On a balmy morning, July 25, 2018, Subrata Roy, banker to the poor who styles himself strangely as Chief Managing Worker for the Lucknow-based Sahara conglomerate, walked into his expansive Aamby Valley on Monday to restart operations at the country’s most expensive slice of real estate housing lakes, chalets, golf courses and its own airport.
Roy, dressed in his trademark vest jacket, black tie and white shirts matching with black trousers, wanted to restart operations at Aamby Valley City with the Supreme Court having restored its control to the group.
It was like homecoming of a king in exile.
The country’s apex court on July 12 had called off the auctioning process of Aamby Valley City as it failed to elicit any response from prospective buyers. In what was seen as a shot in the arm of the beleaguered conglomerate, the court also agreed to remove the receiver and official liquidator from the premium property, paving way for the hill city’s restoration to the Sahara Pariwar.
Roy, known for his conversational skills, met the staff and villagers from villages around the valley and discussed the resumption of some of the operations which had been discontinued after the SC had put it up for auction. It was an emotional reunion, Roy broke bread with the staff, drank sweetened tea and told his staff the clouds had cleared. His office issued a statement that read: “The Hon’ble Supreme Court through its order has given Aamby Valley City back to Sahara and has also withdrawn the Receiver and Official liquidator from the city-owned by Sahara India Pariwar. The court has also directed that all documents and papers pertaining to Aamby Valley to be given back to Sahara.”
The staff and the villagers were - more or less - convinced that things will be normal very soon at the luxurious project near Lonavala that was locked out during October 2017 leading to a massive lay-off of employees as it had been put up for auction. An estimated 1,600 employees working in different departments had lost their jobs while remaining 550 were facing difficulties in getting their salaries on time. “The Supreme Court gave us hope, Roy gave us additional hope,” said Sunil Hundare, a member of the workers union.
In the Indian Capital, Sahara’s lawyer Vikas Singh said a few months back, the court had proposed that Sahara deposit Rs 750 crore to enable the court to grant full control of Aamby Valley to Sahara. Consequently, Sahara informed the court that two firms, Sai Rydam Realtors Private Limited and Prime Down Town Real Estate Private Limited were willing to purchase its property at Vasai near Mumbai for around Rs 1,000 crore which would be deposited in the SEBI-Sahara account.
As a result, the apex court removed the receiver and official liquidator from Aamby Valley and handed over the operations to Sahara. The court asked the two firms to deposit a demand draft of Rs 99 crore and gave a timeline for depositing the remaining amount.
For many of those associated with Sahara, the court’s decision was a relief for the conglomerate which has been battling one of India’s largest courtroom showdowns with the Mumbai-based Securities and Exchange Board of India (SEBI) that continues to maintain that Sahara did not pay its investors and siphoned off the cash. What is strange is the market regulator has been unable to disburse a little over Rs 14,000 crore deposited by Sahara in an escrow account despite having details of investors. The cash, lying with SEBI, has now swelled to almost Rs 20,000 crore (including interest).
The case is indeed very curious. Thanks to charges levelled by SEBI, an impression has gathered across India that the source of Sahara’s cash is unclear and the group was stocking up illegal cash of politicians and business people in India. But that was a charge, never proved in the courts. But SEBI continued to press for more cash, its actual demand was a little over Rs 24,000 crores.
The slugfest, strangely, is still on in Supreme Court, the final verdict is yet to be announced. Roy, meanwhile, spent two long years in jail, probably the only tycoon to have lived a life behind bars under judicial custody in a nation where corporate captains routinely scoot abroad with their cash.
The group, once considered the ideal destination for endorsements ranging from sports to lifestyle to media, suffered humiliation. Sadly, everyone laughed at Roy’s misery, no one asked why SEBI continued to demand cash from Roy but was unable to disburse the same. SEBI continued to refuse comment on its delay in disbursements, merely saying it was making efforts to make the payments. It did not answer why it continued to demand cash when it had enough in its coffers.
The crisis has, arguably, pushed Sahara in a tight spot. Shorn of the glamour and power he once wore on his sleeves like diamond cuff links, Subrata Roy, India’s self-styled baron of the poor, is now pleading a near-cashless situation of his conglomerate.
Roy, who once hobnobbed with politicians, international state heads, top sports personalities and corporate captains, has often expressed regret at what he called a tough treatment meted out to him by the authorities. This group even published a multi-language advertisement in Indian newspapers. The campaign, titled “financial issues” spells out six reasons for the cash crunch the group is facing currently and assures readers that despite “the very bad and negative impact on the group”, it would clear all “obstructions by 2019-20” and that its “assets are three times liabilities”.
This, claimed many, was among many attempts by the Sahara group to make itself heard.
Sometime late last year, Roy even launched a television campaign, shot by Pradip Sarkar of Parineeta fame, showing a wide canvas with booming drums, men and women dressed in black and white like lawyers in Sahara corporate uniform running across expansive flyovers. The campaign eventually ended with what was once popular in India as Sahara Salute, the right arm fixed on the left shoulder like the greetings of Roman kings. Roy was in the frame, even lending his voice to the campaign at the end. In some ways, the campaign hinted that the conglomerate could regroup its workers and strength to get into new zones of business not banned by the market regulator.
Roy has, time and again, cried hoarse for justice. For a brief period, the lanky Roy had even turned into a philosophical author. The first of his trilogy, Life Mantra, was offered on February 1, 2016 - Sahara Foundation Day - to the rich and commoners in 5,000-plus cities across India. India’s World Cup winning skipper, Kapil Dev lent his shoulder and support to the group at an event in Noida near Delhi.
Roy, who once sponsored anything and everything under the Sun (from cricket teams to homes for nuns of Mother Teresa, financial support to Kargil martyrs and building homes for the victim of Latur earthquake), told his staff he wants to be heard and that he wants to start new business by the yearend and the market regulator must return the Rs 19,000 crore it has in its kitty from Sahara because the cash is hugely un-utilised. On paper, SEBI has managed to refund only Rs 91 crore to unpaid Sahara investors over the last five years.
“What do we do to prove our honesty? We are in a very unfair situation,” said a top Sahara official. The official, speaking on conditions of anonymity, said SEBI is repeatedly skirting the demand for a return of cash by saying the matter is being heard by the Supreme Court.
Sahara needs the cash badly.
Soon after the television campaign was aired across multiple entertainment and news channels, Roy, who critics claim runs his company like a cult, has been travelling across the country in his private jet to assuage employees who faced the brunt of this slug fest along with him.
Roy, claimed eyewitnesses, appeared confident of emerging unscathed from the slugfest even though he knows if sells his marquee assets and SEBI does in fact, return the funds, Sahara will find it challenging to acquire the properties at competitive prices. In a letter he once wrote to his staffers from prison in 2016, Roy said, “Keep your morale up, we shall overcome. We will emerge clean from the current crisis, kindly do not get agitated if salaries are delayed because bank accounts are sealed.”
He undertook, along with some of his confidants completed a hurricane nationwide tour of 18 cities in October 2017 to meet Sahara employees. Hundreds greeted Roy at the airports, he was seen as a saviour by many who do not have access to both cash and power, live in small, micro Indian cities where jobs rarely happen. Roy - using a battery-operated microphone - told his employees: “mushkil samay mein kamzor log bikhar jaate hain jabki majboot log nikhar jaate hain (in difficult times the weak are shattered while the strong come our shining brighter) Sahara is your strength. I am here to assure you that we will soon bounce back. We are going through troubled times, testing times. But do not lose hope. We are world’s largest emotionally bound family.”
“As a chief guardian of the family of more than 12 lakhs Sahara India Pariwar (family) it is my duty to protect your interest and future as your father. I am with you, even in jail I thought about you, I am always thinking about you. I have been to jail, as I am paying happy tax for being a guardian,” said Roy.
One of India’s most influential persons who walked among a bevy of guards and women wiping sweat and dust off his face, Roy is trying hard to keep his chin up. Critics have linked his case to that of flashy liquor baron Vijay Mallya, now on the run from India and holed up in his palace near London.
Like Mallya, Roy has an opulent lifestyle. He has a few choppers and a fleet of private jets. One of his mansions is modelled on the White House and another on the Buckingham Palance. Time and again, Roy has been in the news for his larger-than-life image, colourful lifestyle and considerable political connections. Veteran Bollywood star Amitabh Bachchan is among his friends, so is former British Prime Minister Tony Blair. His son’s weddings in 2004 were billed as the Indian marriage of the century, the then Prime Minister Atal Behari Vajpayee also flew down to bless the newly-weds.
But not many have compared Roy with Mallya, or fugitive diamond merchants like Nirav Modi and Mehul Choksi, ostensibly because India’s apex court has noted how Sahara has paid up a large chunk of the disputed amount to SEBI.
The market regulator has hired a warehouse to store truckloads of documents (in original) sent in by Sahara proving the repayments made. Senior SEBI advocate Arvind Dattar, is on record saying all forms have not been evaluated and a large number of advertisements in both big and small dailies failed to elicit any worthwhile response from the market. Around 4 years after the apex court’s order, the regulator is yet to start personal verifications of Sahara investors to conclude who has got a refund. Why it could not complete the verification process, SEBI has not answered.
Sahara officials say its cash position turned precarious due to Rs 15,000 crore hit after it refunded Rs 22,000 crore to investors in just 6 months during 2012. Else, it would have paid in small amounts over 16-17 years under the original plan.
Sahara also claimed it paid Rs 725.97 crore as TDS (tax deducted at source) to the Income Tax Departments on the interest which along with investment was repaid to 95 percent of the investors, between 2009-10 and 2012-13. The income tax authorities had found that the beneficiary investors were existent and accordingly confirmed the repayments made in those particular years. But that has not cut much ice with SEBI.
Roy, who has often called himself a proud Indian, has said his group can cough up enough cash if asked to scrap the barrel, explaining how its overall liability was Rs 62,104 crore as on December 31, 2014, while assets were Rs 1,77,229 crore.
Roy knows he must get into businesses other than para-banking that SEBI has banned. Hence, he wants to foray into education. The group wants to target the poor, as its earlier controversial ventures. Sahara has put in place a team, drawn from some of the top universities and colleges across India and even abroad. This team has designed an online education business totaling 14,000 hours of edited software for students. It will be offered at a minimal cost to millions of subscribers in small towns and villages.
The group is confident that its online programme that will be easy to operate and boost the education standards in the country’s hinterland. Education is big business in India. KPMG and Google jointly estimate India’s online education to be a $1.96 billion industry by 2021, the paid user base growing from 1.9 million in 2016 to 10 million by 2021. India’s education market pegged at a little over $25 billion with a 22 percent annual growth. The online market is pegged at $2 billion.
Besides education, Roy is giving finishing touches to a host of new plans. These will also include setting up hospitals and low cost housing for the poor, which are in high demand across India. Despite selling some of the real estate parcels as part of SEBI's litigation, Sahara continues to have significant land bank across India. Roy has also shown a keen interest in aviation. Roy - claim industry insiders - is not keen to handover all his private planes and the license and not want to expand. Roy is seeking advice from former airline honchos. Sahara’s non-compete agreement with Jet Airways will end in October, 2018. There are enough indications that Roy has started planning some serious moves, seeking advice from former airline honchos.
But first, Sahara must resolve its highly contentious case with SEBI. Roy badly wants his case with SEBI to end. But that his not happening. Stuck with him are estimated 14-lakh members of his Sahara Pariwar and crores of customers.
(Shantanu Guha Ray is a senior journalist. Follow him on twitter @ShantanuBTVI)