Number crunching: Just how much is Sahara's Aamby Valley worth?

The value it is able to derive in the auction holds the key to Subrata Roy's peace and happiness

Last week, the Supreme Court ordered the auction of luxury township Aamby Valley to clear the dues owed by the Sahara group to the Securities and Exchange Board of India (Sebi). Though the Sebi and the Supreme Court had suggested the plan several times in the past, Sahara lawyers had tried to push other ways of repaying the money rather than do anything with the group’s crown jewel.

“The concept of Aamby Valley City has been the long-cherished aspiration of creating independent India's first planned hill city,” the Aamby Valley portal quotes Subrata Roy, managing worker, Sahara India Pariwar. “A realisation of a superior living space, where all the three tenets of life – Shanti, Sukh and Santhushti (peace, happiness and contentment) – can be experienced and cherished in a cosmic environment that exudes natural beauty and radiates energy.” 

Aamby Valley, and the value it is able to derive in the auction, holds the key to Roy’s peace, happiness and contentment, who has been summoned by the Supreme Court for a hearing on Thursday. Just how much is it worth?

In an affidavit to the Supreme Court in 2012, when the then Chief Justice, S H Kapadia, wanted to understand if there were enough assets to cover the claims of some 29.6 million investors who had bought bonds worth Rs 24,029 crore from Sahara India Real Estate and Sahara Housing Invest, the group had claimed that Aamby Valley alone was worth Rs 39,000 crore. After the Supreme Court ordered its auction, a group lawyer said the property was worth over Rs 1 lakh crore.

A look inside

Aamby Valley was incorporated in March 2006. According to the last annual return, for 2014-15, filed in September last year, Aamby Valley’s net worth was Rs 53,004 crore. This included equity capital of Rs 545.91 crore and preference capital of about Rs 1,880 crore.

The top shareholders were Sahara Q Shop Unique Products Range (43.18%), Sahara India Commercial Corp (25.42%) and Roy himself (21.6%). Roy, who was not on the board of the company, became a director in June last year, a month after he was released on parole to attend his mother’s funeral.

The preference shares were owned by Sahara Credit Cooperative Society and Saharayn E Multipurpose Society, both floated by the group around the time its troubles with the Sebi began.

According to the annual report for FY15, bulk of the net worth was on account of huge reserves and surplus on the balance sheet: Rs 51,244.91 crore. Of this, general reserves were Rs 40,897 crore. Securities premium account, largely on account of Rs 900 apiece premium on preference shares, stood at Rs 9,077 crore. Capital reserves were Rs 990.15 crore.

The massive general reserve could be traced back to a court-approved amalgamation six years ago, when Aamby Valley merged several of its subsidiaries with itself. The reserves and surplus account, which was blank the year before, shot up to over Rs 40,000 crore in FY11.

The income tax department has now added some of these transactions to the income of Aamby Valley and raised a record demand of Rs 24,000 crore, The Times of India reported on Tuesday.

On the assets side, the biggest item was inventories at Rs 33,505.7 crore. The biggest piece within inventories was “projects work in progress” at Rs 32,918.16 crore. “Project work in progress includes land. Legal titles of some of them are in process of being transferred in the name of the company,” a note to the balance sheet said. The project work in progress was valued at fair market value.

Apart from this, fixed assets, including leasehold land and buildings, were at around Rs 12,044 crore.

Aamby Valley reported standalone revenue is Rs 337.56 crore in FY15 and a net loss of Rs 22.6 crore. In the previous two financial years, the company had reported profit of Rs 9.03 crore (FY13) and Rs 16.93 crore (FY14) on revenue of Rs 422.75 crore and Rs 409.21 crore, respectively.

The company attributed the 17.5% fall in revenue in FY15 to the curbs imposed by the Supreme Court. “The above deficit is due to the inability of the company to carry on its core business activities, i.e. real estate activities, due to the embargo imposed by Supreme Court vide its order dated November 21, 2013. The company is hopeful that soon the embargo may be lifted.”

Web of companies

Aamby Valley had 10 subsidiaries at the end of 2014-15, including Aamby Valley (Mauritius). The Mauritius arm, through which the group purchased its interests in Grosvenor House in London and Plaza and Dream Downtown in New York, had floated subsidiaries abroad to own, manage and leverage these assets.

According to the auditors, DS Shukla & Co, Aamby Valley (Mauritius) and its 20 step-down subsidiaries had total assets of Rs 12,615.94 crore as on March 31, 2015 and total revenues of Rs 1,438.20 crore.

Helped by this, Aamby Valley reported consolidated revenues of Rs 1,408 crore in 2014-15. However, it reported a net loss of Rs 362.73 crore at the consolidated level, dragged down by finance costs, including interest on bank loan, of Rs 595 crore, administrative expenses of Rs 582 crore, and operating expenses of Rs 362 crore.

In response to an email seeking comments on the financial performance, the Sahara spokesperson said: “On account of the restrictions imposed by the Supreme Court vide its order dated November 21, 2013 Aamby Valley has not been able to sell the real estate products. As a result there was fall in revenue during 2014-15.”

Confirming the net worth number of Rs 53,000 crore, the spokesperson adds: “Land is of outright ownership, and according to the government rate, its value is Rs 46,922 crore. Potential enterprise market value is more than Rs 1 lakh crore.”

Spread over 10,600 acres, off Lonavla on the Pune-Mumbai highway, the township first shot into fame 12 years ago when celebrities like Amitabh Bachchan, Anna Kournikova and Aishwarya Rai endorsed it as “the world’s best city”.

In those halcyon days, Sahara India Commercial Corp, which was promoting the project, was selling English-style 22,000 square feet villas for Rs 10 crore. It also had plans to sell chalets at Rs 80 lakh to Rs 1.3 crore. At that time, the group had plans to sell some 7,000 such plots by 2012. 

Then the problem with the Sebi happened.