Lakshitha Potla

VJA
Adv.ITT B12
SRO0761204
1 About the Company

2 Rise of Sahara

3 Companies Involved

4 Timelines

5Brief about of the Case

Where are the
6
investors
Impact on Stock
7
Markets
8 Conclusion
Sahara India Pariwar is a Lucknow-based Indian corporation.
Subrata Roy created it in Gorakhpur, where he is located, in the year 1978.
Mr. Subrata Roy was the group's Chairman. His primary commercial interests are in
banking, infrastructure, and housing, as well as media and entertainment, consumer
goods, and information technology.
Mission:
To provide an amiable environment to all workers, so that their productivity remains on a
perpetual high and they always experience a blissful state of peace and satisfaction.
Vision:
To ensure that the interests of the pariwar are kept paramount and justice prevails in
every sphere and at all levels to safeguard the interest of all workers.
Core Values:
Discipline, Collective Materialism, Absolute Honesty, No Discrimination
 The Group is a major promoter of sports in India and was the main sponsor
of Indian cricket team.
 It owns a 42.5% stake in Formula One’s force India Formula 1 Team and also
sponsors Indian National Field Hockey Team.
 Sahara Indian Pariwar Sahara Q Shop entered into the Guinness World Records
When it opened 315 Outlets in 10 States of India, Just at one time on Apr 1st,2013
Sahara India Real Estate Corporation (SIRECL)

Sahara Housing Investment Corporation (SHICL)

 The case all started when a Chartered Accountant in Indore sent a note to the
National Housing Bank, mentioning the Bank to investigate the lodging bonds
issued by two SIRECL and SHICL. He found that the bonds had not been issued
according to the principles.
 The National Housing Bank did not have the fortitude to research the charge, so
it sent the letter to the Securities and Exchange Board of India (SEBI), the
capital markets controller.
 Mr. Abraham who was the then Director of SEBI was surveying the Draft Red
Herring Prospectus (DRHP) to raise value for land organization Sahara Prime
City Ltd through IPO. The DRHP revealed subtleties of two partner bunch
organizations SIREC and SHIC that were collecting enormous cash from the
general population through alternatively completely convertible debentures.
 The Sahara -SEBI case is the case of the issuance of Optionally Fully
Convertible Debentures issued by the two companies of Sahara Indian
Pariwar to which Securities and Exchange Board of India had claimed its
jurisdiction and objected on why Sahara has not taken permission from it.
 OFCD is a type of debt security where the option is given to the bond
holder to convert his debenture into equity share after certain time.
 SEBI in return ordered Sahara's two companies to stop issuing the said
bonds and return money to investors.
 Sahara has claimed that the said bonds are hybrid products, thus does
not come under the jurisdiction of SEBI.
 It argued that hybrid debentures are governed by Registrar of
Companies (ROC), under the Ministry of corporate Affairs, from which
permission had already been taken.
 The group challenged the order in the Securities Appellate Tribunal
(SAT) and later in the Supreme Court.
 In August 2012, the Supreme Court upheld SEBI order and directed
the Sahara Group to refund the money to the investors with interest in
three instalments.
 It was a massive blow to the Sahara Group and its investors. The Sahara
Group claimed that it had already repaid a significant amount of money
to the investors and that the remaining amount was small
 However, SEBI disputed the Sahara Group’s claims and argued that
the group had not fully complied with its order.
 Despite Supreme Court orders to make payments in three instalments, the
Sahara Group paid only the first instalment of Rs. 5120 crores, claiming
that they had already repaid the rest of the investors.
 However, when asked for evidence to prove their claim, the Sahara Group
failed to provide any such proof or mention the source of income used to
make the payments.
 As the Sahara Group continued to fail to comply with court orders,
both the Supreme Court and SEBI started considering the case a
money laundering scandal, leading to the freezing of the Sahara
Group’s bank accounts and assets
 In 2014, the Supreme Court ordered the arrest of Subrata Roy (Chairman)
and sent him to jail
 The court also appointed a receiver to sell Sahara Group’s assets to
recover the money owed to the investors. The receiver managed to sell
some of the assets, but it was not enough to recover the entire amount
owed to the investors.
 Additionally, the Sahara scam also involved a bizarre incident in which
the Sahara Group sent trucks carrying documents and cash to SEBI
office in Mumbai. The trucks, which were escorted by the police,
carried over 31,000 boxes of documents and cash amounting to
around Rs. 5,000 crore (approximately US$ 670 million).
 The incident was seen as a publicity stunt by the Sahara Group, aimed
at creating sympathy among the public and the judiciary.
 The group claimed that the documents contained evidence that it had
already refunded a significant amount of money to the investors and that it
had complied with SEBI’s order. However, SEBI dismissed the claim and
argued that the documents were irrelevant to the case.
 The incident drew widespread criticism from the public and the media,
who saw it as an attempt by the Sahara Group to manipulate the legal
system.
 The total amount that needs to be refunded according to SEBI’s estimate now
stands at 40,000 crores.
 Of this, SEBI has received an aggregate amount of about Rs.14,487 crores from
the Sahara Group.
 SEBI has been requesting genuine investors in Sahara to step forward and claim
their money since 2013.
 But even after 4 years of notice, only Rs.85.02 crores, of this amount has
actually been returned to investors.
 This obviously raises questions about the authenticity of Sahara’s investor base,
which needs to be investigated thoroughly.
 It is important to note that the Sahara Group is a privately held company and is
not listed on any stock exchange in India or anywhere in the world.
 As a result, there is no publicly available data on the stock performance of the
Sahara Group before or after the scam.
 However, the scandal did have an impact on the broader Indian stock market.
 The news of the scam and the subsequent legal battle had a negative effect on
investor confidence in the Indian financial system.
 The stock market experienced volatility, and some investors were hesitant to
invest in Indian companies, particularly those with a history of regulatory
violations.
 The Sahara scam is a cautionary tale of greed, deceit, and the importance of
regulation.
 It highlighted the need for stronger regulation of the financial sector in India
and the need for stricter enforcement of the existing regulations.
 It also underscored the importance of investor protection and the need to
ensure that investors’ interests are safeguarded.
 The Sahara Group’s investors may have suffered financial losses, but the
lessons learned from the scam will help prevent future financial scams and
protect investors from fraud.