly even engaged in trading of birds among themselves instead of marketing the emu meat, oil and skin (for leather).
Sensing that something was wrong, the Erode district administration issued repeated warnings asking people not to fall for the tempting offers from these firms. “We have warned the investors on several occasions. But, lured by the get-rich-quick schemes, they failed to see the warning signs,” Collector V.K. Shanmugam said.
The bubble bursts
The bubble burst when Susi Emu Farms failed to pay the monthly maintenance fee to the investors. After waiting for sometime, the investors made a beeline for the firm’s office in Perundurai.
On August 6, Mr. Guru and his entire family disappeared. Others in the business followed suit, abandoning scores of investors and the birds.
The police have registered cases against Mr. Guru and seven others under Section 120-B (conspiracy) and 420 (cheating) of the Indian Penal Code and formed three teams to nab the culprits. About 4,000 investors from across the State have registered their complaints against these firms so far, the police said.
This is not the first time Mr. Guru has been caught in a controversy. Earlier, he was arrested for misusing the former President, A.P.J. Abdul Kalam’s name in promotional material.