celestri.org

Some people go to a bank, others have the private bankers come to them, but the Indian Civil Aviation Minister Praful Patel (whose daughter was recently married) has taken it one step further by living in the same building as the banks, enter – Ceejay House. Ceejay House is located on Dr. Annie Besant Road in Worli, across the street from Atria Mall and next to Poonam Apartments. Ceejay House is owned by the Ceejay Group which Praful Patel owns.

Ceejay House stands impressively at 14 stories and has over 275,000 square feet. It’s currently being quoted around Rs 500/sq ft, which means it will generate over INR 13.7 Crore (USD 3.1 million) in rent a month. But, the building will never be fully leased because Praful has taken the top two floors for his house, which equates to around 40,000 sq feet of living space. Anywhere in the world that is a lot, but in Bombay that’s fu!@#$ hugh.

It only makes sense he lives in the building since he’ll need a place to invest the monthly income the building will generate. And that is where the banks come into play, some of the larger private bankers and private equity guys will be just a few floors below him.

Some of the tenants are Barclays, Credit Suisse, Societe Generale, Lehman Brothers, DEPFA, HypoVereinsbank, Halycon Trading Company, India Equity Partners, Matrix Partners (the guys that started baazee.com and sold out to eBay) and INOX Leisure Limited (they own and run the INOX chain of theaters).

No, i’m not talking about the Ku Klux Klan (aka jackasses) but Kothari, Kotak and Kampani. Over the past 18 months they each have sold their joint venture stakes.

- Dec 2005, Hemendra Kothari sold out to Merrill Lynch for USD 500 million

- March 2006, Uday Kotak sold out to Goldman Sachs for USD 74 million

- Feb 2007, Nimesh Kampani sold out to Morgan Stanley for USD 500 million

Do these guys know something we don’t about the markets? My guess is the investment banks pushed for the separation so they could start their own wholly owned offices in India. In the process some of these guys made out like bandits for being in the right place at the right time.

Just saw my first Acura NSX in Bombay and it almost brought a tear to my eye.

The latest cover story of BusinessWeek sums up the attitude that many people face when conducting business in India. Although the story didn’t cover much on Bombay, it faces the same issues as Bangalore and other cities. Which sadly it should not, being the financial hub of the country it generates over 40% of all taxes paid, and also generates a lot of “black money” – unreported income. A great quote is “What Bombay Makes, Delhi Takes.” The contrast is large between the large roads in Noida (near Delhi) vs. the pothole roads in Bombay.

The article talks about “leakage” as a problem, but another equally painful problem is low expectations. You see it everywhere, in newly built flats that just don’t have the fit and finish you expect, the roads have potholes within days of being built, or malls that have very little parking. And because of this low expectation, things are just half planned or half thought out.

(click on the BusinessWeek cover for the full article)

The latest list from Forbes is out and there are a large number of Indians on the list this year. Many can be attributed to sky high equity valuations and insane property prices. Some of them are:

#62 – KP Singh of DLF. USD 10 billion. A major property developer in Delhi, although not currently listed on the exchanges, valuations done on the enormous land the company owns.

#114 – Ramesh Chandra – Unitech. USD 6.4 billion. Listed on the exchanges.

#754 – PNC Menon – Sobha Developers. USD 1.3 billion. List on the exchanges.

#840 – Pradeep Jain of Parsvnath Developers. USD 1.1 billion. I wrote about their IPO previously and it currently trades 50% off it’s 52 week high. So I’m guessing if you had to calculate his wealth today he would not make the list.

Finally getting around to posting some car pics. The SL500 and 7 series were spotted on Carmichael Road. The Range Rover near Nariman Point and the Bentley on Warden Road. The 540 ain’t nothing special except the fact it is owned by the world’s 86th richest person, also spotted on Carmichael Road.

One of the main attractions for me about being in India, is seeing age old businesses being recharged and revamped. One which I recently came across is the age old tiffin service. Typically you would have someone cook your lunch and then you would give it to a tiffinwala, who would then deliver your food to your desk in the office, alot has been written about this age old service.

The Calorie Care guys not only deliver your meal but cook the food for you. And the food they cook is healthy. The service actually tackles a couple of new issues arising with the new work force in India, people who can’t cook their own food since they live alone and food that is actually healthy.

Although I have not tried the service it’s definitely something to try if you are living in South Bombay and on your own.

The talk over the past several weeks has been about inflation in India and how it affects the common man. The reality is the common man always gets the short end of the stick in India, however in recent elections the ruling party lost key seats because of inflation. Because of that, all the political figures are getting involved and trying to cut inflation in flash, which never happens. The first thing they did was look at the commoditiy markets and banned several commodities (rice and wheat to name a couple) from trading – they blamed the speculators in the market. Poor planning on the governments part? Probably, but it’s easier to blame the traders.

It’s the equivalent of blaming real estate brokers for the rise in real estate. Which brings me to the next big government move. Housing prices are also rising, so the government wants to curb those prices by banning exports on cement.  Which will lead to an artificial supply in India and hopefully prices will fall in cement and make houses cheaper to build…oh wait, the cement companies could just adjust their output and keep prices inline.

All these so called inflation buster moves have done one thing and that is make foreign investors re-think their India strategy. Take a look at the wild price-action movements in the equity markets over the past week. The proposed cement ban is a throwback to the “license raj” era and very much against the free market perception the government has been trying to build ever since 1991.

In 2002-3, HSBC was looking to expand outside of the emerging markets where it was gaining market share and wanted to go after the US market. They jumped right in by acquiring Household International Inc. in 2003 for USD 15.5 billion, now called HSBC Finance Corp., it lent money to people who were termed risky. Although highly lucrative, it’s equally risky to offer these sub-prime loans (an article from the NY Times  about the market). With the stagnation in housing prices and with interest rates going up, people with these notes are now having to re-finance and can barely afford the new mortgages.

Back at HSBC, many of the top executives who gave the green light for the acquistion of Household Int’l have been let go� Which is expected when you bet USD 15.5 billion on an expansion plan that goes haywire. However, there Asian operations are still rolling along and the bank has reported a net income of USD 7.06 billion, while bad loans ballooned to $10.6 billion, mainly in the U.S.