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KHALILABAD, Uttar Pradesh (Reuters) - Like millions of Indians, Jag Ram Chaudhary invested with the Sahara conglomerate - 1,300 rupees a month in his case - to put away money for a rainy day.
"My wife had an accident some years back. I don't have much savings, so I thought I'll be able to save some money by putting in a small amount every month," said Chaudhary, an office helper at a construction company in Uttar Pradesh.
On August 31, the Supreme Court ruled that finance schemes run by two Sahara companies were illegal and ordered it to repay as much as $4.5 billion to up to almost 30 million mostly small investors, plus interest. The final figures are still to be determined as some clients have already redeemed their investments, lawyers on both sides of the matter said.
The case has shone a rare light on the unlisted giant whose interests range across finance, housing, media and entertainment.
Sahara has accumulated a string of trophies in recent years, including a stake in a Formula One motor racing team and ownership of Grosvenor House hotel in London. In July, it agreed to buy a controlling stake in New York's Plaza Hotel.
But its core client base is the towns and villages away from the shiny cities of modern India. There, Sahara sells investment products to often poor people in amounts as small as 2 rupees (4 U.S. cents) a day. The company is a household name in India through its lead sponsorship of the national cricket team.
"Banks take eight years to pay what I get from Sahara in five years," Chaudhary, 40, said in Khalilabad, a town in Sant Kabir Nagar district in Uttar Pradesh. Like several Sahara customers interviewed nearly two weeks afterwards, he had not heard of the court ruling.
Critics, including activist groups, say Sahara's investment products are designed to evade oversight by financial regulators and that it lacks transparency on the source and use of its funds, selling products to investors who do not understand the risks and ploughing the proceeds into real estate projects.
Under the scheme rejected by the Supreme Court, two firms owned by Sahara had offered bonds to small investors, promising, in some cases, to return three times the face value after 10 years.
The court ruling that it raised money by "dubious" means follows another rebuke in 2008, when the RBI ordered a Sahara company to stop taking deposits from the public.
In a country where "black money", or undeclared wealth, is rampant, Sahara's size and spending power have long fuelled speculation over how the company operates.
Sahara, headed by Subrata Roy Sahara, its chairman and self-described "managing worker", says it helps small investors outside the banking system and that it has never defaulted on them.
"Sahara agents motivate people who would otherwise spend the money on liquor, gambling, etc," said Guddu Pandey, a school teacher and Sahara agent in Uttar Pradesh, echoing an argument made by Sahara after the court verdict.
The company did not respond to several attempts by Reuters to get answers to written questions. Roy was not immediately available to be interviewed, Sahara said.
Sahara has not said how it will refund the money to investors, although it has said it is healthy and investors need not worry.
The company's full name is Sahara India Pariwar, or family. Roy, 64, refers to himself as the guardian of the world's largest family, and espouses a philosophy of "collective materialism".
At its headquarters in Lucknow, staff greet visitors by putting their right hand to their chest and saying "Sahara Pranam". Pranam is a respectful version of hello.
Roy, often photographed wearing a black necktie and vest over a white shirt, is based nearby at the showpiece Sahara Shaher, a sprawling gated complex of low white buildings and lawns where he lives and where the group holds an annual mass wedding for 101 couples who could otherwise not afford it.
Starting with capital of 2,000 rupees in the late 1970s, Roy built Sahara into a giant that, according to its website, had assets of more than $21 billion as of April 2011.
Roy is often described as a billionaire but he is not on the Forbes list of rich Indians. Sahara's website says no dividend has been paid for 34 years and no profit has been taken out of the company.
From its north India base, Sahara has become a cashed-up global investor in hotels, sports and entertainment.
Last year, Roy teamed up with liquor baron Vijay Mallya of Kingfisher beer fame, paying $100 million for 42.5 percent of his Force India Formula One auto racing team. It paid $370 million for a franchise in cricket's Indian Premier League.
In 2010, Sahara considered buying English Premier League soccer club Liverpool and held talks to buy the debt of film studio Metro-Goldwyn-Mayer. Neither deal happened.
Still, Roy is not typically bracketed with a corporate elite led by Indian families such as the Tatas, Birlas and Ambanis.
"If you look at the orthodox business community, they have kept him at arm's length," said Ashok Prasad, a physician, lawyer and academic who taught overseas before returning to Gorakhpur, the city where Roy started out.
Instead, Roy is associated with Bollywood celebrities and, like many tycoons, is seen as having good political connections.
Last year, K.M. Abraham, then a board member of SEBI which had ordered that the bonds be refunded in the case that ultimately went to the Supreme Court, wrote to the prime minister alleging "undue pressure" from the then-finance minister and his office to deal leniently with high-profile cases, including Sahara's.
The Finance Ministry and the regulator denied the allegations.
Sahara says its land holdings in India are more than 33,600 acres (13,600 hectares). Although not all is majority-owned, it amounts to more than any listed Indian developer.
In 2009 another group company, property developer Sahara Prime City Ltd, filed a draft prospectus for an IPO to raise up to 34.5 billion rupees. The deal never took place but it came back to haunt Sahara when the prospectus attracted the attention of the securities regulator to the fund-raising scheme ultimately banned by the Supreme Court.
While an IPO of that size in India would typically see top-tier investment banks scrambling for a piece of the action, it was managed by four local brokers and Japan's Daiwa Securities SMBC, a small player in India. Several bankers at global institutions said they would not work with Sahara given concerns about governance and transparency.
"Their business model is not transparent. There are some grey areas," said the CEO of a large Indian bank, who like many people interviewed for this story declined to be identified given the sensitivity of the matter.
"Sahara has a lot of cash but we don't know where all this cash is coming from."
Not that it seems to need bankers. Unlike many big, acquisitive groups, Sahara's in-built funding sources mean it does not rely on bank loans.
"Have you ever seen Sahara's balance sheet? Nobody has seen it," said a senior executive at another major Indian lender.
Among many poorer residents of Uttar Pradesh, India's most populous state, Sahara has substance. Its sponsorship of the Indian cricket team in a country mad about the sport adds to its credibility in small towns.
"Sahara bank? That way," an elderly tea stall operator in Harraiya said when asked for the location of the Sahara branch office, erroneously referring to it as a bank.
The branch itself, up a flight of stairs in a nondescript grey concrete building, was bustling on a recent day.
Sahara customers interviewed in Uttar Pradesh said they trusted the company, which has been around more than 30 years. Some had reinvested in Sahara products when they matured.
Sahara operates through nearly a million agents, who sign up clients and collect payments, sometimes on a daily basis.
"I have never been to a Sahara office. The agent comes, does all the paperwork, and collects the money," said Anil Tripathi, a travel agent who said he had doubled his money with Sahara.
Sahara has built a large niche in a country where 90 percent of the workforce is informally employed, half of households do not have bank accounts and loan-sharking is rife.
"The smallest of the small, the poorest of the poor - the banking industry is not able to cater to them," said Arvind Mohan, a Lucknow University economist.
The issue with Sahara is transparency and regulation, critics and regulators say.
For example, it does not always publicise its investment plan terms. A newer scheme, Q Shop Plan H, which is built around the group's new initiative to sell household goods directly to consumers, promises returns of about 135 percent after 6 years, according to a term sheet that does not mention Sahara. Some agents said they were asked to try and convert holders of the outlawed bonds to the new plan.
Asked if the details of the scheme banned by the court were explained to customers, a long-time Sahara employee in Uttar Pradesh said: "We don't have to explain all that. The depositor only wants to know how much he would be paying and how much he will get back on maturity."
The court ordered the money be repaid within 90 days, with 15 percent annual interest, prompting speculation over how Sahara will scrape that kind of money together.
Sahara responded with a rambling, full-page newspaper ad assuring investors their money was safe. It also condemned any suggestion it had raised any so-called "black money" or sought any undue favour from any authority.
"People cannot accept Sahara's super-fast growth. All along we have been getting beatings and beatings from all authorities, whereas we should be appreciated," it said.
Additional reporting by Sharat Pradhan in LUCKNOW and Sumeet Chatterjee and Swati Pandey in MUMBAI; Editing by John Chalmers, Alex Richardson and Dean Yates