The Breathtaking Sahara India Tamasha.

Tamasha [तमाशा]: An Unsavoury Spectacle.
The incorrigible self proclaimed champion of “Poor Investors”, Sahara Shri Subroto Roy, has fired yet another broadside at SEBI and this time its chairman, U K Sinha. Supreme Court had quite unambiguously ordered the two Sahara India group companies last year to return the INR 24,000 crores it had *unlawfully collected” by (1) depositing the money with SEBI, and (2) providing the full list of investors with application forms to SEBI for verification and due diligence before paying off genuine investors. Implicit in the order is the disbelief that Supreme Court holds about the Sahara claim that tens of millions of small, small investors have entrusted their meager savings to Sahara. Therefore, SC explicitly gave the job of returning money back to investors to SEBI. Sahara claimed in September last that it has partially complied with second part of SC order when it sent *truckloads of documents* to SEBI.
SEBI had asked Sahara to provide details in digital files. Sahara said that considering the gargantuan task before it of copying “literally millions” documents for SEBI, it would take a long time for it to provide fully even the hard copies. Based on Sahara’s claims, I had made the following instructive calculation: ^^^Suppose, when the money was mobilized, each member took say 45 minutes, a modest time, to understand the scheme, fill up the application form, tender cash, and accept receipt. Yes, Cash!! Sahara says it deals with those poor, who are not serviced by the banks. Now, 30 million investors together took 1350 million minutes, or 22.5 million hours, or 937,500 days, or some 2568 years. But it seems that this money was collected in just two years, 2008 & 2009. Clearly a well trained army of tens of thousands of commission agents or say परिवार सदस्य or family members was working hard for the money mobilization. When now the Pariwar is clearly in mortal danger, was it really difficult for it to mobilise say 400 copying machines and 12,000 family members to accomplish the task in stipulated deadline? The answer would clearly be in the negative, unless of course the whole job involves creating the necessary filled in application forms and cash receipts now for most of the depositors from scratch. That would be a different ball game all together and then the woes of Sahara India Pariwar are understandable^^^.
Sahara has been saying for some time now that it is in full compliance of the part one of SC order since it has deposited over 5,100 crores with  SEBI and has already refunded directly over 20,000 crores to its small, small investors. Such cavalier statements it has been issued when SC had ordered in February, ^^^In fresh trouble to Sahara group, the Supreme Court Wednesday said that Sebi is free to freeze accounts and seize properties of its two companies for defying court orders by not refunding Rs 24,000 crore to investors. The apex court also pulled up Securities and Exchange Board of India for not taking action against the companies- Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC) – as per its August 31, 2012 order which had asked it to attach properties and freeze bank accounts of the companies^^^. Undeterred by laws of the land and SC verdict, Sahara India issued a full page advertisement in many national and regional dailies to profess its innocence, its law abiding nature, and its NIL liabilities status: ^^^THE FACT REMAINS THAT WE HAVE PAID ALL OUTSTANDING LIABILITIES EXCEPT (LESS THAN) Rs. 5120 CRORES WHICH WE HAVE PAID TO SEBI^^^.
No one can accuse Sahara of not providing overarching “Facts and Figures”, it provides them in plenty, and the latest broadside doesn’t disappoint too:
^^^
Upto Rs. 5,000/- = 1.33 crores, [ <= INR 6,650 Crores]
upto Rs.10,000/- =  0.88 crores,[<= INR 8,800 Crores]
upto Rs.15,000/- = 0.42 crores, [<= INR 6,300 Crores]
upto Rs.20,000/- = 0.36 crores. [<= INR 7,200 Crores]
This totals to 2.99 crores [who gave together <= 28,950 Crores] out of the total investors of 3.07 crores. We genuinely hope that the SEBI Chairman should kindly send an amended statement to Media with realisation and apologies that why cash repayments to around 90% investors have been made and the 90% cash payments are totally justified. Upto Rs. 20,000 repayments including interest, it is cash payments only as per country’s law.

^^^

This tells us that 0.08 Crore investors put in more than INR 20,000/- per head or a total of 0.44 Crore investors put in more than INR 15,000/- each. Even in these 0.08 Crore investors, there would be few who invested say a couple of lakhs rupees, and obviously none who invested say 10 lakhs rupees or more, leave alone even the talk of anybody investing say a INR 1 Crore. This is a valid observation considering Roy’s claim that Sahara supports those who have no support [from formal financial system]. However, from Sahara’s claims in the 18 March advertisement, Sahara should have some 1.40 Crores investors each of whom put in a minimum INR 17,143/- investment: ^^^Sahara doesn’t say true to its character as to when this TDS was paid or to which Financial year it pertains. Thus we have no choice but to assume it pertains to current F.Y. 2012-13. Now, the rate for Tax Deducted at Source [TDS] is 10% above a threshold limit of  a total of Rs. 5000.00 interest paid per depositor or per investor by a deductor in a financial year. Now for a TDS of Rs.700 crores, Sahara would have to shell out Rs. 7000 crores by way of interest payment in 2012-13. Since, this was paid presumably on the Rs. 24,000 crores mobilised by way of  Optionally Fully Convertible Debentures [OFCD], Sahara paid out interest at a rate exceeding 29% of the principal amount. This is an impressive return indeed considering that otherwise the Indian Economy is in doldrums. At the minimum, every such depositor for whom TDS was deposited, would have to invest Rs. 17143.00 to “qualify” for TDS. The maximum number of such depositors will be 1.40 crores assuming each one invested only a minimum of Rs. 17143/-. But Sahara has always maintained that subscribers to its OFCD were in excess of 3 crores individuals. That means additional minimum 1.6 crores individuals had invested in OFCD below the threshold limit Rs. 17143/=. But their investments would take the tally of mobilised funds by way of OFCD above Rs. 24,000 crores^^^.
To look at it another way, say the 36 lakhs investors in more than 15,000 to up to 20,000/- bracket invested @ INR 20,000/- each. The sum total of their investment would be INR 7,200 Crores. The interest paid @ 29% to them would be INR 2088 Crores and TDS deducted would be 208.80 Crores. That means balance TDS of INR 491.20 Crores was deducted on interest payment of INR 4,912 on an investment of INR 16,938 Crores made by just 0.08 Crore investors. That means each of these 0.08 Crore or 8 lakhs investors put in an average of INR 2.11 lakhs with Sahara group. Further, these 44 lakhs investors account for the entire INR 24,000 Crores raised by Sahara. But there are still 2.63 Crores investors and their investments, both of which have to accounted for. Now, can you figure that out? No! Go ask Sahara Shri Subroto Roy!!
There is more juice left to do figure work. Sahara Said, ^^^It should also be clear that 90% amount of investors in both the companies have come from investors upto Rs.20, 000 that is 2.99 Crores. So any logical but unbiased mind shall be convinced, accept and understand our challenge in the past also that there cannot be any case of fictitious, fake investors in Sahara. He has also mentioned about paying Rs. 20,000 crores in 4 months. But majority payments are in 5 months plus time.^^^. Five months have 150 days. A hard working Sahara worker puts in say 12 hours a day with 10 hours of productive time and has one day weekly off. Thus each worker would have approximately 1300 hours of “quality” working time in 5 months. In responding to SEBI’s dismay that many of the addressees given by Sahara as its investors could not be located, Sahara had  said that its small, poor investors have to change their address frequently due to exigencies of work and poverty. Therefore, say each worker takes on an average 3 to 4 hours to search and find an investor,verify her identify, collect original receipt issued, count and pay the cash, and take signature for the same. Therefore, one worker in 5 months would be able to return money to some 325 to 425 investors;  or on an average 375 investors. That would require an army of over 80,000 diligent, hard working, honest, and patriotic Sahara workers -working full time- to return INR 20,000 Crores to some 3 Crores investors. Sounds impossible? Not at all. Sahara claims to have lakhs and lakhs of such dedicated part time workers.
When one fools around with facts and figures with impunity, facts and figures have a way to strike back.
Time has come that India would be compelled to recognise the talent of Sahara Shri Subroto Roy. UIDAI may be scrapped, Nandan Nilkeni sent packing home, and the Direct Benefit Transfer Scheme should be handed over to Sahara India for flawless and efficient execution without GOI having to pay extravagantly for hardware and software infrastructure as well as costly software glitches in actual operations. This would achieve another very important objective, that of Inclusive Development. Instead of paying huge amounts to fabulously rich IT and BPO companies, the average, poor, mofussil Indian would get an opportunity to improve his earnings and life. Come elections in 2014, and this army of dedicated and ubiquitous Sahara workers would ensure victory of any ruling dispensation. 
Epilogue.
Actually, Subroto Roy’s defense is virtually impenetrable. He alluded to it when he mentions Golden Forest Company: ^^^During April 2012, one news was probably infected by some interested party which spread like wild fire in our field, Countrywide that in case of Golden Forest Company which was exactly similarly initiated and fought by SEBI. After Hon’ble Supreme Court’s decision in 2004 in this Golden Forest Company for repayment, not a single rupee has been paid to any investors till today that is in 8 – 9 years.^^^. SC had ordered a committee constituted by it in 2004 to take over the assets Golden Forest to pay off duped investors. Roy is simply asking, has anybody complained to anybody that Sahara India Group has duped her? No! Then, where is the case of malfeasance made out against Sahara? No one has complained because may be no one has invested in Sahara India companies. That is, there are no genuine small small investors as claimed by Sahara is what Supreme Court seems to suspect. If there are no genuine investors, then where has the money come from. The responsibility for allaying these suspicions is squarely on Sahara India and Sahara Shri Subroto Roy. Until this is done, its operations run the risk of being viewed as the biggest money laundering service operating in the country. Investigating agencies tasked with nailing Economic offenses have their work cut out for them. Unfortunately for them, this one doesn’t promise any foreign junkets. Who stops them from biting the bullet? 
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2 Responses to “The Breathtaking Sahara India Tamasha.”

  1. Pradipto Mondal Says:

    Sahara group chief Subrata Roy and three other top executives on Wednesday made a personal appearance before market regulator Securities and Exchange Board of India (SEBI). However, after meeting with SEBI officials, the Sahara group chief once again alleged that the market regulator was more interested in knowing his personal assets than refunding money to its investors.http://www.moneylife.in/article/subrata-roy-continues-his-tirade-against-sebi-after-personal-appearance/32143.html?utm_source=PoweRelayEDM&utm_medium=Email&utm_content=Subscriber%23106437&utm_campaign=Today%27s%20Exclusives

  2. RJK Says:

    NEW DELHI—India’s Supreme Court on Wednesday allowed the Securities and Exchange Board of India to seize properties owned by the Sahara Group. Justices K.S. Radhakrishnan and Jagdish Singh Khehar ordered the group to hand over to SEBI the original deeds to an unknown number of properties that had been pledged as collateral for bond repayments. http://stream.wsj.com/story/latest-headlines/SS-2-63399/SS-2-228073/

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