An aggressive marketing plan launched by the Sahara group for its sales staff in July 2009 helped it ramp up average monthly collections under its controversial debentures schemes by more than a third.
The plan named ‘Mega Development’ increased the average collections from optionally fully convertible debentures (OFCDs) issued by Lucknow-based Sahara Commodity Services Corp Ltd, then known as Sahara India Real Estate Corp Ltd, to Rs 457 crore a month. That is a jump of 38 per cent over Rs 330 crore it raised per month for over a year before ‘Mega’ came into force.
Sahara Commodity, along with Mumbai-based group firm Sahara Housing Investment Corp Ltd, had targets to raise money for projects worth Rs 40,000 crore between them through OFCDs. A substantial portion of that target was achieved through Mega Development, said two people who shared details of the scheme with Business Standard.
The corpus raised through issue of the debentures could run into thousands of crores of rupees, according to a Sebi (Securities and Exchange Board of India) order issued last week directing the companies to refund this sum to investors.
In an email response, Sahara spokesperson Abhijit Sarkar termed the issue as “trivial” and said, “Mega Development is not a scheme. It is simply a marketing plan which is a regular feature. No company shows their day-to-day marketing plans.”
A calculation derived from two different regulatory filings by the company shows it collected Rs 2,287 crore during the five-month period between July and November 2009. As of November 30, 2009, the company issued 79.92 million debentures worth Rs 6,588 crore.
The company had collected Rs 4,302 crore at an average of Rs 330 crore per month between April 2008 and June 2009. The debenture issue opened on April 25, 2008, and forcibly ended on April 7, 2011, by an Allahabad High Court directive. On July 4, 2009, Sahara launched Mega Development, a plan under which commission earned by agents went up by up to 80 per cent in some debenture schemes. In addition, agents and some 15 levels of sales staff became eligible for various lucky draw prizes.
According to a copy of the Mega Development brochure reviewed by Business Standard, the plan offered 12,000 cash prizes. The prizes ranged from Rs 60,000 to Rs 2.5 crore. Total outlay on the prizes alone crossed Rs 381 crore.
The scheme worked wonders, said a Sahara worker. “Even small branches which collected sums in thousands started doing monthly businesses of a few lakhs.
The scheme did so well that it got extended,” the worker said. “I know a couple of people who got these big prizes.” The scheme was originally slated to close on January 2010, but was extended for another three months, according to the person who shared the brochure.
According to a filing with the Registrar of Companies, Sahara India Real Estate Corporation, one of the two companies directed by Sebi to refund money collected from investors, had raised Rs 6,588.92 crore through debentures. The filing, dated November 30, 2009, says the company has issued 79.92 million debentures of denominations of Rs 1,000 and Rs 6,000 each. The paid-up capital of the company on the date was Rs 10.62 crore, putting the debt-equity ratio of the company at an astonishing 650 times.
Earlier, Sahara Commodity had told the Allahabad High Court that it had collected Rs 4,843 crore as of June 2009.
