Sahara takes on Sebi chief, demands an apology

Says 90% of investors were low-ticket ones, that's why the refunds were in cash

Sahara India Pariwar has taken strong objection to a remark by the Securities and Exchange Board of India (Sebi) Chairman U K Sinha about “a story” floated by a company having refunded “Rs 20,000 crore” in cash in four months.

While Sinha’s remark, which came during a speech on illegal investment schemes and the grey market in finance, did not name anyone, news reports interpreted it as a reference to Sahara.

In a statement issued on Thursday, Sahara said, “Such a responsible person should not give irresponsible statement that how and why Rs 20,000 crore repayments were made in four months and 90 per cent was paid in cash. He should have asked this question to Sahara first. Repeatedly, we have written to Sebi and everywhere that our investors are very small and mostly living in small townships and rural areas. These investors do not go to banks and the banks do not come to them.”

Sahara said the refunds were made over a period of five months.

Explaining its investor profile, the group said it had 13.3 million investors with a principal of less than Rs 5, 000, and 8.8 million up to Rs 10,000, etc. In all, it said 29.9 million out of a total of 30.7 million investors had principal amounts of less than Rs 20,000.

The group said over 90 per cent of the investors in its two companies charged for illicit money collection -- Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Investment Corporation (SHICL) -- have invested a principal amount of less than Rs 20,000 and hence, the refunds to them have been made in cash.

The two Sahara group firms have been charged by both Sebi and Supreme Court for irregularities in the way the firms raised over Rs 24,000 crore through issue of debentures. “We genuinely hope the Sebi chairman should kindly send an amended statement to Media with realisation and apologies that why cash repayments to around 90 per cent investors have been made and the 90 per cent cash payments are totally justified. Up to Rs 20,000 repayments (including interest), it is cash payments only as per the country’s law,” the statement said.

The company highlighted just like Sahara, Sebi has taken actions against dozens of other companies, but not a single refund has been made by these companies.

“In case of Golden Forest Company, which was exactly similarly initiated and fought by Sebi. After Hon’ble Supreme Court’s decision in 2004 on Golden Forest Company for repayment, not a single rupee has been paid to any investors till today, that is in 8-9 years,” it alleged.

Sahara claimed it had refunded “big sums” to investors as there was big rush outside its offices around mid-June. It said most of its investors are small and from townships and rural areas.

“Almost 60 per cent repayments had to be done in around 45 days. Really a very difficult time for Sahara for no fault of ours.”

Sahara also claimed it collected deposits from investors after it got all valid permissions in writing from the Centre through the Ministry of Corporate Affairs.

“Government departments who gave us written permission are not accused at all. Had they not given these permissions, we would not have collected even one rupee and we would not have faced any problem,” the company said.