Neville Tuli’s India Asia Arab Art Fund proved a non-starter but has managed to land him in trouble with his investor, private equity firm Abraaj Capital
by Elizabeth Flock | Jan 29, 2010
Read it at Forbes
Sometimes even an exit route can become an unexpected trap. When Neville Tuli conceived the India Asia Arab Art Fund (IAAF), he also considered it as a potential rescuer of the art fund sponsored by his flagship Osian’s Connoisseurs of Art. Tuli told Forbes India that as a last resort, IAAF could buy modern and contemporary art from Osian’s Art Fund, of course, at an arm’s length pricing and valued by third parties.
IAAF, however, never took off and the elaborate set up that Tuli created for it, landed him in trouble with one of his most high-profile investors, the Dubai-based private equity firm Abraaj Capital.
In a claim issued October 5, 2009, Abraaj Investment Management Limited, an associate company of Abraaj Capital, filed a lawsuit againt Bregawn Jersey Limited in the Queen’s Bench Division of the High Court in the UK for more than $23 million.
Bregawn Jersey Limited is Neville Tuli’s offshore company, based in the Jersey Isles that was acting as a purchasing agent for Abraaj.
In March 2008, Tuli wanted a loan to buy art for IAAF, which would specialise in investing in Indian, Asian and Arabian art. Through several contractual agreements, Abraaj advanced Tuli a sum of $1 million to purchase works of art for the Fund. Tuli said he would repay the loan on or before August 1, 2008, with an extension of a maximum of 30 days. The total sum to be repaid was $1.2 million.
In June of that year, Tuli and Abraaj signed a Purchasing Agency Agreement that increased Abraaj’s loan to Tuli quite a bit. The new loan was again for purchasing works of art on behalf of Abraaj for sale to the IAAF. The purchase price by Tuli was not to be more than
Saturday, January 30, 2010
Monday, January 4, 2010
Karambir Kang: The Stoic
Uncomplicated. Jokester. Turn-around guy. Saviour. Survivor.
by Elizabeth Flock | Dec 29, 2009
Read it at Forbes
Karambir wasn’t supposed to be his name.
At 22, Kanwaljit Kang was married and pregnant. One night, she had a dream. A saint opened the Sikh holy book and said, “Name your baby, a son, Dusht Daman.” Kanwaljit only laughed. Such a hard name for a child, she thought. The name meant “Destroyer of demons”.
The saint was right. A boy was born. For eight months, he went without a name. Finally, Kanwaljit and her husband Jagtar went to a nearby saint to ask for another name. A name not so rough. But the saint said the name should stay. Still, Kanwaljit resisted it. No, we must give him something more modern, she thought. A softer name. They settled on Karambir. It meant, “A person who does brave deeds”.
Now, Kanwaljit, 61, cries when she talks about her son’s name. She wipes her eyes with her dupatta continuously. Her makeup smears into little rain clouds around her eyes.
“If I had given him the name I was supposed to, maybe he could have killed those terrorists that day,” she says. She cries harder.
On November 26, 2008, her son did not kill terrorists. But
by Elizabeth Flock | Dec 29, 2009
Read it at Forbes
Karambir wasn’t supposed to be his name.
At 22, Kanwaljit Kang was married and pregnant. One night, she had a dream. A saint opened the Sikh holy book and said, “Name your baby, a son, Dusht Daman.” Kanwaljit only laughed. Such a hard name for a child, she thought. The name meant “Destroyer of demons”.
The saint was right. A boy was born. For eight months, he went without a name. Finally, Kanwaljit and her husband Jagtar went to a nearby saint to ask for another name. A name not so rough. But the saint said the name should stay. Still, Kanwaljit resisted it. No, we must give him something more modern, she thought. A softer name. They settled on Karambir. It meant, “A person who does brave deeds”.
Now, Kanwaljit, 61, cries when she talks about her son’s name. She wipes her eyes with her dupatta continuously. Her makeup smears into little rain clouds around her eyes.
“If I had given him the name I was supposed to, maybe he could have killed those terrorists that day,” she says. She cries harder.
On November 26, 2008, her son did not kill terrorists. But
Sunday, December 27, 2009
The Law Breaker
Anjali Gopalan won the battle against India’s homophobes this year
by Elizabeth Flock | Dec 26, 2009
Read it at Forbes
She is: The founder of the Naz Foundation
Work: Has given HIV positive people a chance to live with dignity through Naz
Big day: Campaigned for homosexuality to be decriminalised in India. After eight years, she achieved a victory when the court said the law did not extend to consenting sex between adults
Anjali Gopalan has been thrown out of court, out of women’s groups, and out of NGOs for children. She’s been told she’s not gay or lesbian and so homosexual harassment wasn’t her problem; that she was wasting her time working in the fields of HIV and AIDS; and that condoms weren’t necessary.
Eight long years were spent challenging the Section 377 of the Indian penal code, which had been used by the police to go after same sex behaviour among consenting adults. As a result, Gopalan received threats from people around the world bearing the same message: You’re destroying the fabric of society.
“Anyone else would have given up. But she has this incredible persistence, and she took up the case on behalf of the organisation,” says Anuradha Mukherjee, who left a 13-year-long stint at the Center for Advocacy and Research to become programme manager at Gopalan’s organisation, the Naz Foundation.
“With Anjali, even when what she says goes against what many others say, somehow, eventually everyone finds that they agree,” says Mukherjee.
It was 1994 when a man came into Gopalan’s office in Delhi and abandoned his HIV-infected nephew there, saying there was nothing he could do for him; Gopalan’s response — “Well, this is it, now we start a care home.” And so was born
by Elizabeth Flock | Dec 26, 2009
Read it at Forbes
She is: The founder of the Naz Foundation
Work: Has given HIV positive people a chance to live with dignity through Naz
Big day: Campaigned for homosexuality to be decriminalised in India. After eight years, she achieved a victory when the court said the law did not extend to consenting sex between adults
Anjali Gopalan has been thrown out of court, out of women’s groups, and out of NGOs for children. She’s been told she’s not gay or lesbian and so homosexual harassment wasn’t her problem; that she was wasting her time working in the fields of HIV and AIDS; and that condoms weren’t necessary.
Eight long years were spent challenging the Section 377 of the Indian penal code, which had been used by the police to go after same sex behaviour among consenting adults. As a result, Gopalan received threats from people around the world bearing the same message: You’re destroying the fabric of society.
“Anyone else would have given up. But she has this incredible persistence, and she took up the case on behalf of the organisation,” says Anuradha Mukherjee, who left a 13-year-long stint at the Center for Advocacy and Research to become programme manager at Gopalan’s organisation, the Naz Foundation.
“With Anjali, even when what she says goes against what many others say, somehow, eventually everyone finds that they agree,” says Mukherjee.
It was 1994 when a man came into Gopalan’s office in Delhi and abandoned his HIV-infected nephew there, saying there was nothing he could do for him; Gopalan’s response — “Well, this is it, now we start a care home.” And so was born
Friday, December 18, 2009
Phoenix Rising
A year after 26/11, the Taj Mahal Hotel is not just reclaiming a past, but also creating a new identity — room by room
by Elizabeth Flock | Dec 11, 2009
Read it at Forbes
When terrorists entered the Taj Mahal Palace and Tower heritage wing and sprayed the grand staircase with gun fire, the Sea Lounge and Ballroom on either side were devastated. In the centre of the staircase, the iconic hotel’s founder Jamsetji Tata looked on stiffly. But throughout the entire ordeal, the marble bust of the man remained unscathed.
“If you had seen what the place looked like, you would not have believed it,” says Ajoy Misra, senior vice president, sales and marketing at Indian Hotels Company Limited (IHCL), Taj’s parent group. “There are many legends among the staff that Tata is the protector and preserves the Taj. The bust adds to that legend.”
While Tata’s bust was left untouched, most of the rest of the Palace heritage wing was decimated on 26/11 and the days after. The hotel that had withstood a great earthquake in the early 1900s, a fire and bomb in the port areas in the early 1940s, and acted as a hospital during the First World War could not withstand this sort of attack.
Historic Moorish and Florentine architecture, hundred-year-old and 1960s art deco design, as well as notable artworks were damaged beyond recognition. The country’s first licensed bar, first Sichuan restaurant, and most iconic sushi joint were badly hit. The art deco ballroom, elaborate suites given to top industrialists and heads of state, and the sixth floor that housed the general manager, too, were burned or otherwise destroyed.
The Taj senior management’s first reaction:
by Elizabeth Flock | Dec 11, 2009
Read it at Forbes
When terrorists entered the Taj Mahal Palace and Tower heritage wing and sprayed the grand staircase with gun fire, the Sea Lounge and Ballroom on either side were devastated. In the centre of the staircase, the iconic hotel’s founder Jamsetji Tata looked on stiffly. But throughout the entire ordeal, the marble bust of the man remained unscathed.
“If you had seen what the place looked like, you would not have believed it,” says Ajoy Misra, senior vice president, sales and marketing at Indian Hotels Company Limited (IHCL), Taj’s parent group. “There are many legends among the staff that Tata is the protector and preserves the Taj. The bust adds to that legend.”
While Tata’s bust was left untouched, most of the rest of the Palace heritage wing was decimated on 26/11 and the days after. The hotel that had withstood a great earthquake in the early 1900s, a fire and bomb in the port areas in the early 1940s, and acted as a hospital during the First World War could not withstand this sort of attack.
Historic Moorish and Florentine architecture, hundred-year-old and 1960s art deco design, as well as notable artworks were damaged beyond recognition. The country’s first licensed bar, first Sichuan restaurant, and most iconic sushi joint were badly hit. The art deco ballroom, elaborate suites given to top industrialists and heads of state, and the sixth floor that housed the general manager, too, were burned or otherwise destroyed.
The Taj senior management’s first reaction:
Blades of Glory
From Switzerland to Colaba, the Swiss Army Knife has come a long way
by Elizabeth Flock | Dec 1, 2009
Read it at Forbes
Open a beer bottle. File your nails. Even tighten a screw. The Swiss Army Knife, born 125 years ago from one man’s nationalism, has since been widely used by armed forces, boy scouts and the common man alike. Celebrated for its ability to function in a hundred different situations, a single knife tool soon evolved to include a screwdriver, magnifying glass, and some ten other tools. Today, one avatar includes an MP3 player, USB flash drive, digital altimeter, LED light, and digital clock.
That’s a far cry from where the knife started. Before World War I, a lowly surgical equipment maker in Switzerland, Karl Elsener, found out that the Swiss army’s pocket knives were made in Germany. Elsener’s patriotism was offended and he decided to manufacture his own from Switzerland. He chucked out many of his original models until he found a spring mechanism — the pivot point — which allowed double the tools to fit inside that just nine centimetre-long red handle. The first knife had a wooden handle, large blade, screwdriver, can opener, and reamer. The Swiss armed forces loved it.
When Elsener’s mother Victoria died two decades later, he decided to name the company that soon manufactured not just knives but also travel gear, cutlery, and watches, after her. And because the knives were made of stainless steel, or ‘inox’, the company was aptly christened: Victorinox. The knife itself originally had a name that was much harder to pronounce — Schweizer Offizier Messer. US soldiers couldn’t say it, and simplified its name to just the Swiss Army Knife.
When World War II rolled around, the knife became a turncoat. Elsener found himself
by Elizabeth Flock | Dec 1, 2009
Read it at Forbes
Open a beer bottle. File your nails. Even tighten a screw. The Swiss Army Knife, born 125 years ago from one man’s nationalism, has since been widely used by armed forces, boy scouts and the common man alike. Celebrated for its ability to function in a hundred different situations, a single knife tool soon evolved to include a screwdriver, magnifying glass, and some ten other tools. Today, one avatar includes an MP3 player, USB flash drive, digital altimeter, LED light, and digital clock.
That’s a far cry from where the knife started. Before World War I, a lowly surgical equipment maker in Switzerland, Karl Elsener, found out that the Swiss army’s pocket knives were made in Germany. Elsener’s patriotism was offended and he decided to manufacture his own from Switzerland. He chucked out many of his original models until he found a spring mechanism — the pivot point — which allowed double the tools to fit inside that just nine centimetre-long red handle. The first knife had a wooden handle, large blade, screwdriver, can opener, and reamer. The Swiss armed forces loved it.
When Elsener’s mother Victoria died two decades later, he decided to name the company that soon manufactured not just knives but also travel gear, cutlery, and watches, after her. And because the knives were made of stainless steel, or ‘inox’, the company was aptly christened: Victorinox. The knife itself originally had a name that was much harder to pronounce — Schweizer Offizier Messer. US soldiers couldn’t say it, and simplified its name to just the Swiss Army Knife.
When World War II rolled around, the knife became a turncoat. Elsener found himself
Thursday, November 12, 2009
The Big Goa Land Grab
Foreigners came seeking paradise; they’re now in a complicated legal hell
by Elizabeth Flock | Nov 11, 2009
Read it at Forbes
Last December, Nicholas Papa and Michael Cooper got an early Christmas present: A show cause notice from the Directorate of Enforcement (DoE). It carried two messages: Your home may soon be confiscated; you will be fined three times the land’s value.
Papa and Cooper (Nick and Mick, as they call themselves) moved to Goa from the UK nine years ago. In Aldona, a few kilometres from the beach, they bought a bungalow for Rs. 30 lakh and spent another Rs. 18 lakh renovating it, intending to retire there on Cooper’s pension fund. Under the stress of possibly losing their life savings and home, Cooper, 65, had a mental breakdown this January. “They want us to leave,” says Papa, “but won’t let us sell our house, won’t let us gift it. We gave up everything to come here, and now we will lose it all.”
More than 400 foreigners — mostly British — have received similar notices from the DoE.
Paradise Lost
The story of Westerner’s choosing Goa as a place to settle down began when Western hippies first discovered Goa’s beaches. Certainly, laid-back North Goa lured many smitten visitors to set up home there. From 2000 to 2005, the number of foreign landowners swelled. Many were Britons who planned to retire there, on pension or dole money.
By 2004, land values — and tensions — were rising. Many
by Elizabeth Flock | Nov 11, 2009
Read it at Forbes
Last December, Nicholas Papa and Michael Cooper got an early Christmas present: A show cause notice from the Directorate of Enforcement (DoE). It carried two messages: Your home may soon be confiscated; you will be fined three times the land’s value.
Papa and Cooper (Nick and Mick, as they call themselves) moved to Goa from the UK nine years ago. In Aldona, a few kilometres from the beach, they bought a bungalow for Rs. 30 lakh and spent another Rs. 18 lakh renovating it, intending to retire there on Cooper’s pension fund. Under the stress of possibly losing their life savings and home, Cooper, 65, had a mental breakdown this January. “They want us to leave,” says Papa, “but won’t let us sell our house, won’t let us gift it. We gave up everything to come here, and now we will lose it all.”
More than 400 foreigners — mostly British — have received similar notices from the DoE.
Paradise Lost
The story of Westerner’s choosing Goa as a place to settle down began when Western hippies first discovered Goa’s beaches. Certainly, laid-back North Goa lured many smitten visitors to set up home there. From 2000 to 2005, the number of foreign landowners swelled. Many were Britons who planned to retire there, on pension or dole money.
By 2004, land values — and tensions — were rising. Many
Wednesday, November 4, 2009
The Different Ways to Make ESOP work
Two different ways of making ESOPs work
by Elizabeth Flock, N.S. Ramnath | Nov 3, 2009
Read it at Forbes
Axis Bank
UTI Bank, which changed its name to Axis Bank in 2007, was one of the earliest in the banking sector to experiment with employee stock options. It launched a scheme as early as 2001, starting with the unreserved objective of covering all employees, based on performance.
Over the years, the scheme has undergone changes, teaching the bank an important lesson: Not everybody in the organisation wants ESOPs and even for those who do, the current market price is an important consideration.
When Axis Bank first designed the ESOP scheme, there was much debate about how broad-based it should be, says Snehomoy Bhattacharya, president of human resources.
The bank chose to include all employees except the poorest performers. “In surveys, we were below our competitors on cash performance bonuses. Also, we did not have an aggressive variable pay plan. So, we decided ESOPs would be a good way to compensate employees, even at lower levels,” he says.
At first, employees didn’t take well to the new plan. Only when the stock price started climbing, they saw the point and embraced the scheme. The first major change came in 2004. Axis Bank had been accounting the difference between the price at which options were granted and the prevailing market price as an expenditure on the books. “We noticed we were taking a hit,” says Bhattacharya. So, the company changed the formula for pricing the options.
It switched from the 52-week average to the previous day’s close as the basis for the grant price. This helped the company eliminate its accounting expenditure, and also wiped out the arbitrage the employees enjoyed between the two prices.
The next year dealt a bigger blow to ESOPs. The government brought them under the ambit of fringe benefit tax (FBT). Any difference between the fair market value and the vesting price came to be taxed at 33.99 percent. The industry was enraged at what it saw as an unfair levy, but the government did not budge.
At Axis Bank, the management decided to pass on the FBT burden to employees, taking advantage of a clause in the tax laws. This and the new pricing formula had a telling impact on the popularity of ESOPs. Employees have exercised far fewer options from 2005 to the present than they did in the first four years of the plan. In April 2004, more than three million options were exercised, up from one million at the start in April 2001. However, in April 2007, that number had dropped to less than 3 lakhs. The amount of wealth created had exceeded Rs. 100 crore in April 2004, but had dropped to just Rs. 10 crore in the same month three years later.
The year 2008 saw a big shift in Axis Bank’s ESOP strategy. In April, the company decided to narrow the scope of the plan to only employees in the middle management and above. Staff in the
lower rungs was excluded.
There were two reasons for this. Previously, the company was growing at an exponential rate, but growth slowed down and they could not give options to everyone anymore. Also, lower level employees appreciate a cash bonus more than an ESOP. The bank had looked at the plan as a long-term wealth creating exercise, but the employees didn’t.
Axis is now toying with ideas such as phantom stocks and restricted stock units. “These options may result in cash outflow. We want wealth creation without impacting the bank. But in these conditions, we may be forced to explore options for better compensation of employees,”
Bhattacharya says.
by Elizabeth Flock, N.S. Ramnath | Nov 3, 2009
Read it at Forbes
Axis Bank
UTI Bank, which changed its name to Axis Bank in 2007, was one of the earliest in the banking sector to experiment with employee stock options. It launched a scheme as early as 2001, starting with the unreserved objective of covering all employees, based on performance.
Over the years, the scheme has undergone changes, teaching the bank an important lesson: Not everybody in the organisation wants ESOPs and even for those who do, the current market price is an important consideration.
When Axis Bank first designed the ESOP scheme, there was much debate about how broad-based it should be, says Snehomoy Bhattacharya, president of human resources.
The bank chose to include all employees except the poorest performers. “In surveys, we were below our competitors on cash performance bonuses. Also, we did not have an aggressive variable pay plan. So, we decided ESOPs would be a good way to compensate employees, even at lower levels,” he says.
At first, employees didn’t take well to the new plan. Only when the stock price started climbing, they saw the point and embraced the scheme. The first major change came in 2004. Axis Bank had been accounting the difference between the price at which options were granted and the prevailing market price as an expenditure on the books. “We noticed we were taking a hit,” says Bhattacharya. So, the company changed the formula for pricing the options.
It switched from the 52-week average to the previous day’s close as the basis for the grant price. This helped the company eliminate its accounting expenditure, and also wiped out the arbitrage the employees enjoyed between the two prices.
The next year dealt a bigger blow to ESOPs. The government brought them under the ambit of fringe benefit tax (FBT). Any difference between the fair market value and the vesting price came to be taxed at 33.99 percent. The industry was enraged at what it saw as an unfair levy, but the government did not budge.
At Axis Bank, the management decided to pass on the FBT burden to employees, taking advantage of a clause in the tax laws. This and the new pricing formula had a telling impact on the popularity of ESOPs. Employees have exercised far fewer options from 2005 to the present than they did in the first four years of the plan. In April 2004, more than three million options were exercised, up from one million at the start in April 2001. However, in April 2007, that number had dropped to less than 3 lakhs. The amount of wealth created had exceeded Rs. 100 crore in April 2004, but had dropped to just Rs. 10 crore in the same month three years later.
The year 2008 saw a big shift in Axis Bank’s ESOP strategy. In April, the company decided to narrow the scope of the plan to only employees in the middle management and above. Staff in the
lower rungs was excluded.
There were two reasons for this. Previously, the company was growing at an exponential rate, but growth slowed down and they could not give options to everyone anymore. Also, lower level employees appreciate a cash bonus more than an ESOP. The bank had looked at the plan as a long-term wealth creating exercise, but the employees didn’t.
Axis is now toying with ideas such as phantom stocks and restricted stock units. “These options may result in cash outflow. We want wealth creation without impacting the bank. But in these conditions, we may be forced to explore options for better compensation of employees,”
Bhattacharya says.
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