Kingfisher and Subrata Roy

Reason for the collapse of Kingfisher
 Malya considered Kingfisher as his fiefdom

 Strong initial opposition
 Low cost Air Deccan Treated as a step-child
 Lack of delegation
 Frequent changes in strategy and direction
 Frequent change in focus
 Defaulted on pay salary
 Trouble paying fuel bills
 Unable to pay the Aircraft lease rentals on time
 Accumulated dues of Airports authority of India
> Non payment of service Tax
 Bank Arrears
 Cancellation of Flights and grounding of Aircraft
 Bank Accounts Frozen
 IATA suspended ticket sales of Kingfisher Airlines
 Questionable role of Bankers
 Questionable role of regulators
 Proximity to the powerful politicians
 FDI in Aviation come A bit too late for Kingfisher
 Kingfisher was an airline for people with a taste or luxury
 Rising Fuel prices
Failure of Corporate Governance
Unethical Conduct
Disappointing role of Independent Directors
Quetionable role of Audit committee
Defective Accounting policies
Auditors overruled by Management
Misrepresentation &Lack of Transparency
Lack of professional management Money was Diverted to IPL
Political Nexus
Sahara India
Sahara Group Chairman Subratha Roy is one of India’s most flamboyant and mysterious business tycoons .
The family is said to have its roots in Araria ,Bihar, but he was settled in Ghorakhpur in eastern
Uttar pradesh close to the India-Nepal border and around 266 Km away from the UP State capital,
Lucknow. The Sahara group was founded in 1978 by Sabratha Roy, having operations spread across
businesses such as real estate , infrastructure and housing, financial services, housing finance, mutual
funds, life insurance, media, film production and distribution, information Technology ,medical tourism, hospitality and
consumer products, the group employees a total of 11 lakh on its rolls.
Subratha Roy’s Sahara began in 1978 with three workers in the Northern state of Uttar Pradesh as a small
deposits para – banking business. Today it claims to have grown into a $10 billion diversified business
groups with interests in housing, entertainment , media and aviation . Virtually unheard of 20 years ago
, Sahara today runs a private Airline , entertainment and news television channels , a news paper and
claims to own some 33,000 acres of real estate across India. The Sahara group also sponsors the Indian
cricket and Hockey teams and is planning to move into life insurance, housing finance, consumer products, sportswear, and
healthcare.
Downfall
In March two sahara group companies passed a board resolution under the companies Act to raise funds for acquisition of land
, developing townships, residential apartment and shopping complexes etc. through unsecured optionally fully
convertible debentures by way of private placement. The company issued three deferent types of OFCDs (1)
Bonds 10 Ten years tenure (2) 5 years tenure and(3) Nirman bonds 4 years tenure. Sahara India Pariwar is a Lucknow-
based Indian corporation. Subrata Roy created it. Initially, his firm was focused on raising
funds from the general public by encouraging people to invest. The Sahara India Pariwar Group
of Companies was founded as his firm evolved. Mr. Subrata Roy was the group's Chairman.2
His primary commercial interests are in banking, infrastructure, and housing, as well as media
and entertainment, consumer goods, and information technology. For many years, the company
has been a big sports investor and has been the title sponsor of the Indian national cricket team.
The company has around 5,000 locations across India, with a total workforce of roughly 1.4
million people. It is a privately held firm. There are several charges of having an undisclosed
source of financing, as well as money laundering, phoney investors, and sham shares. The
Revenue Department had been keeping an eye on this firm since it had grown so large in such
a short period of time.
v Overview:


 This case is about Sahara group which did a fraud with their investors. Company failed to
comply with a Supreme Court order in 2012 to repay investors in the bond scheme, which
the court has said was illegal. With this regard Delhi police arrest Sahara group owner
Subrata Roy in march 2014 and to appear in court over failure of two Sahara companies
to pay Rs 19,000 crore by way of dues to be paid to investors
The lawsuit concerns two unlisted Sahara group companies which started raising funds in2008. After the
Indian market regulator intervened, the Supreme Court told the company to repay more than $3 billion with
interest to its millions of investors. But market regulator SEBI brought contempt proceedings against Roy
and Sahara for failing to comply with the court’s order. Sahara’s investment programme includes schemes
that are similar to a typical Indian bank’s fixed or recurring deposits. The company largely sells such
schemes to small investors in towns and rural areas through their network of agents These financial
products allow investors to deposit small amounts such as 50 rupees a day for returns that some agents and
investors said are higher than what bank deposits generate. While there is no official company website
which explains Sahara’s investment schemes, agents and investors used names such as “ Benefit” and
“Minor” to identify some of the schemes. Sahara also issues a computer printed receipt with
hologramand passbooks as proof of investment, according to documents seen by this reporter. The public
notice comes after RBI received complaints from individuals that the Sahara group is mobilizing money
from the public under the generic name of Sahara Pariwar and Sahara India Pariwar. These two companies
are not registered under RBI. Only three Sahara group entities are registered with RBI -- Sahara India
Financial Corp. Ltd(SIFCL), Sahara India Corp Investment Ltd (SICIL) and Sahara India Infrastructural
Development Ltd. (SIIDL).Of these three entities, SIFCL, a residual non-banking company, has been
directed by RBI to phase out acceptance of deposits from the public. SICIL and SIIDL are not authorized to
accept deposits from the public
on its website cautioning

es ofSahara-Later on, Sahara

wrong
This case went wrong when court ordered Sahara to return the money to investors through SEBI. But Sahara fails
to do that and instead of paying money to investors, Sahara accused SEBI for defaming company. With this
incident this case fell into worst conditions. Some of the circumstance which makes this case worst is following:-
Court challenging the

SEBI restricted the promoters and directors of Sahara group companies, Sahara India Real Estate Corporation
and Sahara Housing Investment Corporation, from raising any capital through the issue of securities including
any form of securities . Lucknow bench of Allahabad High Court stayed SEBI's order in January 2011.-
h made it mandatory for the

As per the order, Supreme court turned down SEBI’s plea to stop two firms from raising
money from investors, but allowed it to seek information and issue advertisements to inform investors that the
matter is awaiting investigation-SEBI issued a notice on its website cautioning investors against buying
debentures of Sahara-Later on, Sahara Group filed a petition in Supreme Court challenging the Allahabad High
vestors participating in its fund-

Court order, which made it mandatory for the company to share full details of investors participating in its fund-
raising exercise with SEBI.-SEBI directed Sahara firms to immediately refund the money collected through sales
of optionally fully convertible debentures (OFCDs) with annual interest of 15%.-Sahara appealed in Supreme
directed Sahara firms to

court again that SEBI has no jurisdiction. Supreme Court directed Sahara to approach SAT against SEBI order
on OFCDs.
lected through sales ofoptionally

SEBI order against Sahara to refund money in October 2011.-A Supreme Court bench ruled in
favour of SEBI and ordered the two Sahara companies to return its OFCD investors the full
outstanding amount with interest.-Later on, SEBI approached Supreme Court alleging Sahara's
non-compliance with the main order.-The Sahara Group got a temporary reprieve from
Supreme Court as it granted more time to repay the money.-Sahara missed the repayment
deadline set up by court and it was required to submit Rs10,000 crore SC refuses to hear a plea
asking for extension of deadline to refund investors money.-SEBI files a contempt petition
against Sahara in SC saying that the company wash outing SC direction to make refunds as
soon as possible .High drama marked the police action as the police conducted searches inside
the residence.

The order to arrest Roy was issued for his failure to appear before the apex court in a contempt
case arising out of non refund of Rs 20,000 crore to investors by two of his companies.
All this lead Subrata Roy into Tihar jail
Corporate Governance issues in Sahara
Fully Convertible Debentures (OFCD)not in compliance
Flawed Governance Model
Lack of independence in Directors
Lack of transparency
A case of fraud on investers
Unethical conduct business
Violation of laws Alleged Tax Evasion
A case money Laundering
Fake investers
Fake Accounts
Fack Claims
Inadequate Role of Regulator
Cricket Sponsorship
Political connection of Sobrotha Roy

Conclusion:
.
When SEBi comes to know about the Sahara fraud, it takes immediate action.
There were wrong schemes of Sahara which makes investors worried. The
fraud is about those companies under which those schemes are running;
actually those Sahara companies are not registered from RBI. But Sahara
don’t responded fairly and Sahara every times
delays court orders and continues with these schemes. Later on court ordered
non- bailable arrest warrant against Subrata Roy which leads Subrat Roy into
Tihar jail fornon -payment of Rs 19,000 crores to investors
Ahold Scam
International expansion
In the mid-1970s, the company began expanding internationally, acquiring companies in
Spain and the United States. Under a new leadership team, which for the first time did not
include any members of the Heijn family, the company accelerated its growth through
acquisitions in the latter half of the 1990s in Latin America, Central Europe, and Asia.
Ahold received the designation "Royal" from Dutch Queen Beatrix in 1987, awarded to
companies that have operated honorably for one hundred years. That same year Gerrit Jan
Heijn, Ahold executive and only brother of Albert Heijn, was kidnapped for ransom and
murdered.
Accounting crisis
The company's ambitious global expansion was halted by the announcement of accounting irregularities
at some of Ahold's subsidiaries in February 2003. The CEO, Cees vander Hoeven, and CFO, Michael
Meurs, and a number of senior management resigned as a result, and earnings over 2001 and 2002 had
to be decreased. The main accounting irregularities occurred at U.S. Foodservice (now US Foods), and,
on a smaller scale, Tops Markets, in the United States, where income related to promotional allowances
was decreased. In addition, accounting irregularities were found at the company's Argentine subsidiary
Disco, and it was determined that the financial results of certain joint ventures had been accounted for
improperly.
As a result of the announcements, the company's share price plunged by two-thirds, and its credit rating
was reduced to BB+ by Standard & Poor's.
Legal ramifications
The irregularities led to various investigations and criminal charges by both Dutch and U.S.
law enforcement authorities against Ahold and several of its former executives.
Dutch law enforcement authorities filed fraud charges against Ahold, which were settled
in September 2004, when Ahold paid a fine of approximately €8 million. Ahold's former CEO, CFO, and
the former executive in charge of its European activities were charged with fraud by the Dutch
authorities. In May 2006, a Dutch appeals court found Ahold's former CEO and CFO guilty of false
authentication of documents, and they received suspended prison sentences and unconditional
fines.
The United States Securities and Exchange Commission (SEC) announced in October 2004, that it had
completed its investigation and reached a final settlement with Ahold.
In January 2006, Ahold announced that it had reached a settlement of US$1.1 billion (€937 million) in a
securities class action lawsuit filed against the company in the United States by shareholders and former
shareholders. Another class action lawsuit was filed against Ahold's auditors, Deloitte, but this suit was dismissed. The
suit was brought up again by shareholders in 2007, and by a different shareholder group in 2012.
The SEC filed fraud charges against four former executives of U.S. Foodservice: the company's former CFO, former
chief marketing officer, and two former purchasing executives. The purchasing executives settled the charges.The
former chief marketing officer was sentenced to 46 months in prison. The former CFO was sentenced to six months of
home detention and three years' probation.
Major Problems
Fraud ,Insider trading, the board dismissed the CEO, CFO and several other senior executives of the
Dutch food retailer after it was forced to restate revenues by US$I billion as a result of financial
improprieties
Evantual OutCome
The excutives in charge as Dutch retailer Royal Ahold plunged into one of the Europe’s worst
financial scandles were convicted of fraud in 2006 but let off with a fine and no prison time as
judges found they bore tittle criminal guilt. The court find former CEO Cees van and former CFO
Michiel Meures 225,000 euros each and gave them both nine month suspended sentences. The
verdict came more than three years after Ahold went to bankruptcy in 2003. Because the mem were
not personnel enriched by the fraud , presiding jude Frans Bauduin said comparisons between Ahold and Enron corp.

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Reason for the collapse of Kingfisher

 Malya considered Kingfisher as his fiefdom

es ofSahara-Later on, Sahara

Court challenging the

h made it mandatory for the

vestors participating in its fund-

directed Sahara firms to

lected through sales ofoptionally

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