Curren t

In the Dock?
The high-profile Sahara Group comes under the RBIs lens. VIRENDRA VERMA
Financial is making profits for the guardian of the group and the funding of the worlds largest fam- groups other businesses is mainly ily. Thats how through it, says a former employee Subrata Roy, Chair- of the Sahara Group who declined man, Sahara Group, refers to him- to be named. self (the guardian) and his band of investors (a family estimated to be 42.5 million-strong) in a corporate presentation on the group. Last fortnight, however, the Rs 50,000-crore Sahara empire, for the first time, appeared to have begun crumbling at the core. The Reserve Bank of India (RBI) prohibited the groups cash cow, Sahara India Financial Corporation (SIFC), from taking fresh deposits for violating various norms. Sahara promptly got a stay from the Allahabad High Court, but the apex bank was quick to move the Supreme Court. On the day Business Today was going to press, the apex court had directed Sahara to appear before the RBI on June 12 and convince the central Saharas Roy: Worry lines bank that its house was in order. At the time of writing the ultiSpokespersons for the Sahara mate outcome is still hazy, but in- Group were either unavailable or siders at the Sahara Group admit declined to comment on the matter. that if the RBI diktat prevails, Sahara An RBI statement of June 4 could be in big trouble. None of points out that the residual nonthe businesses except Sahara India banking company, with a deposit

ES THE SELF-STYLED

base of over Rs 18,000 crore and a depositor base of 4.25 crore, had continuously violated directions and guidelines relating to payments of a minimum interest rate, know-your-client norms and intimating deposit holders of maturity and repayment. But what could be a greater concern for the central bank is the Sahara companys asset liability match (ALM), as the RBI found a violation of the ALM guidelines as well. This could be a concern both for the central bank and the depositors. RBI s spokesperson declined to comment, as the matter is in court. The legal counsel of Sahara was confident of answering all the RBIs queries. After the Supreme Court directive, K.K. Lahiri, lawyer for Sahara in the Supreme Court, told BT : We have answers for all the allegations made by the RBI. He further says that there is not a single depositor complaint. The financials of SIFC arent exactly impressive; net profit fell 57 per cent to Rs 17.75 crore for the financial year ended March 2007, while the deposit base increased 16 per cent to Rs 18,108 crore for the same period. The financials for the year

000

BUSINESS TODAY

JUNE 29

2008

YASBANT NEGI

ended March 2008 were not available. If the Sahara Group does lose in the court room, the impact would doubtless be felt on its other businesses, including real estate, media and other financial services like mutual funds and insurance. A statement issued by the group after the RBI directive maintains that all the businesses will continue as before and will not be impacted by the prohibitory order. A section of analysts tracking the group reckons that it may still emerge unscathed. They point to the presence of several prominent members on the Sahara board, including a former RBI Deputy Governor, a former board member of the Securities & Exchange Board of India (SEBI) and a retired Chief Secretary of the Uttar Pradesh government. It may be too early to predict the demise of the Sahara Group, but the fact is that Roys conglomerate hasnt been under so much pressure in a long, long time.

T-Series Plays Cop

The music label takes on Yahoo and Google to defend its IP .
around. Music company T-Series, which was once upon a time accustomed to being regarded as the culprit-in-chief of the Indian music piracy scene, has now turned cop. In the past couple of months, T-Series has taken on the global big boys of the Internet, Yahoo and Google, to defend its intellectual property. Last fortnight, the Delhi High Court issued a notice to Yahoo on a suit filed by Super Cassettes Industries Limited (SCIL), owner of music label T-Series, for infringement of copyright by unlicensed streaming of SCILs copyright works on Yahoos website, video.yahoo.com. What biggies like Yahoo and Google are doing is unfair. They attract traffic to their sites by allowing visitors to upload and download copyrighted content on their sites. That, in turn, gets them advertising. As people who generate and

ALK ABOUT A COMPLETE TURN-

Going, Going
Will Spice find a buyerat the price B.K. Modi expects?
VER SINCE THE B.K. MODIpromoted Spice Communications got listed on the stock exchanges last year, several Dalal Street brokers have been advising their

own copyrighted content, we are the biggest losers, says Vinod Bhanushali, Vice President for Marketing and Promotions, TSeries. People wont pay for anything that they can get free, he adds. Bhanushali also says that Yahoo has responded by taking refuge under the Digital Millennium Copyright Act (DMCA), an American law, and asked T-Series to notify Yahoo in accordance with DMCA . Yahoo officials were not available for comment. Last year, T-Series had filed a case against YouTube.com and its parent company Google for a similar infringement. T-series obtained an interim restraint order against YouTube and Google. We are talking to Google now, says Bhanushali. The case for Google is coming up for hearing in July while the Yahoo case hearing has been posted for endSeptember. T . V . MAHALINGAM

clients to buy the share. Reason? It would soon become an acquisition target. In the first week of June, that hope wasnt belied when Modi told shareholders at the companys

annual general meeting that he was open to selling his stake of 40.8 per cent, but not below Rs 60. Several telecom companies, including Aditya Birla Groups Idea