I really believe he is looking for concessions from the government/s to invest
in India. In the business world, there is nothing wrong with that. My only
comment is it would be "transparent" (that he seems to like) if he said it
openly.
Also, if he wants to invest in USA or Europe, there is nothing stopping him.
Tatas and Mittals have done that already.
===============================================================================
India tycoon's got tons of cash, nowhere to invest
Indian billionaire with $3.8 billion pile of cash can't find worthy domestic
investmentBy Erika Kinetz, AP Business Writer | AP – Tue, Dec 27, 2011 10:12 AM
EST
Related Content
*
In this Monday, Dec. 19, 2011 photo, billionaire Indian tycoon Ajay Piramal
speaks during an interview with the Associated Press at his office in Mumbai,
India. In May last year, Piramal's healthcare business sold its generic drug
operations to U.S. pharmaceutical giant Abbott Laboratories for $3.8 billion.
Piramal was eager to set that cash pile to work and wanted to expand one of his
chemical plants, but was told it would take five years. With the country mired
in corruption, bureaucratic red tape and unclear and changing government
policies, many of the men who made their billions here are saying maybe it's
time to quit India. It's got to be easier to do business elsewhere. (AP
Photo/Rafiq Maqbool)
MUMBAI, India (AP) -- Ajay Piramal is sitting on a mountain of cash. Yet the
billionaire Indian tycoon, working in one of the world's fastest growing
economies, is struggling to figure out what to do with the money.
The problem isn't opportunity, he said. It's India.
"Every large investment, there was no transparency," Piramal said.
His dilemma is a worrying sign for India. With the country mired in corruption,
bureaucratic red tape and unclear and changing government policies, many of the
men who made their billions here are saying maybe it's time to quit India. It's
got to be easier to do business elsewhere.
In May last year, Piramal's healthcare business sold its generic drug
operations to U.S. pharmaceutical giant Abbott Laboratories for $3.8 billion.
Piramal, a tall big man in a country that still measures prosperity by girth,
was eager to set that cash pile to work. He wanted to expand one of his
chemical plants, but was told it would take five years.
"The same plant could be set up in China in two years," he said. "I love India,
but my customer is not going to wait."
India, still a beacon of relatively fast growth despite a troubled world
economy, should be a magnet for capital. Instead, since the beginning of 2010,
the amount that Indians have invested in businesses overseas has exceeded the
amount foreigners are investing in India, according to central bank figures.
In part this reflects the confidence and aptitude of India's maturing companies
and the current malaise in the global economy and financial markets. But it
also reflects deep problems at home. India's big coporations may be cash rich
but the failure to invest that money domestically is bad news for a developing
country that needs capital to build the roads, power plants and food warehouses
that could help lift hundreds of millions out of dire poverty.
The frustration of India's business elite with corruption, political paralysis,
log-jammed approvals, regulatory flip-flops, lack of access to natural
resources and land acquisition battles — to pick a few of the top complaints —
has reached a pitch perhaps not heard since India began liberalizing its
economy in the early 1990s.
"If you are an honest businessman in India, it's very difficult to start up
anything," said Jamshyd Godrej, chairman of manufacturing giant Godrej & Boyce.
"Companies are going to operate where they see the best opportunities and
efficiency for their capital."
Increasingly, that's outside India.
In 2008, foreigners poured roughly twice as much direct investment into India —
$33 billion — as Indians plowed into businesses overseas. By 2010, that had
reversed: Indians invested $40 billion abroad — twice as much as foreigners
invested in India — a trend that's continued this year.
There is another, unspoken element to all the complaints. To the extent that
business in India ran on corruption, some of the old, dirty ways of doing
things are being disrupted, freezing India's already glacial bureaucracy,
business leaders say.
Scandals in the staging of the Commonwealth Games, the pilfering of homes meant
for war widows and the irregular auction of cellphone spectrum that cost the
country billions has sent parliamentarians and even a Cabinet minister to
prison.
With Indians tiring of the incessant graft, tens of thousands of middle-class
protesters poured into the streets and pushed an anti-corruption bill onto the
floor of Parliament.
Steelmakers can't get enough iron ore because a massive mining scandal in the
southern state of Karnataka prompted a court to order the closure of illicit
mines that account for a fifth of iron ore production in the country.
The bureaucrats — even the honest ones — are reportedly so scared of being
punished they are refusing to make the decisions needed to make the country
run.
Piramal is not unpatriotic. Each room in his executive suite is named after an
Indian epic hero: Arjuna, the most pure; Dhananjay, acquirer and master of
wealth. There's a quote from the Upanishads scriptures on the wall.
His office sits in a one million square foot office park in Mumbai his family
built. The buildings around him — white with blue glass that flashes back the
unforgiving sun — bear his own name in large black letters: Piramal Towers.
Piramal had the will and the means to build power plants and roads.
Instead, his Piramal Group's largest investment to date has been in one of the
office park's tenants: the Indian subsidiary of the British telecom giant
Vodafone Plc.
Last September, when he got the first payout, of $2.2 billion, from Abbott, the
phone started ringing.
"Because people knew we had money, we had so many people approaching us for
projects in the infrastructure sector," he said. "These people had no
experience and no knowledge and no track record of having built a business in
any area. And yet they were coming to us saying we have licenses and approvals.
That just didn't sound right or smell right."
Each day, they paraded through his office: The investment banker who decided to
build a 500 megawatt power plant, the coal trader assured of a government coal
allocation, small-time miners with pretty presentations promising land,
licenses and financing.
"They'd name politicians from the center and the state who had it all tied up
for them," he said. "It didn't sound right. Obviously there were things going
on in the system."
Road and port projects weren't much better, he said.
Piramal also looked at investing in engineering and infrastructure services
companies, but couldn't make sense of their books.
"We couldn't find anything," he said. "People get greedy. In their desire to
get good valuations they resort to, if I can say, creative accounting."
Today, India's infrastructure companies are known as great wealth destroyers.
"Infrastructure investment has become untouchable, a sure way of losing money,"
said Jagannadham Thunuguntla, head of research at SMC Global Securities. He
calculates that four of India's top infrastructure companies — GMR
Infrastructure, GVK Power and Infrastructure, Lanco Infratech and Punj Lloyd —
have lost over 80 percent of their value since 2007. A fifth, Larson & Toubro
is down 50 percent.
Piramal may have dodged a bullet, but shareholders in Piramal Healthcare aren't
happy. Despite a $600 million special dividend and share buyback, the share
price has sagged since the Abbott deal was announced on May 21 last year.
They'd like to see the Abbott cash productively deployed. Instead, much of it
is sitting in fixed deposit accounts.
Piramal said he really does want to run a pharmaceutical company and be the
first Indian company to discover a world-class drug — despite his dabbling in
telecom, financial services and real estate financing. It's just that pharma
can't absorb all his cash. He plans to sell the 5.5 percent stake he picked up
in Vodafone Essar for $640 million in a few years, when Vodafone Essar issues
shares in an initial public offering, he said.
He has also launched Piramal Capital, to make real estate and infrastructure
loans, and spent about $50 million to acquire IndiaReit, a real estate
investment company.
Meanwhile, his thoughts have turned to Boston, where he set up IndUS Growth
Partners with a professor from Harvard Business School to look for buying
opportunities in the U.S., in security, financial services and biotechnology.
And he said he's still planning to spend over a billion dollars on
biotechnology acquisitions in North America and Europe.
"India was going more towards capitalism than socialism," Piramal said. "I
think we're going back. Capitalism went to too much excess. Corruption levels
went to the extreme."
He said he'll announce his first overseas acquisition by March.
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