Sahara uses small savers to keep Aamby Valley afloat

Sahara uses small savers to keep Aamby Valley afloat

Embattled Sahara conglomerate 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 Rs 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 Rs 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, according to the law under which these cooperatives operate.

Responding to Reuters queries, a spokesman for Sahara Credit Cooperative Society said in an emailed statement that “all required approvals” were in place, and the investments would not put investors at risk.

Sahara Credit Cooperative had shares worth Rs 1,039 crore in Aamby Valley, according to the latter’s 2014 annual report. Saharayn E-Multipurpose Society, which had shares worth Rs 460 crore in the resort, did not respond to requests for comment.

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 is because the conglomerate is under pressure to sell of some of its prized assets to pay off investors in a savings deposit scheme the Supreme Court has declared illegal.

 Over the past four decades, Sahara founder Subrata Roy used his series of small deposit plans to build Sahara into an empire that encompasses businesses ranging from New York’s Plaza hotel and London’s Grosvenor House, to television stations, and a stake in a Formula One racing team.

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