Hotel industry's envy Sahara Group in $5 billion trouble at home in India
Skift Take
Sahara has been controversial from the beginning, and investors everywhere need to ask the hard questions before getting into business with it.
India’s Sahara Group would appear to be the envy of the hotel industry after its recent acquisition of the iconic Plaza Hotel and the Dream in New York City. But in reality it’s facing a $5 billion nightmare in India.
In 2008, the company raised over $4.8 billion from about 30 million small investors living mostly in rural parts of the country. Investees were given “optionally fully convertible debentures.” But when the capital-markets regulator, SEBI, investigated and discovered that the money was raised in violation of its rules, it ordered Sahara to refund this money along with 15% interest on it to investors.
Sahara challenged the order in the Supreme Court. In August, the court passed an order asking Sahara to refund the money by Sept. 10. In addition to the money, the court ordered Sahara to provide documentation relating to its investors by Sept. 10. Sahara claims it sent a truckload of documents, but Sebi did not accept it.
