DELHI: Faced with a tight cash flow, Sahara is contemplating to exit its finance business by December 2017 and focus on retail, real estate, life insurance and mutual fund, its chief Subroto Roy has said in a letter to Prime Minister Manmohan Singh.
The letter signed by his son Smanto Roy was sent to PM on April 15 after Roy had spent over one month in Tihar jail over its legal standoff with stock market regulator Securities & Exchange Board of India (Sebi).
"Sahara wants to go away totally from financial business to non-financial business. Had there not been the Sebi issue, we could have achieved this stage by 2015," the letter said.
"However, now plans are all in place, but cash flow has been badly beaten up. Nonetheless, if we are left in peace we shall definitely be done with the financial business maximum by December 2017," it said.
The Sahara India Pariwar, which has a net worth of Rs 68,174 crore, has been locked in a legal battle with Sebi over the issue of refunding of Rs 24,000 crore by its two companies — Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC) — to investors from whom they had raised the money. Sebi says the funds were raised illegally.
The Supreme Court had ordered Sahara to refund the money raised from investors with interest. Roy has been sent to jail for his failure to comply with the top court's orders. He has been in Tihar jail since March 4. While the SC has given him bail, the company has been unable to meet the bail conditions so far.
Last year, the firm announced plans to expand into retail, luxury retail, diary and food business. The company says it plans to recruit 56,000 employees across sectors and provide employment to 4 lakh people in the next three years.
"From 2009, I totally concentrated on a new plan that is to promote non-financial business. My target was to switch over to non-financial business by the year 2015," said the letter, which was dictated to his son by Subroto Roy.
"But one has to go according to God's wish. From 2010, we got stuck with the Sebi OFCD issue. Cash flow went haywire. The year 2012 was the worst year as far as cash flow issue is concerned. Everything was out of control," the letter said.
It details the plans the company has put in place to shift its focus and enable the firm to provide jobs to its nearly 12 lakh employees.
"With the above plan having reached its optimum level, we shall be able to give respectable livelihood with a considerable growth opportunity to nearly 6-7 lakh people on salary basis. Around 4 lakh shall come in sales and most of them shall become franchisees," the letter said.
"We shall definitely very aggressively run Life insurance, mutual fund or may be housing finance and nothing else," the letter to the PM said, while urging that the company be allowed to execute its shift to non-finance business.