GMR Energy’s Chhattisgarh power project’s funds may be disbursed only when the coal linkage is in place and a certain amount of capacity is tied up
GMR Energy, a subsidiary of Bengaluru-based GMR Infrastructure, is in the advanced stages of financial closure for its Chhattisgarh project. However, sources from one of the main banks funding this project say that funds will be disbursed only when the coal linkage is in place and a certain amount of capacity is tied up.
The infrastructure major plans a 1,200MW power plant in Chhattisgarh. This power plant will be coal-based and the fuel supply is likely to be sourced through coal linkages. While the financial closure for this project may be completed, the funds would be disbursed only when the linkage is in place. The total project cost is quoted at around Rs8,200 crore.
"Even if the financial closure is completed and the related documents are signed, the funds would be disbursed only when the coal linkage is in place," said a source from one of the main banks funding this project.
According to sources, this bank has also insisted on a certain percentage of capacity to be tied up before the funds are availed of. The capacity for this project remains untied.
The coal linkage for the Chhattisgarh project will be tied up when the coal linkage allocation for the 12th Five Year Plan (FY2012-17) projects takes place. "We are positive on the coal-linkage side and the allocation can be expected anytime," said Raaj Kumar, CEO, energy sector, GMR group. He refused to comment any further on either the coal linkage or the untied capacity issues.
While talking to Moneylife last month, Mr Kumar had stated that financial closure for its Chhattisgarh power project and the Vemagiri (Andhra Pradesh) power expansion project is likely in August. "Axis Bank is the lead bank for the Chhattisgarh project and IDBI Bank is likely to fund the Vemagiri expansion project," he had then told us.
The linkage and untied capacities may be an issue with the fund disbursements; however, Axis Bank seems comfortable in signing the financial closure documents without these two requirements in place.
Sources from Axis Bank stated that the signing process for the financial closure is under process. "We have underwritten the debt and now we are in the process of down-selling it. Only when the down-sell happens will we be able to execute the final documents," said the source. Reportedly, the down-selling has received a good response.
ING Vysya Bank Ltd appoints Arun Thiagarajan as the part-time chairman of the company for a period of three years. He succeeds the distinguished banker KR Ramamoorthy. Mr Thiagarajan, who is educated abroad both in engineering and management, has had a successful career in the corporate world over the last forty years. His association spans across companies like Asea Brown Boveri, Wipro and Hewlett Packard in different capacities, inclusive of the position of president and vice chairman.
KGN and its related companies are running what looks like a pyramid scheme through a multi-level marketing chain in Pune under different names, ensnaring gullible small investors
One of the most common ways people lose their hard-earned money is by investing in pyramid schemes. These companies essentially pay a very high rate of interest until one day they go bust. One such company, that claims to invest money in land, is offering an interest of 1% to 2% daily on investments. Interestingly, it does not pay interest on Sundays and public holidays, giving an impression that your money is at work on regular working days!
The company, KGN Sales and Services, has its office in the posh Arora Towers at MG Road in Pune. It also operates under two different names, KGN Land Trading and Kosmic Developers. Both KGN Land Trading and Kosmic have similar looking websites, with a palatial bungalow on the home page. These websites do not allow easy access to outsiders, except to the homepage, the 'about us' page and bank details. KGN Sales and Services has accounts in Axis Bank, Indian Bank, Oriental Bank of Commerce and State Bank of India (SBI) and one account in IndusInd Bank. Kosmic Developers has two accounts with HDFC Bank and one each with SBI and Union Bank.
KGN has been using SMS to spread its network. One SMS reads "Earn daily 1%-2% inv. 5000/5000 & multiples. Call 020-26052013/13. (also available 12 months inv plans) 10/12 pd cheques+agreement."
We called on the numbers provided. The lady who answered told us of various investment plans. One plan is if you invest Rs5,000, after 200 working days, excluding public holidays, you will get Rs8,000. In other scheme, if you invest Rs1,000, after 120 days you will receive Rs2,000. However, under this scheme, KGN will deduct 1% and service charges if you invest more than Rs1,000.
The lady from KGN also told us that the company gives post-dated cheques and signs an agreement at the time of investment itself. After enquiring about how the company can offer such an interest rate on a daily basis, the lady said that KGN invests the money in land and thus can afford to pay such interest rates.
What's interesting is that the company does not have any source of earning on a day-to-day basis, but is still paying interest on a daily basis and nobody is questioning the claims.
The login page on the websites asks for one 'user' name, a 'sponsor user' ID, a 'leg referral' user ID and related details. All this is nothing but a perfect setup used by almost all multi-level marketing companies.
This MLM scheme is in full swing in and around Pune. One investor, a dentist by profession, said that some of his early post-dated cheques given by KGN were honoured. However, in a classic situation that befalls all pyramid schemes, cheques started bouncing later. KGN also promised him that if he could bring in more investors, then they will give him commission. However, despite bringing in four-five investors, the dentist was denied any commission.There is not much information available about the promoters of KGN.