Promise of high interest rates on FDs put JVG on a faster orbit
Major chunk of JVG group’s turnover was created from fixed deposits received from public following aggressive advertising offering high interest rates of up to 30 per cent in early 90s.
Ravindra Yadav, additional commissioner of police (crime and railways), said investors flocked to buy the group’s schemes and the deposit base soon crossed Rs 1,000 crore.
“The group’s turnover increased from Rs 102 crore in 1994-95 to Rs 700 crore in 1995-96. Then chairman and managing director, Vijay Kumar Sharma, had plans for expanding the group to a Rs 12,000 crore empire by 2000,” Yadav said.
Vijay’s father was a teacher, but he gave up studies in class 11. He started his career as a building materials supplier in 1979, and launched his first company, JVG, in September, 1989. He started real estate business by developing JVG Enclave on Noida-Dadri Road, which was later declared unauthorised by the Uttar Pradesh government.
He went onto launchingJVG Finance and developed Chaudhary Charan Singh Awas Yojna in UP’s Bagpat district of UP. In 1992, he opened an office in Patna and developed Jai Prakash Yojna. Vijay planned to set up mega townships in Gurgaon, Patna, Mumbai and Hyderabad, and acquired hotel and cement interests of Delhi-based Jaiprakash Industries, steel units of Rathi Alloys and aircrafts of ModiLuft.
“Vijay earned a lot of money during this phase and purchased Appu Ghar in Meerut. Subsequently, he asked for fixed deposits from public by offering high interest rates and opened several branches of the company all over India,” Yadav added. He went onto launching JVG Times newspaper and afternoon tabloid Sandhya Times in Delhi and JVG Sandhya Prahari in Patna. After this, he launched JVG Departmental and opened stores in Chandigarh, Kurukshetra, Delhi, Patna, Varanasi and Ranchi.
Vijay had announced that he would invest over Rs 4,000 crore in diverse areas such as power, cement, hotels, steel, textiles and aviation.
“Over the next few years, the group brought over 3,000 small firms. Vijay also launched JVG Steels, JVG Departmental Stores, JVG Foods, JVG Petrochemicals and many other companies,” Yadav said.
The group’s trouble started in June, 1997, after the SEBI asked JVG Finance to refund Rs 45 crore it raised from a public issue in March, 1997.