Ponzi Scheme..?? - An article by Economic Times...

There is an article published by Economic Times on Emu... The article could have been deeper, however, this article has raised a concern over whether the Emu Schemes are moving..

The link is below:

http://articles.economictimes.indiatimes.com/2012-03-20/news/31214799_1_investment-scam-ponzi-circular-trading

(Thanks to Economic Times):

Investment scam: Cases of circular trading of Aussie bird emus rising in Tamil Nadu

Sangeetha Kandavel, ET Bureau Mar 20, 2012, 12.46AM IST

Tags:

• ponzi scheme|
• Flightless bird|
• EMUs|
• EMU|
• circular trading|
• Aussie bird

• 

CHENNAI: In Tamil Nadu, a highly literate and industrialised state with a propensity to fall for ponzi schemes, one more investment scam seems to be brewing. This time it centres around the emu, a large, flightless bird native to Australia and reputed to have as many uses as the wonder drug aspirin.

Across the southern state, indications are that there is a steady build-up of what is essentially circular trading of emus, something that is usually a precursor to an eventual collapse. Advertisements on television, Internet and pamphlets are touting the bird as the ultimate in investment.

Among those who fell for the spiel is Arjun, a 30-year-old software engineer from Chennai who bought 10 pairs of chicks investing Rs 2 lakh. He got his money back in two years, but now says there is something fishy about the whole scheme. "If everyone is selling the bird not to the end consumer but to people who are getting into farming, it doesn't sound good," he says.

Investment schemes for emus look remarkably similar to the ponzi rackets that have operated in the past. For an initial investment of, say, Rs 2 lakh for 20 pairs of chicks, an investor is promised total income of Rs 6.5 lakh in five years-essentially a tripleyour-money scheme. All an investor is supposed to do is return the 20 pairs to the company promoting the scheme every year and take a new set.

Emu farming is supposed to have debuted in India in the mid-1990s after emu slaughtering was banned in its home in Australia. Now, those in the business say there are 3,000 farms in the country, largely in Tamil Nadu, Punjab, Maharashtra, Kerala and Gujarat.

It is in the past two years that the hype has grown. Afarm owner near the hill station of Kodaikanal boasted that he has sold over 1.5 lakh emus so far. No order below 25 pairs of chicks is worth his while and payment has to be upfront.

Doubts Over Mkt's Existence

Among those contributing to the buzz is Susi Emu Farms in Perundurai, near Erode, which calls itself one of the largest emu farms in India. Its sales pitch is that "it fulfils dreams of people who are in search of projects providing quick profits on investments in this competitive world".

For Senthil, who relishes quick profits, emus are just what he was looking for. Recently, he paid Rs 1.2 lakh for five pairs of chicks from a farm just outside Chennai. In two years, he believes, each emu will be worth Rs 45,000.

Emus can grow to be as tall as humans and weigh up to 60 kg. Related to ostriches, they can live for 40 years and are fertile for half that period. Those peddling emus say it is a golden goose-its meat, eggs, feathers, toenails, skin and even oil are all valuable.


While software engineers and farmers alike are being lured to emu schemes, they are not asking if there is a real market for emu products. Such concerns have arisen once in a while but formal complaints have not been made. VK Shanmugam, the collector of Erode district, says the emu business is a matter of "serious concern" but since there are no complaints, no action can be taken.

Shanmugam says he is also intrigued by the fact that he doesn't see any of the birds though people seem to be investing in them. "I hear that people are depositing money but are not able to get receipts for that," he says.

The administration recently had a meeting with top police officials about the emu problem. Tamil Nadu has a rich history of ponzi schemes. Among the more notable ones is the collapse in 1998 of the Anubhav group which duped investors who put money in a teak plantation scheme of around Rs 400 crore.

Last year, a PTI report said the Maharashtra government ordered a CID inquiry into a likely Rs 200-crore emu farming scam in Nashik district.

The controversial scheme, run by a private company, involved a promise to triple investment in 45 days. Farm owners in Tamil Nadu estimate the number of emus in the state at around five lakh, or one bird for every 130 people in Tamil Nadu. Sceptics such as Shanmugam, however, don't buy that number.

V Rajapandi, the general secretary of the Tamil Nadu Emu Association, said to be registered under the Societies Act and having 300 members, defends his business.

He says emu farming is a genuine business "if you do it in the right manner." "It has a huge market. Just because a handful of people say so, you cannot say the business is a ponzi scheme," he adds. 

(Thanks to: The Economic Times)

Emu Schemes - Maladies of our time

I am seeing a lot, a lot of lot, advertisements in the Tamil Newspapers, Radio and TV Media, for Emu Farming and its dubious schemes. I am little worried about the stupendous nature of the propaganda, and associated 'freebies'.

I am not sure about other states. People can share them in the comments of this blog.

Only one word, beware...!!!  Be cautious about your hard-earned money on these schemes.

Why I am worried?

1. There is no effective meat market developed yet for export or for local sale and there is no symptoms of it, so far. In my opinion, exporting emu meat is simply not profitable. It has to be sold locally.

2. Unimaginable monthly returns are assured and tempted with Gold Coins. In my opinion, the industry is heading to peak for this year 2012 season (September 2012 to February 2013), and will go down for the next season.

3. Officials from Veterinary Departments, preferred to stay away from saying any comments on this business, since they are not very sure of where it is going. There is no guidance or regulations from the government.

So, whom to beleive in? The game is keep going, and let's see how long will it go.

There are several stories are floating. One thing is certain as the money collected is not purely invested in Emu Farming Business alone. It goes somewhere..!!.

The Egg Season has begun....!!!

Emu Breeders started laying. I also contacted several other people, and many of them confirmed their Breeders started laying, but not started in full swing.

Please note, when the season actually begins, not all the breeders will lay eggs. One or two pair will start laying eggs initially, and to kick off the momentum it will take atleast 2-3 weeks. Until then, you cannot start your incubator. Because to start an Incubator, you need a reasonable quantity of eggs to sustain the cost of production.

What to do with the eggs until then...?

You can keep it in Fridge at 18 degree celcius, for upto 15 days. Or, you can keep it in a dark, cold place inside a clay pot. When you are taking out the eggs from Fridge storage, keep the egg in open space at room temperature for a minimum of 8 hours for the eggs to stabilize.

The price of the eggs?.....  Good question, wait for atleast next 10 days..!!  This is the Demand and Supply equation.

Contract Emu Farming - Some Warnings

Recently some distasteful news in the Media about Emu Business from Maharashtra, which was disheartening. 

There are two sides to a coin. One side is the people who simply ready to be duped with tons of ignorance and Money, and the Other side is the People who design their schemes such that most appealing to a common man to part with his Money and Confidence. This applies to Finance Companies to Forex Companies, and Emu Business is not an exception to this White-Collar Crime.

Before someone new to this industry end-up in a similar scam, there are some valid points to look for before investing in Emu Schemes, whether it is Contract Emu Farming or MLM-type Schemes. We will be seeing them here.

In any Business, there has to be a product. In Emu Business, Meat & Oil are the products (Eggs are only for reproduction and is not a product). These are the two main reasons for which, Emus have to be culled. Culling for reasonable economic values is the essential key to this Business. If there is no culling and no regeneration, the cycle never completes. 

Before you invest and Sign a contract with a Contract Emu Farming Company, please look into the following aspects.

I put them into pointers:

• In an Emu Contract Farming Business - Check whether they have processing plants to produce Meat and Oil. Emu Processing Unit (EPU), as they are called, are setup to cull birds hygienically, and cut meat as required by Market. If the Emu Contract Farming Company does not have EPU and proper Marketing Arrangements to market the meat, do not invest your money with them.

•  If the Emu Contract Farming Business offers you more than Rs.350/- per month per bird, double check their past history, and also check whether they already have the EPU. It might be possible that they need more birds for their busy EPU, so they offer higher premium. If not, they are luring you and your money, because it is simply not viable to run at this cost for long-term.  This also applies to giving Gold Coins as an Incentive to join. Simply, doubt them.

• If the Emu Contract Farming Business is based on the Multi-Level-Marketing mode, never involve into this. You will earn only bad reputation for yourself, because you are false-promising many people into that.  Stay away from these kind of schemes.

With the advent of few big names in the industry doing Emu Contract Farming in large scale has raised concerns for many. Because the amount involved is running into Crores of Rupees. The tipping point for this industry will flower once the Emu Meat is well liked by the end-users. For that to happen, Emu Meat must be freely available on the market first.

Emu business will sustain and grow only when there is a usage, that means, a Market for Meat. This can be achieved only through selling its Meat for consumers and Oil for Pharmaceutical Industries. That day is not too far.

Emu Meat Sector Updates - 3-Aug-2011

I managed to speak to Dr. S.K.Maini on the Emu Meat Sector Developments, and It was fruitful to know lot of facts from him. FYI, Dr. S.K. Maini is one of the pioneers in Emu Farming Industry in India. He is running a NGO, focusing on Emu Products, named AGRIBIOTEK. 

Currently Dr.S.K.Maini is running an Emu Processing Unit (EPU) in Hyderabad with a capacity of 40 birds per day, which sees increasing demand for Emu Meat. The Emu meat is locally marketed, fat is sent to the processing unit. Emu skins are being collected & preserved, once they are approx 500 in number they will be sent for tanning.

The Price is Rs.270/Kg live weight, delivered at their EPU. 

Another Farmer, Mr. Suresh is running a similar sized EPU, but he sells the meat beyond Hyderabad, say, upto Chandigarh and Punjab. Another two similar units are coming up near Hyderabad and one in Nanded. 

In Tamil Nadu, Mr. Jegan Mohan of VR3 Emu farm is helping and advising aspiring entrepreneurs to set up EPUs by providing Consultancy and Marketing Tie-up. Mr. Jegan Mohan is one of the earliest Emu Farmer in TN and his VR3 Emu Farm has also procured license to process EMU OIL, as per Indian Regulatory Requirements. 

Susi Emu Farm and Jeevan Emu Care are coming up with their own EPUs. The procurement for them mostly will come through their Contract Farming.  VC Emu farm has a similar strategy, but there is no information on their EPU.

Vileena EPU is progressing towards to starting its operations in December 2011. 

Other than this established/establishing players, I have seen numerous local emu farmers, who regularly slaughter Emus for Meat to feed their Emu Meat Lovers in their city only during festivals. 

I am keep mentioning that Emu Business will be successful only if there is availability and consumption of Emu Meat in India. That's started happening now. The promotion and advertisement has not started at all. In general, Promotion and ad spending will start happening once there is a sizeable production capacity in place, and we can expect that too to be happening soon. 

Contact Details:

Dr.S.K.Maini - (98480 14071)

Mr.Jegan Mohan - (94426 35308)

Status of Emu Slaughtering Houses in Tamil Nadu

I spoke to few big emu farm owners last week. I got good news on the emu slaughtering houses with some concrete plans.

Jeevan Emu Farm is expected to start operation in their Slaughtering House by early weeks of August 2011. The Plant location is near Saanarpatty, Dindigul (TN). Jeevan has already started their Contract farming in a large scale last year. I have mentioned in detail about their scheme in my earlier post.  Mr. Rajapandiyan, CEO of Jeevan Emu Farms has indicated that they will shortly commence the operation in the Emu Slaughtering house tentatively in first week of August 2011.

The big player, Susi Emu Farms (SUMU), has their slaughtering house is on the cards before Dec 2011, after signing a consultancy agreement the past weeks. The Marketing for emu meat and fat will be done by an Industry Veteran (name withheld by request). I understand from that Friend is that they have secured a Meat Order from Overseas, which requires to cull 850 adult birds a month to produce the required quantity.

Also, Susi Emu farm has started expanding their business in Southern Districts after opening up branches under their umbrella.

The other two parties waiting in the sideline to pick up the slaughtering house business are VC Emu Farms, Salem, and MMT Emu Farms, Karur. I do not have an idea about these two, but, they have potential since they hold large quantities, in Tens of Thousands, of Emu Birds under their Contract Farming business.

It's very clear that the Emu Industry is finally kick starting in Tamil Nadu.

It's a good news, isn't it?

Emu Salughtering - a Franchise Model ?

Emu Slaughtering is the lifeline for Emu Farming Industry. If it is not established soon, the industry will be waning.

Here it comes a new concept on Emu Slaughtering - on Franchise Model.

Emu Slaughtering has to be approved by Animal Husbandry Ministry, which it takes its own time to approve and hence this is one major reason emu slaughtering houses are getting delayed to start their operation. But an approval is not required for a Butcher, except getting sanitary certificate from the local municipality. 

Instead of relying on few big Slaughtering Houses to procure emu birds on live-weight basis in large numbers, there is a new thinking of franchising the slaughtering house model to Butchers in cities. 

How does it work?

Concept:  

The emu slaughtering is not so popular in retail level, because, Butchers do not know how to process this bird and also how to handle the byproducts and biological wastes originating from them. The Butchers are need to be invited to join a free program, where they will be systematically trained on the emu slaughtering in their shops. Systematically here means, teaching & training them on how to do the following: removing the skin with out knifing, removing the feathers without leaving holes in the skin, separating the fat without blood stains, and  handling the biological wastes, etc.

1. Butcher will pay for 3 birds average live weight cost @ 40 Kg x 275 x 3= 33,000/-. It can be arranged with a bank to grant unsecured micro lonas to the butchers. As banks provide the money to the franchiser directly, whereas the butcher owes money to bank.
2. The Emu birds will be given to them on a daily basis, the butcher will sell the meat and be settling the money on the same day evening and along with that, the fat, feathers, and skin also will be collected by the franchier.
3. A Delivery van, with cages for each bird to be built and used to deliver the birds. The birds are expected to be delivered before 6 am in the morning.
4. A Collection van with refrigeration facilities and a safe vault (to keep money), to be visiting each butcher around 4 pm in the evening to collect the money and FAT.
5. The big farmers are to be signed agreement to supply birds @ 250/kg live weight at their farm gate. 
6. An arrangement with Emu Fat processing units (one is already running in Pondicherry) will give you a regular market for the fat. Same applies for Skin and Feathers. There are consumers for it.

Let's look at the cost aspects:

• What does Breeder get?

A Emu bird will reach 40 Kgs at 10th month by changing the feed combination. The purpose made feed combination will help the bird to store lot of fat at the age of 10th months. The selling cost at the 10th month for each bird is: Rs. 10,000. you have spend Rs.4500(feed)+Rs.2500 (chick production cost+labor), which costs you around Rs.7,000/-. You get Rs.3000/- per bird. If your farm is producing 1000 birds every year, you get 30,00,000/- as profit, whereas your sales, is Rs.1,00,00,000. It's a good 30% margin. Breeder gets his money on cash and carry basis.

• What does the Franchiser get?

The Franchiser who does running the distribution network, virtually starts up with very small investment, compared to the Emu Breeder. A bunch of people, several custom-built lorries, and a systematic approach and sincerity to the business are enough to make the big success. Apart from the investment in the infrastructure, Franchiser makes Rs.2000/- per bird straightaway. If the lorry carries 60 birds at a time, it is 60,000/- per trip as total Gross Profit. The advance money is paid by the butcher, as this money is coming from Banks (Citi, HSBC, SCB, etc) as an unsecured Microfinancing Loan. Government is forcing the banks to disburse microfinancing loans as a percentage of their total capital requirement. Actually, these banks are looking for a reliable opportunity and partner to work with. The advance money is with Franchiser to pay in cash to the breeder. Breeder gets his money on cash and carry basis. The fat collected is at Rs.1000/Kg from Butcher and is sold to the Emu oil processing unit at Rs.1,200/Kg, which makes an another Rs.60,000/- per trip of 60 birds (60 birds @ 5 Kg x Rs.200 [1200-1000=200] = 60,000). Each butcher can sell atleast two birds a day (25 Kg meat for each bird) and you can easily find 30-50 butchers in a city to market your product. To increase your sales numbers, you need to advertise periodically about the health aspects of emu meat in Papers and TV. 

• What does the butcher get?

Butcher initially deposits Rs.33,000/- to the franchiser for 3 emu birds at 40 Kg live weight at the rate of Rs.275/Kg, and the money is given by bank as microfinancing loan with no collateral. Butcher sells 25 Kg of meat per bird(with bones, albeit) @ Rs.300-325/Kg, sells 5 Kg of fat to the franchiser at Rs.1000/Kg, and Skin is selling at Rs.500/Skin. The total sales is Rs.13,000, against the bird cost of Rs.11,000/-. The net revenue is Rs.2,000/bird. If he sells two birds, he can make Rs.4,000/day on emu birds. Butcher is not sparing the money from his packet to pay the advance, which he can settle over a period of 3 years to the bank. And also, he is delivered with birds at his doorstep, and the fat is sold at his doorstep to the franchiser on the same day. It's no-pain business for him.

In general, Emu industry will be flourishing if this model gets implemented. If you need further clarification/information/suggestion on this, please email to me at jm.emufarm-at-g.mail_com.