The story of the most bizarre Indian business
Sahara: The Untold Story
by Tamal Bandyopadhyay is a unique book. It starts and ends (on the back cover) with a strongly worded statement from the Sahara group. Perhaps this is also the first book published in India where both, the author and the subject, agreed on 'limited information’ part in the book. Bandyopadhyay’s use of a term like ‘India’s most secretive’ for the Sahara group explains why this book contains ‘limited information’. The Sahara group had approached the court to stop publication of the book. However, later it withdrew the case on the condition that it should be allowed to print its own disclaimer in the book.
The book depicts the 37-year journey of India’s most ‘secretive’ and unlisted ‘conglomerate’, the Sahara India Pariwar and its chief Subrata Roy, through the eyes of a journalist. However, the book is not merely about Sahara group or its chief Subrata Roy. It tells us about the financial world’s dark secret—shadow banking. It shows how an all-powerful group can easily open a new door when an old one closes.
When it comes to raising money from the public, one cannot ignore the phenomenon called Peerless and residuary non-banking company (RNBC). Both Peerless and Sahara (in the initial stages) acceded to the demands of the Reserve Bank of India (RBI). Peerless fell in line and restructured its board and refunded money to investors. Sahara, on the other hand, while making amends with RBI’s ‘instructions’, was raising money through its optionally fully convertible debentures (OFCDs).
And then, one fine day, Sahara decided to enter the capital market with the strange OFCD offering and thus dug its own grave.
According to Bandyopadhyay, the Sahara group chief had under his belt 4,799 establishments, almost equal to the universe of listed companies in India. “This might have gone unnoticed but for Roy’s plan to list one of his group companies, Sahara Prime City Ltd. On page 640 in the disclosure section of the 934-page draft red herring prospectus (DRHP) of Prime City filed before SEBI (Securities and Exchange Board of India), one critical piece of information was tucked away which the market regulator latched on to.
This was a certain tax-related issue in regard to OFCDs, which Sahara India Commercial Corp Ltd (SICCL) was fighting out with the income tax authority. This was related to a Rs35.57 crore disputed income tax that was imposed on the company for accepting OFCDs worth Rs20,000 crore or more from many investors through cash and not account payee cheques or demand drafts, as required under the Income Tax Act, 1961.
SEBI sought clarification from Sahara about the OFCDs; Sahara defied it. This started a chain of reactions that finally led to the detention of Mr Roy on the orders of the Supreme Court. Bandyopadhyay’s book chronicles all the incidents in a simple, news-oriented approach, i.e., he describes them as they happened.
But Sahara is not just about finance. Subrata Roy was, after all, sponsoring the Indian cricket team and counted among his friends the who’s who of India. During his visit to Sahara Shahar in Lucknow for an interview with the group chief, Bandyopadhyay got a first-hand account of Mr Roy’s penchant for glamour and his association with film stars, cricketers and politicians. Asked about why he chose the company of actors and cricketers, Mr Roy told Bandyopadhyay, “We have to take care of human psychology in every aspect—whenever the performance is strong, the faith is more. Renowned people give them security. Glamour plays a positive role. People jump on to film actors, they go mad. We believe in glamour.”
Overall, the book is a good read. The book, which was finalised before Mr Roy was jailed, also tries to predict the future growth and the possible route that Sahara group may take. But, for that, you need to read the book till the end.