Tag: Hotel Leela

Stop corporate debt restructuring

There is a conspiracy of silence about money lost to the people of India due to corporate debt restructuring (CDR). TV channels don’t talk about CDR. Companies borrow crores of rupees from banks and financial institutions and when they say they are unable to pay the loan they are referred to CDR cell. Over the years more and more companies have defaulted on payments.

In F. Y. 2009-10, 256 companies defaulted on payment of 1,15,990 crores rupees, 215 of them got CDR for 1,04,299 crores rupees. In F. Y. 2010-11, 305 companies defaulted on payment of 1,41,158 crores rupees, 242 of them got CDR for 1,10,914 crores rupees. In F. Y. 2011-12, 389 companies defaulted on payment of 2,05,692 crores rupees, 286 of them got CDR for 1,50,286 crores rupees. CDR cell rejected requests of 56 companies for CDR of 19,589 crores rupees and decisions on requests of 47 companies for CDR of 35,878 crores rupees are pending. For three years CDR amount is 3,65,438 crore rupees which may go up to 4,01,316 crores rupees.

If a man borrows a few lakh rupees as housing loan or car loan and defaults on payment he will lose his flat or car. Companies that borrow crores of rupees and default do not lose anything. On the contrary, under CDR they get extension of time for payment and cut in interest rates. It is profitable to default on payment and ask for CDR then to pay as per schedule. GTL Group wants CDR for 17,000 crore rupees. Hindustan Construction Company wants CDR for 8,300 crore rupees. Bharati Shipyard wants CDR for 5,600 crore rupees. Hotel Leela wants CDR for 4,300 crore rupees. No wonder the number of defaulters is increasing.

India’s economy is said to be booming while EU economy is faltering. We hear reports of India’s growth rate. How is that Indian companies are making losses?

CDR cell decides cases when many banks and FIs are involved and the amount is not less than 10 crore rupees. When 75% banks/FIs by value and 60% by number approve CDR is granted and the decision is binding on the 25% banks/FIs by value and 40% by number which is unfair.

Many times under CDR, loan is converted to shares for more than market value. Later the value of shares goes down further. Kingfisher’s loan from SBI was converted into shares at Rs.64.48 per share when the market value was Rs.48 per share or less and now the value is around Rs.16 per share.

What IAC members have to say about CDR? CDR is robbing the poor and paying to the rich. Many banks/FIs belong to the people of India. India’s 121 crore people are robbed so that those who can borrow 10 crore rupees or above become more rich.

What Left Front MPs have to say about CDR? Congress, BJP, BSP, SP, TMC, DMK, JD (U) and MPs belonging to many other parties may have corporate connections and may not raise the issue of CDR but Left Front MPs are not supposed to have any corporate connection. Left Front MPs have not opposed CDR.

Many industrialists have become MPs. Some of them got elected to Lok Sabha but many of them have become Rajya Sabha members. Recently Election Commission countermanded a Rajya Sabha election because 2.15 crore rupees were found in a car. That amount was supposed to be for MLAs to vote for an independent candidate. What about industrialists who pay money to party presidents and become party candidates and Rajya Sabha members? Will Election Commission countermand a Rajya Sabha election if it comes to know that an industrialist got a party ticket by paying 2 crore rupees to a party president?

What Baba Ramdev has to say about CDR? He wants to bring black money stashed away outside India but what about the loot within the country?

CDR cell should be disbanded. Defaulters should approach banks/FIs individually and each bank/FI should decide for itself. If extension is granted it should be for a short period not exceeding six months and interest rate should go up. After that there should be no extension. Property of defaulters should be confiscated.

Abolish Service Tax

Twenty years ago there was no Service Tax. Constitution was amended and Service Tax was brought in. It began at 5% on some items. Later it went up to 8%, 10% and 12%. After the depression of 2008 it was brought down to 10%. Now it is back to 12%. More items came under Service Tax. Now all items except 17 in the negative list are covered by Service Tax. All Indians pay Service Tax directly or indirectly. Most Indians own mobile phones and they pay Service Tax when they recharge or pay bills.

The government should abolish Service Tax. The loss of revenue can be recovered in various ways.

1) Abolish NREGA, NRHM, JNNURM and various schemes named after Nehru-Gandhi family. They are full of corruption. Murders have taken place to prevent the corrupt being exposed.

2) Attach properties of defaulters to public sector banks. Thousands of crores of rupees have been lost. SBI had to be recapitalised to prevent from bankruptcy. Now 15,890 crore rupees are set apart for recapitalization of NABARD, SBI, National Housing Bank and other banks. Companies like Essar, Kingfisher (7,000 crores), Hotel Leela (4,300 crores) and Paramount (500 crores) borrow huge amounts and when they do not repay, people of India are made to pay more taxes.

3) Auction Rashtrapathi Bhavan in Delhi as whole or in parts. That should get 1,00,000 crore rupees or more. Rashtrapathi Bhavan in Simla and Rashtrapathi Nilayam in Hyderabad can also be auctioned. The President of India need not live in imperial splendour.

4) Auction various government properties. It is not the job of government to conduct film festivals. The building in Goa where film festivals are held can be auctioned. There is no reason why taxpayers should finance Indian Olympic Association. IOA is not accountable to the government. Jawaharlal Nehru Stadium, Talkatora Stadium, Shivaji Stadium and other stadia and sports complexes can be auctioned. Similarly various centres for promotion of art, culture, music etc. should be auctioned.

5) Stop building new universities. Taxpayers’ money should not be spent on new universities. Existing universities should finance themselves from fees.

6) National awards should not carry money. Some awards carry money up to one crore rupees.

7) Avoid unnecessary expenditure. Money should not be spent to host FIFA Under-17 World Cup. Bid to host it should be withdrawn.

8) Saturday should be a working day for central government employees. Benefits like leave travel concession should be withdrawn.

These are some suggestions. NGOs who protest on various issues can protest against Service Tax. They can have chain hunger strike. They will have support all over the country.

SBI and Hotel Leela

SBI did not get back the loan it gave to Kingfisher. Kingfisher was bailed out by converting the loan into shares. Now comes the news that SBI has referred 4,300 crore rupees loan taken by Hotel Leela to corporate debt restructuring (CDR). It is said that Hotel Leela has not defaulted. It wants interest rate reduced from 14% to 11% and longer schedule for payment. Perhaps the owner of Hotel Leela thinks he can default and get away just like Vijay Mallya of Kingfisher did. Hotel Leela perhaps wants the same treatment. Who is next in line for default? How is that SBI gave thousands of crores of rupees as loan and unable to recover them? Pilots of Air India and Jet Airways are likely to go on strike. Will SBI and other public sector banks bail out every airline, hotel, tea estate and so on? SBI and other public sector banks are not private property of Manmohan Singh, Veerappa Moily, Congress or UPA.

What is going on? Where are people who speak against loan write-offs, freebies and subsidies? Where are economists who speak of fiscal deficit?

There was no discussion on TV channels about CDR to Leela. What are they waiting for? Will they discuss after Leela defaults and asks for another loan?

SBI should stop CDR. Those who borrow must pay as per agreement. Interest should not be reduced. Payment period should not be extended. Hotel Leela must have pledged something as collateral for loan. SBI should attach the collateral.