GMR in Spotlight Now

GMR is one of India’s largest infrastructure/construction companies with presence in roads, power, airports, construction etc. Like other infra majors the company has been facing a tough time as interest costs have increased, projects have got delayed and growth has slowed. The company now faces attack to its showpiece airport project, for unfairly wrangling out major concessions worth billions from the regulators (corruption and collusion implied by the Indian auditing statutory body CAG).

Note regulatory capture by major corporate groups is quite well known but the proactive approach of low key Government body CAG in recent times has exposed massive corruption in multiple sectors. The 2G scam has already caused the jailing of ministers and CEOs (though, out on bail as usual) and led to cancellation of licenses for many companies. Now the spotlight has fallen on the PPP model followed in giving India’s capital airport to a consortium led by GMR.

The report exposes how:

  • Capital costs were escalated in the middle of the project
  • Additional real estate development was done
  • How the concessionaire manipulated to lower the Government’s revenue share through JV with related entities.

The report is scathing and likely to lead to a long drawn court case with major financial implications on GMR. While the current spotlight in on the huge coal allocation scam, the airport scam is not to be dismissed either.

2G and CWG Scam

India has lately become a nation known for endemic corruption rather than the world’s poster growth boy with the ruling party members implicated in a number of corruption scams. With the Government reluctant to take action against its own, the Supreme Court was forced to take over the supervision of the investigating agency CBI. In the first charge sheet top corporate honchos and CEOs were put under arrest along with the former telecom minister Raja and his cronies. With the ruling party under pressure from a civil society movement against corruption, the ability to manipulate the investigation process is limited. Not that the Government is not trying put impediments in the court cases of top ministers and leaders, indulging in character assassination of the eminent social activists like Santosh Hegde and others. This comes even as other chief ministers of the Congress like Gehlot get caught in nepotism.

Kalmadi who is a Congress member of Parliament and the Chairman of the powerful Olympic Association in India has been arrested in the CWG scam. Note the Commonwealth Games has been known to be one of the most corrupt ones organized in India. Some of the organizing members and Kalmadi friends have already been arrested and released. It is almost 6 months after the Games, with conclusion that Kalmadi has been arrested even as numerous cases of manipulation and siphoning of money have been reported. Not a surprise, given that the Government routinely manipulate the investigation process and agencies like CBI to its own ends.

Indian Express

Government auditor CAG today slammed the government for giving out Delhi airport and its land with a potential earning capacity of Rs 1,63,557 crore to private-led operator DIAL which made a total equity contribution of only Rs 2,450 crore.

With an equity contribution of Rs 2,450 crore of which the private GMR-led consortium’s share was Rs 1,813 crore, the Delhi International Airport Limited (DIAL) got a brownfield airport for 60 years, the report of the Comptroller and Auditor General (CAG) said. A brownfield airport is one which is already in existence.

Renewable Energy Certificate

Renewable Energy Certificate prices in India are showing massive volatility with prices going down by almost 20% in one month as supply exceeded demand. Note the REC market in India is relatively young and is traded on just 2 exchanges. The frequency is just once a month as volumes remain low with limited participants. The market came into being after CERC mandated that by 2020, around 15% of the Indian electricity supply should come from green energy sources compared to around 5% now. To fulfill this requirement each state would have to set up a renewable energy target called RPO. Each state would have a different RPO determined by the state electricity regulator since different states had different green energy potential. The electricity producers could meet the shortfall in their green energy obligations by buying and selling of RECs.

However the market for REC remains volatile due to the fact there is a lot of uncertainty with RPO. The biggest source of this problem is the fact that RPO is not enforceable by the regulator. If the state slips in its RPO, it does not have to bear any penalty or punishment. Given the pathetic state of the electricity distributors in the state with billions of dollars in debt, it seems unlikely that they will buy expensive green energy to meet their RPO.

Indian Renewable Energy Certificate Market grows by an astounding 600% annually

India recently introduced the Renewable Energy Certificate Scheme to promote the use of Green Energy in India through a market based pricing mechanism. Other cleantech subsidies are being gradually reduced in favor of this single unified market process. In Wind Energy, the use of accelerated depreciation and GBI has been cancelled this year. REC Trading has seen an exponential increase almost every month since inception and it grew by almost 50% in June to see a record turnover of almost $10 million. Though small in absolute terms, the figure is set to grow as the pan India market sees many organizations entering to fulfill their Renewable Energy Obligations. India has set a target to obtain 15% of its electricity requirements from Renewable Energy from around 6% now. This will require about 4-5 GW of Green Energy installations every year.

Solar Renewable Energy Certificate (SREC) Prices to get support from New Jersey Legislators

Solar Renewable Energy Certificate (SREC) Prices in New Jersey have been falling at a sharp rate from a high of $600 to $225 as high returns from falling solar panel prices and other tax breaks. This has led to a massive growth in solar installations in the state making it the 2nd largest state by solar capacity. New Jersey installations have crossed 500 MW and made it a huge green job driver in the state. However this boom has made the market driven SREC prices fall quite sharply. Though not falling as sharply as Pennsylvania where SREC prices have become a joke, they are still low and falling.

New Jersey lawmakers are trying to rectify the situation with Assembly Telecommunications and Utilities Committee  approving two bills that seek to reverse a recent sharp fall in the value of the treadable Solar Renewable Energy Certificates. This will have the following measures like:

 1) Increase the PPA term to 15 years

2) Make non-utilities buy SRECs

to boost the falling SREC prices.

You can read:

“Renewable Energy Certificate” Policy Starts in India – What you need to Know and Who will Benefit

Business Line

 Only 1,58,320 non-solar renewable energy certificates were traded on the country’s two energy exchanges on July 25 compared with 2,36,485 in the trading session of last month.

The prices also sank — to Rs 2,000 a REC on the Indian Energy Exchange Ltd, and Rs 2,202 on the Power Exchange of India. Comparatively, the prices were Rs 2,402 and Rs 2,460 last month.

(RECs are generation-based ‘certificates’ awarded (electronically, in demat form) to those who generate electricity from renewable sources such as wind, biomass, hydro and solar, if they opt not to sell the electricity at a preferentially higher tariff. These certificates are tradeable on the exchanges and are bought by ‘obligated entities’, who are either specified consumers or electricity distribution companies. These obligated entities may either required to purchase a certain quantum of either green power or RECs. Trading happens on the last Wednesday of each month.)

Demand for RECs also fell steeply. Demand fell to 1,61,028 RECs against a supply of over 5 lakh RECS. Buy bids June were for 3,60,691, which means that the demand has fallen to less than half.

The Indian Energy Exchange accounted for 93 per cent of the traded volume today.

“With the market starting high during initial months of the financial year itself, we were actually expecting this. However, with prices declining in REC, we can expect new buyers emerging and, hence, prices getting stabilised after few months,” Mr Vishal Pandya, Director, REConnect, , a consultancy that operates in the REC market, told Business Line.

“The whole market is designed based on the assumption of Renewable Purchase Obligation enforcement and the current measures on the enforcement side seem not sufficient,” Mr Pandya said.

The only silver lining was the demand for solar RECs. Buy bids totalled to 8,754 solar RECs. However, due to non availability of solar RECs, only 179 were trade—at a price of Rs 12,800.

The Indian Stock Market remains a highly manipulated one, despite the more than one trillion dollar in combined market capitalization. While most of the large cap index stocks remain less volatile, the mid cap stocks are very volatile. Most of the stocks show large movements without rhyme or reason, falling 20-40% on market rumors which are vague and totally non-credible. Besides manipulation by stock market operators, small cap and mid cap stocks remain highly vulnerable to the shenanigans of their promoters most of whom are totally corrupt.

Many of the large mid cap stocks like Pipavav Defence, Tulip Telecom fell heavily on rumors that some big market operator had gone bust leading to large sales. Other rumor that was credited, with being behind the fall was that a large FII Vanguard had sold the shares. Till now, no one had been able to decipher the real reason why the stocks fell. However this is not a new phenomenon as even larger stocks like DLF, Unitech, Suzlon, Satyam and others have fallen heavily on rumors. Investing in the Indian stock markets remains a hazardous activity and investing based on fundamentals remains mostly a fool’s activity.

Sun TV one of the biggest media companies fell by a whopping 40% intraday as the CBI accused its promoters of being involved in a scam involving a bribe of $100 million. The promoters who are part of a powerful political clan in the Southern State of Tamil Nadu have been accused of various frauds and swindles. Their group stocks keep going up and down like a yo-yo with the changing of their political fortunes.

Yesterday it was Tulip Telecom. Today, it was the turn of Sun TV to crash 40 per cent in opening trade.

Mr Kalanithi Maran-controlled Sun TV and SpiceJet plummeted in early trade on Friday on media reports that the Central Bureau of Investigation is poised to file a charge-sheet against the former Telecom Minister, Mr Dayanidhi Maran, and his brother, Mr Kalanithi Maran, for allegedly receiving Rs 549 crore for their role in the acquisition of Aircel by the Malaysia-based firm Maxis.

The stock of Sun TV opened 40 per cent lower at Rs 176.75, but bounced back sharply to trade at Rs 251.4, still a fall of 14.7 per cent.

Meanwhile, the BSE Sensex was trading higher by 1.4 per cent at 16,871.

SpiceJet crashed over six per cent to trade at Rs 26.40 in the opening minutes.

According to reports, the CBI has almost zeroed-in on illegal gratification accepted by Mr Dayanidhi through Mr Kalanithi Maran in the garb of premium share investment in the family-controlled Sun Direct.

Mr Dayanadhi Maran does not own any stake in Sun TV or SpiceJet.

Corruption in Indian Telecom Industry

India has been rocked by numerous new corruption scandals and scams in the recent past. One of the biggest was the 2G Telecom Scam in which top ministers and leaders of the ruling party were involved. The 2G Scam resulted in cancellation of licenses of a number of companies which included foreign telecom giants like Telenor, Etilisat and others. While the guilty have managed to get bail in the cases as is the norm in India, thousands of job losses are happening as a result of the court rulings. Some of the companies have shut their operations while others are drastically reducing their operations.

The Telecom industry in India provides jobs to hundreds and thousands in low skill work like maintenance, distribution and marketing. Now investment and job creation in the telecom industry has gone into reverse, thanks to the corruption perpetrated by the politicians and bureaucrats in the country. Note the legal system in the country has failed time and again to put the big fish in jails despite massive public anger and media spotlight in these cases.

2G Telecom Scam

 The CBI will charge India’s top conglomerates, the Essar Group and Relaince ADAG with criminal conspirary and cheating in the multi billion dollar 2G Telecom Licenses Scandal. This Corruption Scam was brought directly under the control of the Supreme Court as the Government failed to move against powerful businessmen and politicians. Now the investigative agencies which have broken free from the ruling party’s interference have given the status of the investigation to the Court. The CBI has said that the 2 companies Loop and Swan Telecom were used as front companies by established telecom operators Essar and Reliance Communications to get more license. Note this defeated the entire exercise and there is ample circumstantial evidence to prove that the telecom minister Raja and his cronies connived with the companies to give precious spectrum for a song. Massive kickbacks were given through real estate companies like DB Realty whose top billionaire owners are cooling their heels in jail as well.

It remains to be seen whether the top corporate executives of India’s topmost conglomerates get prosecuted over these wrong doings. Essar and ADAG are amongst the top 10 conglomerates in India with wide ranging operations with billions of dollars in revenues nationally as well as internationally. The Supreme Court has been instrumental in bringing this case so far as the Government seems totally co-opted by corruption. It has been frequently castigated by the Supreme Court and has shamelessly defended corrupt bureaucrats and politicians. It remains to be seen how this 2G Telecom Case ends. If justice is done, then it may provide a new chapter to India’s corruption ridden story till now.


The largest Nordic mobile operator plans to cut its India workforce by scaling down GSM operations in four regions – Tamil Nadu, Kerala, Karnataka and Odisha – out of the 13 zones where it is commercially active in its bid to unlock and reallocate funds to more profitable regions, amid the continuing policy uncertainty on the sale of 2G airwaves.
“Uninor has around 400 direct employees across Odisha, Kerala, Karnataka and Tamil Nadu. As it gradually scales down in these circles, it will also evaluate possibilities of relocating some of the employees to other Uninor circles and also provide assistance in securing employment outside the company,” said Tor Odland, vice-president (group communications), in a written response to ET’s email query on the details of the India workforce reduction exercise.

But the Telenor spokesman confirmed that apart from impacting 400 direct Uninor employees, it would also hit 1,600 indirect employees, together “accounting for around 2,000 of (Uninor’s) 17,500-strong workforce”.   Telenor Group CEO Jon Fredrik Baksaas claimed the latest restructuring of its Indian unit would help it achieve cash-flow break-even before end-2013.


The company has gone down alarmingly in the last 2-3 years making it a classic B-School case study of how not to run a company. Nokia’s market capitalization has gone down by around 95% from a $100 billion to around 5-6 billion now. There are many reasons which have contributed to this downfall, the biggest of which was the advent of the iPhone which completely changed the mobile phone market on its head. The entry of another tech giant Google through its Android O/S further brought a paradigm change to the smartphone industry. Nokia, the market leader in all segments of the phone market suddenly found itself panting to keep up. It has made many blunders since then and tried numerous new strategies, management changes, job firings but all to no avail.

Like other technology companies, one of the reasons for Nokia’s decline is its focus on research rather than marketing. One of the reasons for the stunning success of Apple, the world’s biggest multinational corporation is its relentless focus on the consumer needs and marketing. Nokia failed on both accounts. The company spent $40 billion on R&D in the last 10 years compared to around $10 billion for Apple. Nokia managed to develop all the new features much earlier than its competitors but it failed to move the products from the lab to the market. One of the reasons is that as Nokia became big and sprawling, internal politics ate more of the management time than focusing on what consumers wanted. The company seemed to play catch up to all the new changes in the market like flip phones from Samsung and thin phones from Motorola rather than focusing on its core strengths. The story of Nokia is like that of many other empires which grow too big for their own good, losing out to external competitors.

More importantly its share in the lucrative high end smartphone market is falling faster. It looks with the hypercompetition in the smartphone market, Nokia has an extremely low chance of regaining its lost profits and margins. It is concentrating on the other segments of the mobile market to defends its units where it is also getting hammered by competition from Samsung, LG in the middle segment and local players at the lowest segment. The main problem is its very unsuccessful R&D which despite its long history in the mobile market and huge amount of dollars spent, has failed to compete against much  smaller rivals like HTC. Nokia forms a classic cases study of a Technology Company which failed due to failure of its R&D though Marketing also played a Role.

Nokia Fails in Indian Markets too

Nokia had lost a big chunk of marketshare in 2009 to local competitors like Micromax, Lava, Spice and MNCs like Samsung, LG and others. In 2010, this trend accelerated with Nokia losing an astounding 18% marketshare in the first 6 months of 2010. The company’s marketshare has been whittled down to just 36% from 54% earlier with local Indian mobile makers gobbling up a 33% marketshare. For Nokia, this was another resounding defeat as its Indian Fortress crumbles. Nokia is getting squeezed both on the high end as well as the low end. Local Indian companies are coming up with better features at lower price points and beating Nokia black and blue. Despite huge R&D, manufacturing strengths and an enviable distribution network, Nokia lost the pulse of the Indian customer. The smaller Indian companies like Micromax are receiving Private Equity money to expand faster given their huge success. Nokia clearly needs to change the whole culture and DNA of the company like IBM in the 1990s.


More than seven years before Apple Inc. rolled out the iPhone, the Nokia team showed a phone with a color touch screen set above a single button. The device was shown locating a restaurant, playing a racing game and ordering lipstick. In the late 1990s, Nokia secretly developed another alluring product: a tablet computer with a wireless connection and touch screen—all features today of the hot-selling Apple iPad.

The impact was evident in Nokia’s financial report for the first three months of the year. It swung to a loss of €929 million, or $1.1 billion, from a profit of €344 million a year earlier. It had revenue of €7.4 billion, down 29%, and it sold 82.7 million phones, down 24%. Nokia reports its second-quarter results Thursday and has already said losses in its mobile phone business will be worse than expected. Its shares currently trade at €1.37 a share, down 64% so far this year.

Instead of producing hit devices or software, the binge of spending has left the company with at least two abandoned operating systems and a pile of patents that analysts now say are worth around $6 billion, the bulk of the value of the entire company. Chief Executive Stephen Elop plans to start selling more of that family silver to keep the company going until it can turn around its fortunes.

Also Read:


Solar Mobile Phones

India has the fastest growing market of mobile phones, with the second largest number of subscribers in the world. There are more mobile phones in India than toilets, and phones have reached the poorest sections of the society. The low call rate charges and the cheap price of phones has made it affordable to even people earning less than $2/day (incidentally majority of India around 80% have their incomes capped at that level). However the basic problem of electricity to charge the mobile phones, remains a major hurdle for a vast majority of the population. Even in villages and cities where the power grid is available, power cuts ranging to 20 hours a day is not uncommon. Therefore charging of phones is a big issue.

However solar power which is terrific at providing electricity to off grid communities can solve the above problem as well. Solar powered mobile phones are being introduced by some of the local Indian vendors. These vendors are very good at selling phones with features adapted to the needs of the local population. There are many cheap mobile phones in the Indian Market, with affordable call rates, but the major problem of electricity in rural areas, has disrupted their usage, due to non-availability of any option left for phone charging.

Some of the big Telecom companies that have taken the plunge into Solar Mobile Phone Market are:

Samsung – has come out with its solar mobile phone – Blue Earth, which is a touch phone with a full solar panel on its back, generating enough power to charge the phone. It is not very bulky & is made from recycled plastic bottles.

ZTE – the Chinese mobile manufacturer recently launched the Coral-200, a solar-powered phone. It will just cost 40$. The solar phone provides about 15 minutes of talk time for every hour of sunlight. It comes with a  very slim design.The solar-powered battery generates 3 minutes of talk time for every 10 minutes of sunlight. It is built right into the back cover. If there is enough sunlight, the battery will be able to power the phone for longer periods of time, reducing the dependance on the traditional charger.

Micromax – announced the launch of its solar powered mobile phone in the Indian market, X259 & X258. The X259 is a cheap $50 mobile phone, which can get charged by using solar energy. It has a 1000 mAh battery which ensures a good battery backup as well. It also has plenty of other useful features like a twin SIM, bluetooth etc. The X258 also comes with an inbuilt solar panel that can be used to recharge the device without any charger. It has a 2.4 inch wide colour display along with an alpha numeric keypad. It comes with multiple features like – a memory card (micro SD card) to help users store their favorite music, movies and more; a 1.3 megapixel camera; and integrated Bluetooth.

LG – POP from LG comes with embedded solar cells. It is a slick phone, with a battery cover that is a solar cell, letting users charge up the battery with sunlight. It provides 2.25 minutes of talk time or 180 minutes of standby for every 10 minutes of sunlight.

Sharp – along with Japanese network KDDI, has also launched a solar-powered waterproof mobile phone. The phone, gives one minute of talk time for every ten minutes of sun. The phone is designed to capture 80% of its charge from solar power alone.

You can also read about the leading Mobile Phone Companies in India.

Nokia  – which is the pioneer, in the telecom industry & revolutionized the mobile phone market in India is not planning to introduce a solar powered phone any time soon. It conducted various tests ranging from Kenya to deep within the Arctic Circle. These experiments were done to find out the viability of such kind of phones, but concluded negatively on these grounds:

  • device was hard to keep in direct sunlight
  • limited talk time
  • challenge to make the phone’s weather protection in such a way, so that it does not cover the solar charging panel
  • constantly needs light to stay charged, hence cannot be carried around, in a pocket or a purse
  • occasional calls only.

With a pioneer company like Nokia, not taking the dive in this area, what do you think will be the future of Solar powered mobile phones in India?