The Hindujas’ £100 million mansion is ready to move in

Source:BS:S Kalyana Ramanathan /  November 19, 2011, 0:32 IST

The Hindujas’ £100 million mansion is ready to move in. S Kalyana Ramanathan walks by the exclusive address.

Astatue of Baron John Lawrence, governor of Punjab during the Sepoy Mutiny of 1857 who later became viceroy of India, stands guard at the entrance of Carlton House Terrance in central London. The great imperialist would have been surprised, to put it mildly, to find that the new owners of the prime property along the street are an Indian family — the four Hinduja brothers, Srichand, Gopichand, Prakash and Ashok Hinduja, who head a diversified global conglomerate with interests in trading, automobiles, oil, banking, power, defence and a lot else. The Hinduja family traces its origins to Sindh and first made its fortune in Iran during the reign of the Shah. With a net worth of £6 billion, the Hindujas, principally Srichand and Gopichand who live in Britain, made their debut this year on the Sunday Times Rich List, coming in at number nine.

Earlier this month news leaked to the British media that the “first Indian family” of Britain — who had paid nearly £60 million for the palatial mansion in 2006 and then spent another £40 million and five years restoring it and refurbishing it — was ready to move into its new home next month. The Hindujas’ property numbers 13 to 16 of this stretch that is numbered from 11 to 19.

Carlton House Terrace is a stone’s throw from Buckingham Palace, the Queen’s London residence. The houses along this stretch have been the address of several prime ministers, and eminent historical figures like Lord Curzon and Lord Kitchener, besides housing institutions such as the Royal Society and the British Academy. In fact, the Hindujas already had an apartment on the street before they invested in this property.

The four houses that the Hindujas have bought were built in the late 1820s-early 1830s on land previously occupied by Carlton House, the residence of the Prince Regent who became George IV. It’s architect, John Nash (not to be confused with the Nobel laureate and American mathematician), was the one who remodelled Buckingham House into Buckingham Palace, besides coming up with the design for developments along Regent Street and Regent Park. In fact, Carlton House Terrace was part of the Crown Estates — property owned by the British sovereign — and served as its headquarters until 2005. This heritage and grade 1 residential property is now the most exclusive and expensive of its kind in the entire United Kingdom.

By total spend the Hindujas Carlton House Terrace property falls in the same league as the £117 million that another Indian, Laxmi Niwas Mittal, had paid in May 2008 for a house on Kensington Palace Gardens. This was Mittal’s second house on the street, dubbed “billionaire’s row” in the media, the first being a 55,000 sqft mansion he bought in 2004 for £57 million. Mittal, who has been topping Britain’s Rich List for many years now, bought a third house on Kensington Palace Gardens a month later in June 2008 for £70 million.

* * *

The Hindujas’ property is commonly described in media reports as having six floors. But it is plain for all to see and count that there are only four floors to the Hindujas’ palatial new residence, unless there are hidden mezzanine floors without any windows. It would be even more intriguing if the building had two underground floors!

The media is yet to get access to the property, but there is reportedly enough and more space in the 50-room, around 70,000 sqft building for the 30-odd members of the clan. Snippets that have trickled into the British media suggest that the house has been carved out into four separate but inter-connected apartments, which also include a private theatre, a swimming pool, and a glass dining table that can seat 30 people.

From all accounts, the structure has been meticulously restored in a way that has not raised hackles in conservative circles in Britain. Paddy Pugh, the director for London of English Heritage, a semi-government body that champions historic places, told Sunday Times newspaper, “I can’t think of another domestic restoration project on this scale with buildings of this importance. Rarely have we seen such opulence allied to such craftsmanship.” In fact, the property was restored under the watchful eye of English Heritage.

Despite several requests, the Hinduja family, which is media shy at the best of times, has not allowed any mediaperson a peek into the house, let alone let him take pictures of the interiors.

The Hindujas had initially planned to produce a small brochure that would illustrate the transformation of this Victorian property from a state of shabby disrepair to its original stately beauty as conceived by Nash.

The idea of this brochure has apparently now been dropped after they were told that it would attract unnecessary media attention. The Hindujas had, around the beginning of the new millennium, come under a massive media scrutiny over a cash-for-passports scandal and insiders say they still cringe at the thought of being repeatedly referenced in the media over that sordid affair.

Brochure or no brochure, however, the Hindujas will surely get a lot of public attention when they finally move in next door to the Queen.

Three mega infra projects worth Rs 25,000 cr cleared

Source : BS Reporter / New Delhi November 19, 2011, 0:17 IST


The government on Friday gave regulatory clearances to three mega infrastructure projects involving an investment of Rs 25,000 crore. These are the first among a few projects the government has shortlisted to be put on a fast track.


The projects cleared on Friday were of Hinduja National Power Corporation Ltd in Vishakhapatnam, L&T Metro Rail (Hyderabad) Ltd, and Simhapuri Expressways Ltd in Andhra Pradesh. These had been held up because of regulatory bottlenecks.


“The government should take steps to see the clearance of projects is fast-tracked… The clearances have been given for projects that will now be implemented. It is expected clearances for the rest of the projects will be given before the next meeting,” department of financial services secretary D K Mittal told reporters after a meeting chaired by finance minister Pranab Mukherjee to review the projects.


The first review meeting was taken by the finance minister on October 18, in which 12 projects worth Rs 1.7 lakh crore were discussed. At on Friday’s meeting, 12 more projects worth Rs 37,000 crore with investments in the range of Rs 1,500-5,000 crore were discussed. The government will take up more projects worth Rs 1,000-1,500 crore in the next review meeting on December 18.


“Bank sanction is already available in these projects, but there were some other issues (in getting various regulatory clearances). The issue came up before the finance minister as these are very important projects. We want to clear them because the money of our financial institutions is invested in these projects. If they don’t take off, that will give rise to non-performing assets,” Mittal said.


Mittal said the Foreign Investment Promotion Board had approved the Hinduja power project envisaging an investment of about Rs 6,000 crore, though L&T’s metro project (about Rs 16,000 crore) was still facing some legal obstacles. The highway project in Andhra Pradesh (about Rs 2,550 crore) was also held up over the environment clearance.


The government has started reviewing large projects after a meeting between Mukherjee and the industry on August 1, when industrialists expressed concerns. The finance minister is reviewing implementation of infrastructure projects valued Rs 100 crore and more.
Commerce and industry minister Anand Sharma, environment minister Jayanthi Natarajan and power minister Sushilkumar Shinde also attended the review meeting

What made Niira Radia shut India’s largest public relations group?

Source : BS :Surajeet Das Gupta / New Delhi November 12, 2011, 0:13 IST






On October 18, in the morning, Niira Radia called her top executives to her Taj Wellington Mews residence in Mumbai. As they trooped into a room, the central attraction of which is a large Ganesha, most of them sensed she wanted to get out of the daily grind of business: public relations agencies Vaishnavi and Nucom, and government affairs consultancy Noesis. She had worked round the clock for almost ten years, gone through ups and downs, and built a business of almost Rs 100 crore. 


So, maybe she wanted to take life easy. What she announced left some of them very surprised: she had decided to shut the business on November 1, the day of Vaishnavi’s 10th anniversary and a day after her contract with Tata Group would have expired.


She wouldn’t leave her people in the lurch, she said. While many would be absorbed in Reliance Industries, the bread-and-butter customer of Nucom, those left without a job would get three months’ salary. “We were signing accounts as late as the first week of October when we took on board a Titan Industries subsidiary. 


We had readied contracts for some non-Tata companies which would start from November,” says a senior Vaishnavi executive.


Radia’s decision to close shop was as dramatic as her entry into the country’s close-knit world of public relations. A non-resident Indian from UK, who had closed her travel agency and had started with zilch experience of media management, she made Vaishnavi the country’s largest public relations agency — nearly double the size of its nearest competitor. 


And in the ten years she handled premium accounts like the Tata group and Reliance Industries, she did not hesitate to take on media houses, industrialists , politicians, and of course, Anil Ambani head on. She also changed the norms of the business. 


Her senior executives travelled business class, stayed at luxury hotels and got paid higher than rivals. She would quote sometimes over 50 per cent higher than her rivals and still grab the account. In her heydays, Radia even charged over Rs 10 lakh a month when most others would be elated at half the amount. From public relations, she expanded into corporate affairs and even handled corporate social responsibility for those who were willing to pay.


* * *


So why did she suddenly close? Detractors say the Radia tapes leaked last year dented her image in a business where reputation matters more than anything else. Her conversations with journalists, bureaucrats, businessmen and ministers created the image of an all-powerful lobbyist. What stood out in the conversations was her anxiety to get A Raja, who had got fully embroiled in the 2G spectrum controversy by now, the telecom ministry after the United Progressive Alliance came back to power in 2009. (Ratan Tata would later admit that he had a “chemistry problem” with the other candidate for the post, Dayanidhi Maran.) Raja indeed got the job. Journalists dismissed their conversations with Radia as casual banter to extract information from her. Her role in the controversy was also examined by the Central Bureau of Investigation and the Enforcement Directorate (for violation of foreign exchange laws). Both the agencies gave her a clean chit, but the damage had been done. “What matters is the perception, not the reality. Rajat Gupta might not be found guilty by the Securities Exchange Commission (for passing on insider information to Raj Rajaratnam of Galleon) but which company will re-induct him on its board?” asks a public relations veteran.


The controversy impacted her business as well; some of her customers who left included multinational corporations like Lavazza and Schneider Electric, apart from the Confederation of Indian Industry (its former director general, Tarun Das, got into a controversy because of his conversation with Radia). All told, she lost 10-15 accounts after the controversy broke out, say insiders who worked with her. But that would not have made a serious dent because the Tata group and Reliance Industries, which contributed over 80 per cent to her business, stood by her. The Tata contract was coming up for renewal on October 31. Insiders say that the contract had one key clause: Radia should run the business and drive the account personally for the next five years. But Radia was clear that she did not want to be involved in running the account personally anymore, though insiders say she was not averse to her team continuing the business while she stayed invested. The end result could be only one: close down.


Many would argue that she could have easily sold off the agency; after all, just a few months before the tapes controversy, she had talked to private equity funds and an international public relations agency to sell some stake. And there were many unsolicited partnership offers. But Vaishnavi would not have got the valuation without the Tata mandate. Also, any buyer would have tied her in the business for some years as a precondition for sale, which was not acceptable to her. The controversy had reduced her appetite for a fight. “For many years a few vested interests have been trying to harm Vaishnavi and me personally. Till the recent past I would fight back, survive and probably react. But today I want to give them their victory and let them savour it,” she said in an email to her employees.


But was there some disconnection between the Tata group and Vaishnavi after the tapes were made public? Radia declined to talk for this article. But there are some pointers. Last year, a few weeks after the tapes had become public, a team of senior Tata executives went to media houses to get their assessment of how the Tata name had been dented. There was nobody from Vaishnavi in that team. Subsequently, Ratan Tata said in a television interview that while there was no conflict between his group and Mukesh Ambani’s Reliance Industries at the moment, there could be one in the future: telecom. So, Radia has to take a call. “Tata defended his group but he never defended the conversations Radia had, many of which were industry issues,” says a senior government official. “Radia was not working for us alone,” Tata told the Public Accounts Committee of Parliament. “She has been a supporter of Raja in many ways.” Thus, in her email to her employees, Radia mentioned that Reliance Industries would absorb 30 of them; there was no such commitment from the Tata group, though some insiders say that it may absorb some members of her team. Radia’s contract with Reliance Industries, incidentally, had two more years left.


* * *


It all started in the late 1990s when, after briefly helping Subrato Roy with Sahara Airlines, Radia set up Crownmart, an aviation consultancy, which did business with Singapore Airlines. Around the same time the government wanted to sell 40 per cent in Air India. Singapore Airlines decided to bid for the stake with the Tata group. In order to work out the details of the partnership, it sent Radia to meet Tata. She was given 20 minutes but the meeting went on for two hours. Tata has never spelt out what he liked in her, but Radia talks confidently and comes across as well-informed and energetic. The Air India divestment never happened. But Tata, impressed by her knowledge of the aviation business, offered her to take up the public relations mandate of his group.


Before she came in, the Tata group had over 14 public relations agencies without any clear direction from the top. Tata now consolidated the work and gave it to Radia. This was also the time when he was looking at consolidating the group’s identity with a common logo and began to go global with a string of high-ticket acquisitions (Tetley, the trucks business of Daewoo, Corus and Jaguar & Land Rover). Just six months into the job, Radia was called to douse the fires caused by the ouster of Tata Finance managing director Dilip Pendse — considered close to Tata — for alleged misappropriation of funds. It was while handling the telecom business of Tata that she realised the importance of building bridges with the government and the bureaucracy, say insiders. The Tata group had a public spat with late Pramod Mahajan, the telecom minister from 2001 to 2003, when he attacked VSNL (which the Tata group had bought from the government) for bankrolling the expansion of Tata Teleservices. Radia played a key role in convincing Mahajan that there was synergy amongst the two companies as Tata Teleservices’ international telephony would be handled by VSNL. Mahajan cleared the investment. So much did Tata come to trust her that she personally delivered his handwritten letter to DMK supremo M Karunanidhi in which he made a case for Raja’s reinstatement in 2009!


Pradeep Baijal, a former chairman of the Telecom Regulatory Authority of India and her partner in Noesis, introduced Radia to Mukesh Ambani, insiders say. Radia not only managed to get the Reliance Industries account but also set up a new company (Nucom) for it; she put together a 40-member team in no time and in three weeks prepared a clear strategy on how to handle the battle with Anil Ambani over gas from the Reliance Industries fields in the Krishna-Godavari basin.
***
It isn’t that Radia succeeded in all her businesses and mandates. Despite her best efforts, she couldn’t convince Mamata Banerjee to alter her stand on Singur, nor was she able to get Tata to meet the enigmatic leader. Rivals say she depended too much on the Left government to push the deal through. Her friends say Singur was a success because public sympathy eventually turned in favour of Tata. Noesis too wasn’t a grand success. While she hired retired bureaucrats, they did not get any business and depended on Vaishnavi for fresh mandates. She also flirted with advertising. And her attempt to get into financial public relations, in collaboration with global agency Financial Dynamics, didn’t really take off.


Radia’s biggest failure was to give wings to her dreams of owning an airline, thanks to fierce opposition within the government as well as from existing airlines. Radia promoted Magic Air which was to be a low-cost carrier but the government (Praful Patel was the aviation minister) stopped her because foreign investment was not allowed in the sector. She also made an attempt to buy Sahara Airlines with a consortium of investors but found the price tag forbidding. “I think there was always this fear from other airlines that she would rope in the Tata group and get in big money. And her rivals would not like that to happen,” says an aviation insider.


What next? Will she go back to London as many of her detractors believe? Those who know her say she will continue to work as a consultant and will stay on in India. She wants to help companies keen to enter emerging markets, especially in Africa where she was born. The education and healthcare spaces also interest her; she might be an investor or push it personally. She also hopes to support the businesses in which her three sons would like to go. Would she have just closed down if the tape controversy did not happen? Most probably no, say those who know her well. They also say she would not have tied herself to her biggest account — the Tata group — anymore.

Banking...4 Q

Source :Prashant Joshi :BS :November 18, 2011, 0:25 IST


1.    My uncle and aunt had taken a joint home loan and have been servicing it for 15 years. But, they passed away recently. There is nobody who can service the loan. I am interested in their property and am willing to service it. Is this possible? If yes, what is the procedure?


You will have to get in touch with the bank to find the options available. In such cases, banks generally proceed on the basis of a legally valid will/succession certificate or look to the legal heir. If you are their successor, approach the bank (with other successors, if any) and express willingness to service the loan. Your ability to take it over would be determined by the bank, based on your financial capability and credit history


2.   While shopping for a home loan 10 days before, a leading private sector bank said it would charge two per cent above the base rate. When I went back to apply, it said I would have to pay 2.5 per cent over the base rate, without explaining. 
What could be the probable reason?


Interest rates offered by banks depend on the prevailing cost of funds (interest rates) and the promotional campaigns from time to time, which have a certain validity period. The change in cost of funds or expiry of a particular promotion may be the reason for increase in the rates quoted to you. However, do note that the actual rate applicable may vary, based on the loan size, legal and title checks of your property and financial and credit history checks.


3.  Does Cibil also take into account repayment of personal and education loans when keeping a record of one’s credit history?


The repayment track record for any credit facility, be it a credit card, home, personal or education loan, etc., is reported to Cibil or other credit bureaus by the participating banks.


4.    I know a bank account holder gets insurance of Rs 1 lakh for the money in the account. Can one take additional insurance for this?


All commercial banks, including branches of foreign banks functioning in India, local area and regional rural banks are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). DICGC covers each depositor up to a maximum of Rs 1 lakh held by him in the same right and capacity. Under this arrangement, no additional insurance cover is available.


The writer is managing director & head, private & business clients (India), Deutsche Bank. The views expressed are his own.
 
   

Reserve Bank kills India growth story

source :M D Nalapat: Pakistan observer::Friday, November 18, 2011


In 1997, then Prime Minister of China Zhu Rongji took note of the crisis in several Asian economies and launched a full scope reform of State-Owned Enterprises (SOEs) in China. Several of the worst performers were shut down, and others merged together or told to confine themselves to their core competences. Zhu’s slogan was “Grasp the big and ignore the small”. As a consequence, several smaller state enterprises were shut down. However, industrial reforms ensured that the slack caused by this was more than made up by private units, which were given much greater freedom than previously. Certainly the 1997-99 SOE reform was a very painful process, and it is estimated that about 40 million lost their livelihoods directly or indirectly as a consequence of the measures adopted by Zhu. However, several of these got new jobs in the next few years, as the Chinese industrial economy, both public and private, began to expand throughout the first decade of the 21st century. Today, several SOEs in China have emerged as some of the largest companies in the world.


The growth of Chinese companies has become a nightmare for companies in Europe, who are unable to compete on terms of price. Several markets that at one time were the exclusive preserve of European companies have now switched to Chinese imports. Even more troubling, during 2003-5,several Indian companies began to emerge as global competitors. Indeed, they were even able to buy out several companies in Europe, including huge enterprises such as Arcelor Steel, Jaguar-Land Rover and Corus. All of a sudden, there was fear in company boardrooms across Europe at this new competitor from Asia. Would even more of their global markets get lost because of the Indian private sector?. It was exactly at this time of gathering trouble for European businesses that the RBI, the Reserve Bank of India (the central bank of the country), began to put in place policies that were certain to


negatively affect the Indian growth story. Then RBI Governor Yaga Reddy began raising bank interest rates on loans drastically, besides other steps designed to sharply reduce loans to industry and commerce. From the close of 2005 onwards, Reddy was determined to starve the private sector in India of money from commercial banks, and to see that they paid very high interest rates on the loans taken by them. In the process, he reversed the policy of low interest rates that had helped ensure a high growth rate (and moderate inflation) during the previous five years. Although the RBI is supposed to be an independent organisation, yet the government takes care to appoint only career civil servants as Governors, thereby ensuring that they will follow the habit of a lifetime and listen to commands (passed off as “informal requests”) from the Union Finance Ministry.


Despite increasing protests from industrial groups in India, who began losing out in international markets because of the high bank interest rates and the drying up of credit, the RBI continued its suicidal policy. Clearly, the approach of the central bank met with approval from the Chairperson of the United Progressive Alliance government, Sonia Gandhi, despite the fact that it gave an unfair advantage to European (and Chinese) companies competing in the Indian market. It is noteworthy that Sonia Gandhi is very popular in both China and the EU, being the subject of frequent and flattering media reports in both locations. While Manmohan Singh is the Prime Minister, the reality is that the ministers in his team report to Sonia Gandhi. In a way, he can be compared to President Ahmedinejad of Iran, whose ministers report to Supreme Leader Ali Khamenei rather than to him. Being an expert economist, Manmohan Singh understood the harm that the policy of restrictive credit and high interest rates was doing to the Indian economy, yet he was forced to remain a silent bystander while Finance Minister P Chidambaram ( who is much closer to Sonia Gandhi and her family than is Manmohan Singh) orchestrated the RBI policies which began to apply the brakes on economic growth in India.


Naturally, Yaga Reddy became a hero in Europe, including in the UK, because of the benefits that his policy was showering on industry in that continent. By the time he retired in 2008, the once-feared Indian private sector had diminished into a shadow of is previous self, wounded by the policies of its own government. The Finance Ministry and the RBI were fully aware that rising inflation (which they gave as the reason for higher and higher interest rates) was not at all lowered by higher interest rates. Instead, the higher rates fuelled more inflation, by adding to the costs of doing business. This increase was passed on to the consumer, thereby raising prices still more. The increase was promptly used by the RBI to justify still higher interest rates and sharper cutbacks in bank lending, a cycle of disaster that began picking up steam just when the international financial crisis hit in 2008.


Although the RBI has claimed credit for the relatively better health of Indian banks as compared to those in the US or the EU, the reality is that the lack of problems with Home Lending by Indian banks is because there is a sizeable “black money”( ie undeclared) component in the value shown of houses that are mortgaged to the banks for a loan. This underestimation of the money value of houses in India provides a cushion for the banks in case of a fall in house prices, a factor that is not present in economies where 100% of the value of a dwelling is declared to a bank. That India weathered the 2008 crisis better than several other major economies is a tribute to the resilience of the Indian people and to its entrepreneurial community, not to the policies of a government that has been working overtime since 2005 to slow the indian economy down.


In order to ensure the continuation of Finance Ministry control over the RBI, another career civil servant was made Goverrnor of the RBI in 2008,after Reddy finally retired. Duvvuri Subbarao was a former Finance Secretary, used to taking orders from the Union Finance Minister. He has continued, with still greater viciousness, the policy of higher and higher interest rates and reduction in the flow of credit. To the delight of those VVIPs who want to ensure that Europe and China do not need to feel the pain of competition from India, Subbarao has increased interest rates by as much as thirteen times so far, all in the name of fighting inflation. He has ignored the fact that prices have risen, not fallen, each time he has raised interest rates. After all, he has to fulfill the wishes of those who seek to derail the India growth story. He has to obey those who want to see that Indian industry never emerges as a serios competitor to European and Chinese companies, a job he is carrying out so well that his term in office has been extended from 2011 to 2013.By that time, Reserve Bank of India Governor Subbarao would have succeeded in finishing off several thousand enterprises in India, which are being closed down each week because of the unbearable burden of high interest rates.


The India that was roaring upwards in 2003-2005 is now going downhill, writhing in agony. The Indian growth story has been replaced by steep falls in Manufacturing and even in Services. The only thing growing exponentially is government expenditure. The RBI is merrily printing currency notes to finance the wasteful expenditure of a government that spends more in a single year than others ever did in five. Another “achievement” of Subbarao has been the steady fall in the value of the Indian riupee, which has gone down by 20% in just a year, another factor causing higher rates of inflation. Of course, Subbarao’s political masters do not bother about the falling rupee, because he knows that VVIPs are happy that their Swiss bank deposits get more in rupee terms each time the currency in India gets reduced in value. If the fence begins to eat the crops, what hope is left? When the RBI itself becomes an engine of economic stagnation, India’s once-bright future seems to be darkening.


—The writer is Vice-Chair, Manipal Advanced Research Group, UNESCO Peace Chair & Professor of Geopolitics, Manipal University, Haryana State, India.