Sahara India Scam 🔥 Fall Of Subrata Roy | 24,000 CRORE scam | Business Case Study [2023]

Summary

The script narrates the rise and fall of Sahara India, a private conglomerate that began with a mere ₹2000 in 1978 and grew to become a financial empire. Founder Subrata Roy introduced innovative schemes to attract investments, particularly from the lower-income groups, promising high returns. The company expanded into various sectors, including real estate and media, and even sponsored sports teams. However, regulatory scrutiny began in 1996, leading to a series of legal battles and culminating in the arrest of Roy in 2014. The Supreme Court ordered the refund of investors' money with interest, but the execution has been fraught with difficulties due to a lack of proper documentation, leaving the investors in limbo.

Takeaways

• 🚀 Sahara India started with a humble beginning of ₹2000 in 1978 and grew to become the largest private company in the country with over 11 lakh employees.
• 🏆 Subrata Roy, the owner of Sahara, reached behind the curtains of power, implicating his influence among politicians and the elite, which later played a role in his downfall.
• 💡 The company's initial success was due to its innovative model of encouraging daily savings of ₹1 from its customers, promising them a return with good interest.
• 🌐 Sahara expanded rapidly, gaining the trust of 13 crore people, which represented nearly 11% of India's population at the time.
• 🏢 Sahara diversified into various sectors including finance, real estate, infrastructure, healthcare, media, entertainment, hospitality, retail, and technology.
• 🏨 The company made significant investments in luxury hotels, including the New York Plaza and Dream New York, and owned vast tracts of land across India.
• 🏟 Sahara City, developed by Roy, was a fully equipped city with high-end facilities like a cricket stadium, helipad, golf course, cinema, health center, and numerous petrol pumps.
• 🤝 Subrata Roy was known for his good relations with influential people, including politicians and film stars, which initially supported his empire's growth.
• 📉 The first trouble for Sahara began in 1996 when an income tax officer scrutinized the company's finances, leading to a series of legal and financial issues.
• 📊 The Securities and Exchange Board of India (SEBI) ordered Sahara to return the money to its investors with a 15% interest after finding irregularities in its financial dealings.
• 🔒 Subrata Roy was arrested in 2014 following the company's failure to comply with SEBI's orders, and he was released on parole in 2016 after his mother's death.
• 💼 As of now, SEBI has received only a portion of the money from Sahara, and the investors are yet to be fully compensated, with the case remaining unresolved due to lack of proper documentation.

Q & A

What was the initial capital with which Sahara India started its operations?

Sahara India started its operations with an initial capital of ₹2000 in 1978.

How many employees did Sahara India have at its peak?

At its peak, Sahara India had more than 1.1 million employees.

What major event led to the downfall of Sahara India's financial empire?

The major event that led to the downfall of Sahara India's financial empire was the discovery of its fraudulent activities by the income tax department in 1996.

What was the innovative business model that Sahara India proposed to the public?

Sahara India proposed a business model where people could deposit ₹1 daily and in return, receive the money back with good interest.

How did Sahara India expand its business into various sectors?

Sahara India expanded its business into various sectors such as finance, real estate, infrastructure, healthcare, media, entertainment, hospitality, retail, and information technology.

What significant property did Sahara India purchase in New York City?

Sahara India purchased two luxury hotels in New York City, the New York Plaza and Dream New York, for a cost of 44 billion.

What is the controversy surrounding Sahara India's IPO and how did it affect the company?

The controversy surrounding Sahara India's IPO involved the illegal collection of funds from the public without proper permissions from SEBI, which eventually led to legal actions and the freezing of the company's assets.

What was the Supreme Court's order regarding the refund of investors' money in Sahara India's case?

The Supreme Court ordered Sahara India to refund the investors' money with 15% interest within three months, along with providing all the details of the debenture holders to SEBI.

What was the outcome of Sahara India's failure to comply with the Supreme Court's order?

As a result of Sahara India's failure to comply with the Supreme Court's order, the company's bank accounts and assets were frozen, and its chairman, Subrata Ray, was arrested.

What is the current status of the refund process for Sahara India's investors?

The refund process for Sahara India's investors is still ongoing, with only a portion of the amount collected by SEBI being returned to the investors, and the rest remains unaccounted for.

What is the main issue preventing the completion of the refund process for Sahara India's investors?

The main issue preventing the completion of the refund process is the lack of proper documentation and records of the investors, making it difficult to trace and return the funds.