Harshad Mehta’s Net Worth Breakdown & Stock Market Saga

About Harshad Mehta

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Harshad Mehta was infamously known for being involved in the widely known 1992 scam in India. His involvement in the 1992 Indian securities market scam gained him national fame for market manipulation. 

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He was charged with 27 criminal offences but was convicted of only four before he died in 2001. Mehta was 47 years old when he passed away due to a heart attack.  

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He was born in the Rajkot district of Gujarat and grew up in Borivali, Mumbai, where his father worked as a small-time textile businessman. 

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Work Life

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At the beginning of his career, Harshad Mehta took on meagre jobs in various industries, like textiles, cement, and jewellery. He started his career as a salesman at New India Assurance Company Limited (NIACL). 

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During his time at NIACL, he developed a deep interest in the stock market and shortly quit his job thereafter. Mehta joined a broking firm called Harjivandas Nemidas Securities and worked under Prasann Pranjivandas. 

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Harshad Mehta considered Prasann Pranjivandas as his “Guru” (mentor). From 1980 to 1990, he worked at multiple broking firms, assuming advanced responsibilities. 

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After a decade of hustling, he became a prominent name in the Indian securities market. News agencies and media outlets started calling him “Amitabh Bachchan of the Stock Market”.

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In 1986, Harshad Mehta founded Grow More Research and Asset Management with the financial assistance of associates. By 1990, his firm began receiving investments from well-known individuals who were happy to avail themselves of his services.

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The price of shares in the cement industry rose sharply from ₹200 to ₹9000 due to heavy buying from a group of brokers, including Mehta. He used the so-called "replacement cost theory" to defend his excessive trading in ACC shares. 

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He claimed that the stock had been undervalued and that the market had simply corrected when it revalued the company at a price equal to the cost of constructing a comparable business.

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The 1992 Security Fraud Scam

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The 1992 security fraud scam was one of the biggest financial scams in Indian history. It is also referred to as the Harshad Mehta Scam. 

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Harshad Mehta exploited the loopholes in the banking system to manipulate stock prices and drain around 4000 crore from the banking system.

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Mehta used a method called ‘Ready Forward’ (RF) deals, which is using government securities for short-term loans between banks. He used fake bank receipts to lend him money, which he put into the stock market to artificially inflate stock prices.

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As the stock prices rose sharply, Mehta began selling off his shares to gain massive profits. However, the scam quickly started to unravel as the State Bank of India (SBI) figured it hadn’t received securities against the funds that were lent to Harshad Mehta.

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Once the investigations began, the stock market collapsed, and Indian investors and banks faced huge losses. 

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Ultimately, Harshad Mehta was charged with 27 criminal charges; however, he was arrested for only 4 of those charges. He died in 2001 due to a heart attack while his trial was still ongoing.

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The scam exposed several flaws in the Indian financial system, resulting in regulatory reforms and the establishment of the Securities and Exchange Board of India (SEBI).

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What was Harshad Mehta’s net worth?

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According to reports, Harshad Mehta had an estimated net worth of ₹3,542 crore ($475 million) at the time of his death in 2001. His wealth was at its highest while he was at the peak of his stockbroking career.

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He had a collection of luxurious cars and several real estate properties spread across Mumbai.