At its heart, the case that has landed flamboyant Sahara India chief Subrata Roy in custody is quite simple: two of his group companies -- Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC) – claim to have raised about R24,000 crore from about three million investors.
The problem: being unlisted companies, they could not make public offers to mobilise money. Sahara claimed its companies had raised the amount through a private placement, which the two companies could well do under the law.
But here, it allegedly fell foul of a law that states that all placements of shares, debentures, bonds or any other financial instrument to more than 50 investors would be treated as a public offer.
Sahara went to court, arguing that capital market regulator SEBI didn’t have jurisdiction over the matter but here again it got caught in its own web. Allegedly, a draft red herring prospectus of Sahara Prime City, a group real estate firm, had first publicly mentioned the optionally fully convertible unsecured debentures issued by the SIRECL and SHICL.
Sahara tried every stratagem to get out of this mess : filing multiple legal proceedings in the Allahabad HC and the Supreme Court, and even sending truckloads of documents to the Sebi office in Mumbai containing three million applications for the debenture issue and two million redemption vouchers to prove that it had, indeed, mobilised the money from bona fide investors and that it had repaid a substantial part of its outstanding liabilities.
‘Sahara, The Untold Story’ by Tamal Bandyopadhyay, a deputy managing editor of Mint, is an attempt at demystifying India’s most secretive and largely unlisted conglomerate, the Sahara India Pariwar.
The root of all these are two primary attributes that characterise the Indian economy: a bustling cash economy and lack of access to basic conventional banking services to nearly six out of ten adults—points that come out tellingly in Bandyopadhyay’s book 374-page opus.
Roy may come across as the “Robin Hood of a country where only 35% adult population has access to formal banking services,” but the author raises a deeper point: does he also exploit them? And raises pointed poser: “Do these poor people actually keep money with him, are they fronting for others?”
There have been increased incidences of firms operating between the regulatory boundaries at their will through schemes fall under India’s rapidly growing unregulated “shadow banking” area. Roy’s repeated run-ins with regulators and courts, as elaborately detailed in Bandyopadhyay’s book, perhaps bear testimony to this.
The comprehensive interview (the author says it spanned over two hours after months of persuasion) of Roy at the fortified Sahara Saher in Lucknow is an honest attempt at understanding the man’s pschye, his family, his business, his friends and his relationship with politicians.
To a question on whether Sahara keeps politicians’ money, Roy narrates how he turned down an offer by two political leaders to park Rs 15,000 crore and rubbishes claims about his talked-about links with former UP chief minister Vir Bahadur Singh.
It is not always that a publication carries a rider by the subject itself. “The book is based on a particular notion...portrays Sahara in bad light by attributing unfound facts and incidents to which we have objections,” Sahara says in a disclaimer.
Bandyopadhyay’s account of Sahara and Roy tries to answer many questions. But, as the author himself says, writing about a group that has 4,799 establishments, which include iconic hotels in the UK and the US, interests in sports and entertainment in its fold and the second largest employer in the country after the Indian Railways, is similar to a blind man trying to describe an elephant.