India Insight

Ponzi scheme in West Bengal flames out, embers linger

Suicides, thousands of duped investors, hundreds of laid-off journalists, bickering politicians, protests slack regulation, one suspected mastermind arrested: it’s Ponzi scheme time in West Bengal, and it looks likely that little will change after the drama ends.

The latest fleecing of poor and middle-class investors brought in an estimated $730 million, according to media reports, though public interest litigation filed in the Calcutta High Court by one lawyer says the amount is as high as Rs. 300 billion. ($5.5 billion) The head of the Saradha Group and accused mastermind of the scheme, Sudipta Sen, was arrested in Kashmir on April 23 after two weeks as a fugitive. He has maintained his innocence, and reportedly threatened suicide, saying he might not be able to repay investors.

Sen started out as a small-time property dealer in the late 1990′s in Kolkata. His Saradha Group in the past decade had interests in real estate, tours groups and newspapers and television stations, and eventually owned nearly 100 companies.

Data from India’s Ministry of Corporate Affairs reveals interesting details. Many were incorporated in a one-week period in January 2011. They shared an address: 455 Diamond Harbour Road, Behala, Kolkata. They each listed working capital of Rs. 5 lakh each ($9,196). Their email addresses were the same. India’s market regulator, the Securities and Exchange Board of India, began investigating the Saradha Group in 2010.

Three years after its investigation began, SEBI on April 23 ordered the company to pay back investors in three months. It has threatened to start a criminal case if investors don’t get their money back, according to NDTV. West Bengal sought Sen’s arrest, and the Congress Party has asked for a federal law enforcement investigation.

Wary of stocks, Indians cling to safe havens

Sometimes people suspect that the grass is greener in the next field … but they’re not always right.

Consider this. India’s gross domestic product has grown about 7 percent on an average per year for the past nine years. Its industrial growth has been steadily rising since then. Buoyed by economic growth, the country’s capital markets also offered itself as an attractive and inflation beating investment option.

That means that someone who invested at the end of 2002 in the BSE’s benchmark index, Sensex, would have made a 418 percent return on his portfolio by July 11 (just a random date). It sounds like the Madoff plan, but it’s not. The Sensex’s value on Dec 31, 2002 was 3377.28 which rose manifold to 17489.14 on July 11, 2012. Our market had its fair share of ups and downs, but it remained focused and depicted the country’s growth story.

Survey says doing business in India is tough

A big banner of of U.S. President Barack Obama is pictured on a building in Mumbai November 6, 2010. REUTERS/Fayaz Kabli

Even as India Inc celebrates U.S. President Barack Obama’s recognition of the country as a world super power, a recent study by the World Bank presents a contrasting view.

India ranks 134 among 183 nations in a survey called “Doing Business 2011″  — that gauges the ease of doing business in a country — and is ranked behind countries like arch rival Pakistan, Bangladesh and Sri Lanka.

Singapore leads the pack, while Hong Kong grabs the second position in the list.

Is the media going overboard in its coverage of the Ambani feud?

The war of words between the billionaire Ambani brothers took an unexpected turn when younger sibling Anil offered an olive branch to elder brother Mukesh in a bid to resolve a feud over the split of the Reliance business empire in 2005.

The widespread coverage the Indian media has given to the squabble between the brothers has led to a debate on social networking sites such as Twitter, with some accusing news organisations of playing host to a reality show or soap opera that stars the Ambani family to boost ratings.

Prominent columnist Vir Sanghvi wrote through his Twitter account virsanghvi: “Do you think some network should plan a reality show on the Ambani battle? Or are they doing it already on the news?”

Is India failing to win hearts and minds in Kashmir?

Is India pushing the ordinary Kashmiri people further away by enforcing regular curfews, putting most of their separatist leaders under house arrest and denying them religious freedom by banning Friday prayers in Kashmir’s Jamia Masjid (grand mosque) on a regular basis to avoid violence?

I travelled to Srinagar, the summer capital of India’s troubled state of Jammu and Kashmir this week, and saw how people were tired of violence and wanted peace and dignity in the region.

Many told me how they felt unhappy each time an incident of violence in a remote corner of the city would scare authorities into shutting down the city and forced them to stay indoors, many without any provisions.

Satyam — truth be damned?

If a stock dives 55 percent, is it time to go bargain hunting?

Absolutely not! At least that was the case with India’s Satyam Computer Services after it shocked investors on Wednesday by disclosing most of its profits were cooked up.

The disclosure came after the company’s botched attempt last month to buy two construction firms partly owned by its founders, which sent its shares diving 55 percent in one session by angry investors.

Chairman Ramalinga Raju said: “It was like riding a tiger, not knowing how to get off without being eaten.”

It’s “all in the family” for Indian tech firm

Hold on to cash and don’t jump in to help family-owned firms.

Satyam Computer Services got this stern message this week when it was forced to dump a plan to spend $1.6 billion to buy two builders, part-owned by Satyam’s chairman and other insiders.

Ramalinga Raju, chairman, Satyam Computer Services is seen in his office in Hyderabad in this undated handout photograph. REUTERS/Handout

The move sent shockwaves across a country known for its trailblazing software industry, and triggered a cloud over corporate governance in India.