Image Source : PTI Subrata Roy, the chairperson of Sahara Group who died on Tuesday.
Subrata Roy, the Indian billionaire and founder of business conglomerate Sahara Group, died at the age of 75 at the Kokilaben Dhirubhai Ambani Hospital in Mumbai on Tuesday after a prolonged illness. A prominent figure in the Indian business landscape, Roy’s empire extended to multiple sectors, including real estate, entertainment and retail.
“It is with profound sadness that Sahara India Pariwar informs the demise of our Hon’ble ‘Saharasri’ Subrata Roy Sahara, Managing Worker and Chairman, Sahara India Pariwar. Saharasri ji an inspirational leader and visionary, passed away on 14th November 2023 at 10.30 pm due to cardiorespiratory arrest following an extended battle with complications arising from metastatic malignancy, hypertension, and diabetes,” said the Sahara Group in a statement.
Many prominent figures, such as Samajwadi Party chief Akhilesh Yadav and Bollywood actor Anupam Kher expressed their condolences on Roy’s death. His mortal remains will be brought to Sahara city in Lucknow today where his last rites will be performed.
A rags to riches story
Although the origins of Sahara India Pariwar go back to 1978 as a small company dealing in finance, the story of Roy’s business empire goes back much earlier when he sold salted snacks on his Lambretta scooter after the death of his father.
Born in a Bengali family in Bihar in 1948, Subrata Roy was the elder son of Sudhir Chandra Roy and Chhabi Roy. He studied mechanical engineering from a government institute in Gorakhpur, where he also started his first business. However, that and another venture with his wife Swapna Roy, failed.
In 1978, Roy established the Sahara Group, which allowed small investors to invest money and receive assured income in return, in Gorakhpur. The company started with a modest capital of only Rs 2,000 but went to become one of the largest Indian conglomerates with 9 crore investors and consumers and a net worth of Rs 259,900 crore.
Over the decades since its formation, the Sahara Group diversified into different sectors, including real estate, media, and aviation. The Sahara Group also began to operate numerous businesses like Aamby Valley City, Sahara Movie Studios, Air Sahara and more.
The peak of Sahara Group
The Sahara Movie Studios produced several big Bollywood hit movies, such as Wanted and Sarkar. It also owned a news channel, an entertainment channel, a movie channel and newspapers and magazines in different languages.
As the net worth grew, Sahara also acquired New York’s Plaza Hotel and the Grosvenor House Hotel in London. Roy’s company also sponsored the Indian cricket team until 2013 and bought the Pune franchise of the Indian Premier League (IPL) till the group pulled out in 2018. Sahara also sponsored the Indian hockey team.
Meanwhile, Roy’s flamboyance also grew with the success of his company. He became affiliated with high-profile politicians like Samajwadi Party’s Mulayam Singh Yadav, corporate personalities and movie stars like Amitabh Bachchan.
Roy’s empire grew so large that he was called the biggest employer – with 1.2 million workers – behind the Indian Railways. The marriage of his two sons in his 270-acre mansion in the presence of top personalities from politics and the film industry far eclipsed the typical Bollywood-style weddings.
The Fall of Subrata Roy
Roy’s life was not without controversy – and legal controversies hit him very hard since the company ran into a series of financial troubles in the 1990s. In 2011, the Sahara Scam made headlines, when the Securities and Exchange Board of India (SEBI) accused Sahara of raising funds through Optionally Fully Convertible Debentures (OFCDs) without proper approvals.
Since Roy’s company focused on investments by poor and rural Indians who did not have much access to formal banking services, the market regulator said that Sahara engaged in practices that were declared illegal. Roy faced allegations of fund mismanagement of Rs 24,000 crore from three crore investors and the SEBI directed two Sahara companies – Sahara India Real Estate Corporation Ltd (SIREL) and Sahara Housing Investment Corporation Ltd (SHICL) – to refund the money. These companies were also barred from raising money.
Additionally, the group was accepting OFCDs from investors against cash instead of cheques or demand drafts, as mandated under the law. This led to a routine enquiry that soon culminated in the company’s collapse. It was also found that Sahara’s money was used to develop 10,600 acres of Aamby Valley luxury township in Maharashtra.
The Sahara Group earlier started publishing investments that branded SEBI as ‘irresponsible’. A lengthy legal battle ensued that ended up at the doors of the Supreme Court, at the end of which Roy received one of the biggest blows of his life.
In 2014, the Supreme Court ordered the company to return all money to the depositors with an interest of 15% and Roy was arrested and imprisoned. The court said that the billionaire would not be released until he brought in s 5,000 crore in cash and Rs 5,000 crore by way of bank guarantee.
Roy spent more than two years in the Tihar jail and was released in 2017 on parole. Even after that, his financial and legal troubles did not die down. He was sent back to prison on the issue of property status and most of his properties were attached by the Income Tax Department.
In November 2020, the SEBI asked the Supreme Court to cancel Roy’s parole if he didn’t pay up Rs 62,600 crore. The Sahara scandal significantly ruined the reputation of the Sahara Group and Roy himself, who earlier enjoyed a lavish lifestyle.
After Roy’s death, the undistributed funds totalling over Rs 25,000 crore lying with the capital markets regulator Sebi’s account have come back into focus. Meanwhile, the Centre in August started the process to refund ₹ 5,000 crore of depositors whose funds are struck in four cooperative societies of Sahara Group.
Even after his parole, RoIn his later years, Roy sought additional business ventures such as Sahara Evols, which offered a range of electric vehicles, and plans to enter the online education sector with Edunguru.
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