Byapaar.com -The Indian Business Blog

Its so surreal – almost as if I was watching a Hollywood or Hong Kong flick! When I opened the TV yesterday to get myself updated on happenings around the country – I was shocked to hear live gunshots and police personnel moving around Mumbai streets with their firearms firing at something. Before I understood something – I saw India’s premiere train station Victoria Terminus being attacked by terrorists. Two other seven star hotels ( The Taj Mahal Hotel & Oberoi Grand) also came under attack. As news agencies rushed into the spot- reports of more attacks poured in thick and fast and it seemed Mumbai was transformed into a battle-ground. I could not help but remember the live scenes of World Trade Center towers burning on 7/11.

Mumbai has always been the target of terrorists as it is the financial and business capital of the country handling around 50 percent of India’s overall trade and also 48 percent of international arrivals. It is also a favorite with foreign tourists and CEOs of multinational companies much like New York.

As I write this post, I can see live images of hotels burning, commandos exchanging fire and ambulances rushing to hospitals. Till now, there were terrorist attack on 10 places, over hundred people including 7 foreigners and 15 security personnel have died and many people are being held hostage by terrorists at the Oberoi tower. It is reported that around 25 terrorists came by a Vietnam registered boat from Karachi, Pakistan.

Although the Maharashtra government has called in 800 military personnel and 200 special unit commandos (National Security Guards who are the top most commando unit in the country) along with undisclosed number s of Navy commandos, still there is no report of the battle subsiding. Officially the government maintains that there will be no negotiations or talks with the terrorists, but media reports suggest that talks are being held. The government’s efforts are also hampered by the fact that terrorists are holding huge number of hostages who apparently are big shots. And the government must give top most priority for the safe release of them.

May the problem get settled quickly without much harm.

Enough talk of the economic and financial crisis on my last few posts. So now let it pass by for some time and get little bit personal. Yes, sometimes I do write some posts which might be personal but might be useful to my readers if I share my experiences with them.

Today, I’ll focus on some fraudulent companies posing as up and coming financial or insurance companies. Some companies also pose as investment funds looking to raise funds for investment in certain industrial or realty projects.

Their modus operandi is quite impressive. Most of the time they target the country side – in rural and semi urban areas where a huge section of people have good income. These people have very little option to leverage their savings as they have little choices. Only traditional fixed deposits or recurring deposits at banks and post offices are available. So when good speaking marketers enter their domains with promises of huge returns within a short period of time for seemingly small investments – the unsuspecting villager falls prey. The company representatives carry with them some glitzy leaflets, brochure of their companies and give lectures on how they will grow as big as Peerless in the next few years.

Just last week, someone from a certain company approached me to invest in preferential shares of a new company working for government projects in West Bengal little knowing that I run a business blog and am well versant with the industry though I might live in a non-descript corner of India. When he started his usual sweet lecture about who the big shots are already in their board of directors, I politely asked him to show all the government approval papers and if they have the required documents from concerned authorities. He told that – he is not authorized to carry original documents! But all the information may be found on their website! Now here is a catch they usually use to allay suspicion of prospective clients. As internet penetration and literacy is too low in India, people from semi urban areas have a mystic impression about the internet and websites because they don’t know about it whatever their educational qualification might be. Most of the time they get convinced and the fraud run away with their hard earned money.

These financial agencies also offer extra benefits such as commission to get newer investors and it works on chain system. Someone with pure commonsense might understand that these are nothing but big SCAMs and Ponzi schemes. Otherwise they can never pay up the promised returns.

The most depressing thing about this whole phenomenon is that, cheated individuals have no where to go for complaints as most of these deals are done at homes and legal actions can hardly be taken due to lack of proper evidences. The so called company executives roam around from place to place and have no permanent or temporary office nearby as they claim that their company is still new and has only the registered office. The obviously promise to set up their office here in the future once their client base has grown substantially so that they can process client claims locally. But as I mentioned before –most of these are frauds, scams.

So be very careful with such shady companies. My advice would be – don’t fall for them at all. Just excuse yourself when such people approach you with offers. If you have intentions to save, save it in time proven schemes such as bank deposits, LICI policies, post office deposits. After all, there was a newspaper report recently that top leaders from across parties are all followers of traditional saving schemes like KVP, Government bonds or just normal recurring deposits.

Indian Rupees slipped below the psychological mark of Rs. 50 against the US dollar on Wednesday as it came under heavy pressure from investors and oil companies in a market where the greenback has been scarce for the whole year. The global financial turmoil and imminent recession in industrialized countries have made foreign investors wary of the market and now they have started to withdraw funds from Indian equity

market. According to latest data available, foreign traders have already taken away US $13 billion from Indian market whereas by this time last year, they have pumped in US $17 billion. The pressure on the Rupee increased manifold over last couple of days due to high demand by oil companies who are scheduled to pay import bills at this time of the year. These factors made the Rupee very weak as there is very little supply of the greenback in the forex market. Market analysts and forex traders are speculating that it might slip further and cross Rs. 52 per US dollar mark during next few weeks.

On the other hand the Indian government continues to put up a brave face and is trying its best to ward off serious damages to the economy despite projections of lower growth rate. In its latest report the Center for Monitoring Indian Economy (CMIE) has put the rate of growth at 8% this year. But other agencies put the figure between 6.5 to 7 percent. Indian Finance Minister P Chidambaram said the government is taking more measures in the right direction and asked industries and service providers to cut prices during his speech at the concluding day of Indian Economic Forum, recently held at Delhi. He said -

“The classic response to demand slowdown is to cut prices for the short term ..”

According to him, price cuts will fuel domestic demand and improve sales thereby making balance sheets healthy. He told industry leaders that while banks are ready to lend money, consumers are nervous and are not ready to pay the current price. But CEOs are not impressed by government’s suggestion. They think that the interest rate must fall further before they can think of price cuts .

On another note, the government has announced some protectionist measure to shield local industries. It has re-imposed import duties on certain products including steel and soybean oil. It is also considering of lowering excise duties to give some relief to the industry.

Everybody knows Indian infrastructure is in tatters and government has taken this sector as its vehicle to pump in more money in the market. It is planning to double the stimulus package to US $10.75 billion and wants to work with the private sector very closely in this regard. Read the rest of this entry »