The rise and fall of corporate conglomerate AgriGold Group of Companies in many ways is akin to the death of Karna in the epic Mahabharata.
The company began its business pursuit in a humble manner from Vijayawada in 1995 and forayed into several ventures, including milk, fertilizers, media, tourism resorts, plantations, entertainment, and real estate, and for 18 long years, and there was no turning back.
“The mantra of the company was ‘Aaharam, Arogyam, Anandam, Avasam , Anandam (Food, Health, Entertainment, House and Beauty) and with about 420 products, the group gave some of the established brands a run for their money,” says Chandrasekhar, an agent from Kadapa, who has been associated with the company since 2004.
The business grew rapidly and crossed the borders of Andhra Pradesh to enter States such as Tamil Nadu, Karnataka, Odisha, Chhattisgarh, Maharashtra, Telangana, and the Andaman and Nicobar Islands.
Over 32 lakh people invested about ₹7,000 crore in the companies and its agents worked like disciplined soldiers.
The rise of AgriGold was based on the all-pervasive human weakness – greed. The company exploited it to the hilt by offering higher rate of interest and free plot to the depositors. It purchased the loyalty of agents by offering attractive commission.
“The depositors wanted to get extra money. Eighty per cent of the customers had invested less than ₹30, 000,” says Syed Ali, an advocate, who has been following the scam right from day one.
The company introduced several schemes covering all segments of people.
“The company used publicity and advertisement as a vital tool,” says Ch. Satyanarayana, a former employee.
“It takes eight years for you to double your money in the post office and more than eight years in banks and other financial institutions, but AgriGold gave double the amount in 6.5 years,” points out Sambasiva Rao, an agent.
Everything looked hunky dory and even regulatory bodies such as the RBI , the SEBI and the Income Tax Department failed to anticipate the impending disaster.
Bifurcation blues
However, disaster struck in the form agitations in united Andhra Pradesh both for and against bifurcation in 2013 leading to a period of agonising uncertainty. In fact, the fall of the company started this year.
“During that time differences among brothers surfaced forcing some of them to divert depositors’ money to acquire benami properties,” points out Chandrasekhar.
“Between 2013 and 2014, cheques worth ₹700 crore bounced indicating that something was seriously wrong with the management,” says AgriGold Customers and Agents Welfare Association president Muppala Nageswara Rao.
Bad time befell the group as the five-month-long agitation in united A.P. affected the fortunes of the company. The group, which emerged as a number one real estate company in the State, witnessed a slump in Telangana region after the bifurcation. There were literally no takers in Hyderabad for quite some time.
But A.P. witnessed a peculiar situation with the land bought in various places like Visakhapatnam, Vijayawada and Guntur, witnessing more than 100 % increase.
The spurt in the land prices near the new capital city created jealousy among big players.
Misinformation campaign
The fact that that the company owners belong to a ‘weak community’ was also a reason for the crisis as members of a ‘stronger community’ systematically created confusion in the minds of the customers by spreading rumours and misinformation.
“They created fear among customers that the land possessed by AgriGold would be taken over by the State government. The forces working against the company successfully convinced many customers to cancel their plots thus triggering a crisis ,” points out Bhanu Prakash, a real estate businessman.
The company faced a liquidity crunch as some of the bills from the State government headed by Kiran Kumar Reddy remained pending for a long time. “Certain decisions taken by the State government also impacted several products of the company,” says Chandasekhar.
To overcome the liquidity crisis, the company floated a new venture – AgriGold Parivar, a mutually aided cooperative company, and pressured its agents to mobilise deposits.
However, a series of police complaints by depositors, frequent bouncing of cheques, unrest and panic among customers, subsequent searches in the houses of the directors, including MD Avva Venkata Rama Rao, led to unfolding of many unsavoury events bringing down the image of the company.
With the issue rocking the Assembly, the State government initiated a CID probe, also set in motion a series of measures such attachment of properties and auctioning or selling of the properties with the help of the High Court.
The depositors had a ray a hope when Zee TV owner Subhas Chandra-led Essel Company showed interest in buying the company. But its pullout at the last minute dampened the spirit of the victims.
With the issue back to square one, now all eyes are on the State government which will place its proposals before the High Court on April 25 to find a way out.
The good news is that Chief Minister N. Chandrababu Naidu has promised to explore the legal option.
