A man is missing. And no ordinary man. An extremely public figure, larger than life. A man of legendary flamboyance, given to flaunting his proximity to, and power over, the rich and the famous, the bold and the beautiful of the planet. A man whose rise from small-town anonymity to staggering wealth has left a nation spellbound. But for the last few months, Subroto Roy seems to have vanished. Leaving unanswered questions that could affect millions: where is he now; what is he suffering from; whether the Sahara empire can survive his absence; who his successors could be.
Outlook pieced together this puzzle. It’s a strange story.
He is known for his extravagant lifestyle. At his corporate base in Lucknow, Bollywood celebrities like Amitabh Bachchan have danced to his tune—literally—at special functions every Republic Day. At the simultaneous weddings of his two sons in February last year, Rs 140 crore was spent, and the entire who's who of India attended, from the prime minister to every big name in the Hindi film industry, which actually closed down for a few days during the celebrations. "One could taste the best of wines and single malts and chose from any cuisine," says one of the guests. A government official recalls that Rs 10 lakh was spent on floral decorations, and Rs 14,000 was spent just to rent a super-luxury car for a day for a Bollywood actress. From Anil Ambani to Anna Kournikova, Saurav Ganguly to Shah Rukh Khan, everyone seems to be in thrall of the man.
Given his penchant to be regularly seen with the right people, Subroto Roy's absence and total withdrawal from the world for the last few months is, to say the least, baffling. His only public appearance since January this year was on April 1, 2005, when he paid floral tribute to his late father, Sudhir Chandra Roy, on the latter's birth anniversary at Amby Valley, the grand township he has built near Lonavala in Maharashtra. It seems that he hasn't moved out of there for months, although there are unconfirmed reports of Saharashree (as he is referred to reverently by his staff) sightings in Delhi and Lucknow.
Naturally, Roy's silence got people talking, and the rumour mills started grinding overtime about what was wrong with him. The mystery around his health became more intriguing. A pil filed by a Lucknow-based lawyer alleged that Roy was being kept under house arrest by his wife, Swapna, and his right hand man, O.P. Srivastava, who currently handles the group's parabanking business. Though the pil wasn't admitted, it just increased suspicions over his absence.And this was played out against the backdrop of an internal tussle to anoint his inheritor(s), and unease among the 61 million depositors in Sahara's parabanking schemes and thousands who had booked houses in its housing projects. Where was Roy? And would the group collapse without its charismatic leader?
Mr Sportsman : Roy is known to be a great host. People invited to his house say they were impressed with the manner in which the bahus treated them with warmth and care. He has sponsored both the Indian cricket and hockey teams for several years. Senior cricketers have also been given bungalows in Amby Valley (Lonavala). Roy with Sachin Tendulkar and wife.
The world has been waiting with bated breath for Subroto Roy to re-surface, to prove to all the people whose futures depend on him, that all was well with him. But he remains elusive. All that we have had in the last two months is a press release, e-mails sent to senior employees, and a signed letter published in Sahara's newsletter, and this has only raised more
questions. All that these communiques said was that he wasn't suffering from any serious disease, but had high blood pressure, increased fatigue, and a few reversible mild disorders. That he would be back in the saddle in six to eight months.
Six to eight months. Why would it take so long if it's only high blood pressure? Why was the group suddenly projecting his two sons, Sushanto and Seemanto, as his successors? Why couldn't Subroto Roy scotch all rumours by making just one public appearance—even if it was in a highly regulated manner on any one of the TV channels he owns?
Some of these questions became more relevant when news started filtering in from friends and family members. Uttar Pradesh Chief Minister Mulayam Singh Yadav, who knows Roy well, said that he was praying for his quick recovery. Other UP politicians have told aides that Saharashree is "critically ill". In Lucknow, someone who has worked closely with him for years, says: "He's suffering from fluctuating blood pressure that could result in something serious. This has led to some form of a depression. His lifestyle needs to be monitored." Agrees Amar Singh, a close friend and general secretary of the Samajwadi Party: "If blood pressure fluctuates, it can be serious. If you are travelling by air, it can shoot up suddenly."
In an exclusive interview with Outlook, Subroto Roy's elder son Sushanto admitted his father had fluctuating blood pressure, although he qualified it as "simple". He added that Subroto Roy was leading a highly regimented life. A legal advisor to the Sahara group, who has been associated with Roy for over a decade, calls the latter his "elder brother" and who met him 45 days ago, laughs and says, "All I can say is that he is hale and hearty. If you are a chain smoker and want to get rid of the habit, a change in atmosphere helps. For someone who has been working 20 hours a day for years, some regularisation is needed. But he'll be back—may be in July or August, or even earlier, in June."
Probably the oscillating blood pressure has something to do with politics and business too. "The UPA government led by the Congress has decided to take action against the group on various income tax-related cases. A demand of nearly Rs 800 crore may be raised against Sahara. This is because Sonia Gandhi doesn't like Mulayam Singh Yadav, whose proximity to Subroto Roy is well-known. Also, the rbi has tightened the screws on its parabanking operations. Both will affect the group's businesses and this has taken its toll on Saharashree," says a source who has monitored the group for years.
The Glitterati :Subroto Roy seems obsessed with celebrities. The weddings of his two sons in February 2004 was attended by nearly the entire Bollywood. The Roys hosted over 10,000 guests who were ferried in 200 Mercs. Orchids were imported from Thailand, and a 110-member orchestra flew down from the UK. Roy, seen here with Ash at the wedding.
As it has happened in the past, the charges of income tax violation is an extremely sensitive issue with Subroto Roy. In 1997, when the Lucknow circle of the income tax department issued a showcause notice to the group, he reacted like a wounded
tiger. Within no time, Sahara took full page ads in leading newspapers that listed names of well-known politicians (from almost all political parties) and bureaucrats and asked them a crucial question: can they deny they have deposited money in Sahara's parabanking schemes?
Immediately, there was pressure on the IT department to go slow on the case, although Saharashree was interrogated for a day by government officials. Subsequently, when asked by a journalist, he angrily retorted: "Anyone can try whatever they want to. Anyone can ask for any papers relating to it and see that I haven't defaulted on income tax." Agrees one of Sahara's income tax advisors, "The income tax department has been trying to prove a case against the group for years, but hasn't succeeded. Still, it issues a fresh notice every year. We have regularly won all tax-related cases."
But recent changes in
RBI regulations could prove to be a serious spanner in the works for Sahara's cash cow, parabanking (see box on page 50).It's parabanking that has provided huge sums for the group's diversification in areas like media, airlines, housing and entertainment. A senior employee, who works in Subroto Roy's office, claims the annual collections through various deposit schemes range between Rs 12,000-18,000 crore. One of Sahara's income tax advisors, who obviously knows the numbers, said smilingly that the figure was way above Rs 5,000 crore a year.
Talking to some of the branch managers and field agents provided a better idea of the deposit base. "The collection in one of Gorakhpur's (Subroto Roy's birthplace) branch offices is
Rs 6 crore a
year. In a small town like Musafirkhana in UP's Sultanpur region, it could be a little less than Rs 2 crore. And the group has 1,700 offices in India. So, you can take a guess on the deposit base," explains a branch manager in a small town in UP.
But could these be exaggerations? A fair idea can be got from the balance sheet of Sahara India's finance division, which handles the parabanking operations across the country. In 2001-02—the year's balance sheet was finalised in January 2004—annual deposits were just over Rs 650 crore. This didn't include a sum of nearly Rs 500 crore that was collected, but was "pending remittance" to some of the schemes. It also didn't include over Rs 130 crore that was "pending reconciliation" under two heads— inter-group companies and inter-company transfers. So, the figure for annual collections in 2001-02 was less than Rs 1,300 crore.
One must remember that Sahara's parabanking business has been under pressure in the last few years. Declining interest rates in general, and stringent rbi regulations on the maximum interest that can be offered to depositors, have put pressure on collections. An old-time field agent accepted that default rates by depositors have also gone up. While it may be good for Sahara since it doesn't have to pay anything to defaulters, it also reduces inflows that's critical for the group to finance its ambitious housing projects and a few loss-making businesses in areas like media and airlines (although Sahara Air showed a small profit of Rs 49 lakh last year).
In recent times, the group has followed a four-pronged strategy to tackle these pressures. One, it has given freedom to field agents to mobilise money from anywhere in the country, unlike in the past when they were restricted to their specific regions. "I have collected money from Lucknow and Gorakhpur, although I am the manager of the Musafirkhana branch," claims Gulab Chandra Srivastava. He adds that if his agents have relations in Bihar or Orissa, they can raise deposits from them and those will be credited to his branch.
The A-Team : Politicians and leading industrialists rubbed shoulders with him. Anil Ambani, Amar Singh and Amitabh Bachchan formed his A-team as far as his well-known friends were concerned. SP leader Mulayam Singh Yadav was his constant companion and, in one instance, openly prayed for Roy’s health. Roy with close friends and allies.
Two, Subroto Roy has made a successful attempt to up his profile so that his group can raise huge, one-time and long-term deposits from well-known personalities, be it TV stars, Bollywood celebrities, politicians, bureaucrats or industrialists. Three, Saharashree has created a cult-like organisation, where loyalty and trust play an important role in motivating agents and
employees. "No doubt we miss him. He is our God, and his voice is none less than 'amrit-vani' (heavenly message) to each member," says Srivastava. Subroto Roy, he says, understands their problems and solves them even before he's informed about them.
Finally, Sahara has decided to make real estate—and not parabanking—as its core, money-spinning business to generate huge cashflows. "Today, housing earns more profits than parabanking for the group. Its mega project to set up the world's largest chain of townships in 217 cities (with residential built-up area of over 1 billion sq ft and commercial space of 33 million sq ft) will change the complexion of the group. Work has already begun in a few cities like Lucknow, Gorakhpur and Calcutta," says one of the group's outside
advisors. Also, the group is trying to expand in other areas (see infographics).
But Subroto Roy's disappearance has raised doubts over the group's future. A few months ago, depositors queued up outside offices in Gorakhpur demanding their money back. Some who invested in the dream project of buying a house for Rs 10,000, have done the same. Field agents and branch managers have had a tough time keeping up the depositors' morale. "Jab raja nahi rahta to kya rajya nahi chalta? Unke waris kis kaam ke, woh sara kaam sambhal leten hain (In the king's absence the empire does not come to a standstill. His successors manage the show)," explains Srivastava.
Logically, close friends and family members have started pushing the case for the next generation—Subroto Roy's two sons—as the heir(s) apparent. This is a bid to send strong signals that handing over the baton will not be a problem. Some make direct comparisons between Subroto Roy and Sushanto. Insiders contend that Sushanto is ideally placed to take over his father's mantle. In terms of business vision, strategies and tactics, the son has the same ambition, courage and shrewdness of his father. He commands loyalty, he doesn't spare people who may have erred or strayed, and he is a true leader.
Mr Partyman : Roy hosted elaborate parties in Lucknow and Amby Valley, Lonavala. He organised the Mrs World pageant at Amby Valley last year and invited celebrities like Christina Aguilera to this luxurious complex. Film stars like Shilpa Shetty touched his feet. Seen here, Jennifer Hawkins (Miss Universe 2004), at his party in Lucknow.
Says Gaurav Prakash, a young Lucknow-based entrepreneur who knows Sushanto from his school days: "He is a replica of his father. No airs, a large heart, sharp and focused, yet fun-loving." Even younger son Seemanto is appreciated for the same reasons. "They (the two sons) have become big businessmen now, yet they always find time for us. Sushanto still holds his pals from school with the same affection as he did ten years back. He married his girlfriend from his schooldays!" adds Prakash. Friends of the two siblings describe how they have taken to work very seriously. Says a lawyer close to the family: "They were sent to Bhopal, where they worked as 'ordinary workers' a decade ago."
Today, both Sushanto and Seemanto have been assigned specific responsibilities within the group (see interview). However, that has upset top executives who feel they're being treated badly despite their unstinting loyalty to Subroto Roy for nearly three decades. Says one such sulking manager: "All these years I may have enjoyed a key position, but in reality I have only been a rubber stamp." Such comments have given way to whispers that there's a rift between Subroto and a few family members close to these managers. Therefore, those close to Subroto Roy are aggressively championing the cause of his two sons as the "real inheritors".
In the interim, it's business as usual for the Roy
family. Despite the rumours about Saharashree's health, his wife Swapna went to Calcutta last week for a social visit. Sushanto was on Page 3 as recently as a few weeks ago. And, as we were going to the press, we were told that the mother and two sons were holidaying in Goa to celebrate Swapna's birthday. Yet again, the signals are clear: there are no problems with the group. We'll still have to see what happens to the 'family called Sahara' if Subroto Roy remains out of action for a longer
time. Will this family hold together?
By Alam Srinivas and Sutapa Mukherjee in Lucknow with Suveen K. Sinha in New Delhi and Saumya Roy in Mumbai