Suman Motel: Invest any time you like, you can never leave

With such a description by a leading travel website, who wouldn’t be excited to check out this resort? It seems even officials of the Industrial Development Bank of India (IDBI) went visiting this March. Albeit with a different purpose—to attach the property under the Securitisation Act of 2002.

Having failed to get back Rs 13.5 crore which Suman Motels Ltd owed them, IDBI also took possession of their Shore Club in Kashid, Alibaug. A senior official said they will soon initiate proceedings for sale of the properties.

While this financial institution may eventually get back its money, at least 60,000 people see no light at the end of the tunnel. They had invested in various schemes of Suman Motels, with dreams of turning their few thousand rupees into few lakhs. Many haven’t even got a few paise back, thanks to a company whose motto, by the way, was Committed to Commitments.

Forget money, they don’t even get replies to their letters. One investor’s counsel, who came all the way from Nagpur, knows why. ‘‘Their official, Madan Nawate, told me that each letter costs Re 1 and there are around 62,500 members. He said they don’t have the cash liquidity to spend that kind of money,’’ says Tayeb Ali.

Perhaps Nawate’s clock stopped when Suman’s did, because Re 1 was the rate few years ago — now each letter costs Rs 4!

In an attempt to show that they were incurring huge losses, Nawate also told Ali that they hadn’t paid their employees for months altogether.

Interestingly, at that very moment in another cabin, director Praful Khandhar was emphatically telling this reporter that though the staff has been reduced, they are being paid before the 10th of every month. ‘‘When you go down, you can ask the receptionist if she’s got her pay yet or not,’’ said Khandhar.

A quick rewind first. In 1984, Suman Motels Ltd was launched by Surendra Khandhar, his wife Bharti and Sheikh Mukhtar Husain. ‘‘We wanted to provide facilities like good food and accommodation to people travelling on the highway,’’ explains Praful, who is also Surendra Khandhar’s brother.

For nearly 15 years, the wheels moved smoothly. The company started with its first holiday resort in Khopoli and went on to build nine in Maharashtra and 24 in the rest of the country. It came to be recognised as one of the better three-star resorts, enticing thousands to become members of its timeshare scheme.

Others invested in their bonds and plantation schemes, some of which were floated by sister concerns like Highway Users’ Centres India Ltd and Tej-Gaurav Farms Ltd. The company went public in 1989 and even announced dividends of 15-17 per cent over the years.

Then came the Securities and Exchange Board of India (Sebi) order in 1999, banning them from taking any more money under the Collective Investment Schemes.

Suddenly, the company had to pay back nearly Rs 50 crore really fast. It couldn’t. Investors panicked and took the matter to court. The court gave them a short deadline.

Yeh sab kayde kanoon ki wajah se hamara cycle kaharb ho gaya (All these laws have broken our cycle),’’ rues Praful.

‘‘In the last four years of crisis, we have already settled Rs 10-12 crore of dues,’’ says chairman Mukhtar Hussain. Admitting that they still owe depositors another Rs 25-30 crore, he said they have approached the Board of Industrial and Financial Reconstruction to declare their company sick. And what will that achieve? ‘‘Once we get some government protection, we are expecting some investors to come from abroad,’’ he claims.

How that will happen, only Hussain can figure out. Till then, investors get the benefit of Nawate’s priceless advice: Wait and watch.