Business Today

Scent of a man

Suveen K Sinha        Print Edition: March 17, 2013

Hussain Bhai takes his foot off the rickety wooden stool, leans forward in his chair, and says: "Only educated people like you and me can understand the value that comes with being a public sector company." Sitting inside a bicycle repair shop, he is speaking with authority about Sahara and it feels rude to correct him.

"These people," he waves his left hand in a sweeping gesture that covers the bicycle mechanic as well as the barber across the road, "will not understand this."

Hussain Bhai - that is what everyone calls him - is a respected man in the Rajaji Puram area of Lucknow. He holds a government job, for which he goes to office for a few hours every day, reads newspapers, uses English words here and there, and wears trousers and shirt.

But he is wrong. Awdhesh, the cycle repairman, wears khaki shorts that come up to his knees, and Ramdin, the barber, a white undershirt over trousers. Both give out only their first names. But neither has any doubt that Sahara is a part of the government and that is a big reason why they trust it with their money.

Sahara India Managing Worker and Chairman Subrata Roy
Sahara India Managing Worker and Chairman Subrata Roy
However incorrect, it is an easy belief to harbour in Lucknow. To the faithful, that Sahara's name is on Sachin Tendulkar's jersey, and on every other Indian cricketer's, is only the final irrefutable proof of its government lineage. In this city, Sahara is everywhere. Its name adorns road signs, dividers and roundabouts. Its corporate office at 1, Kapoorthala Complex towers over the busy business district. In Gomti Nagar, the area Mayawati turned into a shiny real estate haven, the former Chief Minister's parks and statues pale before the light grey might of Sahara Sheher. It is a fort, with an ornate facade, high walls, watch towers, and tight security.

It is not easy to get inside. But if you do manage to, as Business Today did, you would find an all-new world stretching before you. It is a world where Saharasri, as Subrata Roy Sahara is referred to, is supreme. Spread over 300 acres, it has wide empty roads, imposing arches, an auditorium that can seat 5,000, a cinema hall, a medical unit, a filling station run by Indian Oil, and a lake whose circumference is 2.5 km.

There is a lush green cricket ground with a sprinkling of little cottages and a club house. There is a large ground with a humungous statue of Bharat Mata, a lady riding a chariot drawn by four lions. She adorns nearly all of the greeting cards sent by the group and is also at the entrance to Sahara Sheher.

Playing second fiddle to Bharat Mata Naman Sthal is Jyoti Sthal, a monument dedicated to Roy's father, Sudhir Chandra, whom the group's website calls "a noted sugar technologist" (mother Chhabi Roy is described as a "pious housewife"). A huge statue of his is the centrepiece here.

On his birthday, April 1, they celebrate Jyoti Diwas. There are several other, smaller statues all over the Sheher: of Rabindranath Tagore, Subhash Chandra Bose, Abul Kalam Azad, Chandrashekhar Azad, etc. In the distance you can see a large dome, which is supposed to be Roy's abode. But - you will be told firmly - you can't go that side.

Sahara Sheher is where Akhilesh Yadav, with his entourage of politicians and industrialists, went for lunch after being sworn in as the Chief Minister. It was an event reported by newspapers without much surprise, in some cases as a footnote.

Imagine Rahul Gandhi going for lunch at the house of Sunil Mittal, the Bharti Enterprises Chairman whose father used to be a prominent member of the Congress Party, right after becoming the prime minister. If nothing else, Bharti's stock would shoot up.

But stock prices are not something that would hold much interest for Roy, who has taken the company's name as his surname and the unique title of Managing Worker and Chairman. What matters to him is what people like Ramdin and Awdhesh believe. That is what gives Sahara its unfathomable financial strength, rupee by rupee.

Awdhesh, who owns and runs Unique Cycle Repair, has two schemes with Sahara. The first requires him to deposit Rs 15 every day and the second Rs 10. Photo: Suveen K. Sinha
Awdhesh, who owns and runs Unique Cycle Repair, has two schemes with Sahara. The first requires him to deposit Rs 15 every day and the second Rs 10. "Hum to roz kuan khod kar paani peete hain (we have to earn our keep every day)," he says, pausing to take in a Mohammed Rafi song blaring from a passing rikshaw. "So I like Sahara.

It does not put much burden on us and yet helps us save." Ramdin's father wanted him to become a tailor. But the son ran away from his apprenticeship and opted to follow into his father's footsteps by opening a barber shop. He had his first brush with Sahara two decades ago with a scheme under which he deposited Rs 5 a day. It matured and he opened another, and another. Now he has a Rs 10-a-day scheme. The receipt for his deposits comes every 15 days.

Both have Hussain Bhai's blessings. "Sahara is a low-risk investment," he says. "My money with Sahara is secure."

On the other side of the city, in Bakshi Ka Talab, the shops are bigger, their owners richer, but just as much in love with Sahara. Diwakar Prakash Singh says he opened an account with Sahara in 1994, the same day he opened his garment shop. He has had a series of schemes since then, opening a new one the day an old one matured. He now has two schemes running, each of which requires him to deposit Rs 100 a day.

"The interest rate is not very high, but my money goes out in a trickle and comes back in bulk," says Singh. Sanjay Lal Maurya, who sells pipes, has been with Sahara for a decade and a half and currently deposits Rs 100 every day. "Sometimes," he says, "I do not really want to make a deposit, but the agent says, 'Bhaiya, please,' and it is difficult to say no."

The agent, typically, is a relative, or a friend, or someone from the neighbourhood. "We do not deal with strangers," says Hussain Bhai.

Ramdin, the barber
Ramdin, the barber, had his first brush with Sahara two decades ago with a scheme under which he deposited Rs 5 a day. It matured and he opened another, and another. Now he has a Rs 10-a-day scheme. Photo: Suveen K. Sinha
In fact, many agents begin their careers by enlisting their family, immediate and extended. They work on commission and, therefore, have no hesitation in going to small shopkeepers for their little deposits every day.

Banks, on the other hand, work through employees, who have no time, or incentive, to do the hard yards. In any case, many of Sahara's depositors don't have bank accounts. In the case of the Rajaji Puram gang, the agent is Sandeep (again, no second name), a man who often comes to Awdhesh to get his bicycle repaired or its tyres inflated. His hair carrying the distinct brown tinge of henna, Sandeep is a friend as much as a representative of the company they trust with their savings. "I continue depositing with Sahara also because I do not want to spoil my relationship with Sandeep," says Awdhesh.

The relationships add a glow of warmth to the way they look at Sahara; it is the group that gave jobs to their friends.

The Managing Worker is aware of this. On his website, he lists his "biggest achievement in life" thus: "I'm very proud to be the guardian of the world's largest family." This family, which the group refers to as the Sahara Parivar, has grown to more than a million, a far cry from the outfit Roy started in 1978 with Rs 2,000 in capital, a table, two chairs, a Lambretta scooter, a clerk and an errand boy.

Several entrepreneurs may have had similar beginnings, but none of them would match the uniqueness of Roy's philosophy.

The website credits Sudhir Chandra with instilling in his son respect for human beings. The story goes that the father once caught a young Subrata berating the dhobi for not ironing his shirt properly. "Is he not older? Can you iron his shirt?...He knows the job better than you," said the father, and made his son touch the dhobi's feet and apologise. On another occasion, when Roy was complaining about a small tear in his favourite shirt, the father took it, tore it completely, and said: "Never get so attached to something materialistic or lifeless." He once made Roy spend three days in the house of one Sharmaji, one of the father's junior officers who had suffered a heart attack.

Roy did all the chores in the house while Sharmaji recuperated. The sum of Roy's learning from his father is given as: "Always be contented in receiving and discontented in giving."

No wonder Roy calls his corporate philosophy "collective materialism", described by the group as one "that advocates collective growth for collective sharing and caring".

The group's employees and agents have never formed a union. The group does not declare dividends. Forty per cent of the profit is spent on welfare of workers - kartavyayogi (for whom work always comes first) is how they are thought of - 35 per cent goes into the company's net-owned funds, and the rest is spent on social work. Talk about unique.

Of late, though, the harmony looks to have been disturbed and Roy's "all is well" veneer has grown thin. Sahara worked like a charm while the going was good. Unaffected by the scandals around the non-banking finance companies of the late 1990s - epitomised in the way C.R. Bhansali's life unravelled - Sahara grew from strength to strength. In June 2011, Sahara India Financial Corporation, the group's bedrock, caused a flutter by taking out newspaper advertisements that put the value of its deposits at Rs 73,000 crore. Soon after the ads came out, Roy told India Today: "The Sahara family is intrinsically strong, it will overcome all the imponderables strewn in its path."

The imponderables have grown. That Rs 73,000 crore proclamation came in the midst of a battle with regulators, the Reserve Bank of India and the Securities and Exchange Board of India (SEBI), both of which have been trying to clamp down on raising of deposits by Sahara companies.

The RBI has gone to the extent of publishing advertisements saying it would not guarantee repayment of deposits raised by them. SEBI has taken the same line. The Supreme Court has endorsed SEBI's stand, asking Sahara to refund nearly Rs 24,000 crore raised through OFCDs (optionally fully convertible debentures) by two of its companies from millions of small investors. It seemed to be a long war of attrition, destined for years in court. But SEBI upped the ante on February 13, freezing the assets and bank accounts of the two companies which had floated the OFCDs and also of their top executives including Roy.

In an interview to Society magazine in August last year, Roy chose to make his point through the timehonoured tool of comparison - comparison with Bangladesh. "In one of their very senior minister's house, where we had lunch, the minister took so much interest that he instructed his people to get fresh fish from so and so river to serve me.... one should go and learn how ministers and bureaucrats should behave without any element of ego. They love you, they respect you, they welcome you if you are there for their country, and there is a beautiful feeling.

I love my country, but even then, I strongly say that the others in Delhi should go and learn how their counterparts there behave. They should learn how to welcome the right people for the development of the country. They are not looking to get sadistic pleasures."

He is similarly enamoured of British Prime Minister James Cameron. "When I went to meet the British PM, my car was held up for some time outside the gate. When I entered, there was no security check for me. When the PM entered, the first thing he did was to apologise by saying aloud, 'Mr Roy, I'm so sorry you were held up at the gate. I apologise. I am going to take action. It was not right.' Then, he asked me about all my forthcoming projects - he knew about all of them. I had reached London just four days ago, and he knew everything. I really admire him, they have a fantastic PM."

Gomti Nagar, Lucknow
In Gomti Nagar, former chief minister Mayawati's parks and statues pale before the might of Sahara Sheher. It is a fort, with an ornate facade, high walls, watch towers, and tight security. Photo: Suveen K. Sinha
At Agenda Aaj Tak, a conference organised in New Delhi in the first week of December by the eponymous TV channel, where he made one of his rare public appearances, Roy was a lot more direct. "I would never have gone across the border [to do business] if there had not been so much hardship [in India], so much torture here for no fault of ours." Sahara has acquired iconic hotels in London and New York.

According to Roy, regulators have a better understanding of their powers than their responsibilities. "Regulators have to be taught to regulate, not become a banning agency. If there is something bad, shut it down. But be selective. Don't shut everything down. If the RBI sits across the table, I can explain to them how no talented young man can do well now."

He recounted his entrepreneurial journey as a series of roadblocks and how he circumvented them. He started in 1978 with a scheme to raise funds from the public, which got banned by 1979/80 and he had to make immediate repayment. He carried things over to a partnership firm. "But the Banking Amendment Act of 1982 banned it" from raising public money. Then he started a housing finance company, which had no ceiling on the money raised.

"We jumped into it. But before two years were out, a ceiling was imposed... Then we got into a mutual benefit company. In another 1.5 to two years it was banned." Then came the longest trouble-free period of his career, when he ran a residual non-bank finance company, which functioned smoothly for nearly two decades before - you guessed it - it was banned. "Let's not go into why the regulators banned it."

Then the two Sahara companies floated the OFCDs, Sebi's current targets, which have been told to stop and repay. "Only the cooperative route is left. But no young man or new entrepreneur can think about it. If I were to start today, I could not have grown beyond Rs 5 to Rs 10 crore... We have moved away from socialism in development. Only those who come from wealthy families can prosper. Let's not talk socialism, let's talk capitalism."

A disillusioned Roy, who says he never liked using goods made outside India, has started using imported perfume. "My wife used imported perfume. I used to run away when she sprayed it on me. But today I use it."

The aroma of this angst has not reached Rajaji Puram. Out there, there is no concern, indeed no knowledge, of Sahara's troubles with the regulators. Their only grievance is that the group at times takes long to give their money back. In the wise words of Hussain Bhai: "At times people have urgent work, say getting a gas connection. A delay in payment does not help in such cases."

Additional reporting by Ashish Misra

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