Sahara’s 25,000-crore Saga with SEBI: A Decade of Mysteries, Investments, and Unanswered Questions
Sahara was a large corporate empire with its fingers in many pies; it was a banking institution, a home finance firm, a media house, an airline, a hospitality business, and even a Formula 1 team shareholder. Its assets were valued at around Rs. 2,50,000 crore. The entire system began to crumble in the 2010s. Even now, no one appears to have solved a specific enigma behind Sahara’s 25,000 crore liabilities.
Let’s Dig Deeper Into Sahara’s Business
We’ll have to go back to 2010. One of Sahara’s group businesses, Sahara Prime City Limited, had submitted its Draft Red Herring Prospectus (DRHP) with SEBI. For the uninitiated, a DRHP is essentially a document filed by a firm before becoming public on the stock exchange. It includes the company’s financials, prospects and dangers, and industry information.
In any case, Sahara Prime City intends to utilize the proceeds from the public offering to fund infrastructure projects like bridges, airports, and rail systems. That was its concern. However, when SEBI reviewed this paper, it discovered something unexpected.
ALSO READ: Indians Can Explore Thailand Visa-Free: Discover the Details and Top 5 Visa-Free Destinations
It was discovered that two additional Sahara group businesses, Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL), had previously raised over 19,000 crores from over 2 crore investors.
The SEBI was taken aback by this. It questioned Sahara as to why it hadn’t been made aware of this enormous fundraising.
And Sahara was prepared with a response. It said that the fundraising was not available to the general public and was only intended for friends, workers, employees, or other persons related to the Sahara Group. It was technically a private fundraising. Because the bonds were not intended to be posted on the stock exchange, it did not need to notify SEBI.
Now here’s the deal: Optionally Fully Convertible Unsecured Debentures (OFCDs) were a security provided by SIRECL and SHICL. Simply explained, an investor loans money to a firm in return for a security that may subsequently be converted into company stock.
When a corporation raises money in this manner from more than 50 people at once, the regulations state that it is no longer private fundraising. It will be considered a public issue, and the fundraising will require SEBI approval. However, Sahara claimed that the funds were raised by its ‘pariwar’ (family) of well-wishers. That’s how the group refers to itself, its personnel, and its customers.
As if they were one huge happy family. So it simply used its 10 lakh agent network and over 2900 branch offices to send an information statement to over 3 crore people, encouraging them to subscribe to the OFCDs.
ALSO READ: Battling India’s Air Pollution Crisis for a Healthier Tomorrow
There was no cooperation. There was no legal structure in place. There was nothing there. As a result, it ordered Sahara to refund all of the money to the investors and halted Sahara Prime City’s IPO. The Supreme Court even directed Sahara to deposit the funds earned under the OFCD with SEBI. The situation had been resolved.
What Happened Next With SEBI?
Sahara began to declare that it had reimbursed the investors’ money in cash. That it has already served its purpose. However, there was no evidence of such an occurrence occurring. In reality, the Supreme Court inquired as to the source of the repaid funds. It has been nearly ten years, and SEBI has only received claims totaling 138 crores!!! That means that hundreds of crores are sitting inert in SEBI’s bank account with no beneficiary connected.
Conclusion
Was Sahara able to generate that much money through the OFCD? Or did they simply make up a story to persuade more individuals to part with their money in the future? Sahara would accept deposits in exchange for interest. It spread the word that if individuals deposited a modest bit of their daily earnings with Sahara, their savings would be doubled or tripled.
Even 20 was not too little a sum to invest in Sahara’s plans. It accepted all of them. And Sahara earned the faith of its investors by delivering on the enormous profits promised. However, the 25,000 crore rupee enigma remains.
