Sahara has another Rs 100 cr bill coming from Sebi

By R Jagannathan

Sahara Group boss Subrata Roy, who must even now be scrounging around to find the Rs 24,000 crore-and-odd that the Supreme Court ordered him to repay by end November with 15 percent interest to investors in his optionally fully convertible debentures (OFCDs), has more bills coming his way. At least Rs 100 crore, it seems.

On 31 August this year, the apex court held that two Sahara companies, Sahara India Real Estate Corporation and Sahara Housing Investment Corporation, which had raised money through OFCDs after bypassing Sebi, must return the money to its three crore alleged investors.

Sahara is clearly going to pay dearly for its folly of trying to avoid the long arm of the regulator by dubious means.

But the court made it clear that this job would not be done by Sahara directly, but with Sebi playing honest broker. Sebi has to verify the bonafides of these three crore investors before the money is paid out. And it is here that the new bills are going to be added to Roy's costs.

According to a Business Standard report, Sebi has floated tenders to outsource the job of verifying and paying out the money which Roy will have to repay by 30 November. The newspaper says the data-processing work involves not just three crore investors, but 10 times the number of application forms - 30 crore - for the return of the money.

Given the scale of the task, registrar and transfer agents can expect to collectively make around Rs 100 crore on revenues over the coming months - if not years.

But this is what Sahara will rue: under the Supreme Court verdict, the tab for this pain-staking work will be picked up by Subrata Roy.

Not only that, every cost incurred by Sebi - whether it is for the data processing work, or for any investigations needed to check the authenticity of the investors on Sahara's books - will have to be borne by Sahara.

The 31 August court order asks Sahara to refund the money to Sebi with 15 percent interest, and the money has to be deposited in a nationalised bank with the highest fixed deposit rate.

Sahara has to pay Rs 5 lakh per month for the work of retired Judge BN Agarwal, who will oversee the whole process adopted by Sebi to ensure the payment. Any expenses incurred on Justice Agarwal's staff or other requirements will also be debited to Sahara.

Plus, there could be other bills for incidentals. The court said: "Sebi (Whole-Time Member) shall have the liberty to engage investigating officers, experts in finance and accounts and other supporting staff to carry out directions and the expenses for the same will be borne by Saharas and be paid to Sebi."

Clearly, the court did not think the Saharas were trustworthy enough to return the money themselves. It has also made it clear that if some investors don't exist, the money will go to the government of India.

Sahara is clearly going to pay dearly for its folly of trying to avoid the long arm of the regulator by dubious means. Now Subrata Roy has the regulator hovering all around him.