What is the Sahara Case all about ?

• Sahara’s case is all about OFCD and its investor. But its root is in a ruling by the Reserve Bank of India in 2008. Here is a chronological list of how events unfolded from 2008 to the issuance of non- bailable warrant to Sahara chief.

What is a Debenture ?

•Debenture is the acknowledgement given by the company to u.

•There r situations where the company may need finance. During that time it issue debentures. By purchasing the debentures it means that u financed the company the value of debentures and the company owes u.

•For eg. u bought a debenture worth rs. 1000 it means that u financed the company by Rs.1000 and the evidence for it is the debenture.

Than what is a convertible Debenture ?

•The company may open an option for the debenture holders to change the debentures to shares.

•Ur position in the company changes from a creditor to a owner in case of convertible debentures.

•Once the debenture is converted u get share from profit instead of periodical interest.

What is OFCD ? OFCDs are optionally fully convertible debentures. OFCD holders can become shareholders of the company if they chose to do so.

Generally (which is true in the case of Sahara) there is no asset marked against such investment, in other words they are unsecured in nature and in case of liquidation of the company they will be one of the last stakeholders to be refunded.

• 1. In 2008, RBI debarred Sahara India Financial Corporation from raising fresh deposits. Growth of Sahara’s empire was always a mystery; many believed it ran a Ponzi scheme by collecting funds from investors.

2. Sahara decided to issue OFCDs by floating two companies – Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC). It was the Registrar of Companies (ROC) that needed to clear these investment vehicles.

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6. Abraham found out that even though the Sahara group companies collected money they did not have proper records of the identity of its investors. How and to whom would they then return the money? Even professional agencies were unable to locate the investors.

The man who nailed Sahara

: 7. The two companies, Abraham alleged, intended to rotate money between group companies. Though the OFCD instruments were issued in the name of the two companies, cheques were sought in the name of Sahara India.

8. When SEBI issued its order on the wrongdoings of the Sahara group on June 23, 2011, Sahara

group took the matter with Securities Appellate Tribunal

(SAT). But SAT held the Sebi findings to be correct.

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9. Sahara group then approached the Supreme Court but in August 2012, the honorable court asked the group to repay an amount of over Rs 24,000 crore to Sebi within 90 days. The regulator will then distribute the money to bonafide investors. But suddenly Sahara said it had repaid most of the money over the last one year and an amount of just over Rs 5,000 crore was pending.

non- bailable warrant with an order to appear before the

court on March 4.