Subrata Roy: Who made it large, drop by drop in good and bad times

His was a story that can sound like an urban legend, but Subrata Roy literally made it large, drop by drop.

What he started with a borrowed capital of just Rs 2,000 in 1978, kept growing for over three decades and became a corpus of tens of thousands of crores with contributions as low as Rs 10-20 each from investors, but then it started crumbling down, brick by brick.

Roy, who died in Mumbai on Tuesday after a prolonged illness at the age of 75, continued to make it large, even while battling it out in courts and before regulators.

When asked for proof of payments collected from his crores of investors and the repayments made to them with returns, he famously sent 128 trucks containing more than 31,000 cartons of documents to capital market regulator Sebi's headquarters in Mumbai.

Flummoxed by the humongous task of sorting and verifying tonnes of investor papers, the regulator Securities and Exchange Board of India (Sebi) had to put them in a huge hired warehouse having 'automated robotic system' document handling and safe vaults with 32 lakh cubic feet of storage capacity.

In another mammoth task later, Sebi had to engage a server hosting vendor to provide electronic data storage and web access services for a database of 20 crore scanned pages in the high-profile Sahara case.

On the other hand, the Sebi saga began with just two sets of complaints -- one from a small group of 'investors' and another from an individual named 'Roshan Lal' -- but it eventually turned out to be the biggest nemesis for Roy's sprawling business empire.

Before it all started falling apart, the Sahara portfolio comprised financial services, real estate, aviation, marquee hotels in London and New York, an IPL cricket team and a Formula One racing team as also sponsorships for the country's cricket and hockey teams.

And then, there was one of the most ambitious projects -- a hillside township in Maharashtra, Aamby Valley, which was supposed to have villas for virtually all who's who of the country from fields of cricket to films to politics where he had many 'friends'.

It was often alleged that the tens of thousands of crores of rupees that Sahara had collected actually belonged to many politicians, cricketers and Bollywood stars, but there has never been any proof of this.

Aamby Valley was one of the several projects undertaken by the group's real estate arm Sahara Prime City Limited and it was a proposed IPO (initial public offer) of this company in 2009 that led the regulator Sebi to launch a probe.

When Sebi was looking into the draft prospectus filed for the IPO, it received a complaint on December 25, 2009, from 'Professional Group for Investor Protection, which alleged that a Sahara group firm, Sahara India Real Estate Corporation Limited (SIRECL) was issuing convertible bonds to the public throughout the country for many months and the same was not disclosed in the draft prospectus.

A similar complaint from Roshan Lal was also received by Sebi through the National Housing Bank vide a letter dated January 4, 2010.

The number '4' thereafter went on to become a key date in the Sebi-Sahara saga.

Arvind Datar, a counsel for Sebi in the long-running legal battle, once said, "It all started with Roshan Lal, whom we have never seen him, from Indore who on a colder winter morning decided to write a letter in Hindi to Sebi".

Little did Lal know that the one-and-a-half page letter could set in motion a litigation that seemed to be almost endless and little did he know that exactly four years and three months to the day after the letter that Roy would be sent to Tihar jail.

When Sebi issued a notice to Sahara, they went to the Lucknow bench of the Allahabad High Court and got a stay. The case was posted on January 4.

Roy was also sent to jail on a 4th (March 4, 2014), Datar appeared for Sebi for the first time on 4th, and the main affidavit of Sahara was given on 4th, according to Datar, who also said once that it so happened that Sahara engaged almost all senior lawyers at the Supreme Court and Sebi had no one else except him from Chennai.

The case also came to the Supreme Court on January 4.

Also, while the cases were continuing in various courts and tribunals, Sahara group continued to grow and collect funds as it denied any wrongdoing and always maintained that all investors got their money back with promised returns.

When the matter had reached the Allahabad High Court, the amount collected by the two Sahara firms facing the probe stood at about Rs 2,000 crore, By the time the matter reached the Securities Appellate Tribunal, Sahara Real Estate had collected Rs 17,000 crore and Sahara Housing had collected about Rs 6,500 crore.

The number of investors who invested in the bonds of two firms exceeded 3.1 crore and at one point it was more than the number of all investors in all stock exchanges combined.

According to Data, the money was collected in a short time of 10-12 months.

Eventually, Sahara group deposited more than Rs 24,000 crore with Sebi which its two firms had collected from over three crore investors through an instrument called ' Optionally Fully Convertible Bond', though it maintained that more than 98 per cent refunds were already made by the two firms.

According to the latest update, Sebi has managed to refund only about Rs 138 crore as investors are hardly coming out to claim their money, while the corpus in the Sahara account maintained by the regulator exceeds Rs 25,000 crore along with interest generated.

Roy was referred to as 'Saharasri' by his employees and friends and used designations like 'Managing Worker' and 'Chief Guardian' of Sahara India Pariwar in place of usual ones like Managing Director or Chief Executive Officer.

According to its website, it has over 9 crore investors and customers, a land bank of 30,970 acres and the "most fair value" of its assets is worth Rs 2,59,900 crore.