Indian Economy - News & Discussion 27 May 2012

vera_k · Post by **vera_k** » 05 Apr 2013 01:49

Depends on how one looks at it. The oil substitution issue can be framed as "Let every Indian drive a car" instead of "Let every Indian drive an oil-fired car". This does not imply a reduction in consumption, only replacement of one technology by another.

In that sense, it is no different from how oil displaced coal fired steam engines. More recently, people substituted mobile phones for landlines.

ArmenT · Post by **ArmenT** » 05 Apr 2013 10:16

X-posting from the TIRP thread

Dunno if you guys have been following the business world, but someone just leaked 260 GB of data containing decades of records for over 100,000 shell companies and trust funds linked to powerful people in over 175 countries.
http://www.icij.org/offshore
Here's a list of a few names:
http://www.icij.org/offshore/who-uses-offshore-world

From India, we have:

India
Ravikant Ruia

Businessman

Details: In December 2011, he was accused of criminal conspiracy by India's principal anti-corruption enforcement agency, the Central Bureau of Investigation. The accusation relates to a broader investigation of politicians, government officials and telecom executives in India for alleged irregularities in the award of cell phone frequencies to telephone companies. Ruia’s firm is disputing the charges made against him and others.

Offshore business: Shareholder in one firm in the British Virgin Islands, Orion Worldwide Universal Corporation (2008). His daughter, Smiti, is a shareholder in two others. One of Ruia's flagship companies, Essar Power, has further BVI entities that are named in the ICIJ documents.

Comment: A company spokesman said that of the eight companies registered in Ruia’s name as well as in the name of his flagship business Essar Power, five have since been liquidated. Three continue to be operational. “These companies were started as SPVs [Special Purpose Vehicles] to make investments and are in the knowledge of the authorities concerned,” the spokesman added.

Singha · Post by **Singha** » 05 Apr 2013 11:25

on another note after direct orders from PC to mop up NPAs , the PSU banks have started filing suits and liquidating the collateral used by industrialists who could not repay. they are even starting to tally up and go after personal wealth of the promoters..something unheard of in the cozy backscratching that exists in the stratosphere.

times are going to be not-so-nice for the mallya heir apparent who struts around unshaven wearing a white vip banian ganjee and english accent

PSU banks claim to have no money to lend to small business and make people jump through 100 hoops to get a home loan, but they advance $1.5 billion to KF ....even SBI that darling of the "play safe" middle class

http://timesofindia.indiatimes.com/busi ... 391834.cms

Banks test personal guarantees, may spur M&As

Anshul Dhamija, TNN | Apr 5, 2013, 04.33AM IST

BANGALORE: India's public sector banks, which often tiptoed around corporate clients, are beginning to rattle the big fish of India Inc. In recent weeks, they have set out testing the strength of personal guarantees issued by millionaire borrowers in precedent setting moves.

For long, Indian promoters have issued such guarantees to lender banks in order to mobilize funds in crunch situations, and PSU banks had accommodated such borrowers. However, with their non-performing assets (NPAs) ballooning, the situation has altered dramatically.

A consortium led by State Bank of India ( SBI) that has more than Rs 7,000 crore exposure to the grounded Kingfisher Airlines has started selling pledged shares of the beleaguered promoter Vijay Mallya in his group companies United Spirits and Mangalore Chemicals & Fertilizers.

United Bank of India on Thursday issued a public notice that it was selling the assets of Yash Birla-owned Birla Surya, after the promoters failed to pay outstanding dues of Rs 70 crore.

The Kingfisher lenders have sought legal opinion and are readying a plan to stake claim to assets that weren't pledged specifically towards the airline loan. The personal guarantees of the promoter covers all his assets, especially in a crisis-ridden loan account like Kingfisher, where the banks have little room to sell the assets of the troubled company.

So the lenders are looking at Mallya's personal assets, from his stud farms to the luxury sky villas, Kingfisher Towers he is building on his ancestral property in Bangalore. Kingfisher Towers is a 32-storeyed, 80 apartment luxury project with a sale value of up to Rs 2,240 crore.

The UB Group issued a statement to TOI that read, "Kingfisher Towers does not form part of any collateral given to KFA's banks."

Punjab National Bank CMD K R Kamath said he wasn't aware of any specific recovery steps regarding Kingfisher at the moment, since the issue was being handled at various levels within the bank and within the consortium. "When we look at invoking personal guarantees, we look at all the personal assets of the borrower, and not just what has been made available," Kamath said. PNB has an exposure of Rs 800 crore to Kingfisher Airlines.

Concerned over the rising levels of bad loans of various public sector lenders, finance minister P Chidambaram last month asked bankers to take firm steps to recover loans, saying that the country cannot afford to have "affluent promoters and sick companies".

"Any lenient step on NPA recovery would be looked down upon. If the banks are allowed to bailout NPA companies, it's the government that has to foot the bill. And the government is unlikely to finance sick loans when it is desperate to contain the fiscal deficit," said Sanjay Jain, director, Taj Capital, a New Delhi-based boutique investment consultancy firm. He added that, till date, the approach of public sector lenders towards invoking personal and corporate guarantees had been sedate, even though the laws adequately empowered them.

With PSUs tightening the noose around affluent promoters of sick companies, more merger and acquisition deals are expected rather than promoters just trying to restructure their debt. Earlier this week, Zuari Group picked up a 10% stake in Managlore Chemicals & Fertilizers, a company which the former is interested to acquire, after mopping up shares offloaded by Kingfisher's lenders.

Pratyush · Post by **Pratyush** » 05 Apr 2013 13:22

Remind me again, which political party Mallay belongs to. That he is being taken to the cleaners.

Singha · Post by **Singha** » 05 Apr 2013 16:13

I have no idea. the big cats seem to have channels of communication and patronage open to all parties regardless of any ideology. that ensures consistency across regime change events.

sum · Post by **sum** » 05 Apr 2013 17:53

^^IIRC, he was a JD(U) candidate

Singha · Post by **Singha** » 05 Apr 2013 19:12

his big loans came from the big banks which JD(U) had no leverage to influence. all under GOI ie INC control. so his relations with the sultanate had to be cordial for such a long rope to be extended.
he even managed to rope in some consultant to value the KF "brand" at 4000cr and used the vapour of the brand as **4000 cr** of collateral. can you believe it? who wants KF condoms and shoes and TVs?

Supratik · Post by **Supratik** » 05 Apr 2013 19:26

He was with the JD(S).

Sriman · Post by **Sriman** » 05 Apr 2013 19:35

He has allies from a certain pawarful party.

anmol · Post by **anmol** » 05 Apr 2013 20:27

BJP backs Vijay Mallya for Rajya Sabha
Press Trust of India | Updated: June 16, 2010 17:46 IST

Bangalore: vijaymallya216.jpgLiquor baron Vijay Mallya appears set for a second stint in the Rajya Sabha after garnering ruling BJP's support for the June 17 biennial elections from Karnataka.

Sources in BJP said the party, with around 30 surplus votes, could ensure victory for 54-year-old Mallya who is contesting as an independent with the support of 27 member JD-S group and an Independent MLA Varthur Prakash.

Mallya, who was elected to the Rajya Sabha as an Independent for the first time in 2002, needs 45 first preference votes for victory.

BJP has convened its legislature party meet tomorrow to discuss its strategy for the Rajya Sabha polls.

The party has fielded its senior leader M Venkaiah Naidu, for the third successive term and state unit spokesman Ayanur Manjunath, who had sacrificed his claim for Shimoga Lok Sabha seat last year in favour of Chief Minister B S Yeddyurappa's son B Y Raghavendra.

The sources said the BJP would issue a whip to its MLAs.

Congress which is staking claim for the second seat has fielded senior leader T V Maruthi, besides former union minister Oscar Fernandes.

KPCC President R V Deshpande told reporters that the party's strategy for Rajya Sabha election would be firmed up at its legislature party meeting tomorrow.

Y S V Datta, JD-S spokesman said, "We will not issue whip. But our MLAs will go in a group and cast their votes."

Against the backdrop of Mallya getting BJP support, Congress has to be content with the victory of Oscar Fernandes and does not appear to be in a position to drum up support for Maruthi. The ruling BJP, however, is in a position to ensure facile victory of Naidu and Manjunath.

In the 224-member Assembly, BJP has 116 members, Congress 74, JD-S 27 and Independents six. One seat is vacant.

RoyG · Post by **RoyG** » 05 Apr 2013 21:06

Singha · Post by **Singha** » 06 Apr 2013 06:18

My prediction, mallya will lose control of his liquor business as well to the likes of diageo and lenders and only his offfshore wealth might be safe. Might settle in london as a exiled oligarch.

sampat · Post by **sampat** » 06 Apr 2013 14:27

Mallya is also good friend of Praful Patel. Like other businessmen he has friends in all parties.
Maybe the plan all along was to fleece banks and shareholders?

Bade · Post by **Bade** » 06 Apr 2013 19:23

He was the only one missing in the CII conclave addressed by Rahul-ji on stage. Would have fit right in there with the general theme of pep talks and mutual back-patting by Nth generation entrepreneur families, as well as an excellent example of exporting the "energy". He sure is a high energy, driven and connected swindler of the highest order. He can even get the people's parties to join hands with him.

Wonder how the new vapor-ware founders with no god-fathers of their own, felt on the dais with all the other posers.

Suraj · Post by **Suraj** » 06 Apr 2013 23:00

In whose interest is it to tear down Mallya entirely ? Ultimately money talks, and he will attempt to grease the right hands. These events are a result of the lack of adequately streamlined corporate bankruptcy and liquidation processes, combined with immature lending risk assessment. I agree that Mallya's personal fortune should not be raided to pay for his corporate failure; there needs to be a better system for ensuring such a corporate failure is managed in a clear and straightforward manner, rather than through a series of ad hoc measures that leave everyone feeling cheated.

svinayak · Post by **svinayak** » 07 Apr 2013 09:55

Public companies need a systamtic way for M nA and liquidation.

Singha · Post by **Singha** » 07 Apr 2013 18:17

..immature lending risk assessment...

Not at all. Banks are well aware of risk assessment, but when extending credit to corporate and political sweethearts such rules do not apply.

Try to default on a 50 lakh loan from sbi and see what happens. Goondas will appear from nowhere and cart away your entire house after thrashing your family.

ldev · Post by **ldev** » 07 Apr 2013 19:37

I agree that Mallya's personal fortune should not be raided to pay for his corporate failure

In that case, he should not give a personal guarantee. Because a personal guarantee in support of a corporate loan means that all personal assets are on the hook. Even if those personal assets are pledged elsewhere, any surplus leftover after payment to the pledged lender is then available to the corporate lender. That is also how it works in the West as well. However, the reason that lenders in India (and elsewhere) ask for personal guarantees is because the primary cashflow analysis for the corporate entity does not provide adequate comfort to the lender of a repayment of the loans under various scenarios and hence the additional security via a personal guarantee. However, personal guarantees are not asked for in all corporate situations. It will be very educational/instructive, if a list is made available of loans made to Indian industrial groups where personal guarantees are part of the security package, because that could indicate where some "massaging" has been done.

Singha · Post by **Singha** » 07 Apr 2013 20:33

last month the finmin has asked all PSU banks to publish a list of their top50 defaulters and make public photos, names and addresses related to the same.

pentaiah · Post by **pentaiah** » 07 Apr 2013 20:41

The art of starting and shaving money form public institutions and politicians, creating wealth all around the industrialist and destitute institutions as by product.

Rule number 1

At the start of placing equipment capital or other wise ask suppliers to over invoice equipment cost by at least 10% and siphon back into Benjamin personal accounts ( specifics ask EX COAS Tyagi ji and Nanda ji)

Rule number 2

make allowance of another 10% to pay politicos whose blessings are required to get multiple PSUS banks. This in case of NPA tag added in future the defunct are spread across multiple institutions.

( example Rahul bajaj who is source central bank of India maximum NPA worth hundreds of corers)

Rule number 3

Sell ancillary Small scale industry promotion by getting huge tracks of land to near and kith &kin, and political benefactors and then make them sick ad resell at huge profits for land.

Rule number 5

spread the risk and make sure you default at every stage unless its a monopoly or becomes a property of Public AKA nationalization.

Rule 6 Co opt the union leaders if they form unions the labor is worth the hire says The Bible so hire union leaders and use them to arm twist further public money

Rule 7 keep passport handy to retire in Swiss alps and own a small villa in Monaco and host politicos past present and future...

Never exceed more than ten percent ownership directly in your own company, t
You know the future why not prepare

So Mallay is well set for anything , he has plenty of bottles to hit any way

ldev · Post by **ldev** » 07 Apr 2013 21:35

In India, a politically connected industrialist approaches a PSU bank/s for a loan. The project is not deemed viable by the bank...industrialist then approaches his political friends who call up the Chairman of the PSU bank and pressurize him. Chairman agrees, provided a personal guarantee is forthcoming (He is covering his a**). Guarantee is provided and loan is given. Everybody in the picture knows when the s*it hits the fan, the personal guarantee will not be invoked, because political pressure will be used, and in any event,the foreclosure process in India is long and protracted because of the slow pace at which court cases move. So the defaulted industrialist will still be flying high and living his jet set life style many years after various loan defaults have taken place. In Mallaya's case, there is some pressure because of his very high profile life style and the relatively high profile corporate because it is an airline....if it was some godforsaken mine in Bihar, nobody would be talking about it.

Suraj · Post by **Suraj** » 07 Apr 2013 23:16

ldev: Thanks for the additional information. Was not aware of Mallya's personal guarantee on these loans. If he did put up personal property as collateral in this manner, yes he's on the hook personally too. Mallya's flashy lifestyle does contribute to him getting more attention too.

Singha: doesn't sound much different from collection and repossession system in the US. It's all a matter of scale - you owe 50 lakh and the bank owns you. You owe 50 billion, and you own the bank

vishvak · Post by **vishvak** » 07 Apr 2013 23:32

May be Mallay's main biz of liquor will be overtaken to reduce competition in liquor market?

pentaiah · Post by **pentaiah** » 08 Apr 2013 01:44

It's this way
You owe bank 100,000
The bank has you by balls

If you owe a million and above
You have the bank by balls

Theo_Fidel · Post by **Theo_Fidel** » 08 Apr 2013 20:31

A good monsoon is expected. So everyone breath easier. Hope the rains start on time. Last year the late start wipe out my crop season.

http://online.wsj.com/article/SB1000142 ... 66274.html

India is likely to get normal monsoon rains this year, which will bring relief to large swathes of the country gripped by drought, a top weather official said Monday.

"So far, there is no worry signal," said D. Sivananda Pai, head of long-range monsoon forecasting at India's Meteorological Department. The department is due to release its official forecast for this year's monsoon after April 10.

Theo_Fidel · Post by **Theo_Fidel** » 08 Apr 2013 20:47

Many many years ago I had the opportunity of working a bit on jungle retreat project Mallya was putting together. Even back then he was an outsized personality, but when I met him he was the simplest and kindest and most unassuming person you can imagine. He took us naukari types out for lunch and when he heard that one of the guys in the group was having housing difficulties he even arranged a spot for him at one of his Bangalore houses for a month or 2 while he sorted it out. Said homeless banda now runs a well-respected engineering firm in Mumbai. I just thought I should mention this.

He took a business risk and failed. There can be no shame in this. I wish him the best and hope there are more such people willing to take business risks in India. Did he causes losses to banks, absolutely, but has he made a ton of money for them as well, absolutely.

IME starting a business is a highly failure prone endeavor. Something like 9 out of 10 businesses fail completely causing complete financial loss to businesses and investors and ordinary folks. But the wealth of the nation is built on the 10% that succeed and prosperity depends on the 1% that go on to be wildly successful.

Supratik · Post by **Supratik** » 08 Apr 2013 21:47

Yes, aviation is a more demanding business and businesses often fail. In India the problem is that there is no clear-cut exit policy.

sampat · Post by **sampat** » 08 Apr 2013 21:50

Mallya is well known for his largesse and friendliness. I have a close friend who worked for him. He will order same services for his staff as for himself. Be it food or accommodation. He truly lives king size life.

hanumadu · Post by **hanumadu** » 08 Apr 2013 22:23

He lost quite a bit of his personal fortune too, I think about 20% stake in UB Group. It was bad business decisions by people all around.

chetak · Post by **chetak** » 08 Apr 2013 22:41

sampat wrote:Mallya is well known for his largesse and friendliness. I have a close friend who worked for him. He will order same services for his staff as for himself. Be it food or accommodation. He truly lives king size life.

Many people take him for a ride because of this. That's exactly what happened in the airline.

svinayak · Post by **svinayak** » 08 Apr 2013 23:49

sampat wrote:Mallya is well known for his largesse and friendliness. I have a close friend who worked for him. He will order same services for his staff as for himself. Be it food or accommodation. He truly lives king size life.

My close friend works as the President of one of his BU. People who know him say that they have no complaints.

krisna · Post by **krisna** » 09 Apr 2013 05:11

when pappu talked to FICCI, the BSE dropped 300 points the largest drop since feb 2012.

some businessmen were groaning - better he shuts his mouth than drop pearls of dung.

may be it is the reason MMS and 2g do not open their mouths.

It is all the fault of a certain individual for forcing these worthies to speak.

RoyG · Post by **RoyG** » 09 Apr 2013 22:25

A must watch for all. Excellent presentation.

alexis · Post by **alexis** » 10 Apr 2013 09:48

As per grapevine, even KF employees lived life kingsize! There was little effort to control costs.

RamaY · Post by **RamaY** » 12 Apr 2013 19:30

subhamoy.das wrote:http://www.mineweb.com/mineweb/content/ ... &sn=Detail

Anybody consuming a lot of gold is considered weathly. So should we consider India to be more wealthier than CHINA as it consumer more gold than CHINA ? The answer would be yes unless the CHINESE does not have an apetite for gold. The same way IPHONE sales and $50,000 schools cannot be the barometer of weatlh because INDIAN consumers may not prefer these and puts there money some where else like SAMSUNG GALAXY and local boarding schools.

Prem · Post by **Prem** » 15 Apr 2013 22:29

Indian PSUs turnover likely to touch $1 trillion by 2020
http://www.business-standard.com/articl ... 186_1.html

Public Sector Units (PSUs) in the Indian economy accounted for $383 billion turnover in FY12 with a revenue growth of 11% since 2009.According to a study on Indian PSU Landscape by Zinnov, a market expansion and globalisation advisory firm, Indian PSUs are expected to witness a turnover of more than $1 trillion by 2020 and a large part of the growth will be attributed to investments in modern forms of IT including cloud, big data & mobility.
PSUs are looking at investing into technology to help address the challenges they faced in early years of transition towards establishing a more transparent and accountable organisation, reduce the cost of production and enhance productivity and customer reach. IT spend accounts for about 2% of total PSU revenues – higher than most other verticals,” the report said.According to the report findings, energy and BFSI are the major PSU verticals for IT investments.Further, the report talks about some of the major challenges, which have impacted the growth of the Indian PSU sector.Presently, the major challenge faced by the PSU sector is the ‘Talent Related Challenges’ resulting in lack of performance incentives in terms of recognition and accelerated growth paths for workforce giving rise to productivity challenges.
In addition to this, other challenges like lack of quantitative benchmarks against domestic private companies or global equivalents is affecting the performance of the sector while broad based decision making structure (stakeholders with overlapping responsibilities) is resulting into the lack of accountability.
Praveen Bhadada, Director – Market Expansion, Zinnov said, “India is a hub of 225 PSUs operating across verticals, with 16 of these companies featuring in the global list of top 2,000 companies. With their growing size and dominance, PSUs have started looking at IT to address the global competition. Examples like SBI, which has done one of the largest Core Banking Solution implementation globally or BPCL which has made early investments in Big data make the segment very lucrative for the technology companies.”The sector gives employment to 1.4 million, with 40% of PSU companies operating in the manufacturing secto

RoyG · Post by **RoyG** » 15 Apr 2013 23:53

RamaY wrote:
subhamoy.das wrote:http://www.mineweb.com/mineweb/content/ ... &sn=Detail

Anybody consuming a lot of gold is considered weathly. So should we consider India to be more wealthier than CHINA as it consumer more gold than CHINA ? The answer would be yes unless the CHINESE does not have an apetite for gold. The same way IPHONE sales and $50,000 schools cannot be the barometer of weatlh because INDIAN consumers may not prefer these and puts there money some where else like SAMSUNG GALAXY and local boarding schools.

What are you trying to get at?

Theo_Fidel · Post by **Theo_Fidel** » 16 Apr 2013 02:04

Gold today dropped to $1360 per oz.

Altair · Post by **Altair** » 16 Apr 2013 04:47

Theo_Fidel wrote:Gold today dropped to $1360 per oz.

make it 1351

RoyG · Post by **RoyG** » 16 Apr 2013 07:37

Theo_Fidel wrote:Gold today dropped to $1360 per oz.

Awesome. Gold will be cheaper for india's citizenry. It will go back up in value. As long as central banks continue to inflate their currency the general trend will be gold rising in price.