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Dangers of Indian Realty Investing – Sahara,Oberio Realty,Lavasa and DB Realty prime suspects in latest Corruption Scandal

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I have been repeatedly pointing out the dangers of investing in Real Estate Companies as more and more skeletons tumble from the closet.Its an open secret that Real Estate Companies in India fudge their Financial Statements through Creative Accounting and other means such that even Fund Managers don’t invest in the Realty Sector.Major Real Estate Companies like IREO and Emaar MGF have played prominent role in some of the major corruption scams rocking the country.Now more big Real Estate Firms like Lavasa,Oberoi Realty have been implicated for their role in other corruption scandals.DB Realty a Mumbai based Realty Company has been found to be a prime suspect in the LIC Housing Finance Scam where the CBI has arrested.Some construction companies like Man Infrastructure,HCC have also become a target of investigation.

India Real Estate Shares Fall Sharply on Bribery Case – WSJ

Shares of LIC Housing Finance Ltd., along with those of realty companies Hindustan Construction Co., Oberoi Realty Ltd. and DB Realty Ltd. plunged early Thursday after the companies were named in a loan scandal late Wednesday.The Central Bureau of Investigation Wednesday arrested eight people, alleging they took huge bribes to issue corporate loans. The arrested include four senior bankers at state-controlled lenders, three from a financial services firm and one from India’s largest insurance company.The CBI alleged that the loans in question were given to companies including Lavasa Corp., a unit of Hindustan Construction, Oberoi Realty and DB Realty, as well as some other listed and privately-owned companies.

Sahara Group and its promoter Subroto Roy has been barred by SEBI from raising funds from the stock market.An Investor Group had complained about material omissions in regulatory filings by a Sahara Group Company.Note the Sahara Group has been looking to raise funds along with a host of other realty companies for a long time.However the lack of trust and the bad name of the sector has prevented them from doing so.The Sahara Group has been accused of raising millions of dollars in the form of debentures without disclosing this information.Investing in Indian Real Estate remains one of the stupidest investment ideas.

Sebi bars 2 Sahara cos from raising funds – TOI

Market regulator Sebi on Wednesday barred two  Sahara Group companies—Sahara Real Estate Corp and Sahara Housing Investment—from raising funds from the market and, in effect, delayed the launch of the IPO for Sahara Prime City, another group company.

The market regulator also issued a showcause notice against the two companies on why it should not take action against them for issuing convertible bonds without Sebi’s permission and barred them from issuing such bonds, termed as optionally fully convertible debentures (OFCDs). In its order, Sebi also said that when asked for documents and explanation for issuing such convertible bonds, the Sahara Group companies had said that the instruments which they had issued did not come either under the jurisdiction of Sebi or the National Housing Bank (NHB). The Sebi order stated that both the companies, “… instead of providing the information sought by Sebi, (they) have adopted various means and adopted convenient pleas for not providing the information and delaying the examination process initiated by Sebi to ascertain the facts.”


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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