In what is perhaps going to be the biggest pan-India land sale in India’s recent history, about 4,700 acres of Sahara Group’s property, spread across 14 states of the country, are set to go on sale. Indian conglomerate Sahara India’s founder and chairman Subrata Roy landed behind bars after failing to refund Rs. 24,000 crores to investors and not appearing in court despite repeated summons.
The Supreme Court of India had ordered the arrest of Roy after capital market regulator Security and Exchange Board of India (SEBI) dragged the Sahara chief to court on this account.
Subrata ‘Sahara’ Roy, also known as ‘Saharasri’, has been behind bars since March 2014 and his bail plea was rejected by the Supreme Court of India. In April 2016, after completing two years in jail, Subrata Roy pleaded ill-health and sought bail on health grounds.
In view of this, the Supreme Court has asked SEBI to initiate the sale of Sahara group properties to raise the money required of the Sahara chief to get bail. Following the Supreme Court directive, SEBI has kick-started the process of selling Sahara properties to HDFC Realty and SBI Capital Markets.
Interesting facts about this much-anticipated property sale
- According to reports, SEBI is expecting to get Rs 6,500 crore from the sale of the land spanning across 14 states and 60 properties.
- SEBI’s move follows the Supreme Court directive to begin the “process of selling 87 ‘unencumbered’ properties of Sahara group”.
- The proceeds from this sale will be used to generate the bail amount for Subrata Roy.
- According to reports, Sahara has about 33,633 acres of land across the country, of which Amby Valley in Lonavla is 10,600 acres and another 1,000 acres are spread across Uttar Pradesh.
- There are apprehensions that SEBI’s task of selling the properties to recover bank dues may end up being a failure like Kingfisher owner Vijay Mallya’s assets.
- It is highly doubtful that auctioneers HDFC Realty and SBI Capital Markets will succeed in selling the land and get the expected amount. As most of these assets are involved in litigation, there may not be many takers for them.
The Sahara case is acquiring disturbing similarities with the Vijay Mallya case. Kingfisher’s lenders, who are stuck with dues worth Rs. 9,000 crore from Mallya’s Kingfisher Airlines, have been trying to sell the headquarters of the defunct airline for the last few months but failed to get any bids. This is despite the building having a built-up area of over 17,000 sq. ft. and being located in the posh Vile Parle area near Mumbai domestic airport.
The auction conducted on 17 March was a washout as no bidders came forward claiming that the reserve price, which was set at Rs. 150 crore, was quite high. Banks are now planning to revalue the property. Sahara’s properties going on sale are most likely to meet a similar fate. While Kingfisher House is in Mumbai city, the land portions of Sahara are situated in rural areas. This could make the sale even more difficult.
Are Builders Holding Back from Buying Lands?
There is another factor that may affect the outcome of this exercise. Earlier seen as an easy place to park black money, the Modi government’s chase after black money and a slowdown in the real estate sector have made buying land less lucrative for builders who are also wary of the Real Estate Bill pending in Parliament. Some headway could be made with the Amby Valley property at Lonavla. Besides, land parcels in rural areas could be taken over by the government to fulfil social welfare objectives.
Needless to say, SEBI has its task cut out. It has to raise Rs. 6,500 crore by selling 4,700 acres. What remains to be seen is if there is any investor ready to risk his money by owning a piece of Sahara’s unenviable legacy.