Netflix Series Bad Boy Billionaires: India

Episode 3: The World's Biggest Family

 Strategic Management
Assignment 05

Understanding Business Model and

Strategy Evaluation of Sahara India

Course Information:
Name & Code: Strategic Management (MGT4802)
Semester: July – December 2021

Submitted to:
Maj Gen Alauddin MA Wadud (Retd.), Bir Protik
Professor
Department of Business Administration - General, FBS
Bangladesh University of Professionals

Submitted by: Group 4 | Section B

Touhidul Islam B18231080

Abdullah Noman B18231026
Mumu Tabassum B18231014
A.K.M Armaan Anto B18231078
Itmam Sanjid Sparshan B18231042
Emam Md Ashik Elahi Rafi B18231062

Sunday Bangladesh University of Professionals

October 24, 2021 Mirpur Cantonment, Dhaka-1216

Letter of Transmittal
Professor Alauddin M A Wadud, Bir Protik
Major General (Retd.)
Department of Business Administration-General
Faculty of Business Studies
Bangladesh University of Professionals

Subject: Application for submitting the assignment

Dear Sir,

With due respect we have prepared our assignment on the topic “Understanding Business Model and
Strategy Evaluation of Sahara India.” From the Netflix Series Bad Boy Billionaires: India, Episode
3: The World's Biggest Family, under the course Strategic Management. This assignment focuses on
the strategy evaluation and business model of Sahara India.

It has been an immense pleasure to submit you the assignment. We hope you find this assignment
satisfactory.

Sincerely yours,

Group-4
Touhidul Islam - B18231080
Abdullah Noman - B18231026
Mumu Tabassum - B18231014
A.K.M Armaan Anto - B18231078
Itmam Sanjid Sparshan - B18231042
Emam Md Ashik Elahi Rafi - B18231062

Acknowledgement
The assignment was given to us as part of our course ‘Strategic Management’. We have tried our
best to present all the information as clearly as possible. We hope everyone will be able to
comprehend our work in this assignment.

We have completed this assignment under the guidance and supervision of Professor Alauddin M A
Wadud, Bir Protik. We will fail in our duty if we do not acknowledge the esteemed scholarly
guidance, assistance, and knowledge that we have gained from him which enabled us to properly
complete our assignment. Mere acknowledgement may not redeem the debt we owe to our
classmates and teachers for their direct and indirect support during the entire course of completing
this task.

And finally, we are forever grateful to Almighty Allah for giving us all the opportunities in doing
each and everything.
 Executive Summary

Bad Boy Billionaires: India is a Netflix series based on the lives of four prominent business
magnates of India. The focus of this paper is the 3 rd episode titled- "The World's Biggest Family";
directed by Nick Read. The episode is about Subrata Roy who takes his Sahara India Pariwar
conglomerate to dizzying heights before facing accusations of enticing poor investors into a pyramid
scheme. The success tale of Sahara India Pariwar began in the year 1978. Sahara India Pariwar
started off with a capital of bare Rs 2,000 and gradually became the pacesetter in Indian
entrepreneurship. Sahara operates a diversified business in different sectors like finance,
infrastructure & housing, life insurance, media and entertainment, hospitality, health care,
manufacturing, technology, self-contained city etc.

Sahara Pariwar considered all of its stakeholders as one large family and it claimed itself as a source
of help (Sahara in Hindi) for the poor people of India; hence the name Sahara Pariwar. The founder
of Sahara India, Subroto Roy introduced the chit fund scheme where they acted as a residuary non-
banking firm that takes extremely modest deposits from the small earning people of rural areas.
Sahara Group employed a strategy called the pyramid scheme which is a business model that recruits
members through a promise of payments or services for enrolling others into the scheme. In other
words, Sahara India used a fraudulent investment scheme where money brought in by the newer
investors were used to pay off the older investors.

Using the money collected from the poor, Sahara India Group was able to boast a seemingly
impressive list of assets and credentials. But the business faced its first roadblock when the Reserve
Bank of India ordered Sahara Financial Corporation to stop accepting new deposits in 2008. The
major setback for Sahara India came when the Securities and Exchange Board of India (SEBI) found
out that SIRECL and SHICL, the two companies of Sahara Group, had illegally raised money. It was
proved that Sahara failed to comply with the legal regulations of Sebi and the company faulted for its
lack of transparency on terms of source and use of its funds. The Supreme Court instructed the
Financial Regulator Sebi to take the responsibility of tracking down and refunding the claims of the
30 million people who invested in Sahara’s two companies that went public. But the millions of
people who invested in other Sahara schemes are unfortunately not covered by the Supreme Court
ruling.

The story of Sahara can be depicted as the story of betrayal of trust and lies. Most of the poor people
who invested in the chit schemes of Sahara never got their principal back let alone a return on their
investment as Sahara inhumanly took advantage of the financial illiteracy of the people from some of

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the poorest sections of India in the name of financial inclusion, family bond, patriotism, sahara and
other lies.

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 Table of Content

Serial Chapters Page

01 Executive Summary V
Chapter 01: Introduction 1-3
02 Bad Boy Billionaires: India - Netflix Series 1
03 Episode 3 "The World's Biggest Family" 2
04 Characteristics of Subrata Roy as a leader 2
Chapter 02: Company Overview 3-6
05 Introduction of Sahara India 3
06 What problem did the company solve 4
07 Business model of the company 5
Chapter 03: Strategy Identification & Discussion 7-12
08 Gaining trust of poorest people of India 7
09 Growth strategy of the company 8
10 Strategy with the Investors money 9
11 Portfolio formation strategy of Sahara India Pariwar 10
Chapter 04: Strategy Evaluation 12-15
12 Strategy Evaluation: Sahara Group India 12
13 Why the Sahara Group’s Strategy Collapsed? 13
Chapter 05: Company & Leadership Failure 15-17
14 Beginning of the End for the company 15
15 Leadership Mistakes of Subrata Roy That Led to His Downfall 16
Chapter 06: Learnings & Conclusion 18-19
16 Sahara Group- A Tale of False Promises 18
17 Conclusion 19
Chapter 07: References 20

Table of Figure

Serial Figures Page

01 The Business Model of Sahara India 6
02 Visual representation of the pyramid scheme 8
03 Visual representation of The Concept of Super Multiplier 9
04 BCG and Ansoff matrix 10 & 11
 Chapter 01: Introduction

Bad Boy Billionaires: India - Netflix Series

Bad Boy Billionaires: India also known as Bad Boy

Billionaires is a 2020 Indian Netflix original
documentary anthology web series which focuses on
the lives of four prominent business magnates of
India, including Vijay Mallya, Nirav Modi, Subrata
Roy and Ramalinga Raju, who achieved predominant
success in their businesses during their lifetime before
being accused of corruption. The documentary
chronicles major financial scams in India and was
released in part, following a lawsuit initiated by
Subrata Roy's Sahara Group. Netflix unveiled the
official trailer of the film on 24 August 2020, and it
was reported that the trailer was removed
subsequently from the platform following legal issues.
The documentary was initially scheduled to be
streamed via Netflix on 2 September 2020.

Three (out of four) episodes of Bad Boy Billionaires released globally on Netflix in October 2020 to
enthusiastic reviews and strong viewership It went on to enjoy a multiple-week run as the number
one most-watched Netflix title in India while also nearing the top of Netflix's global charts and being
named the most-watched documentary of the year 2020 in India.

The documentary series explores scandals involving controversial Indian billionaires Vijay Mallya
(Kingfisher Airlines), Subrata Roy (Sahara India), Nirav Modi (Gitanjali Group) and Ramalinga
Raju (Satyam Computers)

No. Episodes Director Release Date

01 "The King of Good Times" Dylan Mohan Gray
02 "Diamonds Aren't Forever" Johanna Hamilton October 5, 2020
03 "The World's Biggest Family" Nick Read

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Episode 3 "The World's Biggest Family"

The last of the released episodes is titled ‘The World’s Biggest Family’. Netflix describes the
episodes as, “Subrata Roy takes his Sahara India Pariwar conglomerate to dizzying heights before
facing accusations of enticing poor investors into a pyramid scheme.”. The Subrata Roy story, as told
by Netflix, is as engaging. The narrative of The World’s Biggest Family paints an eerily unsettling
picture of how Roy ran Sahara like his own personal cult, after building his company on the meagre
savings of poverty-stricken millions who believed they were investing in a chit fund.

Featuring interviews with journalists like Shutapa Paul and Sharat Pradhan, known for his exhaustive
reporting on the Sahara scam, the episode details Roy’s run-ins with SEBI even as he built a pyramid
scheme thanks to Sahara’s never-ending list of “investors”. The highlight of the episode is Pradhan’s
insightful into Subrata Roy’s defiance and daring, even as it paints a real human story at the heart of
the Sahara scam — one of the employees who believed their boss was a Demigod, and of duped
investors who have by now lost all hope of securing whatever little principal amount they invested in
Roy’s chit fund.

Continuing to bank on a vast repository of archival footage and content in the public domain, The
World’s Biggest Family details how Roy’s decision to take two Sahara companies public, and thus
opening his business to public scrutiny would eventually be his downfall.

Characteristics of Subrata Roy as a Leader -

The episode 3 of the series Bad Boy Billionaires Revolves around what Subrata Roy did with his
company SAHARA India and his leadership role as well. Subrata Roy is an Indian businessman who
was born on 10 June 1948 at Araria (40 km. north to Poornia, Bihar). He is the chairman and
Managing Worker of the Sahara Group of companies based in India fondly known as the “Sahara
India Pariwar”. The Netflix show introduces him as Mr. Roy who started out his career selling
snacks with a Lambretta scooter as the only asset to his name. In rural Uttar Pradesh, he was a
messiah of the poor who helped them develop the habit of saving, He appears as Master of Mass
Psychology. He clearly knows how to build trust and credibility among the poor, not so much the
regulators. he revels in pomp, splendor, and loyalty. The glitz and glamour attract the poor; they
remain glued to Roy, who straddles the world of glamour and the other India that lives in Gorakhpur,
Varanasi and Lucknow with consummate ease. He is an entrepreneur who doesn’t like to be
regulated.

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Subrata Roy had a unique way of thinking. The show mentions that He wanted to be the biggest
industrialist, the biggest businessman, the number one man in India. To portray that he is a powerful
leader and an influential person, he followed some techniques. For example, every time he takes a
formal photograph, he used to take it from a declined angle and in a power pose, so that it seems that
he is above all and very influential person. Quickly after his company started to become famous, he
started giving Advertisement in different newspaper. And he used to bombard those newspaper with
so much AD that those newspapers could never speak anything against him. This prevented a lot of
defamation for SAHARA India. Apart from that, he used to stay connected with very influential
person like Amitabh Bachchan, Ministers, influencers, and celebrities. This gave him a lot of fame,
popularity, and highlight. It helped him to gain trust of many people as some of those celebrities are
considered as gods in India. Also, when the company was in crisis with the Securities and Exchange
Board of India, he cleverly thought about a way to gain back the trust of the mass people (who are
their investors). He did that by a record-breaking National Anthem performance by all of his
employees. All these steps he has taken for himself, and his company makes him an exceptional
leader for the country. In fact, Roy was featured among the “10 Most Powerful People of India” in
2012 by India Today. In 2004, Sahara group was termed by the Time magazine as ‘the second largest
employer in India’ after Indian Railways. However, despite all these, he had his short comings,
which was showed in this Netflix series, and we have discussed it further in this paper.

Chapter 02: Company Profile

Introduction of Sahara India Pariwar

Sahara India Pariwar is one of the largest Indian conglomerates which is headquartered in Lucknow,
India. The success tale of Sahara India Pariwar began in the year 1978. The firm, which began on a
small scale with only a mere investment of $2,000 in funding, has come a long way to become one of
the greatest leaders in Indian entrepreneurship. Today, Sahara India Pariwar is a prominent corporate
player with varied operations across India. The services of this company are available in many of the
countries of the world. This large group operates in many business aspects such as Finance,
infrastructure & housing, real estate, sports, power, manufacturing, media & entertainment, health
care, life insurance, educational institutes and many more. Within the 50 years of their business
operation, Sahara India Pariwar has created a gigantic business network that has facilitated the
company in the front lines which represents the companies with highest net worth in India. The
company has also earned reputation as significant sports promoter in India, serving as the title

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sponsor of the Indian national cricket team, Indian national hockey team, Bangladesh national cricket
team, Force India Formula One squad, and a variety of other sports teams.

Chit Fund Scheme

The founder of Sahara India, Subroto Roy, at the age of 30 years took over a company named Sahara
Finance which was primarily based on a “Chit Fund” concept. The overly ambitious Subroto Rot
tried to implement an outdated and simple financial strategy through this concept. He established a
residuary non-banking firm that takes extremely modest deposits from the small earning people of
rural areas.

Mission, Vision and Objectives

In the initiation phase of Sahara India, the company had a mission of to help every class of investors
find a suitable avenue for profitable and prudent investment of his/her money, consistent with his/her
needs and objectives. The Vision of Sahara India Pariwar is to bring in majority of Indians towards
their financial schemes and creating establishments that will pour in business profits of nearly
billions in the long run of the business.

Sahara India Pariwar’s business objectives towards their mission and vision are a blend of both
strategic and financial objectives that creates the path of achieving the highest business growth for
the company. They are:

 Reaching out to maximum number of rural investors with attractive small fund schemes
 Setting up effective channels for attracting a huge customer base
 Providing quality services with the help of honoring rules, regulations, and commitments
 Ensuring greater profitability through diversification of funds in multiple business sectors

What problem did the company solve?

The Savior Syndrome: The huge wave of liberalization that had started sweeping India into a
booming economy and a rising market, did leave out a certain portion of marginalized people. These
people did earn but did not have the scope to invest or grow due to education gap and geographical
distance gap. Saraha understood that gap and in the beginning they did pay their investors. And the
returned money made huge socio-economic milestones possible in the lives of those people. This
was the foundation for Sahara Pariwar that led to motivation for investing for other mass people.

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Family Community: Sahara appealed and pushed their chit-schemes to millions of low-income
investors. With “family” and “Sahara” (savior) as marketing buzzwords, Sahara successfully tapped
into the psyche of people and harvested a common family sentiment among these people. That
contributed a long way in motivating people to leave their lifetime savings as investment in Sahara.
Collective Materialism Business Model: The combination of modernity and tradition in their
management ensured that anyone working for the company would have growing wealth. The
company targeted lost causes, gave them responsibilities and a chance to life. The altruistic approach
to business made the people more loyal and hard workers.

Business Model of Sahara India

A business model explains how an organization generates, distributes, and captures value. The
business model of SAHARA India Pariwar can be explained through the following building blocks
of business model:

 Value Propositions: Value Propositions mainly describes the collection of products or services
which an organization provides to the needs of a certain customer segment. Sahara India Pariwar
mainly started their journey by rendering non-banking financial services towards their specified
customer segment. The company tailored their differentially designed investment schemes to
interested investors all over the country. In case of service design, the company focused mainly
on collective materialism approach that blended in both modernity and traditions.
 Customer Segments: This block of business model identifies the many categories of individuals
or organizations that a company intends to reach and serve their products or services. This is an
important one as customers are considered as the lifeblood of every business. The target audience
of Sahara India was mainly the people living in rural areas who have the capacity of investing
small funds. The company has carved itself as a significant niche in the country where 90 percent
of the workforce is informally employed, half of households do not have bank accounts.
 Channels: Sahara India used a panel of highly personalized agents to cater their services all over
the country. These Sahara agents are first required to become investors in the schemes
themselves. The company is now a large family with over 1,100,000 of employees. The agents
are located to remoted areas of the country. The agents at the first are incentivized on
commission basis by accounting of how many customers they can attract.
 Customer Relationships: The customer relationships building block explains the many sorts of
relationships that a firm has with targeted customer segments. Sahara India Pariwar created its
identity as not only a business organization, but an emotionally integrated family. The company

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 strives to establish a emotional bonding with their customers with the spirit of nationalism,
culture, tradition, belief, ethics, values and morals.
 Revenue Streams: This building block explains the revenue structure of the company gained
from the targeted customer segment. Sahara India’s main revenue stream is realized from the
difference of the required rate of return for investors and the rate of return earned through
different projects of the business. The invested funds are used to cater many lavish projects by
Sahara which brings in significant figure of revenue for the company.
 Cost Structure: All expenditures incurred to execute a business model are described in the cost
structure. Sahara India’s cost structure includes-
 All sorts of human resource expenses. This accounts for the largest portion for the company.
 Cost of managing different projects.
 Costs incurred for promotional activities of the company.
 Key Activities: Sahara India in indulged in diversified activities. The major concern goes
towards the financial services provided by the company. Sahara has interests in insurance and
asset management. Other major business activities include infrastructure & housing, media &
entertainment, consumer merchandise retail venture, manufacturing, and information technology.
 Key Resources: The key resources of Sahara India that helps the company for successful
implementation of the business model includes-
 The most precious asset for the company will always be the investors faith and confidence.
 A good brand image gained through the words of integrity and transparency
 Providing innovative products specifically designed to attract investors of different segments
 Highly personalized employee base which ensures greater productivity
 Emotional respects gained through charitable works
 Vast network connections with other reputable organizations

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 Fig 01: The Business Model of Sahara India

Chapter 03: Strategy Identification & Discussion

How Sahara Company Gained Trust of So Many People

Agent: There were agents of Sahara India who used to tell people Sahara is a good company & it is
trustworthy. Rural people were told that first you need to invest yourself in the company & then you
can become an agent of the company. People of rural areas where it was hard to find a small job,
becoming an agent of a big company gave them the trust to get ahead of their lives. Sahara India
used to give commissions to their agents. The company used to offer agents if you bring more and
more investors in the company then you would get higher commissions. As a result, people slowly
started investing into the company and had faith in Sahara India as it was a big company. Sahara
India made them believe it was like a whole Indian family. The family concept was a powerful idea
because it binds people emotionally and it becomes more easier to gain trust of the people.

Taking Care of Rural People: Sahara India used to call themselves “World’s largest Family”. Even
in their advertisements would depict the kind of culture they follow. They gave them the trust to take
care of rural people who left their homes to shift to a new city like “Delhi”. Sahara India created
wealth for everybody who worked with them even the lowest of the low, the people who had
nothing. Sahara India’s way of doing business was a very altruistic approach. It made people work
more harder for them & more loyal. Subrata Roy the CEO of Sahara India married off a hundred
couples at his own expense & gave them five lakh rupees each to start their lives. He used to help
poor so much and it helped to gain attention of those people to invest in Sahara’s chit funds.

Post Crisis Record-Breaking National Anthem: At the time when everyone was against Sahara
India, Subrata Roy the CEO of Sahara realized that Sahara should do something which instils a sense
of patriotism, which binds the organization, which binds the nation, does something good which
brings smile to everyone’s face. So, he sang Indian national anthem with almost 11 lakhs people
which was record breaking. He tried to prove that Sahara is still a patriotic organization which works
for the country without expecting any benefits, so that the people gain back the trust in Sahara.

Sponsoring the Indian National Cricket Team: Cricket in India is sacred; cricketers are like God
to Indians. Sahara used this opportunity to sponsor the Indian national cricket team as a fact to let
people know that their heroes wearing a Sahara shirt. So, people gained the trust that Sahara India is
a patriotic organization.

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These were some of the ways that Sahara India managed to gain trust of the poorest people of India
and managed to get investment from them

Growth Strategy of the Company

Sahara India used to take money from very poor people of the rural areas who didn’t have permanent
jobs & permanent residents of their own. But Sahara India promised them a certain return under
various terms & conditions. They were called “Chits”. In 1970’s & 80’s, they were not many banks
in India. But people of rural areas did earn money by investing in Sahara. Sahara India sooner found
out so many poor people were there to invest/deposit their money into the company. Over a time,
these poor people would get interest or some benefits. During the 1980’s Sahara grew exponentially,
recruiting thousands of agents to sell their “chit” schemes to millions of low-income investors.

The Pyramid Scheme: Subrata Roy the CEO of Sahara India, was genius because he understood the
value of scale very well. If Sahara took a couple of rupees, ten rupees, twenty rupees here, it would
become very hard to make money for them. But they knew that India is a very large country with a
large population. As a result, at the beginning, they took money from 10 million people to 50 million
people & turn the company into a sizeable business empire. By the year 1997 Sahara India claimed
to be worth $1 Billion. In the beginning, everything worked perfectly for Sahara India. The money
that came into their company, was funding the payments that were going out. But ultimately this was
the form of the “Pyramid Scheme”, because the return on paper that were being given to original
investors were only being made because more & more people were being enticed into the system.
That’s how Subrata Roy the CEO of Sahara India ended up employing hundreds of thousands, nearly
a million agents, across India, whose job was to find more and more poor people. And as long as the
poor people kept doing that, then the returns kept coming.

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 Fig 02: Visual representation of the pyramid scheme

The Concept of Super Multiplier: Initially when someone deposited the money in Sahara, they
were told that this money would become double in three years. At the end of three years, Sahara told
them another scheme which was even more lucrative. If someone put 10000 rupees, he or she will
get 30000 rupees at the end of three years. For a poor people it was like a gold mine to get 30000
rupees in three years. But after three years Sahara started suggesting the poor to reinvest in their
company & it was almost 15 years scheme in which the money was supposed to six and a half times.
Because the return was so good, People like a taxi driver would not take the money out rather he
would let it roll over to the next year. So, the pot of money that had been invested by everyone kept
growing.

Fig 03: Visual representation of Concept of Super Multiplier

Strategy with the Investors money:

Sahara India was very successful raising the capital from the poorest people in India. As a result,
Subrata Roy gained a lot of money, but the question raised what the company did with the money
collected? Subrata Roy CEO of Sahara India began to use the money to buy all sorts of other assets.
He bought “Air Sahara” airplane, part of the US $4.08 billion Sahara India Group that had interests
in Public Deposit Mobilization. Subrata Roy soon became the largest property owner by some

9
measures. He began to invest in hotels both in India and abroad. He bought the luxury Plaza hotel on
the iconic fifth avenue at Central Park in Manhattan. So, in sense, he was using the money that he
was raising from some of the poorest people in India to turn into a broad ranging conglomerate that
was focused on the Indian & global middle class. He also invested in a megaproject which is called
“Aamby Valley”. They had facilities out there; that are like no other. At the evening they were sort
of dancing fountain, sound, and light show. Subrata Roy also built an entire city as a tribute to
himself in a way. The city was called Sahara City which was almost 360-odd-acre compound. It
houses Subrata Roy himself & a few hundred of his employees. The building that he used to live in
was almost the same size of the White House & it looked very similar as well. The rest of the
compound had number of facilities, a helipad, a golf course. Subrata Roy’s personality was like a
magnet. He started using the money of the poor people to throw grandest parties to surround himself
to be with rich people. Subrata Roy’s two son’s wedding held in 2004. He invited the prime minister
of India of that time, chief minister of Uttar Pradesh, some of the biggest superstars of India
including Amitabh Bachchan to the wedding. Ten thousand people were at that wedding in Lucknow
& the wedding ceremony reportedly cost over $60 million USD, it was the most expensive wedding
in India’s history of that time.

Portfolio formation strategy of Sahara India Pariwar

Sahara Pariwar is an established business player with diverse operations throughout India. This
group's services are provided in a broad range of nations throughout the world. This multinational
conglomerate is involved in a variety of industries, including finance, infrastructure and housing, real
estate, sports, power, manufacturing, media and entertainment, health care, life insurance,
educational institutes, and many more. To understand how Sahara India invests fund in various
sector, we conducted an analysis through Ansoff matrix. Ansoff product and market growth matrix is
a marketing planning tool that helps a company determine its product and market growth. This is

10
normally assessed by concentrating on whether the items are new or old, as well as if the market is
new or old.

The business activities of Sahara India can be categorized into two broader categories. Their
financing activities and their investment activities. They also choose their investment activities based
on how much marketing exposure they can gain from their investment.

From their investing activities, the general investment of Sahara India follows on penetrating in low-
risk industries like real estate, media, health care and other manufacturing. Then we can also see a
substantial investment for product development in sports, hotels which generates marketing exposure
for Sahara India. They also tried to create an ultra-rich market through founding a self-sustained
planned city. Also, some investment to diversify in high-risk marketing gimmick like former cars
and electric vehicles.

In the financing side, they focused mainly on market development through chit schemes, the return
from individual investment is low but collectively they generated a huge amount of investment. They
also tried to launch in different international market like Bangladesh. They also developed product
like life insurances and reinvestment schemes to ensure that investors continue to invest in Sahara
India’s

Portfolio management of Sahara India Pariwar

Time magazine dubbed the Sahara Group "India's second largest employer" behind the Indian
Railways. Under the Sahara India banner, the group operates over 5,000 enterprises across India with
1.2 million employees both field and office. They invested in almost every profit potential sector
inside India and even focused on starting a multinational venture. To understand how they invested

11
their money we created a BCG matrix model from their portfolio. It was impossible to identify more
than their 5000 businesses. So only a handful investments with maximum impact on the organization
was analyzed.

Here, sports, Media and entertainment, Hotels, Life insurance was their start products with highest
growth potential and market share. Sahara India dominated the Indian sports scene and gained huge
publicity. They had huge investments in sponsoring national cricket team, which is the most popular
sports event in India. Further investment in this sector can turn this investment into cash cows. On
the other hand, Real estate, Q-shop, Power plants, Chit schemes were their cash cows. This generates
an almost steady income for them. Their chit schemes ensured a continuous flow of funds, and real
estate, power plants ensured that all funds are invested in most lucrative businesses. Electric
vehicles, Health care, Reinvestment schemes were the main question marks. Reinvestment schemes
ensured that the funds stayed with the company and promised greater return to the investors.
Whereas health care was established to gain the trust of people over profit. Stars are risky ventures,
but they also have high growth potential. Sahara India invested heavily on their question marks, they
should halt further investment and analyze the market condition for this business. Their electric
vehicles mostly consisted of small local transport that created employment, high risk factors with
substantial return. Former cars, Jute projects, Sugar factory and distillery were the dogs. Former cars
and air Sahara was mostly used as a marketing gimmick and failed to generate any substantial return.
This business worked well only as market gimmick and failed to generate any revenue. As Sahara
India has fallen into a financial crisis, they should now focus on divesting this business.

Chapter 04: Strategy Evaluation

Strategy Evaluation: Sahara Group India

As we know to evaluate the strategy of a company, the first precondition is to know the strategy of
the company. Looking into the strategy of the Sahara India Group during the 2000’s, it would be
appropriate to call it a scam rather than a strategy.

Sahara India Pariwar started off with a capital of bare 2,000 Rupees and gradually became the
pacesetter in Indian entrepreneurship. The group operates a diversified business in different sectors
like finance, infrastructure & housing, education, life insurance, media and entertainment,
hospitality, health care, manufacturing, technology, self-contained city, mega Quality Township, and
electric vehicles.

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Sahara India Pariwar employed a strategy called the pyramid scheme which is business model that
recruits members through a promise of payments or services for enrolling others into the scheme,
rather than supplying investments or sale of products. In other words, Sahara India used a fraudulent
investment scheme where money brought in by the newer investors were used to pay off the older
investors. This created an impression of a successful investment scheme. Of course, as long as
money entering the scheme is greater than the money leaving it, all is well. The moment the situation
is reversed, the scheme collapses. And this is what exactly happened to Sahara Group India.

Despite having a sketchy business model, Sahara Group India boasted an impressive list of assets
and credentials, but they were unable to exploit the strengths it claimed to possess. Some of the
assets and credentials Sahara Group India are shown below-

a) Marquee Projects: Sahara owns Aamby Valley, which is a marquee project to have in any
business’s portfolio. It also claimed to have a land bank more than 36,000 acres spread across
different locations in the country.

b) Large Employee Base: In 2014 Time Magazine stated Sahara India Pariwar to be the second-
largest employer in India after Indian Railways with around 1.4 million employees working under
the Sahara India Group umbrella. The group had presence in sectors like real estate, financial
services, insurance, media and entertainment, sports, and healthcare.

c) Sports Teams: Sahara group used to own IPL’s Pune franchise and had a significant stake in
Formula One racing team Force India.

d) Property Acquisitions: During a protracted legal battle with market regulator SEBI, Sahara
group was able to acquire iconic properties like London’s Grosvenor House and New York’s Plaza
Hotel.

e) Investment Horizons: The group had plans to develop as many as 60 luxurious townships all
across the country with a planned investment of Rs 90,000 crore. The process of land acquisition was
almost over for many of the townships.

f) Association with Influential Personalities: Bollywood stars and famous sports personalities used
to be regular visitors at most of Sahara’s functions.

Why the Sahara Group’s Strategy Collapsed?

So, despite having such a seemingly impressive list of assets and credentials, brand Sahara has
always under-performed, and their strategy collapsed.

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The reasons mainly lie with how the group fared on regulatory tests multiple times.

1. Sahara Group Lacked Transparency:

The supporters of the Sahara Group believe that by providing financial services to those who have
previously been excluded from the banking system, the group has helped to financial inclusion.

Market observers, on the other hand, claim that the group has always been secretive. And it has been
found deficient on numerous occasions for failing to obey regulations to the letter and spirit. They
claim that the group continually switched money-raising financial vehicles from basic deposits to
bonds, then cooperative societies, to avoid regulatory supervision.

There have also been additional claims leveled against the organization. According to sources,
redemption in any of the group's products is a difficult undertaking once invested. Investors are
enticed to continue reinvesting in various programs to avoid capital outflow. Critics have also
pointed out the group's lack of transparency when it comes to the source and usage of funding.

Lack of transparency hurt the Sahara brand more than anything else. The group's evasive methods
when it comes to regulatory frameworks have also not gone down well.

2. Conflict with the Reserve Bank of India and Securities and Exchange Board of India:

In 2008, the company ran into its first regulatory roadblock. In the same year, the Reserve Bank of
India ordered Sahara Financial Corporation to stop accepting new deposits. It was a major setback
since it threatened to suffocate the cash flow of other group firms that were struggling to make a
profit. To keep its numerous businesses solvent, the organization needed a regular influx of new
capital.

Then came yet another setback, this time from the Securities and Exchange Board of India (SEBI),
the market regulator. On 30th September 2009, Sahara Group Company Sahara Prime City (SPC)
filed for DRHP with SEBI for issuing IPO. As per the eligibility norms, a company is required to
submit a Draft Red Hearing Prospectus (DRHP) to the Securities and Exchange Bond of India
(SEBI) to get approval for publicly issuing securities. When SEBI examined the DRHP, it appeared
that Sahara India Real Estate Corporation Ltd. (SIRECL) and Sahara Housing Investment
Corporation Ltd. (SHICL), the two companies of Sahara Group, had illegally raised money.

As per SEBI’s claim, the SIRECL and SHICL, the two companies under Sahara Group, had offered
Optionally Fully Convertible Debentures (OFCD) to the general public such as cobblers, peasants,
artisans, laborer, etc. Two of Sahara's real estate businesses were directed to stop issuing bonds to

14
investors. According to sources, the two companies raised more than Rs 20,000 crore from around
three crore people across the country.

The huge sum of money was raised mostly from villagers and farmers who lacked the basic
understanding of financial market aspects that were required for converting the debentures into
equity shares. Investors were guaranteed a hefty return in ten years if they joined the scheme. A prior
approval from the market regulator was required for any company seeking money from more than 50
people using bonds, according to SEBI's rule. Sahara was in violation of current regulations since it
lacked such consent.

The matter reached the Supreme Court and the apex court ruled in favor of SEBI in August 2012.
The Sahara group was asked to deposit Rs 24,000 crore with the SEBI within 90 days. The regulator
was given the responsibility of redistributing the funds to legitimate investors. Roy and two of his
coworkers were arrested after failing to completely comply with the apex court's decision on time.
The regulator was given the responsibility of redistributing the funds to legitimate investors. Roy and
two of his coworkers were arrested after failing to completely comply with the apex court's decision
on time. The arrest tarnished the group's and its managing employee's reputations.

Competitors: Sahara India is the leading company in its industry. Some of the notable competitors
in India are Aditya Birla Group, Tata Group, Arvind Group, Essar, Toyota, Ford etc. As we can see
some of the multinational groups of industries are competing against the Indian giants.

Chapter 05: Company & Leadership Failure

Beginning of the end of the company

In the episode of Netflix, we got to know exactly when the country of India started to see the
Beginning of the end of the company Sahara India. It was followed by some notable events
mentioned below

 Hosting of the most expensive wedding ceremony of his sons costing $60 million. The
extreme degree of lavishness of that wedding really started the questions among people about
the extent of wealth possessed by Subrata Roy.
 Gap in strategic policy that led to people questioning the shady rules of the chit-find schemes.
 When he started to take his companies public in 2007, first went housing and infrastructure
with the intend to unlock value and clear the vagueness arising around his company. That’s
when SEBI (Securities and Exchange Board of India) detected that the papers of Sahara were
unclear about exactly who their investors are.

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  The prospectus issued by the Sahara declared the company as a private company, but it was
operating as a public company. Sahara Prime City, a company of this Sahara India Pariwar
group registered a red-herring prospectus of more than 934 pages for issuing debentures. In
the said prospectus, they mentioned the tax disputes that the company is facing against the
Income Tax Department for issuance of OFCDs worth Rs. 34 Crore.
 It also collected money by issuing of OFCD between the period of 25th April 2008 and 13th
April 2011, which was a clear violation of what was written in the prospectus of the
company. The company further issued Initial Public offerings (IPOs) as well.
 During this period, the company had collected over Rs. 17,656 Crore. The amount was
collected from approximately 30 million people. Further, it failed to report the same to SEBI
which is the market regulating authority. By the end of year 2009, liability of the company
had gone up to Rs. 20,000 Crore.
 The Reserve Bank of India barred the company from issuing any further debentures and
asked it to start proceedings for winding up. That’s from where the real issue started. To sum
it up, the company was charged for fraud and money laundering.

Leadership Mistakes of Subrata Roy That Led to His Downfall

A deep look at the life story of Subrata Roy reveals that he made some fundamental mistakes, which
eventually led to his downfall and the decline of his expansive Sahara business empire. Here are the
mistakes Subrata Roy made as a leader:

- Poor Interpretation of Turn of Events

The chaos that Roy found himself did not happen overnight. It was a culmination of a series of
events. Roy was not proactive or intelligent enough to piece everything together. Assuming he had
good foresight, he could have prevented many of the mishaps that later hit him and his business. 

- Lack of Financial Backups 

Many people were shocked to realize that Roy resorted to selling his assets and other buildings to
offset bills or fines from his legal troubles. It was more than frightening for someone who projected a
super-rich billionaire’s image that Roy did not have stable financial backups. A profitable business
will always have backup strategies for the rainy day, but Roy did not have any. He probably thought
such a day would never come.

- Poor Media Perception Strategy

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Many tycoons have their media outlets to control their narration of events and state their sides of the
story. As the media descended on Roy, he did not have a good media platform to launch effective
counteracts. Hence, he ended up being pilloried across television and on the faces of newspapers. 

Countless people trusted Subrata Roy and invested all they had with him. They did so with the hope
that he would help them grow their assets, but he did not do any of that. He instead preferred to live
large on their sweat while operating the businesses with no transparency. He had no tangible media
platform to counter the backlash from his victims.

- Unethical Corporate Practices

In the 1980s, he started his chit scheme by targeting illiterate and poor rural Indian people with his
outlandish claim and promises of prosperity. Most Indians knew nothing of sound banking principles
and Subrata Roy took advantage of that. He encouraged poor Indians to donate 10 to 20 rupees every
day. 

He then sweetened the deal by saying that he was going to double the money in three years. This was
a scam and a pyramid scheme but most of those who saved with him saw him as a savior due to
ignorance. They believed he was going to protect them from penury and usher them into an age of
abundance. They were blissfully unaware of the seemingly corrupt system. In 2008, it was also
revealed that two of his real estate businesses did not have the approval to raise money from over 50
people via bonds. He dragged the issue with the regulatory body SEBI right up to the Supreme Court
until he lost in August 2012. Sahara Group was then slammed with a judgment that included
depositing Rs 24,000 crore with the SEBI in the space of 90 days. 

SEBI was then tasked with ensuring that the money is refunded to the original investors. The failure
to entirely comply with the Supreme Court ruling in a punctual manner led to the dramatic arrest of
Roy and his two executives. This arrest and his eventual imprisonment at the notorious Tihar Jail
ended up sending immense shock waves across India. It was a devastating effect on the brand that
Roy had carefully carved over the years which came crashing down in an instant. 

- Horrible Performance 

Although Subrata Roy excelled at showmanship, the same cannot be said of his professional
performance. Even though he had his businesses in several sectors, he was not raking in profits.
Losses and debts were piling up, and the workers were not being paid. Workers’ welfare did not
seem to be a priority for him as the employees worked under shocking conditions. He demonstrated

17
negligence in this regard, and it should not come as a surprise to anyone that it eventually led to its
collapse. 

Chapter 06: Learnings & Conclusion

Sahara Group- A Tale of False Promises:

The Group named Sahara Pariwar considered its employees, investors and all of its stakeholders as
one large family and it claimed itself as a source of help (Sahara in Hindi) for the poor people of
India; hence the name Sahara Pariwar.

Sahara Group claimed to seek “financial inclusion” through investments from the unbanked, poor
people mostly with no permanent jobs and permanent addresses. Sahara provided investment
opportunities to the rural nooks and corners of India that were overlooked by most major banks.
They allowed poor people to deposit amounts as little as 10-15 Rupees daily with the promise of
superior returns.

The model operated through almost a million agents, who could be local grocers, milk producers,
village authorities, etc. The agents visited individual households to sign up and collect payments
from new investors. This model became very popular, for several reasons. Many customers came
from unbanked parts of the country and they had no previous opportunity to invest. The agent
network offered great convenience. And Sahara’s brand popularity added a level of familiarity and
trust.

But the company faulted for its lack of transparency on terms of source and use of its funds. The
company failed to repay the returns it promised to millions of investors. Additionally, the Supreme
Court of India while looking into investor records found several listed clients to be nonexistent and
determined Sahara’s record-keeping to be less than diligent. The Supreme Court instructed the
Financial Regulator Sebi to take the responsibility of tracking down and refunding the claims of the
30 million people who invested in Sahara’s two companies that went public. But the millions of
people who invested in other Sahara schemes are unfortunately not covered by the Supreme Court
ruling.

Refunding the Sahara Investors:

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Capital markets regulator Sebi has managed to refund Rs 129 crore to investors of two Sahara
companies in nearly nine years after being assigned the task by the Supreme Court, while the amount
deposited in specially opened bank accounts for the repayment purpose has swelled to over Rs
23,000 crore, according to the latest disclosure made by the regulator.

In its latest annual report, the Securities and Exchange Board of India (Sebi) said that it received
19,616 applications as of March 31, 2021, involving total refund claims of nearly Rs 81.6 crore. Of
this, it has issued refunds in 16,909 cases (Rs 129 crore, including Rs 66.35 crore principal and Rs
62.34 crore interest), while 483 applications (involving over Rs 2.3 crore) have been referred to
investors for addressing discrepancies.

Therefore, the story of Sahara can be depicted as the story of betrayal of trust by Sahara as they
broke the trust of the poor people in India by offering them false promises of high returns. But most
of the poor people who invested their life savings in the chit schemes of Sahara never got their
principal back let alone a return on their investment as Sahara inhumanly took advantage of the
financial illiteracy of the people from some of the poorest sections of India in the name of financial
inclusion, family bond, patriotism, Sahara, and other lies.

Conclusion
Sahara’s misdeeds are considered as an eye-opener in several respects about the uncertain dealings
inside the corporate-houses and it brings in to being the need for protecting the interest of several
millions of investors, who invested their hard-earned money in such socially irresponsible
corporations.

A corporate scam of this level, which first came in the radar in year 2009, could reach till the first
conviction by the Supreme Court in the year 2014 shows how inefficient our system is, especially
when the fight is against muscle and money. Even then, we came across the important role played by
the SEBI in this case in absence of which, we probably wouldn’t have ever been able to get hold of
this huge fraud.

Even with all the laws coming up in this regard, we will not be able to curb these incidents because
of the lack of activism in the judicial mechanism, the omnipresent loopholes and the power of
money. Nonetheless, this case is an example of how the wrong will not prevail in the end irrespective
of how fool proof it was.

The reasons for such scandals are several including lack of transparency, weak provisions, political
nexus and above all, ignorance of investors. In the light of Sahara case, it is the responsibility of the

19
government and its various agencies to protect the interests of investors and nation as well through
putting in place necessary provisions in accordance with the changing requirement of market.

Please Turn Over

Chapter 07: References

1. Netflix Series Bad Boy Billionaires: India, Released in 5 October 2020, Retrieved
https://www.netflix.com/title/80990073

2. Nikhil Chandwani (2020, October 19). 6 leadership mistakes of Subrata Roy that led to his
downfall. NYK Daily. Retrieved October 18, 2021, from https://nykdaily.com/2020/10/6-
leadership-mistakes-of-subrata-roy-that-led-to-his-downfall/.

3. Leader Biography. (2019, July 5). Subrata Roy. Leader Biography. Retrieved October 18, 2021,
from https://www.leaderbiography.com/subrata-roy-biography/.

4. Bundhun, R. (2021, July 7). Subrata Roy: The Rise and Fall of an Indian billionaire. The
National. Retrieved October 18, 2021, from https://www.thenationalnews.com/business/subrata-
roy-the-rise-and-fall-of-an-indian-billionaire-1.591332.

5. Netflix releases three episodes of 'bad boy billionaires'. The Wire. (n.d.). Retrieved October 18,
2021, from https://thewire.in/film/netflix-bad-boy-billionaires-three-episodes-released-vijay-
mallya-nirav-modi-subrata-roy.

6. Wikimedia Foundation. (2021, July 3). Bad boy billionaires: India. Wikipedia. Retrieved
October 18, 2021, from https://en.wikipedia.org/wiki/Bad_Boy_Billionaires:_India.
7. The Curious Case of the Sahara Model | Center for Financial Inclusion. (2020). Center for
Financial Inclusion. https://www.centerforfinancialinclusion.org/the-curious-case-of-the-sahara-
model
8. M, P. (2020, October 5). ‘Bad Boy Billionaire’ Subrata Roy’s Journey to ‘Disgrace.’ TheQuint.
https://www.thequint.com/voices/opinion/bad-boy-billionaire-subrata-roy-business-empire-
stumbled-before-multiple-regulators#read-more
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9. P. (2014, February 28). Sahara chief Subrata Roy arrested in Lucknow. The Times of India.
https://timesofindia.indiatimes.com/india/sahara-chief-subrata-roy-arrested-in-
lucknow/articleshow/31151724.cms
10. Pyramid Scheme Defubutuib. (2021, April 14). Investopedia.
https://www.investopedia.com/insights/what-is-a-pyramid-scheme/
11. Vijaya Lakshmi Kanteti, D. (2015). Corporate Social Irresponsibility Towards Investors- a
Case Analysis of Sahara Group, 4(5), 1–2.
https://www.worldwidejournals.com/paripex/recent_issues_pdf/2015/May/May_2015_1430744
248__59.pdf
12. Bhatt, A. (2021, February 16). The Sahara Scam. The Company Ninja.
https://thecompany.ninja/sahara-scam/

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