Citizens' Issues
The banking system and Pramod Mittal’s lavish wedding bash

Promoters like Pramod Mittal exemplify how banks and RBI allow Indian industrialists to get away easily

The Reserve Bank of India (RBI) frowns on bad loans; the All-India Bank Employees Union (AIBEA) says deliberate defaults are weakening banks. But, we, the ordinary people, find it hard to believe that banks are serious about recovery because of the lavish display of wealth by habitual defaulters. Consider the 60 million Euros that Pramod Mittal spent on his daughter’s lavish wedding in Barcelona.

Why is it a problem if Pramod Mittal decides give his daughter one of the most expensive weddings ever? For nearly 15 years now, Mr Mittal has made news mainly because of his perpetually high debts, loan restructuring and, eventually, selling out his steel plant supposedly for a pittance. This, too, happened only after a two-time corporate debt restructuring (CDR) involving massive write-offs. Although the Mittals have been defaulters even in the 1990s, Pramod Mittal’s Ispat group was bank-rolled for a series of global adventures after 2003 that have all run into trouble. These include contracts and major acquisitions in Bulgaria (including a football club), Nigeria and the Philippines, which are all mired in controversy. Employees of Ispat’s Nigerian business have reportedly remained unpaid shortly after 2006 and have been left high and dry.

The group also owes over Rs630 crore to the State Trading Corporation (STC) which STC is now trying to recover from JSW Steel of the Sajjan Jindal group (which acquired the beleaguered Ispat Industries in 2010). A Central Bureau of Investigation (CBI) probe into this has also gone nowhere. Pramod Mittal paid off some of his Indian debts with the sale of Ispat Industries; but, even today, the Nigerians threaten to agitate should he return. In India, Ispat Profiles, which owes more than Rs1,000 crore, is facing liquidation.
Everywhere, allegations against the Mittals are similar—building huge debt, often through collusive deals, diverting funds to other ventures leading to defaults. Yet, the Mittals’ personal wealth, and the lavishness of their lifestyle and spending, has only grown due to the benevolence of our banks.



Bharat Thakkar

3 years ago

Not only banks, but Accounting Standard Regulators, Auditors, CDR Empowered Group, Independent Directors, Stock Exchanges and SEBI etc all work for these looters (called businessmen. They advice on how to make loss and also to make profit out of entries made in the book of account from thin air. Look at the inefficiency and the inability of the stock exchanges and SEBI that they have asked companies to fill in a form while filing their balance sheet and profit and loss account. The form must say whether the auditor has qualified the accounts or not. What a joke. Why can’t stock exchange and SEBI read for themselves to find out audit qualification? The companies and auditors have also now tied up as to how to not qualify the accounts. Don’t qualify accounts but write everything under the heading “Emphasis of Matter”. So, the company can say that there is no qualification and thus no need to recast the accounts. My experience that all those points for which the auditors would have qualified their opinion about five years back, are now done through this dubious “Emphasis of Matter”. The ICAI, SEBI and all other regulators including Stock Exchanges should consider “Emphasis of Matter” as good as qualification by auditors and the authorities must mandate companies to recast the accounts as per law made applicable in case of audit qualification.


3 years ago

This is what is happening in this country.Wealthy people acquired their riches at the cost of common people who deposit their hard earned money in banks.People like Mittal swallow that money and there is no mechanism in this country to rcover.people lost money because of exploiters specially in the last decade since we did not have any leader worth the name at the top.Let us hope we will get better leadership which has concern for common people who have no saviour at any level.

Veeresh Malik

3 years ago

And in case you wanted to read up more on Global, inputs from another source are here:-

Veeresh Malik

3 years ago

Typically, the way most of such companies fiddle is they report losses. (And then use the skim/loot/scoot for weddings?)

This is how they do it:-

Under report sales: Companies show less production than actual production and as such show lower sales. The actual production is sold without accounting for it in the number one books. In this manner they additionally avoid paying excise duty on the production / sales which is not accounted for in the books. However, full cost of raw materials and other costs of production is taken and the company reports losses.

One way to check for this is things they cannot hide. For example, in electric arc furnace there is a clear ratio of electricity consumption and steel production.

The relevant questions to ask here is, what has been the electricity consumption (month wise) and steel production over last 10 years and see if there is consistency. It should also be compared with other companies operating in the same industry.

Similarly, if they were producing speciality alloy steels, they would be mixing fixed amounts of tungsten / titanium / molybdenum / magnesium etc. If these records are compared (monthly consumption of any of these inputs with production and sales of steel) one can get an idea if they have been cooking on production / sales figures.

Since these are high value speciality metals / minerals with limited suppliers proper records of their purchase / consumption has to be maintained. And if a certain consumption of these inputs is accounted for, there would be a certain amount of steel actually produced. If the actual steel produced is less, they have major reasons to answer.

Under invoice sales:- Companies sometimes under invoice sales to shell companies, who then onward sell to end users. In this manner the actual producer shows losses and so can declare themselves sick and get all kinds of reliefs and concessions.

H____Co & B____r C______c followed this route. B___r C_____c was a group company of the A____a Bxxxa Group and captive producer of caustic soda for H_____co.

They sold their production to H_____co at much lower prices as compared to market prices and reported large losses and went to BIFR and took all eligible reliefs and concessions. M.....i companies in general and Bxxxa group in particular had mastered the art of legally milking GOI and the Indian public at large in this manner. That is why they can afford to have so many temples built!

The relevant questions to ask here are:

(i) Did the banks and other authorities compare selling prices - actual charged by the company with what similar products have been sold during the same period?

(ii) Did they check if sales are directly to customers or through selling agents (generally owned by close relatives or promoters). What price sold to the intermediary and at what price the intermediary sold to end user.


Another one:- Over invoice capital costs: The cost of plant and machinery can be over invoiced. Say the actual cost is Rs.60/-. First they get quotation from sellers for Rs.100/-, then apply for Term Loan from banks for Rs. 80/- and claim that they would meet their commitment (margin) of Rs.40/- evidencing their financial stake in the business. Since the actual cost is Rs. 60, once the seller has been paid Rs.80 (direct disbursement by the bank / FI), the difference in cost of Rs.20/- is shared between the seller and the promoters (also the middleman). Second, such over capitalised businesses typically would find it difficult to service their interest costs / repay principal dues since profitability and cash flow projections are massively optimistic. And the promoter had no intention of serving his debts to start with!

The relevant questions to ask is check for project cost of similar projects. Technical experts from consultancies like MECON / Engineers India Ltd. / Dasturco used to give pretty good estimates.

And then:-

Over invoice operating costs: Purchases are made through middle men at higher than market prices, and from whom promoters get a cut. Personal expenses are charged to company. Fictitious expenses are charged to P&L like market development expenses etc. Careful sieving through audited financials over a number of years often give out clues.

But then, should we be doing it, or the authorities at BIFR, CLB and others?

Time will tell as technology starts making it easier to find out - and track stolen money.



In Reply to Veeresh Malik 3 years ago

Thank You Veereshji, u gave valuable information.

Hemant K Chitale

3 years ago

How could his daughter be happy being married off with such money ? Doesn't it hurt her conscience to have that much money spent away ?

mm sundram

3 years ago

the bankers who financed to this beleagured company should be blamed. this is very very horrible that public monies has been looted by the defaulters/companies whereas the small amounts of personal loan given to small and ordinary citizens pressurized vehemently by the bankers.

How about floating rate deposits?

While most people know about bank fixed deposits, there is a lack of awareness on floating...

Premium Content
Monthly Digital Access


Already A Subscriber?
Yearly Digital+Print Access


Moneylife Magazine Subscriber or MSSN member?

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation
Marriage registration: Twice over

If you are married the traditional way, but plan to go overseas, make sure your marriage is registered. And in order to do that you need to know the law and its intricacies

A long, long time ago, a young damsel met her prince charming, an army officer. They got married, had children, and a grandchild, now 21. Their prosperous progeny settled down abroad. The officer, who had retired a much-decorated general, was a gentleman-about-town and with his better half, had the world at his feet.   


Suddenly, our picture of roses and pink galore gets a Grisham-like twist. They are asked to get their marriage registered. The visa authorities are not quiet convinced about the genuineness of their marriage. Greater scrutiny, more paperwork, and delays ensue. In comes agent 007, the general’s advocate schoolmate, and also the Registrar of Marriages—a Kafkaesque official— putting the lovely Hindu couple through the travails of official registration. For a septuagenarian, even a simple application for registration of his marriage can be a bit tiresome. The pundit who officiated the wedding, and would therefore be the best bet for confirmation, is so very much forgotten that he is presumed to be dead. Alternatively affidavits are notarised and filed along with other documents.


All this just to ensure a timely visa and a happy trip. But the general was not alone; there were others, mainly Hindus, at the Registrar of Marriages, married for eons and in queue to get a registration certificate. 


There is no such thing as a compulsory registration of marriages under the Hindu Marriage Act, which sets it apart from other enactments. A religious ceremony, well announced is deemed to be sufficient. Within India, it may be difficult to get documents processed without a registration certificate; whilst dealing with authorities operating in foreign jurisdictions the confusion can only get compounded. It is here that the Special Marriage Act comes into play. Hindu couples have to look to the provisions of the Special Marriage Act, 1954, to obtain a Marriage Certificate.


Registration of marriages under the Special Marriage Act, 1954 is often recommended to all those who plan to stay overseas, or even visit for a considerable period. Mere registration of marriage under the Special Marriage Act can make all its provisions applicable to the couple. Obviously the Hindu Marriage Act and the Special Marriage Act are not identical. The differences between the two acts may not be radical but, nevertheless, they exist even though they may, at times be just plain quirky.


Let us take the quirky ones first: husbands cannot seek alimony/ maintenance against the wife under Special Act; they can under Hindu law. Apostasy is a ground for divorce under the Hindu Act, not under the Special Act. In any case, divorce under the two acts is a topic complicated enough to demand a separate column, and which is in the offing.


Moving on to the radical differences, the real knock-out punches are to be found in Chapter IV of the Special Marriage Act. A member of a Hindu Undivided Family (HUF), marrying under the Special Marriage Act, is deemed to have effected his severance from the family. If the spouse is engaged in the joint family business and no partition has so far taken place, this provision can put a young couple to great difficulties. Further, the succession of the couple is no longer governed by the Hindu Succession Act, but by the Indian Succession Act; this is tantamount to replacing one law with another. The intricacies will have to be laboriously elaborated deserving of a whopping docket for an advocate.

How jolting this could be can be gauged by a stray instance. If X dies issueless and intestate, leaving behind him his father and widow, then in case X was married under the Special Act his estate would be divided between his widow and father. If, however, X is married under the Hindu Act, the whole of his estate would devolve on his widow.


Interestingly, a Hindu father is a class II relative. However, according to section 21A of the Special Marriage Act there would be no such deemed severance from the HUF or the substitution of succession statues if one Hindu marries another. One might feel that inter-faith unions are being targeted rather than helped by the Act. But so far, in its working, it has been so good.


Registration of marriages is still advisable. But, one ought to know what’s rightfully theirs and what isn’t so that the best choice can be made.


Going back to our original fairy tale ......., “What did the general do?” He simply said, ‘I do’. Once more.


(Divya Malcolm is a senior associate with Kochhar & Co. The views expressed are her own and not to be construed as legal advice)



Satya Adhar Kulshrestha

2 years ago

Hi, My wife still carries her maiden name and there is no real reason for this. Would you advise changing her surname same as mine ? What can be the potential problems otherwise ?


3 years ago

read thoroughly and act


3 years ago

it is time marriage rules are made simple and enforced. A couple should must, shall & absolutely get tested for venereal diseases and then get license to get married. The law should be one for all irrespective of their religion. The marriage must be registered.


Divya B Malcolm

In Reply to mairacha 3 years ago

Venereal disease in a communicable form is a ground for divorce under the Special Marriage Act as well as the Hindu Marriage Act.

I am thinking of writing on divorce laws; your inputs are welcome and will be much appreciated.


3 years ago

Wow Was unaware of most of the provisions/conditions mentioned.
Thanks for the info

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)