Embattled conglomerate Sahara has been funnelling cash from small savers to fund one of its biggest projects, a luxury resort south of Mumbai, according to documents Reuters reviewed.
Sahara has ploughed at least ₹1,500 crore from two of its credit cooperatives into the Aamby Valley resort project through investments in preference shares, according to documents filed with the companies regulator.
It is doing so as some investors in its credit cooperatives complain they have struggled to get Sahara to pay out their matured time deposits — even for sums as low as ₹30,000.
The credit cooperatives’ investments into Aamby Valley are not illegal. Cooperatives are allowed to invest in shares and bonds of infrastructure and real estate companies after board approval, if they are in the interest of the cooperatives.
Approvals in place
Responding to queries, a spokesman for Sahara Credit Cooperative Society Ltd said in an emailed statement that “all required approvals” were in place and the investments would not put investors at risk. He did not elaborate.
Sahara Credit Cooperative had shares worth ₹1,039 crore in Aamby Valley, according to Aamby Valley’s 2014 annual report. Saharayn E-Multipurpose Society Ltd, which had shares worth ₹460 crore in the resort, did not respond to requests for comment.
But some experts say if Sahara is using deposits from the cooperative societies to finance Aamby Valley, members of the cooperatives might face difficulty recouping their money.
That’s because the conglomerate is under pressure to sell of some of its prized assets to pay off investors in a savings deposit scheme that the Supreme Court has declared illegal.
The two credit cooperatives could be hit “if Aamby Valley is monetised and the proceeds are given up to the investors of the earlier financial schemes, which is sitting in the Supreme Court,” said Prem Rajani, founding partner of Mumbai-based law firm Rajani Associates.
Property auction
The Supreme Court will decide next Tuesday whether to appoint a receiver to auction off some of Sahara’s properties as part of efforts to refund investors in the banned savings deposit scheme.
An official from the Ministry of Agriculture’s credit cooperatives division said Sahara could be “misusing provisions of the law” that govern credit cooperatives by investing some of the cooperative funds into Aamby Valley.