India to press for resolution of currency war at G20 meet

Gyeongju (South Korea): India is likely to press for intensive engagement to amicably resolve the currency war, mainly between the US dollar and Chinese yuan, at the two-day meeting of the Group of Twenty (G-20) finance ministers and central bank governors beginning here tomorrow, reports PTI.

Finance minister Pranab Mukherjee, who is heading the Indian delegation to the ministerial meeting, will also hold separate consultations with the finance ministers of other BRIC nations, namely Brazil, Russia and China, on wide-ranging global economic issues, sources said.

Mr Mukherjee had earlier said, "My approach is that we should try to engage the countries into negotiations and build up a consensus through which the matter (concerning currency war) could be resolved."

He had also stressed that such issues "cannot be resolved through confrontation... and we should engage in the process of building up consensus."

While the US wants China to allow the yuan to appreciate in line with market forces, the Chinese government is resisting the move, as it would hurt the country's exports.

The currency war has prompted some other countries, especially Japan, to weaken their currencies by pumping more funds into the market.

India, which has witnessed about 5.5% appreciation of the rupee against the dollar since January, has not taken a stand on the issue and wants the matter to be sorted out without confrontation in the interest of global financial stability.

Meanwhile, a US official said in Washington that when large economies with undervalued exchange rates act to keep their currencies from appreciating, it compels other countries to do the same, setting off dynamic of competitive non- appreciation.

"It's bad for the system and it's bad for all of us. It imposes an unfair burden of adjustment on other emerging markets that are running more flexible exchange rate regimes," he added.

In addition to currency war, the G-20, which is a club of developed and emerging economies, will also deliberate on issues like quota reforms in the International Monetary Fund (IMF), protectionism, the global economic situation and a framework for strong, sustainable and balanced growth.

The ministerial meeting will be followed by G-20 summit to be held on 11-12 November at Seoul, which is likely to be attended by global leaders including Indian prime minister Manmohan Singh, among others.

US president Barack Obama, who will visit India in early November, is also expected to attend the G-20 Summit, which is being held in an Asian country for the first time.

As far as the currency crisis is concerned, World Bank president Robert Zoellick, at the recently concluded Fund-Bank meeting in Washington, had cautioned that such tensions could lead to trouble if not properly managed.

"Today, we face currency tensions. Tensions can lead to trouble if not properly managed," he had opined.

"One should take this situation for granted, because my primary message is that we are still in a very fragile recovery and people have to be careful about some of the downside risks," the World Bank chief had said.


Aditya Birla Money: A saga of wrong bets, losses and damage control

Brokerage firm Aditya Birla Money’s fancy scheme for the rich incurred heavy losses amid wrong bets. It has required intervention from the very top to set things right 

In the high stakes game of wealth management, where revenue generation usually takes precedence over client welfare, all it takes is a few overzealous people to run a portfolio to the ground. Aditya Birla Money, a financial services firm, discovered this the hard way recently, when a fancy scheme tailored for individuals with deep pockets ran into heavy losses apparently due to wrong and slipshod bets. However, Moneylife learns through informed sources that Kumar Mangalam Birla personally intervened to ensure there were no losses to the investors.

The scheme, Options Maxima, involved trading in equity options where fund managers either short sold Nifty and bought options or did it the other way, a person familiar with the development told Moneylife. The scheme promised returns of around 1%-1.5% every month based on the arbitrage opportunities through this activity, which ensured what was considered a very fair 12%-15% return annually. The managers, however, made wrong calls on the movement of the index and stocks.

Narrating this incident, our source told us, "They (Aditya Birla Money) used to run something called Options Maxima involving covered calls where one short sells Nifty and buys options or the other way around, whereby there is a small arbitrage opportunity. Every month it offered 1%-1.5%, translating into annual returns of 12%-15%. It was aggressively marketed as a risk-free investment in various presentations. Suddenly in September when the market went up this manager based out of Chennai short sold Nifty and bought options, resulting in a huge loss."

The resulting losses supposedly amounting to a sizeable sum of nearly Rs100 crore caused panic in the company. Sources say that Kumar Mangalam Birla personally inspected the books of the company at its office and was there very late into the night. We have learnt that the Birla group has written cheques to make good the losses through a private group entity. But such a blunder could not go unpunished. The buck had stopped at Kanwar Vivek, managing director of Aditya Birla Money, who apparently put in his papers. Pankaj Razdan, deputy chief executive, financial services, Aditya Birla Group had roped in Mr Vivek a while ago. We have now learnt that this incident has also put Mr Razdan under considerable pressure. However, company sources deny any talks of him leaving the company.

An Aditya Birla Group spokesperson declined to reveal more details regarding this sensitive issue as the listed company is slated to come out with its quarterly performance figures early next week. However he did mention that most of the reports in the media were purely speculation, including the estimates of the loss incurred by the scheme. "As a company policy, we do not comment on speculation," said the spokesperson.

At a time when the group is intent on making significant strides in several of its new-generation businesses, Mr Birla would surely like to put this incident behind him. Financial services forms a big part of the group's plans and has contributed 37% to the FY 2009-10 consolidated revenue of Aditya Birla Nuvo, the holding company. Mr Birla is infusing more cash into businesses like financial services and telecom through Nuvo and enhancing his own stake in the process. Aditya Birla Financial Services is, in fact, intent on launching banking services provided the Reserve Bank of India (RBI) gives it a banking license.




6 years ago

Not recommend in investment in shares in Adityabirla money. You loose hard earned money by investment, the marketing persons are giving false promises on invesment of Rs.25k and you get Rs.4k in every month. Practically you never get and dont fall in trap and tell your circle not to invest in AB money.


ramkishan sonthalia

In Reply to Subrahmanyam 6 years ago

I think this was a scam almost similar to the Citibank. Please give your comment.

ramkishan sonthalia

6 years ago

If such type of irregularities are noticed, who will give them a banking liacence is a big question. Same incidence may happen again, who konws.


6 years ago


Buy LIC Housing Finance, target Rs 1426: Aditya Birla Money has recommended a `Buy` on LIC Housing Finance with a price target of Rs 1426 in its report dated Nov. 24th, 2010.


Dev singh

6 years ago

if company goes by recommendation this is what will happen. Mr. Pankaj razdan ( ex ICICI) referring Mr. Vivek Kanwar (ex ICICI). Mr. Kanwar referring his close associate Mr. Vivek Mahajan. His recent recommendations on Eros media and GPIL made people lose in crores. Would we also be refunded ???

ashok L Surana

6 years ago

whether this is exactly front running by fund manager and whether this is a genuine loss or fabricated loss to pass on gain to someone.this needs to be checked by sebi messiah of investor


ramkishan sonthalia

In Reply to ashok L Surana 6 years ago

I also have the same doubt as Mr Surana has in his comments. My suggestion would be for full invstigation in the matter.may be the scheme was launched for the benefit of birla executives only. who knows?


In Reply to ramkishan sonthalia 6 years ago

Aditya birla nuvo(parent company of Aditya Birla Money ltd) took this loss made by the acts of 2 individuals in its 2Q sep 2010 results.

These 2 individuals Mr. Vivek Mahajan and Mr. Kanwar vivek were not selected by any selection process. As the above news article says by referrals they were choosen with no real merits.

Aditya Birla group is known for its business ethics. So they have made good the losses. But Mr. Vivek Mahajan's recommendations day in and day are causing crores of losses to many innocent investors. The recommendations given by him in media is given with no fundamental research but by just toss of a coin. Again one cannot blame him. Its like asking a door painter to draw a beautiful painting !

There are small shareholders and investors losing money because of irresponsible acts of uncalibered individuals. Thousands of individuals through their hard earned moeny fund a company's growth by getting the company's shares listed. By certain professionals like Mr. vivek mahajan and Mr. kanwar vivek only help in ruining the company.

With less than 3 months of joining Mr. vivek mahajan helped the company make Rs. 100 crs loss. May be company is waiting for him to make Rs. 1000 crs loss !!!

ram kishan sonthalia

In Reply to pushkar 6 years ago

Agree with all of your views but how will bell the cat.


6 years ago

Mr. Vivek mahajan of aditya birla money ltd was recently hired to oversee the operations of options maxima of aditya birla money ltd. But in his style he overlooked the operations causing Rs. 100 Crs loss to the company. The press releases when he joined says he has rich experience. But definitely he became rich after joining this company. Mr. Vivek kanwar who hired him unfortunately has to take responsibility and left the company.


6 years ago

Mr. Vivek mahajan caused Rs. 100 Crs to aditya birla money Ltd. he expected market to consolidate. But market gave a bull run. He short the market heavily in options maxima scheme.


ramkishan sonthalia

In Reply to shirish 6 years ago

Is there any legal procedure to be followed against such person/company?


6 years ago

who is this kanwar vivek? He is the expelled Managing Director of Aditya Birla Money Ltd. He is close associate of Mr. Pankaj Razdan (CEO of Aditya birla financial services). Kanwar vivek gets Rs. 5 crs as salary. Under his very efficient leadership not only did Birla Sun Life Distribution Ltd ( now Aditya Birla Money Mart Ltd) kept making losses, but its partner Sunlife also withdrew its partnership as there was no turnaround. This person appointed another person vivek mahajan for a salary of Rs. 2 Crs. Both of them paid this hefty salary to make this much loss to the company is it? Why doesnt Aditya Birla Money Ltd recruit people of good caliber? A costly mistake by the company board.

Ravi M

6 years ago

I am one of the unfortunate investor of this scheme. Surely, this scheme was wrongly sold, as stated in the article.
However, the manager (employee of AB Money) who sold me this scheme, refused to give any compensation for losses over 25%. Well, I have exited form the scheme.

Can we trust a company like AB Money - that is owned by person like Aditya Birla ???

ramkishan sonthalia

6 years ago

good coverage. may be the scheme was launched for the benefit of birla executives only. who knows?

Narendra Doshi

6 years ago

Congrats Moneylife Digital Team for this report, so fast, so soon.
Also, kudos to Aditya Kumar Birla for his personal touch & action, again so fast, so soon, for being a responsible Head of his group & taking timely action , PERSONALLY, and accepting the eventual responsibility. Birla's action is worthy of being followed by several other business group operations.


6 years ago

Financial services recruitments need to be looked into seriously. You just cant go by people's resume , a proven track record & reputation is a must.



In Reply to ramchandran 6 years ago

Read this arcile

Thursday Closing Report: Rally may stretch up to 20,400

The local market opened on a strong note this morning on positive cues from across the globe. Easing of weekly inflation numbers and good earnings figures gave the indices the much-needed boost, enabling them to erase the losses suffered over the past two days.

The market started the day in the green on optimism seen in the US markets overnight; it also brushed aside the cautiousness exhibited by Asian bourses this morning. Early buying gave way to range-bound trade in the morning session. However, easing of the country's weekly food inflation numbers lifted the indices further, helping them touch the day's highs and surpass the crucial levels of 20,200 on the Sensex and 6,100 on the Nifty.

The Sensex ended the day's proceedings at 20,260, up 388.43 points (1.95%). The index touched a high of 20,293 and a low of 19,886 during the session. The Nifty settled at 6,101, up 119.40 points (2%). The benchmark touched a high of 6,113 and a low of 5,985, intraday.

The market breadth was in favour of the gainers. Twenty nine of the thirty Sensex stocks ended in the green today. The Nifty closed with 45 gainers against 5 declining stocks. Among the broader indices, the BSE Mid-cap index surged 1.37% while the BSE Small-cap index rose 1.04%.

The top performers on the Sensex were Hindalco Industries (up 5.05%), Bharti Airtel (up 5.03%), Hindustan Unilever (HUL) (up 3.95%), ITC (up 3.65%) and Cipla (up 3.59%). NTPC, down 0.12%, was the lone loser today.

All sectoral indices ended in the positive zone today. BSE Fast Moving Consumer Goods (FMCG) (up 3.19%), BSE Bankex (up 2.09%) and BSE Oil & Gas (up 2.03%) were on the top of the list while BSE IT, with a gain of 0.89% ended at the bottom of the list.

Food inflation declined to 15.53% for the week ended 9th October, down by 0.84 percentage points from 16.37% in the previous week, government data showed.

Experts said the impact of adequate monsoon was slowly becoming visible on prices of essential items, as supply-side pressure was easing after the good harvest.

 Markets in Asia ended mostly in the green on positive signals emanating from the US markets in overnight trade. However, cautiousness prevailed as China announced sluggish growth numbers for the third quarter even as inflation in September rose to the fastest pace in yearly two years.

The Hang Seng was up 0.39%, Jakarta Composite was up 0.25%, KLSE Composite was up 0.29%, Seoul Composite gained 0.23% and Taiwan Weighted added 0.08%. On the other hand, the Shanghai Composite was down 0.68%, Nikkei 225 shed 0.05% and Straits Times lost 0.49% in today's trade.

Markets in the US erased most of the losses accrued on Tuesday on good earnings reports and a weak dollar, which increased investors' appetite for riskier assets like stocks and commodities. Material and energy stocks, which took a beating on Tuesday, were the top performers yesterday. Financial companies reported mixed earnings. While Wells Fargo & Co announced higher earnings but Morgan Stanley came up with a surprise loss.

The Dow advanced 129.35 points (1.18%) to 11,108. The S&P 500 gained 12.27 points (1.05%) to 1,178. The Nasdaq rose 20.44 points (0.84) to 2,457.

Participation by institutional investors was lacklustre on Wednesday, giving an indication that funds have gone to the Coal India initial public offering. While foreign institutional investors were net buyers of stocks worth Rs16.35 crore, domestic institutional investors were net sellers of Rs27.50 crore.

Gayatri Projects (up 1.09%) has bagged an order worth Rs43.45 crore from FLSmidth for completion of work at the Kumaraswamy Iron ore Crushing project at Donimalal, Bellary in Karnataka.

Gayatri Projects is one of the fastest growing construction company in India executing major civil works including construction of concrete/masonry dams, earthen dams, national highways, bridges, canals, aqueducts, airports, ports, etc.
With a view to push its bulk drugs and immuno-suppressant products overseas, RPG Life Sciences (down 2.57%) is eyeing marketing and distribution tie-ups with foreign companies, a top company official said.

The tie-up will help the RPG Group company push its products in Europe. Both the companies will buy products from each other and sell them in their respective strong markets.

State-owned exploration and production (E&P) major Oil and Natural Gas Corporation (ONGC) (up 0.56%) today wrote to Cairn Energy Plc insisting that the UK-based firm will need its explicit nod before it can sell its India unit to Vedanta Resources Plc.

ONGC, which partners Cairn India in all of its three producing assets and most of the seven exploration acreage, wrote to Cairn Energy Plc saying that it has the right of first refusal (RoFR) on these assets.

Cairn Energy, which holds 62.38% stake in Cairn India, is selling 40%-51% stake in the India unit to London-listed Vedanta Resources for $8.48 billion.


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