On Sunday, July 1, 2018, Sahara India Pariwar, led by Subrata Roy, expressed that it is optimistic about coming out of the financial embargo it had been caught in, by the next fiscal year. The group announced that it will be stepping into various new businesses and regain a leading position as an Indian conglomerate.
Sahara has been stuck in a prolonged legal battle with a market regulator body in India, SEBI. It was alleged of failing to comply with the norms while raising the funds of Rs 25,000 crore by the means of certain bonds. The Supreme Court had later ordered the group to deposit funds for repaying the investors with Sebi, even when Sahara has already refunded majority of the bondholders.
Sahara India has recently has released a newspaper advertisement giving details on its financial issues. According to that, the group had deposited funds of over Rs 20,000 crore to SEBI, which are lying idle along with the interest accrued.
As Sahara has already repaid most of the investors, SEBI has managed to refund only Rs 91 crore in the past five years.
The group has been restrained from raising any funds. An order was passed, which stated that any proceeds from the sale of assets will be credited to the Sebi-Sahara account and the group will not have the rights to use even a single rupee for addressing its needs.
As a result of this ban, Sahara India had lost various business opportunities of making profits of several thousand crore of rupees.
However, the Subrata Roy-led Sahara India Pariwar is confident of its bright future. The group stated that the money in Sebi-Sahara account will come back to it, once the verification of its documents about the repayments to the investors will be done.
The original financial schemes stated that repayment will be made in small amounts over the period 16-17 years. However, in the year 2012, Sahara had to refund around Rs 22,000 crore to investors against the plan, in a time span of just 6-7 months. As a result, Sahara’s cash flow took a hit of Rs 15,000 crore.
The group on the negative impact on the cash flow stated that it cannot be reversed. Remaining confident, it said that after clearing all obstructions by 2019-20, it would attain a key position in India, because its liabilities continue to be three times less than its assets.
On the assertions, a spokesperson of Sahara India Pariwar informed PTI that on December 31, 2014, the group accounted for a liability of Rs 62,104 crore, and assets of Rs 1,77,229 crore. There has been not much fluctuation in the ratio of these figures till today.
On its plans of overcoming the financial constraints by the next fiscal year, the group remarked, “Sahara India Pariwar is confident that Sebi will be directed very soon to start the verification of the documents of Sahara’s investors, which are already with the Sebi.”
In 2012, Sahara India had provided a proof of the repayments made by it, through documents which included bond certificates, original vouchers, other maturity documents and receipts, etc.
The group asserted, “As the central point of the case is that Sahara’s investors are refunded, this at one end will resolve this long drawn case.”
“The verification will itself reveal that Sahara has already refunded more than 95 per cent of its investors. Hence, the majority of Rs 20,000 crore of Sahara’s money (including the interest), which is with Sebi, will be refunded back to Sahara,” it added.
Sahara India also expressed that this money will not just lift the embargo, but will all end the woes of Sahara India, its 14 lakh workers and crores of its patrons.
“For past five years, Sahara is facing constraints in operation of its businesses due to the embargo.
By 2019-20, all these issues will be resolved and we are sure that Sahara will attain a key position in the country.”
“Along with the present businesses, Sahara is also entering into new businesses, which are at different levels of development, and shall be launched one after another within this year,” the group added.
Sahara India Pariwar has been operating in real estate, FMCG and a number of other businesses, along with the financial services.
The group shared, “If in 2012, there had not been such payment order, which we had to do within few months, Sahara would have had cash assets of around Rs 15,000 crore today. This has been the major cause of a huge problem, where we are not able to make repayments in time.”
“We have been continuously depositing money in Sahara-Sebi account for the purpose of refund, even after Sahara India has refunded more than 95 per cent of its investors. This has led to an accumulation of around Rs 20,000 crore in the Sahara-Sebi account (including the interest earned).”
“Making such double payments against a single liability has created an extra burden on the financial strength of Sahara,” the group said.
In November 2010, SEBI had restrained Sahara India Pariwar from raising money by approaching the public. It had also asked two entities of the group to not raise funds from issuance of any security to the public, or from the equity markets.
In 2007-08, Sahara India Real Estate Corporation and Sahara Housing Investment Corporation, mobilized funds via certain Optionally Fully Convertible Debentures (OFCDs). Later, in June 2011, the regulator asked the two group entities to give back the money collected from investors through OFCDs, along with the return.
In 2012, Sahara India Pariwar was ordered by the Supreme Court to refund the money, along with 15 per cent interest, to investors.