CG Posted August 31, 2012 Posted August 31, 2012 (Reuters) - The Supreme Court on Friday ordered the Sahara conglomerate, the lead sponsor of India's cricket team and which recently agreed to buy New York's Plaza Hotel, to refund more than $3 billion raised from millions of small investors, reaffirming earlier rulings that said Sahara's fundraising did not comply with securities regulations. Two unlisted Sahara group companies had between 2008 and 2011, raised a total of 177 billion rupees from 22 million small investors through an instrument known as an optionally fully convertible debenture. The Securities and Exchange Board of India (SEBI) last year ordered the companies to refund the money, with 15 percent annual interest, after it found that the fundraising process did not comply with its rules. An appellate tribunal upheld the regulator's order. While Sahara had argued the fund-raising was a private placement not governed by rules for public issues, SEBI had said it violated rules because a private placement should be limited to a maximum of 50 investors. The Supreme Court ordered Sahara to pay 15 percent annual interest to investors on their deposits, reaffirming the capital markets regulator's order last year, two lawyers representing the regulator said. Unlisted Sahara, which has interests ranging from financial services and housing to media and sports, did not immediately comment on the decision. P. Venugopal, a lawyer representing the SEBI, said the court ordered Sahara to refund the money within three months and had appointed a retired judge to oversee the process. "It's a landmark judgment given by the Supreme Court today which gives a lot of protection to investors," he told Reuters. Sahara, founded by Subrata Roy Sahara, has been the sponsor of the Indian cricket team for more than a decade. It also sponsors the country's field-hockey team and owns a stake in Formula One auto racing team, Force India. Last month, Sahara agreed to buy a controlling stake in New York's landmark Plaza Hotel for $570 million. It also owns London's Grosvenor House Hotel. Investors in Sahara's financial products tend to be from small towns and rural areas where banking penetration is low. "They see Sahara on television everyday as sponsor of the cricket team and that leads them to believe that this is the best company," said a spokesman for the Investors and Consumers Guidance Cell, a consumer activist group. Reuters Breakingviews last year cited India's National Council of Applied Economic Research as saying 81 percent of rural households save, but only half keep their savings in bank deposits, while 36 percent prefer to keep cash on hand. (Additional reporting by Anurag Kotoky; Writing by Devidutta Tripathy; Editing by Matt Driskill) Reuters http://in.reuters.com/article/2012/08/31/sahara-refund-court-idINDEE87U03B20120831
Prakat Posted September 1, 2012 Posted September 1, 2012 Sahara clearly planned and abused its high profile association with the national team. This clearly makes a case for BCCI applying a level of vetting before even accepting bids for sponsorship.
DomainK Posted September 1, 2012 Posted September 1, 2012 They had the money with them for sometime. They are paying the investors back with 15% interest. I am sure they must have made good money from that huge sum.
Prakat Posted September 1, 2012 Posted September 1, 2012 They had the money with them for sometime. They are paying the investors back with 15% interest. I am sure they must have made good money from that huge sum. Where did you read that? The Hindu today reported that Sahara wasn't even able to furnish the SEBI with records of the deposits and instead questioned the body's jurisdiction in the matter when it is absolutely the SEBI's business to look into such collections of funds from people as long as their number crosses 49. This is a pure and simple swindle al la lala and a la munimji.
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