Subrata Roy, the head honcho of the Sahara Group, did make a point with his taped address to the nation and interview on Friday. But some of his statements raised more questions than they answered. For instance, the Sahara Chief categorically denied any succession to his business empire. The control will be put in a trust that cannot be broken in 200 years. In a written reply, its communication department told us, ‘‘There is no division of business or anything in the Pariwar and neither there is any succession plan in the pipeline, these are mere baseless speculations.’’ This obviously means that a report planted in the same favoured newspaper a couple of weeks ago about succession was false. Roy talked about having drawn up investment plans of Rs 200,000 crore. Yet, our request for an annual report of its airline company (one of its most capital intensive businesses) drew a blank. The group website has no details on its finances. Its print advertisements talked about setting up 214 townships, but there is no mention of actual investment numbers on the website. Yet, Roy claims that Sahara is now bigger than the Reliance group (presumably each half of the soon-to-be-split empire). Does anybody have annual reports of its most capital-intensive companies?
HSBC home loans
It is ironical that on the very day that the Reserve Bank Governor expressed concern at the excesses by banks in credit card and housing loan collections, a group of cardholders were going on a rampage at Standard Chartered Bank. While service standards are slipping, the sales strategies for hawking loans border on entrapment. Consider this offer from HSBC: ‘‘Remember the business development plan, waiting for the right financial touch? Or the Sharmas next door, compromising nothing for their only daughter’s wedding?’’ HSBC want parents to borrow against their property (which is often their only old age security) to splurge on a wedding. Apart from the lure of longer repayment periods for a loan up to Rs 1 crore, the bank offers unspecified ‘‘attractive’’ rates, and throws in sweeteners such as a ‘‘free’’ debit card, ‘‘unlimited’’ transactions. As a debit card depletes ones bank account instantly, and no bank charges more than Rs 100 (which is also controversial) for such a card, what is the point that the bank is making? What the central bank needs to worry about is the offer of 65 per cent of the existing property value as a loan, which comes in the middle of a property boom. If it is a bubble in some parts, and banks initiate tough recovery action when it bursts, we may see a customer backlash that banks have not had to deal with so far.
The Ajay Piramal Group, which got a contract to convert an open parking lot in Mumbai’s crowded Nariman Point into a modern multi-storied car park, was allowed to construct a Shopping Mall and multiplex cinema (CR2) to subsidise it. But months after its opening, the modern car parking facility has few takers. Firstly, it remains much too expensive, after parking fees were recently halved from a high Rs 30 for the first hour (it remains at Rs 10 for every subsequent hour) and even less on the weekend. Even after the reduction, the first level of parking (P1) was barely more than half full on a busy Tuesday afternoon, and the remaining seven levels were empty. Employees told me that the situation is the same on all weekdays. More interestingly, the top and side clearance on the driveway is so tight that the security guards turn away SUVs for fear of damaging the vehicles.
Nariman Point, once the most powerful business locations in India, is clogged with cars, double and treble parked. But this does not bother the Municipal Corporation or even the MLAs who congregate at the Vidhan Bhavan next door. Clearly because, people’s problems are never a priority so long as the police and the municipal staff collect money (haftas) from the agents who have been granted contracts to collect paring fees on the roadside. To add insult to injury, the Corporation, which has not asked the Piramals to reduce rates, or built any new parking facilities, plans double-parking charges all over Mumbai. If the bankrupt government and Corporation keep bleeding people with increasing tariffs and duties, with no improvement in public facilities, it can only lead India’s commercial capital go to seed.
The buzz is that all is not well between the big Babus at the finance ministry. Inter-personal relationships have apparently deteriorated to the point that it is even affecting official communication between top bureaucrats and the ‘outsider’ in the finance minister’s (FM) team. A few weeks ago we reported that this outsider would head for the World Bank when the post of Executive Director falls vacant. The FM has apparently scuttled the move and plans to recommend someone else to the coveted assignment. So, the man, who used to be known for his ability to bag any job that he chose, is now planning a return to Mumbai to his old banking assignment.