Group Cos Had Raised Money From Three Crore Investors
Dhananjay Mahapatra TNN
New Delhi: The Supreme Court on Friday asked two Sahara companies to refund within three months Rs 24,029 crore collected by them between 2008 and 2011 from over 2.96 crore investors, flouting regulatory provisions and the Companies Act. The SC also asked Sahara to pay 15% interest on the amount.
A bench of Justices S Radhakrishnan and J S Khehar held that Securities and Exchange Board of India (Sebi) was right in faulting Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL) for the manner in which they raised huge funds, bypassing statutory requirements.
SIRECL had floated optionally fully convertible debentures (OFCDs) as an open-ended scheme and collected over Rs 19,400 crore from April 25, 2008 to April 13, 2011 from 2.21 crore investors. The company had a total collection of Rs 17,656 crore as on August 31, 2011 after meeting the demand for premature redemption. SHICL collected another Rs 6,380 crore by issuing similar OFCDs from other investors.
The court expressed suspicion that many of the OFCD subscribers could be fictitious and directed Sahara to furnish all documents about its investors to Sebi within 10 days. It allowed the regulator to engage investigators to probe the genuineness of investors and the claim that certain refunds were made.
The suspicion was highlighted by Justice Khehar, who said, “It is essential to express that there may be no real subscribers for the OFCDs issued by SIRECL or SHICL. Or alternatively, there may be inter-mix of real and fictitious subscribers.”
Dhananjay Mahapatra TNN
New Delhi: The Supreme Court on Friday asked two Sahara companies to refund within three months Rs 24,029 crore collected by them between 2008 and 2011 from over 2.96 crore investors, flouting regulatory provisions and the Companies Act. The SC also asked Sahara to pay 15% interest on the amount.
A bench of Justices S Radhakrishnan and J S Khehar held that Securities and Exchange Board of India (Sebi) was right in faulting Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL) for the manner in which they raised huge funds, bypassing statutory requirements.
SIRECL had floated optionally fully convertible debentures (OFCDs) as an open-ended scheme and collected over Rs 19,400 crore from April 25, 2008 to April 13, 2011 from 2.21 crore investors. The company had a total collection of Rs 17,656 crore as on August 31, 2011 after meeting the demand for premature redemption. SHICL collected another Rs 6,380 crore by issuing similar OFCDs from other investors.
The court expressed suspicion that many of the OFCD subscribers could be fictitious and directed Sahara to furnish all documents about its investors to Sebi within 10 days. It allowed the regulator to engage investigators to probe the genuineness of investors and the claim that certain refunds were made.
The suspicion was highlighted by Justice Khehar, who said, “It is essential to express that there may be no real subscribers for the OFCDs issued by SIRECL or SHICL. Or alternatively, there may be inter-mix of real and fictitious subscribers.”
All depositors will be paid in full: Sahara
Hours after the SC judgment, the Sahara group on Friday assured its depositors that they should not worry about the money they had invested or deposited with the group’s companies. Highlighting the fact that all the investors in its OFCDs would be paid in full within the court-stipulated three months, it said that all its money and assets were legal. P 26 Investors see little impact on markets
Investors do not see any major impact of the verdict on the stock market, since the group is neither a big investor in listed stocks, nor does it run any large listed company. “Sahara (group) is not a big investor and hence we don’t expect any big selling because they now have to arrange Rs 25,000 crore within three months,” said an investment advisory firm’s head. P 26 UNDER SCANNER SC gives Sebi full powers to probe refund documents
New Delhi: The Supreme Court on Friday indicted two Sahara group companies for bypassing Sebi regulations in floating OFCDs. If Sebi finds the refund documents to be fake, then it would be taken that the Sahara firms had not refunded money, the bench said. “Sebi (whole-time member) shall have the liberty to engage investigating officers, experts in finance and accounts and other supporting staff to carry out directions and the expenses for the same will be borne by Sahara and be paid to Sebi,” it said.
The court asked Sebi to deposit Rs 24,029 crore with 15% interest given by the Sahara firms in a nationalized bank till identification of investors for refund, a process which it said would be supervised by former Supreme Court judge B N Agarwal.
The amount which could not be refunded due to non-identification of investors would accrue to the government, it said. Simple interest at 15% per annum for Rs 24,029 crore works out to Rs 3,604 crore for a year.
The court noted that the red herring prospectus issued by the companies had claimed that funds raised would be utilized for financing acquisition of townships, apartments, shopping complexes, etc, and construction activities would be undertaken by the company in major cities of the country and also to finance other commercial activities/projects.
The prospectus also said the company intended to carry out infrastructural activities and the amount collected from the issue would be utilized to finance the completion of projects, namely, establishing/constructing bridges, modernizing or setting up airports, rail system or any other projects which might be allotted to the company in future.
The prospectus also highlighted the intention of the company to engage in the business of power generation and transmission and that the proceeds of the issue or debentures would be utilized for power projects which would be allotted to the company. Both Sebi and the ministry of corporate affairs had taken strong objection to the manner in which the funds were raised without following statutory requirements and had issued notices seeking explanation from the two Sahara companies.
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Sahara strikes back at regulators
Challenges Authorities To Find Any ‘Benami’ Money With Group, Assures Investors
TIMES NEWS NETWORK
Mumbai: The Sahara Group on Friday resorted to an emotional outburst against regulators for repeatedly questioning the source of all its public deposits and investments and challenged the authorities to find any ‘benami’ (illegal) money with the group.
In a late evening release, several hours after the Supreme Court judgment directing the group to repay Rs 17,400 crore of investors’ money along with 15% interest, Sahara sought to comfort its depositors saying there was nothing to worry about and that there wouldn’t be even a day’s delay in repayment. “Sahara is the most honest custodian of your money and by the grace of God, we are so healthy that there cannot be even one day delay in any payment commitment of Sahara,” the release said.
It also emphasized that in the last 33 years, there hasn’t been a single complaint of non-payment against the company and that it has paid around Rs 1,40,000 crore to about 12 crore investors. It may be pointed out that during 2008, the Reserve Bank of India had directed the group to close its para-banking business and repay its depositors within seven years. “The RBI in 2008 killed our financial inclusion-based RNBC (residual non-banking finance company) activities and gave us seven years’ time to repay our depositors, which we cleared in just four years,” it said. “The income tax department held on to our refund for decades, to the tune of around Rs 2,000 crore…but ultimately they had to pay us back the entire amount in the year 2011,” it added.
The group, which supports various sports activities including the sponsorship of the Indian cricket team and is also a part-owner of a Formula One racing team—Force India—said that it was because of its “meteoric rise” that it has been at the receiving end of the authorities ‘again and again’.
The group has also been in the news recently for buying out two iconic hotels, one each in London and New York.
“For the past seven-eight years, we have faced the onslaught of various authorities since they concluded whimsically…that the deposits and investments we have received from the public are fictitious and bogus as they feel the money with us is illgotten from politicians, etc”, the statement said in an oblique reference to the SC judgment asking Sebi to probe the source of funds. “The fact is that there is not a single benami money and this statement is Sahara’s challenge to all authorities of our country”.
Emphasizing the fact that it has never done anything against the law, it said that the authorities have convinced the courts of its wrong doing by creating a negative perception of the group and that it would never blame the courts for it. Highlighting the fact that all their investors are genuine, the statement added: “Each and every rupee we have accepted in last 33 years is always against receipt from the company and with an application form duly signed by its depositors and investors”.
The statement also said that this approach of the authorities has led Indian companies to expand overseas, which it does not plan to do. Outlining its investment plans in the country it said; “through our expansion in the next two to three years we shall provide permanent salaried employment to three lakh people apart from around five lakh new field workers.”
Hours after the SC judgment, the Sahara group on Friday assured its depositors that they should not worry about the money they had invested or deposited with the group’s companies. Highlighting the fact that all the investors in its OFCDs would be paid in full within the court-stipulated three months, it said that all its money and assets were legal. P 26 Investors see little impact on markets
Investors do not see any major impact of the verdict on the stock market, since the group is neither a big investor in listed stocks, nor does it run any large listed company. “Sahara (group) is not a big investor and hence we don’t expect any big selling because they now have to arrange Rs 25,000 crore within three months,” said an investment advisory firm’s head. P 26 UNDER SCANNER SC gives Sebi full powers to probe refund documents
New Delhi: The Supreme Court on Friday indicted two Sahara group companies for bypassing Sebi regulations in floating OFCDs. If Sebi finds the refund documents to be fake, then it would be taken that the Sahara firms had not refunded money, the bench said. “Sebi (whole-time member) shall have the liberty to engage investigating officers, experts in finance and accounts and other supporting staff to carry out directions and the expenses for the same will be borne by Sahara and be paid to Sebi,” it said.
The court asked Sebi to deposit Rs 24,029 crore with 15% interest given by the Sahara firms in a nationalized bank till identification of investors for refund, a process which it said would be supervised by former Supreme Court judge B N Agarwal.
The amount which could not be refunded due to non-identification of investors would accrue to the government, it said. Simple interest at 15% per annum for Rs 24,029 crore works out to Rs 3,604 crore for a year.
The court noted that the red herring prospectus issued by the companies had claimed that funds raised would be utilized for financing acquisition of townships, apartments, shopping complexes, etc, and construction activities would be undertaken by the company in major cities of the country and also to finance other commercial activities/projects.
The prospectus also said the company intended to carry out infrastructural activities and the amount collected from the issue would be utilized to finance the completion of projects, namely, establishing/constructing bridges, modernizing or setting up airports, rail system or any other projects which might be allotted to the company in future.
The prospectus also highlighted the intention of the company to engage in the business of power generation and transmission and that the proceeds of the issue or debentures would be utilized for power projects which would be allotted to the company. Both Sebi and the ministry of corporate affairs had taken strong objection to the manner in which the funds were raised without following statutory requirements and had issued notices seeking explanation from the two Sahara companies.
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2012/09/01&PageLabel=1&EntityId=Ar00101&ViewMode=HTML
Sahara strikes back at regulators
Challenges Authorities To Find Any ‘Benami’ Money With Group, Assures Investors
TIMES NEWS NETWORK
Mumbai: The Sahara Group on Friday resorted to an emotional outburst against regulators for repeatedly questioning the source of all its public deposits and investments and challenged the authorities to find any ‘benami’ (illegal) money with the group.
In a late evening release, several hours after the Supreme Court judgment directing the group to repay Rs 17,400 crore of investors’ money along with 15% interest, Sahara sought to comfort its depositors saying there was nothing to worry about and that there wouldn’t be even a day’s delay in repayment. “Sahara is the most honest custodian of your money and by the grace of God, we are so healthy that there cannot be even one day delay in any payment commitment of Sahara,” the release said.
It also emphasized that in the last 33 years, there hasn’t been a single complaint of non-payment against the company and that it has paid around Rs 1,40,000 crore to about 12 crore investors. It may be pointed out that during 2008, the Reserve Bank of India had directed the group to close its para-banking business and repay its depositors within seven years. “The RBI in 2008 killed our financial inclusion-based RNBC (residual non-banking finance company) activities and gave us seven years’ time to repay our depositors, which we cleared in just four years,” it said. “The income tax department held on to our refund for decades, to the tune of around Rs 2,000 crore…but ultimately they had to pay us back the entire amount in the year 2011,” it added.
The group, which supports various sports activities including the sponsorship of the Indian cricket team and is also a part-owner of a Formula One racing team—Force India—said that it was because of its “meteoric rise” that it has been at the receiving end of the authorities ‘again and again’.
The group has also been in the news recently for buying out two iconic hotels, one each in London and New York.
“For the past seven-eight years, we have faced the onslaught of various authorities since they concluded whimsically…that the deposits and investments we have received from the public are fictitious and bogus as they feel the money with us is illgotten from politicians, etc”, the statement said in an oblique reference to the SC judgment asking Sebi to probe the source of funds. “The fact is that there is not a single benami money and this statement is Sahara’s challenge to all authorities of our country”.
Emphasizing the fact that it has never done anything against the law, it said that the authorities have convinced the courts of its wrong doing by creating a negative perception of the group and that it would never blame the courts for it. Highlighting the fact that all their investors are genuine, the statement added: “Each and every rupee we have accepted in last 33 years is always against receipt from the company and with an application form duly signed by its depositors and investors”.
The statement also said that this approach of the authorities has led Indian companies to expand overseas, which it does not plan to do. Outlining its investment plans in the country it said; “through our expansion in the next two to three years we shall provide permanent salaried employment to three lakh people apart from around five lakh new field workers.”
STATE OF SAHARA
LIABILITIES
40,000 crore: Net outstanding liability of public deposits, OFCD, secured loan from banks, advances against various projects, Life Insurance Policy Holders Fund and money in mutual fund
ASSESTS
Investment in govt securities, fixed deposit, cash & bank balances 11,597cr (book value), 11,708cr (market value); indicative earning Rs 11,708 crore
Fixed assets, inventory, WIP projects — book value 8,816cr, market value — 85,620cr; indicative earning – 2,51,554cr
Other current assets — book value – 12,614cr, market value – 19,390cr; indicative earnings 19,390cr
Total group assets: Book value — 53,027cr($11.7bn), market value — 1,16,719cr($26bn) indicative earning 2,82,652($63bn) Sahara India Pariwar has total land bank, majority owned and some under MOU, is around 33,633 acres. Additionally, it is in the process of buying around 11,000 acres Major investments in assets: Sahara may raise funds by pledging one or all of these assets, if needed, as it had done earlier
Amby Valley | Over 10,600 acres near Mumbai
Sahara Star hotel | A worldclass 5-Star Hotel spread over 7.42 acres and located adjacent to the Mumbai domestic airport.
Grosvenor House, London| Sahara bought it for 470 million pounds in dec 2010.
Bought Pune warriors team.
New York Plaza | Last month Sahara agreed to buy New York Plaza for $570m
BUSINESSES
Finance- Life insurance, mutual funds, housing finance. | Infrastructure & housing | Media & entertainment (studio, cineme halls, news and entertainment channels.) | Consumer merchandise retail business | Manufacturing | IT
CASE DETAILS
Oct ’09 | Sahara Prime City files for IPO with Sebi
Nov 2010 | Sebi alleges two Sahara group companies raising money illegally through optionally fully convertible debentures (OFCDs), asks Sahara to refund money to investors
Dec 2010 | Sahara moves Allahabad HC against Sebi order, Sebi moves SC
Jul 2011 | SC asks Sebi to move Securities Appellate Tribunal (SAT) against Sahara
Oct 2011 | SAT upholds Sebi order, Sahara moves Supreme Court
Aug 2012 | SC orders Sahara to refund Rs 17,400 crore to investors with interest within three months
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dear snehaji
ReplyDeleteall this type of chit fund companies have to do all type of publicity gimiks open different companies ranging from aggriculture to print t.v news to power to list goes on and print attractive brochures showing there various companies doing brisk business and they never says they are doing wrong because they want there agents to go in the market and bring more collection by selling the dream and showing un-suspecting poor investors that there company is the best. you can see various news papers and search in google in last three years more then dozen companies have duped investors and the top level management team till they are caught they never claim they are wrong or are doing any cheating but now are behind bars and lakhs of small investors are on road dont know where to go so please dont be carried away with the press notes given by these type of companies as they have to release this type of motivational statements or else investors cum agents will kill them or commit suicide bcos they are the people who really face the market ...
its simple business for this type of companies !!! MONEY COME FROM NEW INVESTORS - MONEY REFUND TO OLD INVESTORS AND BALANCE LEFT DIRECTORS ENJOYS AND INVEST IN OTHER BUSINESS WHICH AFTER SOME TIME STARTS BACK FIRING !!!! and everything goes in a mess....