Sahara group's big-buck regime
A Business Standard analysis of two statements issued between April 2011 and September 2012 by the Sahara group reveals the extent of its money-collecting capability.
After the Allahabad High Court effectively put a lid on the money raising operations of two of its group companies in April 2011, the Sahara India Pariwar’s net outstandings went up by Rs 14,286 crore, shows the analysis of two financial statements published by it for the periods ending April 30, 2011 and September 30, 2012. The first statement is available on the group’s website, while the latter was put up in newspaper advertisements on December 1.
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In the 17 months between the two dates, the group raised Rs 60,091 crore from various sources, small investors in North Indian states forming a significant portion. During this period, it refunded Rs 45,805 crore, giving a net inflow into the group coffers of Rs 14,286 crore. This sum gives for the first time a glimpse at the power of Sahara’s million-strong money raising army, operating in 4,618 centres across the country.
An e-mail questionnaire to the Sahara group spokesperson on Monday, seeking details on the source of new funds and the growth in assets and liabilities, remained unanswered.
According to the first statement, the book value of “total fund received /raised from public since 1978 till 30/4/2011, outstanding balances of secured loans from banks, advances against various projects, life insurance policy holders fund and mutual fund, etc", stood at Rs 1,64,909 crore. The recent statement says: “Total fund received/raised from public since 1978 till 30/9/2012 with accrued interest, including life insurance policy holders’ fund, mutual funds, Credit Cooperative Q shop customers advance, bank loans in India and overseas, etc" stood at Rs 2,25,000 crore.
Similarly, “Net outstanding liability of public deposits, OFCD, secured loan from banks, advances against various projects, life insurance, MFs" stood at Rs 40,078 crore on April 30, 2011. This swells to a “net outstanding liability (including accrued interest)" of Rs 54,364 crore, according to the latest advertisement.
The key difference between the two statements is that advances against various projects and OFCD get replaced by Q shop advance and credit co-operative.
On a gross basis, Sahara raised a whopping Rs 3,534 crore every month, despite the various legal proceedings initiated against it by the Securities and Exchange Board of India (Sebi). On an average, each member of the million-strong workforce raised about Rs 35,000 a month from their investor base. The group’s land bank also increased considerably during the period, according to its statements.
In the 2011 statement, the group said, “Sahara India Pariwar is having total land bank majority owned and some under MOU (sic) is around 33,633 acres. Additionally, we are in the process of buying around 11,000 acres."
The land bank has grown by 2,998 acres to 36,631 acres, says the latest statement. As a result, value of the “land, inventory and work in progress" grew by 60 per cent to Rs 36,358 crore.
Other assets have also shown remarkable growth. The value of fixed assets grew over 50 per cent to Rs 9,475 crore, while cash and bank balances increased by Rs 10,263 crore.