January 18, 2017

Dark regime

I share below an interview from Scroll.in which I found insightful. I wish universal brightness to envelop all those people in the country's governance system today whose hearts are filled with darkness currently as a result of which they indulge in politics of revenge.

I dream of a India where ALL honesty and ethics are rewarded.

Interview: Arvind Kejriwal's principal secretary on how he was hounded, humiliated and maligned
'I can speak out,' says Rajendra Kumar, 'but there are millions who are framed out of vengeance, who are framed to fix them politically.'

Ajaj Ashraf

Till the time he was arrested last year for alleged corruption, Rajendra Kumar had been the Principal Secretary to Delhi's Chief Minister, Arvind Kejriwal. In this 90-minute interview to Scroll.in, Kumar bares his heart. He speaks of his run-in with former Lieutenant Governor Najeeb Jung, the ominous messages that would be sent to him, the raid the Central Bureau of Investigation conducted on his office and residence, the people he claims were beaten to make them testify against him, the details about his arrest and suspension, and why it is important for civil servants to stand up and be counted.

What was your interaction like with Najeeb Jung, who became Delhi's Lt Governor in July 2013, and Sheila Dikshit was then the chief minister?
I was then Secretary, Higher and Technical Education. My interaction was mostly with Sheila Dikshit and her ministers only. With the Lieutenant Governor, my interaction with him was mostly confined to formal meetings in a group.

During those days, didn't Jung insist on bureaucrats sending files directly to him, as he was to do later with the Aam Aadmi Party government?
No, it was nothing like that. I served Delhi under the Dikshit government right through its entire tenure [which was 15 years long] but for two years. There was no system of all files going to the Lieutenant Governor. Only on the issue of transfer and posting of senior IAS [Indian Administrative Service] officers, super-time and above (that is, secretaries and above), the files would go to the LG, broadly, for his concurrence. None of the LGs differed with the proposals sent by the government. For all other officers below them, the files would be handled by ministers or the chief minister, depending upon portfolio allocation.

So when you were handling higher education at the time Dikshit was chief minister, did Jung ever summon you?
He called me once to say that he wants the files of a Vice-Chancellor of a particular university. I sent the files to him via the chief secretary. Subsequently, Jung responded saying he didn't want these files but one which had against complaints against that Vice-Chancellor.

Who was the Vice-Chancellor?
He was the Vice-Chancellor of Delhi Technical University. I sent the file Jung wanted. But he said it didn't contain specific complaints. He asked me to examine and bring out his misdemeanour, his misconduct, his favouritism and then put it up, again, to him. I sincerely looked into the complaints. There are always general complaints filed against almost all authorities. However, after examining the complaints against the Vice Chancellor, I concluded these complaints didn't have a reasonable chance of being proved. I submitted the file with my observation that none of the complaints was fit to be investigated.

You made a note of it in the file?
Yes, I did, and I forgot about it. Much after I left the higher education department, I came to know that the Vice Chancellor was forced to go on leave. He did come back to Delhi Technical University for 15 days or a month, and retired thereafter. That particular VC was earlier the Director of Delhi College of Engineering for 10 years or so. A learned professor of the Indian Institute of Technology, he took the Delhi College of Engineering to great heights.

It is easy for me to figure out who the Vice Chancellor was.

Well, I don't wish to name him. However, in my 25 years of career till then [now 27 years], I had never seen a person go after another in such a manner. The humiliation of being asked to go on leave at that level is extreme.

Then the Aam Aadmi Party formed the government after the December 2013 polls and lasted for 49 days. You were appointed as principal secretary to Chief Minister Arvind Kejriwal. Did your relationship with Jung change then?
With the chief minister, I attended some meetings with Jung. Two days after the government resigned, Jung called me. The first thing Jung said, "Rajendra, people tell me that you have identified yourself too closely with the AAP government."

Being a person who believes in giving direct answers to direct questions, I countered, "Sir, do you also think I was too close to the AAP government?" Jung kept quiet. But it was obvious to me that he thought I had gone far beyond my call of duty.

Thereafter, President's rule was imposed. Did your relationship with Jung become strained in this phase?
I moved to the Department of Urban Development, which is [a] very public oriented [entity]. His difficulties or anger or dissatisfaction, whatever you may wish to call it, with me continued. Jung gave me a show cause notice for reaching five minutes late in a meeting he had once called. I was late because I was in a meeting with the chief secretary. I had assumed the chief secretary too was supposed to attend the meeting. That was the first show cause notice I had ever been served in my life.

Other than this show cause notice, did his anger or dissatisfaction with you become obvious
In meetings, his behaviour towards me was what you can call a bit stern. But I continued with my work in the best possible manner. During President's Rule, all MLAs, irrespective of their party affiliations, would come to me, primarily, for executing scheme under the MLA Local Area Development.

Did Jung have complaints that your were helping AAP MLAs?
No, but I suppose – and I can't know that – he perhaps thought AAP wouldn't come to power again. I say this because once AAP came to power again, in 2015, Jung's behaviour towards me became very, very different than what it was during President's rule.

Did he write your Annual Confidential Report during President's rule?
He graded everyone outstanding, including me. In that respect, he was very kind to all of us. However, after AAP came back to power and I was back as principal secretary to the chief minister, I found he was very uncomfortable with me during two-three meetings, which were held in a group and were not one-to-one.

In these meetings, Jung would say, "Rajendra, come and meet me." On each occasion I replied, "Sir, I am always there." A few times, I sought an appointment with him because LG, after all, is the executive head. However, I never got an appointment with him.

What could have been his idea to ask you to meet him and yet not give you an appointment
You will have to ask him that, but I suppose he wished to make a public expression of supporting or liking me even thought he perhaps personally never felt that way.

Did you sense Jung was gunning for you before it all blew up? Let us go chronologically – of complaints being filed and you being raided and…
AAP formed its second government in February 2015, and from April onwards, I used to get messages that I am misguiding the government.

From whom did you get these messages?
From different officers.

From whom were these messages coming?
The Lieutenant Governor. But I ignored these message because as a staff officer of the chief minister, who has a council of ministers, and if they seek my advice, it my duty to give it. In fact, it is my duty to give advice even if they don't seek it, for instance, on a better way of doing things. This normally comes to you after some years of administrative experience.

There was also the issue of my holding the charge of home secretary. A duly authenticated order of the services department gave me this charge. Even then, messages were communicated to me, besides notices and orders from the chief secretary.

What did these notices say?
These notices said that I shouldn't look into the files of the home department. I asked the Chief Secretary, in writing, to the effect, "Please sir, there is a duly authenticated order and if you don't want me to work, I don't have any issue at all. But please, kindly have the order withdrawn."

He would verbally tell me not to look into the files, but I said that as long as the order wasn't withdrawn, I would be guilty of misconduct and non-performance of my duty. The home department is anyway a difficult department to work in. Later on, the order was withdrawn and I stopped looking into the files of the home department. The correspondence between the Chief Secretary and me exists.

This was when?
May 2015. Many reports were also sent by the LG to the Union Home Ministry, and I am given to believe that he personally briefed people in that ministry about the so-called misconduct of mine.

Was it spelt out what your misconduct was all about?
I have notes and letters sent by the LG. These are very general in nature. These would say that my behaviour is unbecoming of an officer of my seniority. It was never specific. My reply to the show-cause notice given by the Home Ministry…

What was this show cause notice about?
It asked me to explain why I looked after the work of the home department despite having received instructions to the contrary from the Chief Secretary.

My reply to the show-cause went into several pages. In it, I raised questions extremely pertinent to the civil service. I said, "Sir, kindly guide, for there is a duly authenticated order and I am being verbally asked not to follow that order. You are the Chief Secretary and I am secretary. What's government in this context isn't at all clear to me." The simplest thing was to withdraw that order. But I was told, no, no, simply follow what you are being told.

Why was the Chief Secretary asking you not look after the home department?
There is a 1998 Presidential Order, which prescribed that on reserved subjects of land, public order and police [which falls in the jurisdiction of the Central government], the files will be submitted through the chief minister. In pursuance of that Presidential Order, the chief minister [Kejriwal] issued instructions that all such files [pertaining to reserved subjects] should be sent through him [to LG]. I think that was what Jung didn't like. He perhaps thought that it was I who advised Kejriwal to issue the order.

But even if I had advised the chief minister to do so, I would be deemed to have advised correctly as there was a Presidential Order to that effect. To threaten officers for giving advice which is inconvenient to you (LG) is not what our system is. Our system runs on rules, regulations and set patterns. The matter went to the Home Ministry, which then issued me the show-cause notice.

To which you just said you replied.
Yes, after which they issued a final order. Once again, it reiterated that I shouldn't have continued to look after the files of the Home Department despite the Chief Secretary advising me. They never clarified the points I had raised in my lengthy reply. They disregarded that.

Instead, they issued an advisory that I should be more careful in the future. [Decoded], it meant I shouldn't advice the chief minister properly. I should not, as a staff officer, do what I am required to do under the law. [To dissuade me], they had to find something else.

Which was what?
In June 2015, they forcibly posted an officer to the Anti-corruption Bureau, which, so to speak, went under their control. In September, the Anti-Corruption Bureau called me for a month.

Every day?
No, I was called five or six times. The purpose was to indirectly give me a warning that…

Could you describe what these indirect warnings were?
They found that I had been transport commissioner for three months, between November and January, in 2012-2013. In the year 2002, the transport department had given a contract for [implementing] CNG [Compressed Natural Gas] fitness issues. The Anti-Corruption Bureau was examining was whether or not the contract had been properly awarded. In December 2012, they filed an FIR [First Information Report], which had nothing to do with me as I hadn't been in the transport department in 2002.

In September 2015, however, the Anti-Corruption Bureau wanted to know why I didn't cancel that contract in Dec 2012 and Jan 2013 after the FIR had been filed. I explained to them that there is no law which calls for cancelation of contracts after the filing of an FIR [as it does not mean that the person against whom it has been filed is guilty].

Was the contract cancelled after you left the transport department in January 2013?
For the next two years, I am sure it wasn't. I am also sure my successors were not summoned to the Anti-Corruption Bureau and grilled.

And the Anti-Corruption Bureau was under Jung's control?
It was completely under his control. After that, as is known, a person made a complaint to the Anti-Corruption Bureau. That complaint was transferred to the Central Bureau of Investigation, and then the raids happened in December.

Didn't this complaint pertain to contracts given by you to Endeavour Systems Pvt Ltd.?
Yes, but I can't talk about the details of the case as the matter is before the court.

When did you start getting summons from the CBI?
The CBI never questioned me. The CBI manual says that when there is a complaint, it has to conduct a form of preliminary inquiry. Let us say that the CBI did conduct an inquiry into the complaint which the Anti-corruption Bureau had transferred to it. In that case, they either found something or nothing at all. If they hadn't found anything, they couldn't register a case. If they had, then they would have registered a case on the findings of the inquiry. They did neither. The FIR that the CBI filed against me mentions only oral information. It doesn't even state when that information came to them. Even the special judge court found it unusual.

When was this FIR filed?
It was filed on December 14, 2015 by the CBI. They were in such a hurry that they registered it (the case) on the 14th, obtained a search warrant the same evening, and on the 15th morning searched my house, my office, and the chief minister's Office.

Weren't you expecting this blowback? Didn't you between September and December feel, even once, why you were getting into all this?
Maybe I am naïve. My trust in the government system was so high that I never thought these things were possible.

The search or raid must have come as a shock to you and the family.
It was definitely a shock. They searched the entire house, opened all almirahs, took out all the stuff in there, looked up the rooms where my helpers stay, looked into drains, even the cars parked outside. The media people were there…

I suppose the media had been told about the raids beforehand.
I suppose so. This is a rich neighbourhood [Maharani Bagh, which also has government quarters]. The search party thought that the cars parked by the road running past my house were mine as well. They wanted to search these cars until they were told that I wasn't their owner.

Did they check your computers and laptop?
They did, they seized my laptop, my mobile, my iPad.

In complete breach of your privacy?
The search warrant said that they had to obtain the data of electronic devices I used. Had I been careful, or the search hadn't been a surprise, I would have been able to save my gmail account, which they took control of. I am among those rare persons who pay to gmail for an extra 100 GB storage capacity.

What do you mean by saying that they took over your gmail account?
They asked for my password, and then they changed it, even the questions that constitute the process of recovering your password in case you forget it.

Is your gmail account still inaccessible to you?
It still remains inaccessible. All my life is on it. I had the habit of scanning all my documents and storing it in my gmail account. I had to restart my life. My personal photographs, even the letters my wife wrote to me, because the ink on paper fades and I wanted to preserve that memory. I have no access to them. I don't know how much they have seen.

More importantly, how much of it hasn't been deleted?
I have filed a request in the special judge's court that I should be allowed to recover my gmail account. This is in violation of the Information Technology Act, which doesn't allow unauthorised changing of passwords.

Maybe, you should have monitored them at the time they asked your password.
I even told them that my password would require an SMS on my mobile phone. But I was so confident, I thought if they want to see my email, let them see it.

How long did the search last?
The search was over in two-three hours, but they have a very lengthy procedure of documentation…

Were the people in the search team talking to…?
They were reporting every five minutes what was happening here. That was being passed to the media, which was reporting the search live. They did everything possible to malign me, pass right or wrong information. A few TV channels reported that the house I lived in was worth Rs 50 crore.

That is because your house is located in Maharani Bagh, counted among Delhi's posh colonies.
They even reported that five or six expensive vehicles have been found outside my house.

Obviously, they didn't disclose that your house is owned by the government.
They didn't disclose that. Tell me, who could have been feeding such information to the media other than members of the search team?

There was also talk about liquor being seized from your house.
It is my personal choice whether or not I drink.

Delhi, anyway, doesn't have prohibition.
Yes, but there is a limit to the amount of liquor an individual can posses.

What's the limit?
It is 9 litres for hard liquor [whiskey, rum, vodka] and 18 litres for beer and wine. These are limits for every individual above the age of 25. They found 14 litres of liquor at my house. Although my in-laws were also there in the house then, my wife and I are permanent residents. My house, therefore, could legitimately have 18 litres. I told them that.

You knew this rule?
I knew it. I have worked in the government. I don't know who were guiding the CBI people – they were under the impression that nobody in Delhi can keep a bottle of liquor without obtaining a government permit.

By that token, the entire city of Delhi would be in infringement.
They called over a guy from the excise department. But he wrote down facts – that the individual limit is 9 litres, that 14 litres were found in a house having two adults above the age of 25. Although my in-laws were also there, it was good they did not drag them into it. Later on, I found that they added one more section to it. It is a section which has been used just seven-eight times in the last 50 years. This section pertains to smuggling of liquor. I was accused of smuggling liquor.

Smuggled from where?
That is matter of proof. You must have heard a Commissioner of Delhi Police once say that a person has to prove his innocence. It puts the jurisprudence on its head, that is, they have registered a case against me for smuggling liquor and I have to prove I did not smuggle it.

Did they leave your residence by the evening of Dec 15, 2015?
They left by evening, but they asked me to come along to the CBI headquarters. I went. I was taken to the DIG's [Deputy Inspector General's] room. The DIG was watching TV.

That DIG was Sanjeev Gautam?
Yes. The news about the search on my residence was there on TV. His first reaction was, "Why don't you tell your chief minister not to use the kind of language he is employing? [Kejriwal had tweeted,"Modi is a coward and a psychopath."]

I was aghast. I told Gautam he is chief minister, it is for him to decide what he wants to speak, how can I stop him?

Gautam said, "You work for him, you guide him, you advise him, and now you are saying you can't advise him?"

Did you know Gautam beforehand?
I had never met him. He then said, "I understand there are criminal cases against you?" I said I didn't. Gautam said he had information that I had been called by the CBI earlier as well. I have never been called by any agency before, I said. After an hour or two, I was told I could return home, but I should return to the headquarters the next morning.

What was the night like at home?
My friends and relatives were there. They were very worried.

Did these friends also include some from your service as well?
Yes, they were there as well. They were worried because they were sure I would be arrested. When you start to abuse the process of law, then there is no limit. When you can file a false FIR, misguide the court to obtain a search warrant, when you can search the office, well… I don't want to speak on the legality and motive of searching my office except that even if I did something between 2007 and 2012, the files wouldn't have been kept in that office but in the departments from which contracts were granted.

Was it to find out something against Kejriwal?
I wouldn't want to speculate on their motives, but the next morning when I went over to the CBI headquarters, they said they didn't have anything against me…

'They', meaning Gautam?
Gautam and another CBI inspector. They said I could be free if I so want but only that I would have to give things and evidence which could implicate Person X.

They didn't spell out X's name?
They did.

So was X Arvind Kejriwal?

They said that without ambiguity?
Yes, they did. Not only then, but on all the five days they called me.

Are you saying that after five days, they stopped harassing you?
They didn't call me, but just about everyone I knew, they called… They went into my past…

You mean to say even those who weren't in government service?
Everybody. They called almost 300 to 400 people.

300-400 people!
I don't think they have called so many people even in the coal or 2G scams.

This is where their possession of your gmail account must have come handy, for tracking down people whom you know.
Before they raided my house, they had nothing. From my gmail account, they stumbled upon a mail from a person saying that such and such housing society is coming up and whether I would like to become a member of it. Even the person who had sent this mail was called.

Did the sender of this mail know you?
He knew me – and for a very long time. He is a co-accused as of now. That housing project has 350 flats, and even at the time of recession, they sold 300 of those. Of the 300 purchasers, they called almost 175 of them. They were mostly government officials. To each of them, they said your property belongs to Rajendra Kumar and that they were holding it as benami.

The person would plead that he didn't even know me. To it, they would ask him to prove ownership. All these 175 people had to submit proof of purchase. But it didn't end there. They would inquire whether they had intimated the government about the purchase. They would then bring their notice of intimation.

Three or four of them hadn't, as it often happens, because they were lazy. They filed disproportionate asset cases against them. They went as far as beating some of them.

Beaten up whom? A few of the nearly 175 people they summoned?
At least, a dozen of them were beaten up. They were beaten severely, not once, but over multiple days.

Were the people who were beaten closer to you than others who were not?
No, they were on a look out for those who seemed to have money and who could therefore say that their money belonged to Rajendra Kumar.

So they were harsher on those who were relatively wealthier?
Yes. One person was slapped so hard that he underwent a permanent loss of hearing. He said this in the court.

Whose doing was it? 
The person who lost his hearing was slapped by a DSP [Deputy Superintendent of Police] from the CBI. When I was taken into police custody [in July 2016], I had once seen them beat a person, a co-accused, who was made to stand on his feet, asked to raise his arms, and they beat him up from behind. He later told me that they wanted him to become approver, name me.

None of these guys who were beaten up agreed?
One of them did. It is a person who I have never met. He is not one of the accused.

How many accused are there in the CBI case, which pertains to the contracts given to Endeavour Systems Pvt Ltd?
There are seven besides me. They went to my ancestral house in Patna. It was purchased by my father before my birth. They went to my house in Greater Noida, which was on rent. They threatened the tenant, who left even before the expiry of rent lease. They went after the Chartered Accountant who used to file my tax returns.

He would come to me once every year, in July, at my office. They obtained his number from my mobile phone which they seized once they took me into police custody. They raided the CA's house and found Rs 27 lakh. I don't know whose money it was.

I suppose those who were beaten must have been bitter about it. What did they tell you?
They never told me anything. They were co-accused in the initial FIR that was filed on December 14, 2015. There were five of them. Two others were added to the chargesheet they filed in the case, one of the names was dropped. All that I know about the chargesheet is through newspapers. I haven't yet got a copy of the chargesheet. But it wasn't as if only the co-accused were beaten.

What was it like to be taken into police custody in July 2016? It must have shaken you.
Definitely not. But first, why did they need to arrest me in July? After all, they had, by March, stopped calling people and beating them up in the hope that they would implicate me somehow. My guess is that I continued working as hard as I used to. They wanted to remove me from there [as Kejriwal's principal secretary]. Since I had continued to work, they thought once I was arrested I will get suspended. They succeeded in achieving their purpose.

Did you ever come close to cracking up?
You see, I had answers to all their questions. There was just a bidding of theirs I wouldn't do – and that was about naming the chief minister. They beat up people to force them into naming me. They arrested me to name the chief minister. After all, what was the purpose of seizing files from the Chief Minister's office in 2015? They would show me these files and ask, "Isn't this your signature?" I would say yes. They would then ask, "Did the chief minister ask you to sign?"

I told them it is my job to monitor schemes and projects that the chief minister has assigned. I don't have to seek the chief minister's approval or anybody else's to sign on these files, as my monitoring is supposed to improve the projects.

After how many days did the suspension order come once you were arrested?
The rule says that anyone who has been in police custody for more than 48 hours, he is deemed to be under suspension. So they issued the suspension order on July 6, 2016. They knew of the arrest, so they were ready with the order. They issued just after the expiry of 48 hours.

After three months, the suspension order is supposed to be reviewed. There is a Supreme Court order, and there is a Department of Personnel, Government of India, rule as well, that if within three months in cases such as mine, a chargesheet is not served for (initiating) disciplinary proceedings, the suspension shall not be continued. But my suspension has continued.

Haven't you moved the court on this count?
I haven't. I will, again, say I have faith in the system. When the law itself says that the suspension cannot [be extended], why should I believe they would do otherwise? Later on, I gave a representation to the Ministry of Home Affairs, to the Chief Secretary, in the belief that in an extreme, extreme case, the government's circular might have gone un-noticed. However, I still remain under suspension.

Doesn't that fill you with anger?
When the raid happened, and even after my arrest, I thought to myself that if I were to ask citizens of the country whether they would change their place with me, that is, I go take their place and they take mine, with all the problems I have been entangled in, my answer was that 99% of citizens would like to take my place. This means that even in the situation that I am, I am still better off than 99% of the people of this country.

Why should I get angry then? It is the system which has failed. The most important thing for me is that when I stand before the mirror, I am able to look into my own eyes.

I will not say I have done no wrong in my life. I have fought with my sisters and friends, I might have sometime used the pen from my office for my personal use, I am not saying I have never sinned, so to speak.

So your solace in all this is that you can still look into your eyes?
Yes, and that has been my endeavour all my life. But the important point is that if the system can do what it has to me, Principal Secretary to the Chief Minister, to an IAS officer of 26-27 years of standing, who has received top awards, including the prime minister's award for excellence in civil service – which I got in the second year of its institution – plus four national awards for e-governance, then think of what can happen to millions of people who have been wrongly framed.

I can speak out, I have people who support me, but there are millions who are framed out of vengeance, who are framed to fix them politically, think of them.

This is not the democracy we want. This is why it is necessary to tell people what has happened. What has happened may have happened physically to me, but it also tells you how agencies behave. It isn't just the CBI, but also the Anti-Corruption Bureau, the income tax department, the Home Ministry… At one time, I was told that even the Enforcement Directorate was likely to register a case against me.

Well, what is to be done when these institutions don't stand up? Or do you think the blame lies on the political masters?
Institutions are inanimate, and the people who run the institutions are important. The coercive powers of the state are confined to certain people – it could be the officer in-charge of a police or the tehsildar or the income tax officer – and if they stand up, then no political set-up can misuse them. Either they are too weak to stand up or they have their own issues because of which they are scared of standing up.

Can you recall a case similar to yours, in which a civil servant has been harassed to fix a political rival?
I have never seen it. My case has no precedent, as far as I can recall.

What is the status of the case?
In what will go down as the rarest of the rare case, the CBI has filed a chargesheet without securing approval for prosecution. This the CBI manual says, but in my case they have done it without securing the government's approval for prosecution. But the approval will come from the Home Ministry.

You have, anyway, decided to go for the Voluntary Retirement Scheme.
I have, but I am sure they will put obstructions in that as well. They haven't understood one thing – that if a person doesn't get scared, you cannot scare him by any means. After all what I have gone through, why should I get scared by them not granting me VRS? I cannot allow these people to run my life. Let them not give me VRS, there are so many other options.

Ajaz Ashraf is a journalist in Delhi. 

January 17, 2017

Slack in power output may weigh on power cos in Oct-Dec

My latest article; on power sector generation:

[C] ANALYSIS: Weak plant load factor may weigh on power cos Oct-Dec
Cogencis, Tuesday, Jan 17
    By Rajesh Gajra
    NEW DELHI - Most listed companies in the power sector may see subdued earnings from their core power generation operations in Oct-Dec, data on average plant load factor for the quarter and power generation of major companies during Oct-Nov showed.
    The average plant load factor fell to 59.8% in Oct-Dec for thermal power units from 63.8% a year ago, despite a rise in total generation. In Jul-Sep and Apr-Jun, the plant load factor was 56.7% and 63.7%, respectively. Thermal powermade up for 88% of all electricity generated in the country in Oct-Dec.
    In Oct-Dec, total power generation in the country rose 5.2% on year to 288,401 GWH, an analysis of Central Electricity Authority's data from Cogencis Corporate Fundamental Database showed. This rise could be due to new capacity as shown by contradicting lower plant load factor during the same period.
    In two of the preceding three quarters--Jan-Mar and Apr-Jun--the on-year power generation growth was sharp at 9% each. 
    According to a report by Emkay Global electricity generation at five out of seven biggest power companies fell during Oct-Nov (see table). Even at NTPC, India's biggest power producer, it was the gas-based plants that saved the day for the state-owned company, with mainstay thermal plants seeing a decline in generation.
    The brokerage firm had not compiled the December figures at the time of filing this story. 

ELECTRICITY OUTPUT                      
                       Oct-Nov                            Apr-Nov
                   Output   On-year chng   Output   On-year chng
                    GWH       Per cent           GWH       Per cent
NTPC               40949         1.2            168183       5.6
NHPC                2626       -13.8             18852      -3.0
Tata Power Co        7302        -1.8             27986       0.4
Reliance Power      7196         0.1             27186      -4.3
Adani Power         9858        -5.4             37600      -7.7
JSW Energy          3645       -20.6             17519     -12.2
CESC                1790        -2.3              8339       9.9
Source: Emkay Global's power sector research updates  

    The brokerage firm said back down by state distribution companies affected generation at power companies such as Tata Power Co Ltd, JSW Energy and Adani Power.
    Electricity generation at the only hydro power generating company NHPC too saw a 14% fall in electricity generation in Oct-Nov and this could be due to the early onset of winter season, according to analysts.
    Collectively, the seven major power companies recorded a power output of 73,366 GWH in Oct-Nov, 2.1% lower than the year ago level. In the Apr-Nov period, their collective output had risen by a marginal 0.8% on year.
    The power sector continued to face constraints in terms of poor demand
recovery and low pricing and financials of power distribution companies, Emkay Global said in a report.
    "Falling merchant rates negatively impacted PLFs (plant load factors) of merchant players and plants with open capacities," Edelweiss said in a research note.  End

Edited by Arshad Hussain

    Cogencis Tel +91 (11) 4220-1000
    Send comments tofeedback@cogencis.com

Analysis:Will Oct-Dec announced order wins lead L&T to meet guidance?

By Rajesh Gajra

Larsen & Toubro Ltd's announced order wins of 148 bln rupees may not prove to be much of a hindrance in the company's progress path towards meeting its 2016-17 guidance of 15% on-year growth in consolidated order inflow.

he largest engineering and infrastructure company in the country with a long history of executing domestic and international projects announces key order wins during a quarter but the final order inflow is disclosed after the quarter ends and along with the quarterly results.
The last four reported quarters till Jul-Sep has seen the ratio of L&T's announced key order wins to eventual order inflow figures range between 35% and 70% (see table), an analysis of data from Cogencis Corporate Fundamental Database showed.

L&T announced order wins and final order inflow

​    ​
                     Order wins         Reported order inflow
​   ​
                  during quarter     in quarterly results
                         -------------              ---------------------
                            Bln rupees         Bln rupees
                               ----------         ----------
Jul-Sep 2016-17          217              311
Apr-Jun 2016-17          145              297
Jan-Mar 2015-16          223              433

Sep-Dec 2015-16           73              385
Figures pertain to consolidated financials

In Oct-Dec the order wins announced during the quarter added up to 148 bln rupees. If the actual order inflow figure, which will be disclosed when L&T reports the earnings for the quarter in January or February, fall under the 35-70% range, the Oct-Dec order inflow could come in between 210 bln rupees and 420 bln rupees.
This would result in the Apr-Dec order inflow coming in at between 820 bln rupees and 1350 bln rupees, as against 927 bln rupees reported in the Apr-Dec period of 2015-16. The on-year change in order inflow during Apr-Dec would range between an increase of 45% and a decline of 12%.
Historically, L&T's announced order wins to reported order inflow ratio in any quarter has tended to be volatile and it is hard to predict how much it will be for the Oct-Dec quarter, said an analyst from Motilal Oswal Securities.
Other analysts said the demonitisation effect will not hit L&T's revenues from the execution of existing projects but there could be some adverse effect on new orders on account of some delay in start of new projects.
Order inflow growth in Oct-Dec would therefore is seen by analysts as a critical indicator of progress made by L&T to attain its 2016-17 guidance of 15% growth rate in order inflow.

L&T's management guided that incremental order inflow growth would be supported by pick up in ordering activity in the power, railways, hydrocarbon and defense segments, according to a recent research update on L&T by Motilal Oswal Securities.
In Apr-Sep, order inflows at L&T grew 12% on year to 608 bln rupees.Will the Oct-Dec order inflow figure help make the Apr-Dec on-year growth materialize at the top end or the bottom end of the -12% to 45% range?
L&T's reliance on domestic projects has stayed intact in 2016-17. Domestic projects made up for 66% of the order inflow in Apr-Sep while 34%
​ ​
came from international projects. In Apr-Sep 2015-16 too, the order inflow
​ ​
break-up was 66% domestic and 34% international.
In an investor presentation in November, L&T said its order inflow growth
​ ​
in Apr-Sep was mainly from domestic infrastructure and international hydrocarbon verticals. The company said its domestic capital expenditure was picking up in selective areas.
The outstanding order book of L&T on Sep 30 was placed at 2518 bln rupees, as against 2500 bln rupees as of Mar 31 and 2426 bln rupees a year ago.

January 10, 2017

Solar power cheaper than using diesel generator sets, housing societies should switch to solar

I share below interesting insights on cost of solar power versus cost of diesel generator sets' electricity:

Housing societies should replace diesel generator (DG) sets 
with rooftop solar power systems, recommends CSE
New CSE analysis finds solar rooftop power tariff is half the
cost of power generated by DG sets
  • Centre for Science and Environment releases its new study report and policy brief Solar Rooftop: Replacing Diesel Generators in Residential Societies
  • Calls for a ban on use of DG sets in new residential societies in highly polluted urban areas like NCR
  • Recommends mandatory installation of solar rooftops for all upcoming residential societies to ensure they replace diesel generator sets for back-up power
  • CSE releases a unique online 'rooftop solar calculator' to help consumers design the system themselves based on their electricity requirement
New Delhi, January 10, 2017: A new analysis done by Centre for Science and Environment (CSE) suggests that residential societies – which use diesel generator sets for power back-up -- can easily replace them with rooftop solar power systems and save substantially on costs. "In all the residential societies that CSE studied and analysed, the cost of power from solar rooftop with battery back-up was found to be about half the cost of power generated by DG sets. This alone should make residential societies move away from the extremely polluting diesel generator and adopt solar rooftop to meet their power back-up needs," said Chandra Bhushan, deputy director general, CSE, while releasing the results of the analysis in a conference organised here today by CSE.
The study and its findings
The CSE study examined the feasibility of solar rooftops in residential societies across Delhi, Haryana, Uttar Pradesh and Rajasthan. CSE's research was aimed at understanding the economic considerations including financing and generation cost; architectural and roof space preferences; building by-laws; and constraints experienced by various stakeholders including customers, government agencies and distribution companies (discoms).
The study finds that the cost of power generation from a DG set, including the capital cost, is Rs 27 to Rs 33 per unit -- compared to rooftop solar tariff of less than Rs 10 per unit.
The CSE study finds that as power outage from the grid reduces, the cost of power generation from DG sets increases and that from solar rooftops with battery storage becomes more financially attractive. Says Priyavrat Bhati, programme director, energy, CSE: "DG back-up has become increasingly redundant because of reducing power outages in cities. On an average, many cities now have less than an hour of power cut in a day. We must realise that 'full back-up' was considered a basic need by upscale societies when the outages often lasted several hours a day."
The study concludes that for most societies, solar rooftop would be able to meet the basic load for individual flats ('partial load' in industry parlance which covers lighting, fans and some communication and entertainment appliances) along with essential area loads. "Moving away from the DG set to solar rooftop requires a change in mindset. If power outage is less than a hour a day then the very definition of "full back-up" needs to be changed. For tens of minutes of outage, even for the high end societies "partial load back-up" should be sufficient," adds Bhushan.
CSE researchers have estimated that up to 3 giga-watt (GW) of solar rooftop can be installed on new residential societies over the next five-seven years. This segment can, therefore, be a key to reaching the government's ambitious target of 40 GW solar rooftop to be achieved by 2022.
Recommendations of the study
The report offers a set of recommendations (visit www.cseindia.org for a detailed pdf version):
  • Make installation of solar rooftops mandatory for all upcoming residential societies.
  • Ban DG sets in new multi-storied residential buildings except for common area loads in polluted areas.
  • Support discoms to encourage them to push solar rooftop.
  • Provide subsidy for hybrid solar rooftop systems.
  • Increase awareness among RWAs – provide single window information and initiate campaigns.
  • Initiate monitoring by regulatory authorities. 
The rooftop solar calculator
In order to further the promotion of solar rooftops and democratise solar power generation, CSE released a website-based rooftop solar calculator with the aim of providing all the necessary information required for a common domestic consumer to install a solar plant on her/his rooftop.
The calculator is specifically designed for residential houses, which is a huge untapped market for solar power in the country. Bhushan says, "This calculator would allow residential consumers to install a rooftop solar plant based on their electricity needs and also provide information on viability of the plant for consumers based on their individual investment patterns and rooftop space available to them."
The calculator covers the entire country and a consumer can get data by just putting in the pin code of the area. It would help consumers design the system based on their electricity requirement and provide them the economic and environmental benefits of such a system. The model provides information on rooftop solar plants based on the presence of grid power and battery – these systems can be grid-connected, off-grid and hybrid systems. The tool also provides estimates of benefits and limitations, so that the users can easily compare among the three systems and conclude which one suits their requirement. In addition, one can play around with the available choices to determine the ways in which they can reduce the cost of the solar plant.
Says Bhati: "CSE welcomes feedback and opinions from users. Developing this kind of a calculator is a constant process. User feedback will help us deliver the perfect model. The future versions of the calculator will include upgrades like inclusion of solar plant installers in the nearby area, including industrial and commercial sectors."

December 27, 2016

NSDL's financials

The largest depository in the country, National Securities Depository Ltd, earned more out of non-core depository services in FY16 compared to FY15. NSDL's revenue from depository services increased 11% year on year in FY16 to Rs 137 crore while database management services revenue jumped by 30% to Rs 47 crore.

In FY16, the share of depository services revenue to total revenue was 74% while that of data services was 25%. In the previous year (FY15), depository segment's share was 77% and data segment share was 23%.

Segment profit (operating profit) in data services rose sharply by 209% YoY to Rs 13.2 crore while depository services profit grew by 77% to Rs 56.4 crore.

Overall, the Profit after Tax of NSDL (consolidated) was up 23% YoY to Rs 63.4 crore in FY16.

The non-depository operations of NSDL are primarily through its wholly-owned subsidiaries, NSDL Database Management Ltd and NSDL e-Governance Infrastructure Limited.

NSDL's depository operations earns revenue on a recurring basis primarily from four transactions--debits in investors' demat accounts, settlement-related transfers from the clearing corporation of stock exchanges to clearing members' pool accounts, transfers between clearing members and pledge transactions in any demat account.

Settlement value of demat securities fell by nearly 3% YoY in 2015-16 and was a major reason for the a smaller YoY growth rate of 11% in the depository segement revenue.

In FY15, the depository company had shown a Rs 19.1 crore increase YoY in its depository segment revenue to Rs 124 crore and recorded a YoY growth of 18.3%.

The first half of FY17 (April-September) has seen the depository segment revenue come in at Rs 104 crore, but the non-depository revenue data for HI, FY17 has not been disclosed by NSDL.

December 14, 2016

Voting at TCS' EGM to remove Cyrus Mistry

Voting at TCS' EGM yesterdayto remove Cyrus Mistry:
FOR: Promoters (predominantly Tata Sons) 73.3%,
Public 7.4%
AGAINST: Public 6.0%
ABSTAINED: Public 13.3%

% - percentage of total number of equity shares of TCS

November 28, 2016

Insightful article on Indian govt's illegalising old currency notes

This is a very insightful commentary on the move by the Indian government in early November tp make illegal the use of existing 500 rupee notes and 1,000 rupee notes.


Problematic terms in the demonetisation debate

by Anirudh Burman.

The Government's move to demonetise Rs. 500 and Rs. 1000 notes, and place restrictions on withdrawals, exchanges and deposits has attracted both appreciation and criticism. This piece analyses the framework of this discourse and its implications for the economy and society. Terms like "demonetisation", "corruption", "inconvenience and hardship", "implementation" form the basis of this discourse. Interestingly, most of these terms have originated from the Government itself. This piece argues that by confining ourselves to these terms, we fail to grasp the true nature and impact of this measure.

The economic context

The Indian government's move to withdraw the legal tender status of Rs. 500 and Rs. 1000 notes has had widespread effects on the economy. Holding these beyond a certain notified date will be
illegal. Those left with these notes after December 31 will lose their wealth by a corresponding amount. There are daily reports of the plight of urban daily wage labourers, farmers and those in unbanked areas.

The economic impact of this measure is being contested. A great piece by my colleague Suyash Rai argues that the costs of imposing this measure far outweigh the benefits are likely to affect the poor and under-banked areas disproportionately and may have a modest impact on corruption at best. Others have played down the likely impact on the poor and rural areas. They have supported the demonetisation as a courageous and bold step towards a larger effort at wiping out endemic corruption and black money.

What is already safe to assert is that for better or for worse, there has been large-scale disruption within the economy. Print and electronic media, social media, daily conversations are consumed with conversations around the principle and implementation of demonetisation, and around issues of corruption and black money. Yet, most of this discourse follows a predefined framework, using terms and nomenclatures propagated by the Government. The framework of this discourse is problematic, and this framework itself may have deleterious effects on our society.

Problematic term: "Demonetisation"

Characterising the government's move as "demonetisation" is the most problematic fallacy of the current discursive framework. In this case, the Central Government has said that the RBI will refuse to honour its promise to provide legal backing to Rs. 500 and Rs. 1000 currency notes. They will effectively refuse to honour the property rights of those holding them. Every time the RBI issues a currency note, it adds a liability to its balance sheet. By refusing to honour these notes as legal tender, the RBI will extinguish its liability towards persons holding them, in effect enriching itself. In addition, substantial restrictions have been placed on exchanging old notes for new, withdrawal and exchange of money. This is a substantial interference in the rights of people from accessing their own money. This is expropriation, not demonetisation.

In its broadest sense, expropriation refers to a taking of certain items or goods by the government by refusing to honour the property rights of those holding such items or goods. Bank nationalisation was an act of expropriation. The Indian government refused to honour the property rights of the owners of banks and transferred the ownership of the banks to itself.

Land acquisition is an act of expropriation.  The government expropriates the property rights of individuals. Land reforms undertaken in the 1940s and 1950s were acts of expropriation where property held by zamindars was transferred to the states by virtue of laws passed by them.

The Vodafone tax demand by the Indian government has been alleged to be an expropriatory action as Vodafone's income is being expropriated by imposing an allegedly unfair tax on it. Expropriation need not be an absolute taking or extinguishment of property rights in all cases.

Even a high degree of restriction or interference with property rights has been held to be expropriatory in many jurisdictions worldwide. Therefore, the Government and RBI's decision to (a) withdraw legal tender status, and (b) impose severe restrictions on withdrawals from one's own account is definitely an act of expropriation.

This act of expropriation is singular, given the nature of the expropriation and the views of the political party in power. Two of its cabinet ministers favoured a debate early last year on whether the word socialist should remain in the Preamble to the Indian Constitution and its ally the Shiv Sena demanded the removal of the word (link here)! This same Government is now justifying this expropriatory act as a moral imperative.

The nature of the expropriation is much more problematic. There are at least three ways in which this expropriation is remarkable:

  1. In most cases, property rights of certain defined individuals or classes are expropriated. The owners of banks were identifiable individuals, and so were the zamindars who were expropriated when land reform laws were passed. In this case, it is not so. Property rights across the entire economy are being expropriated without distinction. At the same time, there is no single identifiable person who is being expropriated. This is likely to have societal consequences I will elaborate later.
  2. Governments usually expropriate rights, or assets - like wealth, mineral resources, land, intellectual property (through compulsory licensing). In this case, the medium of exchange in society is asset being expropriated. This is an expropriation of cash, not wealth. This is singular in the annals of expropriatory actions by governments worldwide. Many governments have demonetised currencies to combat hyperinflation, but no one has withdrawn legal tender status on currency notes in times of normalcy, and imposed restrictions on an individual's ability to hold cash at the same time. In an economy that is almost completely cash driven, and where most households hold Rs. 500 and Rs. 1000 notes as means of exchange for sustenance, this is bound to have serious repercussions.
    Money is not just a medium of exchange and a store of value, it is also, as has been argued, a source of social prestige and psychological security. In a cash-based economy like ours, people primarily derive social capital and psychological security from money in the form of cash. This expropriatory measure has therefore arguably extinguished or imperiled the social prestige and psychological security of those who relied on cash money to provide these for them.
  3. Governments usually expropriate the rich to redistribute to the poor (at least ostensibly) or to create benefits for the public good (roads, highways, etc). Bank nationalisation expropriated the rich bank owners so that Indira Gandhi could use banks as agents of poverty reduction. Land reforms were done to expropriate zamindars and redistribute land to the poor. In other countries, governments expropriate owners of oil fields and mineral deposits so that the government can channel the benefits from such resources for the public good. Since this expropriation is economy-wide, everyone's medium of exchange is being confiscated/ restricted regardless of whether they are rich or poor. However, the main brunt of the expropriatory action is on the poor. There are two main ideas being talked about with regard to what the government might do with the windfall in order to redistribute wealth to the poor. To clarify, neither the Government nor the RBI have stated or clarified on what they intend to do, and what legislative changes will need to be made. It is however worthwhile to discuss these as the two broad ideas that are being discussed -
    1. The government may improve its fiscal situation and use the fiscal space to provide income tax relief/ loan waivers. The poor are not going to benefit from income tax relief since only 4 percent of India's population pays income tax. The Sixth Economic Census of the CSO (March 2016) finds that only 2.3 percent of non-agricultural establishments received financial assistance from financial institutions. This number is likely to be the same or even lower for agricultural establishments. Loan waivers are therefore going to have minuscule impact, and benefit only those who are well-off enough to access the formal financial system.
    2. The government may, through some legislative jugglery, recapitalise banks and kick-start lending. Again, the gains are going to accrue mostly to the rich and the middle class. It is debatable as to how the unbanked and expropriated 40 percent would reap the benefits of any bank-led redistributive measure since 40 percent of the country is unbanked (Census 2011).

This is therefore, a unique expropriatory measure that expropriates from everyone in society to benefit those who suffer the least "inconvenience" from the expropriation (more on this later).
Discussing this step as an expropriatory measure brings to the fore legal protections and requirements that are concomitant with expropriation: what is the legal authority for taking away the
property of individuals? Is compensation due to those who have been expropriated and if yes, in what form? What due process is applicable to expropriatory measures taken by the Government? Coining this expropriation demonetisation is putting lipstick on a pig in its truest sense.

Problematic term: "Corruption"

Equally problematic is the way this expropriatory action has re-defined the "corrupt" and "corruption". All preceding actions against corruption taken by the Indian State in the past have been against those who have either evaded taxes or earned money by committing illegal acts. The issue was that certain people either evaded taxes or did something they were not supposed to, and such people had to be identified and punished. The voluntary disclosure scheme followed this overarching principle by encouraging people who did not pay taxes to come forward. The same principle is at play in the issue over identifying people who have stashed their illegal money abroad, and in the identification and prosecution of officials violating the Prevention of Corruption Act.

This expropriatory measure has the potential to re-define how people think about the corrupt and corruption. For one, the focus is now on confiscating corrupt wealth and black money. Identifying the corrupt and identifying individual acts of corruption has taken a backstage. Expropriation itself has become a mode of punishment. It is being suggestively implied that society has a chance to start again with a clean slate if black money is wiped out. The complete failure of the state to act against corruption is being used as an excuse to infuse society with a new kind of morality.

Second, corruption has now become a crime without a perpetrator. Multiple people I have talked to situate themselves as victims of corruption. A landlord who has built an illegal flat does
not give his tenant a lease-deed and accepts payments only in cash told me he was proud the Prime Minister had taken this step on behalf of honest people like him. An auto-wallah who confessed to driving without a permit and did not agree to go by meter railed against the corrupt during the duration of my journey. An Uber-driver praised the expropriation repeatedly while he ferried me. Close to the end of the ride he nonchalantly told me he had to drive carefully since the police had impounded his license the previous day. While these anecdotes hardly constitute statistical evidence, they are indicative of the fact that people go to great lengths to justify their actions as moral and honest.

However, the logic goes, everyone else must be corrupt if corruption is endemic enough to justify this kind of measure. This discourse is elevating the widespread cynicism and hatred against politicians, bureaucrats, the police, big business, small business and the media. Everyone feels like a victim and everyone else is suspect. But no one is a perpetrator or an agent. Everyone wants to sock it to the rich and the corrupt though no one knows who they are. So it is acceptable to take some punches yourself if the corrupt suffer in the process. The Government is at once elevating the pitch for shared sacrifice while also (most probably and hopefully, unintentionally) exacerbating the conditions for social and institutional distrust. Issues of class envy and class conflict are already coming to the fore and may get further magnified in the future.

This, in turn, is likely to create a collective psyche where no individual or institution can be trusted. No one is deserving of empathy since their corruption might be the cause of your suffering. This is happening even though the Government is at pains to explain that this will be one among many previous and future steps against corruption. By re-framing corruption as a crime without an agent through this singular action, the Government has perhaps unwittingly created the conditions in which the nature of discourse regarding solving corruption in society changes permanently.

This is a simple expropriation at its core. The object and effect of this measure are predominantly expropriatory. The confiscation of black money is an incidental benefit by design. The rhetoric of sweeping up black money and the design of the expropriatory measure do not match up to each other.

Problematic terms: "Inconvenience"

It is inconvenient to have to switch to a mobile wallet and stand in an ATM queue for 2-3 hours once a week. Many people I have spoken to are ready to suffer this inconvenience if it helps achieve the stated objective of finishing off black money in the economy. When individuals who depend on their daily wage to feed themselves and their families are laid off, this cannot be called an inconvenience. The tribulations of agricultural workers and small entrepreneurs cannot be called an inconvenience if their enterprise fails due to the lack of liquid cash. Sectors of the economy that function largely in cash are suffering disproportionately compared to those with access to plastic money and mobile wallets. There is an attempt to normalise and standardise the way the effects of this expropriation are to be thought about by using this one word to describe the depth and diversity of suffering within the economy.

There is a breadth of literature on the impact of income shocks on those who are at the lower end of the poverty line. Income shocks push many just above the poverty line back into poverty. They also push many into debt, since their savings are not sufficient to sustain themselves. Small incidents like an unanticipated illness have an outsized impact on their long-term well-being and potential for growth. The current actions of the Government have administered just such an income shock on the poorest.

The Government should have taken much more aggressive measures to protect the worst affected economic classes in society, but calling this suffering an inconvenience allows it to paper over this failure. Had the Government instead defined the consequences of this measure as a "scarcity" of currency, corresponding actions may have been discussed, and some implemented. Government actions and popular discourse during times of scarcity are motivated by a desire to ensure everyone has adequate rations to sustain themselves.
Scarcity creates its own social dynamics. It creates new intermediaries in the market - when food is rationed, black marketeers emerge to supply food at above-market prices. After this expropriation, intermediaries are delivering white money for black for a commission. The war against corruption is creating new forms of corruption.

Mobile applications with horrifying names like "Book my chotu" are advertising hired help who can go stand in queues for those who can afford it. Most troublingly, scarcity changes relationships in society by creating new power dynamics. Hitherto bankers were service providers. Now they are agents of rationing. They have asymmetric power compared to those standing in the queues before them. It is a credit to them that they are still providing services under conditions of extreme difficulty. On the other hand, like any agent of rationing, they are now exposed to mob fury and mob violence. The customer has now become a beggar. His/her money is locked up in a bank. The psychological security gained from holding money that I alluded to earlier has vanished. Whereas earlier he or she could demand service, now they pray they get to exchange\withdraw money, and can suffer at the hands of a capricious banker.


Some have argued that even if the Government wanted to take this step, it could have been timed better. But what is a good time for extinguishing property rights? Any time is equally good and equally bad. Others have argued that the step has been implemented badly. But expropriatory actions are judged first and foremost by the validity of the expropriation itself. We have been too quick to assume the validity of this measure and debate its implementation. As long as the terms of the discourse are set by those who introduced the measure, we will also be confined to their predefined moral straitjacket of honesty versus corruption, sacrifice versus timidity and sincerity versus venality. Empathy will be a casualty.

The Government has framed this step against corruption as a moral question. Should we not ask a moral question of the Government: Is it ethical for any State to expropriate the predominant means of exchange from everyone in society, especially in a poor cash-dependent economy?

The author is a researcher at the National Institute for Public Finance and Policy. 

November 10, 2016

Effect of Tata-Mistry spat on investors in Tata Group companies

FPIs lose over 5% on their holdings in 9 major Tata Group companies

As of this Tuesday’s (November 8) closing prices, foreign portfolio investors (FPIs) lost 83.15 bln rupees due to shares held by them in nine key Tata Group companies and the ongoing battle between Tata Sons and Cyrus Mistry.

Since October 24, when Mistry was ousted from the chairmanship of Tata Sons, FPIs have seen their investments in the nine companies lose 5.5% to 1428 bln rupees from 1511 bln rupees.

The highest loss has been in the shares held by them in Tata
Consultancy Services Ltd.

On the basis of Tuesday’s closing price, the notional loss of FPIs
from their holdings in TCS has been to the tune of 48.46 bln rupees,
followed by the  notional loss in their holdings in Tata Motors to the
extent of 14.78 bln rupees.

This is seen from an analysis of shareholding data of FPIs in nine key
Tata Group companies. The analysis compared the collective value of
FPI holdings in the 10 companies as of October 24 with the value as of
Tuesday, based on their holdings as of Sep 30.

The nine Tata Group companies comprised of Tata Chemicals Ltd, Tata Communications Ltd, Tata Consultancy Services Ltd, Tata Global Beverages Ltd, Tata Motors Ltd, Tata Power Co Ltd, Tata Steel Ltd,Titan Company Ltd and Voltas Ltd.

Shares of these Tata Group companies have fallen from 2% to 17% sincebOctober 24, with Tata Global Beverages having fallen the highest at 17.3% to 127.5 rupees from 154.1 rupees and Titan Company having declined the lowest at 1.7% to 371.2 rupees from 377.6 rupees.

TCS’ share price has fallen by 6%. FPIs held a collective stake of 17%
as of Sep 30 and the value of this stake has fallen to 765.71 bln
rupees as of Tuesday’s closing price compared with 814.17 bln rupees
as of Oct 24 closing level.

In Tata Motors, where FPIs collectively held 26.1%, their holding
value has come down to 407.23 bln rupees from 422.01 bln rupees.
Shares of Tata Motors are down 3.5% since the day of Mistry’s ouster
from Tata Sons.

After TCS and Tata Motors, the highest value loss for FPIs are in TatabPower, Tata Chemicals and Voltas where they have seen their
shareholding value getting eroded by 6.54 bln rupees, 3.28 bln rupees
and 2.71 bln rupees.

In the remaining four group companies of Tata Global Beverages, Tata Steel, Tata Communications and Titan Company, FPIs have lost 2.51 bln rupees, 2.17 bln rupees, 1.44 bln rupees and 1.26 bln rupees

Non-FPI institutional investors have also lost heavily in the
Tata-Mistry spat. Their holding value in the nine Tata group companies
has fallen by 6.4% or 47.36 bln rupees to 742 bln rupees from October 24 to Tuesday.

These institutional investors have lost 14.69 bln rupees in TCS, 8.19
bln rupees in Tata Motors and 6.21 bln rupees in Tata Power.

October 27, 2016

Biocon's Jul-Sep results analysis

Last Thursday (20-Oct-2016), I did the Jul-Sep quarter results analysis for Biocon Ltd, for the organization I work for currently. Here is what I contributed:

Earnings Review: Biocon Jul-Sep PAT at 1.47 bln rupees

Bio-pharmaceutical company Biocon Ltd recorded a consolidated net profit of 1.47 bln rupees in Jul-Sep, the recorded as against a net loss of 106 mln rupees in the year-ago quarter. The profit growth was aided by a sharp rise in sales and lower raw material costs.

Consolidated net sales of Biocon grew nearly 20% on year to 9.40 bln rupees in the September quarter, driven by a steady 17.1% growth on year in revenues from its largest product segment of small molecules to 4.03 bln rupees and a sharp 34.4% on year increase in its biologics product sales to 1.56 bln rupees.

Biocon's revenues from research services and branded formulations business segments recorded year on year growth of near 16% and 14.5% to 3.03 bln rupees and 1.37 bln rupees respectively.

The company's net profit was in line with estimates. An average of estimates of nine brokerages had pegged the quarter's net profit at 1.46 bln rupees. Net sales was below the average estimate of 9.85 bln rupees.

Chairperson and managing director of Biocon, Kiran Mazumdar-Shaw was quoted in a company statement as saying that the company's performance in Jul-Sep was led by strong growth across all its verticals. "Expansion of our biologics footprint in emerging markets and licensing agreements boosted the revenue further," she said.

The growth in small molecules was driven by sales in emerging markets of Africa, West Asia and South America and to India based customers servicing the needs of the US market. Biologics vertical, the company said, saw strong growth of 26% at nearly one bln rupees on account of sales in emerging markets of Africa, West Asia and South America.

Operating margin of the biopharmaceuticals company jumped up to 25.2% in the September quarter from 21.2% in the year-ago quarter. The 400 bps rise in operating margin was chiefly due to a 6.3% fall on year in cost of material consumed to 3.18 bln rupees.

Total expenditure was up 13.7% on year to 7.82 bln rupees. Research and development expenses in the September quarter was 6.8% of sales, up from 5.3% in the June quarter.

Finance costs increased 2.2 times year on year to 65 mln rupees and the tax payment was 48% up on year at 417 mln rupees. 'Other income' was up 69% higher on year at 384 mln rupees in Jul-Sep.

Shaw said Biocon's insulin Glargine pen launched in Japan was well received in the September quarter with prescriptions beginning to gain traction. The quarter also saw the European drug regulator accept for review

Biocon's application to market its biosimilar Trastuzumab co-developed by Biocon and Mylan.

The company received a tentative approval from US FDA for its generic drug, Rosuvastatin Calcium tablets. The company also said that its facilities in India had completed regulatory audits by MCC South Africa and US FDA in the September quarter.

From the June quarter, Biocon's net profit was down 11.9% and its net sales was down 4.2%.

October 26, 2016

Re-blogging an old blog post (28-Feb-2012) on Tata Sons

Re-blogging an old blog post (28-Feb-2012) on Tata Sons


ife in financial markets: tata sons issues Rs 58 crore worth of preference shares to 9 people including ratan tata

Here is something that is of some relevance to shareholders in listed Tata Group companies which they won't get to know of immediately under the disclosure norms of the listing agreements with the National Stock Exchange of India and BSE. 
On December 30 last year (2011) and January 2 this year (2012), Tata Sons, the holding company for all Tata Group companies, issued 5.78 lakh new 7.5% cumulative redeemable preference shares of Rs 1,000 each to nine people, as per the mandatory statutory filings made by the company under The Companies Act, 1956 (as amended till date). 
Issued at a par value of Rs 1,000 each, the preference shares issue fetched Tata Sons a sum of Rs 57.78 crore in cash. Prior to issue of these preference shares, the paid-up preference shares capital of Tata Sons was Rs 4,089 crore, made up 408.9 lakh preference shares of Rs 1,000 each. The paid-up equity share capital of Tata Sons, as of January 2 this year (2012) was Rs 40 crore comprising of 4 lakh equity shares of Rs 1,000 each.
Of the new Rs 58 crore worth of preference shares issued at par,
-- Rs 25 crore worth preference shares was issued to Narotam S Sekhsaria, founder and promoter of Gujarat Ambuja Cements who headed it till six years ago,
-- Rs 11.52 crore worth of preference shares was issued to Noshir Adi Soonawala, a Tata Group veteran,
-- Rs 10 crore worth of preference shares was issued to Ratan Tata,
-- Rs 6.16 crore worth of preference shares was issued jointly to Ravi Kant and Arti Kant. Ravi Kant is a Tata Motors veteran,
-- Rs 2 crore worth of preference shares was issued to Arunkumar R Gandhi,
-- Rs 1 crore worth of preference shares was issued jointly to Praveen P Kadle and Chetana P Kadle,
-- Rs 1 crore worth of preference shares was issued to Farrokh K Kavarana
-- Rs 0.6 crore worth of preference shares was issued jointly to Jamshed J Irani, Daisy J Irani and Zubin J Irani,
-- Rs 0.5 crore worth of preference shares was issued jointly to Simone N Tata & Noel N Tata.