Embattled Sahara India Pariwar confident of making a remarkable comeback by next fiscal

Sahara India Pariwar, on Sunday, announced that it is confident of emerging out of the long financial embargo by the next fiscal. The group has also expressed hopes of regaining a key position among Indian conglomerates by foraying into several new businesses.

The prolonged legal battle with apex market regulator SEBI had locked down the group’s financial activities. SEBI alleged that Sahara had breached norms as it raised about Rs 25,000 crore via certain bonds. The Supreme Court had asked the Subrata Roy-led group to deposit the requisite funds to SEBI for refund to investors, even as Sahara maintained that it had already refunded most bondholders.

Sahara had recently released a detailed newspaper advertisement regarding its financial issues, in which the group claimed that funds totalling more than Rs 20,000 crore which were deposited by the group to SEBI are lying idle as the regulator has managed to refund a mere Rs 91 crore to the investors during the last 5 years.

Through the advertisement, the group also expressed its concerns over its otherwise “bright and prosperous future” by saying that the embargo imposed by SEBI has barred it from raising any funds, since the proceeds from the sale of any of its assets would go directly to the SEBI-Sahara account, leaving not a single rupee to address the needs of the group. The ban has also cost Sahara business opportunities of earning several thousand crores of rupees.

Sahara India Pariwar is confident of the money in SEBI-Sahara account returned to them, once the documents about the investors repayments are duly verified. However, the group says that its cash flow took a hit of Rs 15,000 crore when it had to refund about Rs 22,000 crore ito the investors within a span of around 6-7 months in 2012. This was against the planned repayment in small amounts over a period of 16-17 years, as the original financial scheme stated.

However, through its latest announcement, Sahara India Pariwar has expressed confidence upon attaining a “key position in India” by 2019-20 once it has cleared all the hurdles and obstructions. The groups assets remain three times of its liabilities.

Upon being asked to explain its assertions further, a spokesperson from Sahara India Pariwar revealed that as on December 31, 2014, the liability totalled Rs 62,104 against the assets amounting up to Rs 1,77,229 crore. “The ration of the figures is not much different today,” the spokesperson said.

“Sahara India Pariwar is confident that Sebi will be directed very soon to start the verification of the documents of Sahara’s investors, which are already with the Sebi,” the group replied to a query on how it expects to overcome its financial constraints by the next fiscal.

The group claims that it had provided SEBI with the documents proving repayments, which included bond certificates, original vouchers and other maturity receipts and documents. “This at one end will resolve this long drawn case, as the central point of the case is that Sahara’s investors are refunded. The verification will itself reveal that Sahara has already refunded more than 95 per cent of its investors, hence, the majority of Rs 20,000 crore of Sahara’s money (including the interest) which is with Sebi will be refunded back to Sahara,” the group asserted.

“Due to the embargo, for past five years, Sahara is facing constraints in operation of its businesses. By 2019-20, all these issues will be resolved and we are sure that Sahara will attain a key position in the country. Along with the present businesses, Sahara is also entering into new businesses, which are at different levels of development, and shall be launched one after another within this year,” Sahara India Pariwar added.

Talking about the negative impact on cash flow, the group said that it cannot be reversed, “Had there not been such payment order in 2012, which we had to do within few months, we would have cash assets of nearly Rs 15,000 crore today. This has created a huge problem that we are not able to make repayments in time.”

The group added, “Despite the fact that Sahara refunded more than 95 per cent of its investors, it has been continuously depositing money in Sahara-Sebi account for the purpose of the same refund and this money is now around Rs 20,000 crore (including interest earned). This double payment against single liability has cast an extra burden on the financial strength of Sahara.”

In November 2010, SEBI had asked two Sahara entities not to mobilize funds from equity market while restraining the group from approaching public for fundraising. The two companies – Sahara India Real Estate Corporation and Sahara Housing Investment Corporation  – had raised funds through Optionally Fully Convertible Debentures (OCFDs) during 2007-08.

The two companies were asked by the regulator later in 2011 to return the money collected through OFCDs. The Supreme Court, in 2012, had ordered the group to repay the investors along with 15 per cent interest.