investmnts

1. India tycoon's got tons of cash, nowhere to invest
Indian billionaire with $3.8 billion pile of cash can't find worthy domestic investment
By Erika Kinetz, AP Business Writer | AP – Tue, Dec 27, 2011 8:42 PM IST
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

2. 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.

3. 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.

4. "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.

5. 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