12 January 2012

UP Elections: Why political shifts are important for Anil Ambani, Manoj Gaur, Ponty Chadha, Subrata Roy & Kushagra Bajaj


Mayawati or Mulayam? That question takes on a whole new meaning for some business groups. For the last 10 years, these two politicians have taken turns to preside not only over Uttar Pradesh, but also over policy and administrative decisions that made or unmade select business groups.

According to professor Rajesh Mishra, head of the sociology department in Lucknow University, as they grow in stature, emerging politicians start having economic interests of their own that goes beyond funding elections.

"This leads to active collaboration with particular business houses for whom they tweaks policies, manages bidding processes and contracts, and facilitate all direct clearances," he says. It's a symbiotic relationship, adds Professor DS Sengar of Indian Institute of Management, Lucknow. "A businessman needs certainty to function and expand."

In UP, if the Jaypee Group and Ponty Chadha have prospered under Mayawati, Anil Ambani and Subrata Roy have endured body blows. Mishra describes it as a "fi ght of the foxes". "When a certain political party assumes power, it goes out to hurt the interests of those who are seen close to the previous regime," he says.

"Corporate groups are ready for such periods of victimisation. It becomes a part of their risk-management strategy, where they multiply fast during one period and then try to preserve during an adverse regime."

Three of the five business groups profi led below have gone through a phase of phenomenal wealth creation, followed by brutal destruction or stagnation. The other two have experienced highs under Mayawati.
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So, in the event of a regime change, might they be in for lows? Such is the secrecy and sensitivity of the issue that, barring Manoj Gaur of Jaypee, the others declined to talk for this story; likewise, for Mayawati's Bahujan Samaj Party. But when the votes from UP are counted on March 4, they will watch with anything but academic interest.

Manoj Gaur 

Today, UP may account for just 10% of Jaypee's revenues of Rs 15,749 crore. But going forward, it will be the prime revenue and reputation driver for the group because of two road projects.

The first is the 165-km Yamuna Expressway, which promises to halve the travel time between Delhi and Agra when it opens in two months. It's a build-operate-transfer (BOT) project. Jaypee is not charging anything to build the expressway. Instead, it will collect toll on the road for 35 years, and then hand it back to the government.

More importantly, the UP government has given it 6,000 acres of land on either side of the road on a 90-year lease. It is developing townships at five locations: two in Gautam Budh Nagar, and one each in Noida, Aligarh and Agra.

Jaypee plans to build houses, offices, an international airport and a sports complex on it. The development of it could yield Rs1,35,000 crore in revenues over the next 20 years, says Manoj Gaur, executive chairman, Jaypee Group.

Jaypee bagged the project in 2002, when the BJP was in power. But it was the Mayawati government that helped Jaypee acquire land, at fixed rates and at a time when land acquisition by governments had become a hot potato. 
Flaying this land acquisition, opposition parties in UP say the government paid owners the price of agricultural land, not commercial land.

"Jaypee was favoured brazenly, rules were bent for them," alleges Samajwadi Party spokesperson Rajendra Chowdhry. "Whatever the government did was well within the bidding agreement," replies Gaur. Chowdhry also alleges that Anand Kumar, Mayawati's brother, holds benami shares in the Jaypee Group.

"If the SP comes to power, it will probe the matter," he adds. A November 2011 research report ofEdelweiss Capital said: "Jaiprakash Associates (holding company) is exposed to the risk of any political upheaval or any exigencies in UP."

The second road project, the Rs 40,000 crore Ganga Expressway, is structured along similar lines, but is bigger. Jaypee has the right to develop 30,000 acres in eight townships on this road connecting Noida and Varanasi.

The 1,047-km project is currently in limbo, with the Allahabad High Court in May 2009 asking the state government not to go ahead with it without environmental clearances. Gaur is optimistic. "If people are happy with the Yamuna project, they may clamour for the Ganga project.

That's the only hope," he says. Despite the SP threats, political observer Paranjoy Guha Thakurta says: "Any change in power does not necessarily mean the projects will be in jeopardy."

Jaypee has prospered under all regimes: it bagged the Yamuna Expressway under BJP, it bought a cement company through a court-monitored auction during Mulayam's regime and thrived under Mayawati. "We will work with the government," says Gaur.

Anil Ambani 

After his split with brother Mukesh in 2005, Anil Ambani identified the power business as his vehicle of growth and UP as his building ground. He shared a relationship of business and bonhomie with Mulayam and his number two, Amar Singh. He attended the swearing-in ceremony of Mulayam, whose party later supported Ambani's candidature to the Rajya Sabha in 2004.

"Ambani's relationship with the Samajwadi Party was more than political allegiance," says Paranjoy Guha Thakurta, journalist and political observer. "He was part of the extended SP family. Amar Singh wrote so many letters to the Prime Minister brazenly batting for Ambani (in the bad times)."
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Alleges Congress MP, Raj Babbar, who led the agitation against the Dadri project: "The land acquired was far in excess of what was needed for a project of that size." A multi-product special economic zone (SEZ) in Noida proposed by Ambani was also grounded.

Explaining this decision taken in the second cabinet meeting of the Mayawati government in May 2007, state cabinet secretary Shashank Shekhar Singh said the SEZ did not meet the guideline of being on a contiguous piece of land, having one entry and one exit.

"It was found to have been proposed on two pieces of land, with a road dividing the plots," he had said. In UP, Ambani presently only has a 900 mw power plant in Rosa (bought from the Aditya Birla group), and two road projects bagged in 2011 on which the planned investment is Rs 3,500 crore.

In his group's scheme of things, UP is a small contributor. It could have been bigger. The continuing presence of Mulayam could have seen more of Ambani's ambitions in the power business being realised - at a projected 5,000 mw at the end of 2012, Reliance Power is behind its 2017 target of 35,000 mw.

If Mulayam returns, that could change. Ambani still has land in Dadri, but no gas. Also, a person close to the group says Mayawati is less hostile to "enemy business groups" than before. "She is supportive of Rosa," he says, not wanting to be named. "She wants to project herself as the future prime minister."

Subrata Roy 

Subrata Roy's Sahara Shaher in Lucknow stands adjacent to Mayawati's magnum opus in concrete, the Ambedkar Memorial complex. And it bore the scars of Roy's muchflaunted friendship with Mulayam.
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"Ponty who," was the public refrain. Outside of UP, it still is. "The policy (of awarding the liquor licences) was tailormade for Ponty Chadha," alleges Samajwadi Party spokesman Rajendra Chowdhry. "He has benefited the most in Mayawati's rule."

Chadha declined comment on this charge, though he had told ET in a rare 2009 interview: "We do business according to the rules and guidelines put forth by the state." In the same interview, Chadha reluctantly revealed that his group's size was Rs 6,000 crore.

Of this, he said, Rs 4,000 crore came from the liquor business, with his group having operations in six states. Much of the remaining came from real estate, under the Wave brand, which is currently developing perhaps the largest integrated township in India, over 4,500 acres in Ghaziabad.

The group is also developing 152 acres of commercial land in the heart of Noida, where finding such tracts is difficult. Chadha started business in Punjab, where he was reportedly close to the Congress government during 2002-07.

But he made his millions in UP, first under Mulayam, who inaugurated his Wave mall-cum-multiplex in Lucknow, and then under Mayawati. In 2010, he bagged five of the 11 sick sugar mills sold by UP. "He got the mills RsRs 276 crore, when their market price was Rs 1,000-1,500 crore," alleges Congress leader VM Singh.

"The Mayawati government ensured the bidding process was manipulated to favour Chadha." The sale of all mills - five were bought by a central PSU and one by a private player - has been challenged in the Allahabad High Court. In spite of also being a film producer, Chadha keeps a low profile and is rarely seen publicly.

Yet, in March 2009, a liquor industry veteran who has engaged Chadha in business deals in the past, jokingly said: "He certainly appears more influential than the Mughal empire in its twilight years."

2 comments:

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  2. Regarding Shift Students in another College
    Hi Everybody
    I am Anjali Raghav Student of BBA final year last semester from Global Business School.I am in last semester ,then Global Business School Shift all Students to GIIPM,Noida.There are Some points related to my problem:
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