L&T Finance Directors fleece the company

L&T Financial Holdings Ltd., just a three year old company (that had to wind up in its earlier avatar L&T Finance Ltd. because of mismanagement and reckless lending) with an annual turnover of Rs.112 crore seeks shareholders approval to pay its Directors a compensation which is unheard of amongst its peers in the Financial Services Industry.

All this, even as the company has a captive and ready customer base by way of customers of L&T Ltd., the holding company that is into EPC and Capital Goods business.  All that it has to do is to finance the equipment / services purchase by its vendors and sit tight.  No sweat.

For such a cakewalk, the company wants to pay its Chairman Y.M.Deosthalee, a Director on the board of L&T Ltd. a remuneration of close to Rs.7.33 crore and its non-executive Directors 1% of net profits.

IIAS, the proxy advisory company has quite rightly debunked this move, outraged by this incongruous payout, especially at a time when the investors in equity markets have been mauled badly by weak investor sentiment and gross under-performance by companies with sequential dwindling earnings.

This resolution deserves to be torpedoed.  Shareholders, do convey your dissent either through postal ballot or by personal presence at the meeting.  Mr.Deosthalee is nearing his retirement and is in a hurry to boost his kitty on his way out... But should you, the institutional and minority shareholders ensure that...?

Was ICICI Venture CEO Ms.Renuka Ramnath dozing at Subhiksha Board meets?

India’s premier PE firm ICICI venture (I-Venture) with more than $2 billion fund size can’t be so naïve.

I-Venture CEO & MD, Renuka Ramnath says the management of flagging retail chain Subhiksha (in which the firm has a 23% stake and has the power to appoint majority directors in its Board) kept it in the dark regarding the goings on. (She was one of the Board members then). She goes on to add "As a responsible investor, despite being minority shareholders and not having management control, we are talking to all players concerned and trying to seek a possible solution which will be in the best interest of all, including the employees”.

Here is the punch line "We didn’t know what to trust and what was the real intention of the merger” (with a listed NBFC Blue Green Constructions with which Subhiksha sought to reverse merge for widening its shareholder base).

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Oh, really? A firm in which a leading PE firm has a 23% stake and the firm knows "nothing" about decisions as critical as a reverse merger? It was all over the media back in June, 2008 when Subhiksha acquired 40% stake in the little known listed entity Blue Green Constructions. The Board (in which I-Venture has majority) Meeting in which the acquisition was to be ratified was reportedly held on June 30, 2008 and then Ms.Ramnath didn’t seem to object.

The fact is, had the back door listing strategy worked well, I-Venture would have exited the firm lock, stock and barrel thro divesting its stake either in the open market or thro a secondary exit to other PE firms. The manner in which it “quietly divested” 10% stake for Rs.230 crore to Azim Premji’s PE arm Premji Invest back in September 2008. While I-Venture could dupe Azim Premji, it couldn't dupe the public investors since the merger didn't go thro.

Now why would a PE firm exits in a hurry if it wasn’t in control of the company and wasn’t aware of the murky goings on? Normally if there is a listing possibility, PE investors would rather wait for the market to discover the price. Even if one were to buy Ms.Ramnath’s argument – that Subhiksha did not submit audited accounts beyond March, 2007, it should have disclosed the fact to Mr.Premji which it clearly did not. I-Venture looked after its own interests, to hell with the company, co-investors or employees. But no one would blame the PE firm for that because it just cashed out on an opportunity. But you can’t excuse it if it says it was kept in the dark by the investee company management, despite wielding majority control of its board and in a company where it has a substantial 23% stake.

It’s a little too naïve – to expect the world to believe Ms.Ramnath. It’s ok if she chickened out fearing prosecution when legal notices (from unpaid vendors, employees, EPFO) started flying in. That's when she along with her colleague exited the Board of Subhiksha. But then it also means she wasn't exactly awake all the while at those Board Meetings leaving Subhiksha MD Mr.R.Subramonian to run the business as he did.

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ASATYAM COMPUTERS books weren't cooked; that was 3D virtual reality

Here, I suspected it's no longer SATYAM.... Now I stand vindicated...

Speculations glaore. I go it's all worthless. May be it's worth the value of some pricey real estate that it occupies in India's southern city of Hyderabad provided its overcooked balance sheet has truth enough in its declaration of the company's debt-free status. Otherwise, one would assume that even the properties may have been pledged or worse, being that of a software company, it's created out of 3D virtual reality. Something as in Second Life.

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I begin to doubt the Indiaworld acquisition that Sify (Satyam Infoway, sister concern of Satyam then) did for a mind boggling Rs.499 crore ($115 million in 1999 $). Did money really changed hands to that nondescript entrepreneur Rajesh Jain, CEO of Indiaworld? If so, why is he still stuck with some never-to-start startup? People with $100 million certainly will have a lot more options that the world would be curious to track. I have this feeling the price that Sify paid would have been far less, far far less and bulk of the money would have been stashed away by Rajus in some secret tax haven accounts.

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But then they also say the liabilities are underfunded to the extent of Rs.1230 crore (about $24 million) that Raju has arranged by pledging his shares. Anyway, too bad that Raju used a wildlife metaphor while attempting to clear his conscience in his letter to the Board- "it was like riding the tiger and not knowing how to get off without being eaten" - and disgrace the animal.

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It sure is a murky mess and it's only getting murkier. But there are some bravehearts too... And I sure can't stop envying the folks that were short on the stock yesterday...!
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Should they junk SATYAM management?

The (A)SATYAM saga is getting messier by the day.

The issue has meandered around a lot of flaky bends. First it was the bid to diversify into real estate defying all norms of corporate governance by disregarding the need for shareholder approval before making a strategic business shift. Then came the relevance of independent directors on its Board, that remained passive to promoter Ramalinga Raju’s initiative to buy grossly overvalued family concerns. Almost all of them have since resigned. What followed was yet another rant on Raju’s wiliness – how could he pull off all this while his stake has dwindled close to nothing (all of his 8.6 % in SATYAM was pledged to institutions to raise funds to finance MAYTAS venture that lost almost 80% of its value in the recent real estate meltdown – the institutions have recalled the loans that Raju could not meet and they sold his entire stake in the open market last week as the story broke).

And the latest is, HP training its guns on SATYAM. Gartner studies say IBM leads the global IT services market with around 7.2% of the market, followed by HP-EDS with around 5.3% of the market. HP overtook second-placed Accenture after it acquired EDS earlier this year. The global market for computer services is estimated to be around $748 billion. Even after the EDS acquisition, through which HP gained over 20,000 employees of MphasiS, it trails both IBM and Accenture in terms of offshore strength. IBM has over 73,000 professionals in India and Accenture some 37,000.

And now a fresh debate. Should the existing management be allowed to continue given their track record of delivering consistent business growth? I too believe that a change could be harmful and are willing to give the existing operational team a chance. Had the management clearly realized its mistake and makes amends on the governance front, it’s better to run with the same bunch that ensures customer comfort and affirms durable relationships. It’s not easy to let go off clients GE, Qantas and regain their confidence in the short term for any new management.

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ASATYAM COMPUTERS ?

“Satyam” in Sanskrit and a host of Hindu Dravidian languages like (Tamil, Telugu, Kannada and Malayalam) means Truth / Honesty.

“Asatyam” means just the opposite.

With the investor backlash over the attempted skullduggery by its management (with just 8% stake) to bailout the slumping Raju family group (Satyam founders) concerns MAYTAS Infrastructure and MAYTAS Properties (MAYTAS incidentally is SATYAM spelt reverse) for $1.6 billion (that's all the cash in its balance sheet!) and the subsequent calling off, there seems to be a good case for renaming the company as ASATYAM Computers. It’s not its first attempt by the minority management to oppress other minority shareholders. The group is known for its several dubious pursuits committed with impunity earlier.

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See how they squeal

I was at the Reuters India Investment Summit last week. The usual suspects were in full attendance – Akhil Gupta of Blackstone, K.V.Kamat, ICICI Bank, Manisha Girotra of UBS besides some irregulars like Arun Shourie of BJP, Arvind Virmani the chief economic adviser to MoF, Suresh Senapati of Wipro, G.V.Prasad of Dr.Reddy’s etc.

Here is the report from ET. I tuned my ears to Akhil Gupta of Blackstone who wanted more policy freedom as it was facilitating “crooks” and not strategists. He found support from the investment fraternity as well. "The flow price rule is a stumbling block," said Vedika Bhandarkar, of JPMorgan. "In a falling market like India, if you have a six month rule you can't do a deal. That rule, we expect to be relaxed soon."

I allowed myself a smirk. Aren’t these the same guys that clamored for the rule to stay when prices were soaring? They enjoyed the flow price rule and were valuing on the basis of last 6 months average price and forcing company management to accept it because the regulations said so. Now when the prices have caved in, it hurts them. Now Akhil Gupta worries the rules favor a crook, while he goofed up on his choice of investment in Gokaldas exports and (Ushodaya enterprises that went see-saw) the like. Blackstone, Gupta’s employer is famous for big time goofing up. Remember their $36 billion acquisition of Equity Office Properties Trust from Sam Zell way back in Nov.2006 when mortgage prices were peaking? In less than a year, they realized their blunder and started stripping it off its priced assets. But its CEO Stephen Schwarzman smartly went public and cashed out before the serial guffaw took its toll on his personal holdings. And Gupta is squealing about crooks outside!

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PE funds need to talk straight

Private Equity can do with some straight talking.

“One of [PE’s] defining characteristics is never, ever, to admit to a mistake in public. By convention, most buy-out bosses maintain that they anticipated a recession and acted cautiously. In reality, the buy-out industry had its biggest-ever binge just before the bust began. Most big firms paid silly prices for companies using sillier levels of debt.”

I have solid data on PE investments in Indian companies at obscene valuations. Some of them were mandates that I had turned down because the asking price was too high. But there were ambitious investment bankers / fee hungry brokers that went ahead and goaded their PE clients to invest in. Result - every company in PE portfolio has its valuations deep underwater. Recognizing their liberty to keep it locked down for several years, the PE fund managers get away without marking their investments to market. But the pension funds and other investors in the Funds, have regulatory mandates advising them to mark down their investments and disclose the level of erosion.

Now I have mandates from three funds that badly need to reshuffle their portfolio. Tell you what? There are no takers even at this down to earth valuations, not even the owners and majority shareholders!

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Turnaround strategy for airlines - "shut down"

Vijay Mallya is flamboyant even in the face of absolute ruin. Here he says "This long-awaited initiative will stabilise the aviation industry and provide much needed financial stability to airlines. In response to the initiative from the government, Kingfisher will immediately reduce air fare across the board as soon as the declared goods classification is approved."

But has he got a choice? He knows he is in deep trouble after having lost 60% of his passengers ever since he cannibalized Air Deccan (the LCC) and hiked the fares. The whole of aviation industry is bleeding as former air travelers flock to not so badly run Indian railways. I used to fly Bombay-Delhi often earlier but after my recent journey by Rajdhani Express (overnight, complete with A/C sleeper, dinner, breakfast, beverages and water), I am a card carrying member of the Rajdhani user club. Soon I’ll be a fan of Indian railways.

I save a lot too in time and money. The airport is an hour’s drive from home, will have to check in at least an hour before and then at the destination, I’ve to pay for the cab for another hour’s drive. The total cost of one way travel between Bombay – Delhi will be about Rs.8500/-. By train, it costs me just one-fourth of that. Given that there is a recession around and the stock markets are scraping at the bottom, the savings don’t hurt at all!

As I see it, there’s one sure way how airlines can get back into black – “shut down”!

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Foreclosure of FCCBs?

Remember FCCB frenzy of 2003-07 period? Almost every public listed company went ahead and borrowed in foreign currency egged on by the cheap (Yen carry) debt available then. When mixed with the rising stock markets back in India, the convertible bond was simply irresistible as a funding option for financing acquisitions and new ambitious projects. The option looked so alluring given the bubble valuations that most companies got. Let me put this in perspective with one example.

Take for instance Subex Ltd. This was known as Subex systems before, a micro cap company that was into developing software for telecom fraud management / revenue assurance (billing) solutions. The company was doing fairly well when the market frenzy drove its stock price up from Rs.150 to Rs.850 levels. But then the inevitable happened and it was bitten by the M&A bug. Acquisitions by Subex include the fraud management assets and technology of Mantas in March 2006, Lightbridge in August 2004 and Alcatel in July 2004. Along came street smart merchant bankers that peddled GDR / FCCB routes and Subex never looked back. Then it bought out UK based Azure solutions in April 2006 at a phenomenal price of over $140 million and its balance sheet was by now stretched way too thin.

The promoters recognized the fortune and smartly began to cash out. Now they hold just 9% of the company. Majority shares are with FII, GDR custodians and general public including body corporates. Now the FCCB is coming home to roost. FCCB outstandings are currently about Rs.846 crore and conversion hurdle is far away at Rs.897 per share, whereas its stock is currently languishing at Rs.82. So the investors are certain to press redemption in which case the company’s net debt will rise to Rs.1057 crore. Peg that against revenues of about Rs.178 crores and a net loss of Rs.78 crores for trailing four quarters. [EPS is –Rs.22]

Can this company with a negative earnings Rs.22 per share repay a debt of Rs.1057 crore? Of course, we know worst cases have turned around. I can think of ESSAR STEEL that defaulted in its FRN obligations back in the 90’s. The first of its kind to get that ignominy. But that was a steel company that collapsed under the weight of industry downturn. Not because of overstretching its balance sheet for adventurous acquisitions. So when the industry turned around and its realizations got better, the company came back into black and with a few calculated forays into Oil, Shipping and Telecom – it became a trailblazer in the Indian stock market history.

Subex is not alone. The list is long – Aurobindo Pharma, Hotel Leela, HCC, Bajaj Hindustan, Ranbaxy… so it goes. Never forget the fundamentals. Go for a forex loan only if your earnings in the same or a stronger currency is enough to cover the projected outgo in constant currency terms. Better still, have the proceeds deployed in tangible assets that can be liquidated without jeopardizing the solvency status of the company. Acquisitions can wait.

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Resurgere surge - stock in play?

Resurgere mines (RESU.BO: Quote, Profile, Research) IPO debut took my breath away.

Coming at a time when bearish overtones rule, the miniscule 4-4.5 million shares offered in this IPO received bids of about 1.2 times. A very lukewarm response. In normal conditions one would call it a “scrape through”. Debut listing price was also at a very marginal premium of Rs.2/- (i.e. Rs 272.05) on the BSE, over its issue price of Rs 270. No marked bidding frenzy was observed when the book was open. QIB had bid for 1.3 times and HNI about 2.4 times. Retail turned their back on it with just 0.4 times. CRISIL had assigned a '1/5' grade to the offering, citing the management's limited track record in the iron ore business and the fact that the company's financial returns are vulnerable to spot price movements of iron ore.

Normally such dubious issues begin to slide post listing or just maintain price levels. But this was not to be. What happened later was astounding.

Within minutes of listing yesterday, the scrip touched a high of Rs 299 and over 3 lakh shares exchanged hands. The share price surge in a weak market at record volumes - 33 million shares on the BSE - raised eyebrows given the low rating and cautious brokerage. It closed at a whopping Rs.524, a premium of about 100% on day 1. Today the scrip rose by another 20% and hit the upper circuit to close at Rs.625.

Clear signs of something-wrong-somewhere. But not enough for SEBI to sit up and take notice. May be, we should wait for a couple years for CBI to ferret out the rot, well after the smarts have pasted it on unsuspecting investors that might get caught in the wild dance...

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The Airline experience

The progression (if not evolution) of successful industrialists sometimes baffles me. Doesn’t success yield some experience? I see airline after airline collapsing all over the world. Oil prices and operating costs are soaring, demand slows down, flights get cut. Few of them have even gone bankrupt. Still enterprises that make money from successful businesses head straight towards the airstrip. Vijay Mallya made money from his liquor and other businesses set up Kingfisher airline that is bleeding. Subroto Roy (Sahara, now sold out), Dr.B.K.Modi (Modiluft, sold out), East West, NEPC, Damania (closed down / soldout) are all examples. Mallya found LCCs as the culprits and bought out Air Deccan (now eyeing Spicejet) to consolidate his business. May be he'll get to own 40% market share. But to what purpose when the pie itself is shrinking? The high passenger load factor that allure investors is because of LCC fares. If they are gone, passengers too will be. Remember they used to take the trains before. They will, in future. [The upright seating airlines offer has already forced many to reconsider their mode of travel, now they drive up fares and cut flights too - last nail?] That leaves the managements to put up with soaring fuel costs, expensive pilots and maintenance crew. Here is Naresh Goel’s Jet Airways endorsement. I am sure fellow industrialists would be watching this spectacle.

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Or did they? At least some of them who are up close, like GMR infrastructure – that builds large Airports are expected to know better. Apparently they see something that we obviously don’t. Perhaps they are right. But I am certainly curious. Who can bet on this business? What are the odds of success?

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Here's Warren Buffett on Airline industry -

"I made the comment that if a capitalist had been present at Kittyhawk back in the early 1900s, he should have shot Orville Wright. He would have saved his progeny money.

But seriously, the airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in.

You've got huge fixed costs, you've got strong labor unions and you've got commodity pricing. That is not a great recipe for success.

I have an 800 number now that I call if I get the urge to buy an airline stock. I call at two in the morning and I say: "My name is Warren and I'm an aeroholic." And then they talk me down."

Prove me wrong. I'd be obliged.

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Stock buybacks - value capture or management swagger?

Why do buyback announcements fail to boost stock prices?
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Typically if a company has generated surplus cash from its operations and is of the opinion that the cash cannot be profitably redeployed in the business in the near term, it may choose to distribute such cash amongst its investors by way of dividends. Further, if the company has built up a war chest anticipating large capital expenditure and because of adverse market conditions it decides against expansions, then its management may decide in favor of using the cash to mop up equity from stockholders desirous of cashing out. It also sends out signals that in the opinion of the management, the intrinsic value of the business is not adequately reflected in its stock price.

When a company buys back its shares and cancels it, the residual stake held by existing holders goes up. Each residual share gets a larger claim to the earnings pie (the numerator) since the number of shares (denominator) has gone down. As a result there will be fewer claimants to its equity and distributable profits (numerator) in future. Lower investor base brings down annual servicing costs. So even at a time when business prospects are not so buoyant, the surplus resources are not allowed to clog the arteries of business since overcapitalization is more dangerous than under capitalization. The business runs with optimal capital – and no excess flab.

But recently we’ve been noticing consistent decline in stock prices of companies that announce the buyback. Is it that investors don’t read the signals? Or is it that they read it only too well?

Notice the times. Liquidity is hard to come by and managements would do well to keep money in the bank than apply it towards stock buyback. If they need it later, how sure are they of raising it? If sure, at what cost? That is why investors see buyback announcements made by companies as management swagger, not backed by seriousness of purpose with an intention to capture value. Not the least when interest rates are going up and raising debt is way too expensive. Especially if it comes from companies that are already reeling under huge interest burden such as Reliance Infrastructure or DLF Limited that face a double or triple whammy - with large unfunded capex plans, bruised by economic headwinds and wading through a tardy business cycle.

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Tatas Man Up

Chivalry sometimes shows up when you run out of choices. When Tata owned Indian Hotels rights issue (6% NCD cum convertible warrants at Rs.150/- Offer size Rs.600 crore) got barely 19% subscription, the promoter group has the gall to pick up the unsubscribed portion – even as the stock is languishing at Rs.104/- at close yesterday.

The offer was doomed from inception. Wondering how Nimesh Kampani’s JM Finance let such a dubiously priced issue hit the street. The NCDs carried a 6% rate of interest when even AAA rated PPF is offering 8%; the conversion price of attached warrant at Rs.150/- (1 for 10 equity shares held) when shares were quoting Rs.114/- was insane. Ok. The name is TATA. But when the sentiment is rock bottom, names don’t mean much.

When markets thaw stock prices quote low and ideally clients should be advised to put off their fresh fundraising plans and instead use some group funds (they have bought in Rs.480 crore now to bail out the issue) to shore up their stake - either through a buyback or through creeping acquisition – like some smart founders do now. But then that would mean JM should settle for a lower fee (for buyback) or for just brokerage (from creeping acquisition), if routed through them. Anyway I-banks can’t count on Tata clientele for long; now that they are coming up with their own investment bank – Tata Capital.

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SBI should coach American Banks

What am I to make of this? SBI Chairman O.P.Bhatt had reportedly told Business Standard that the entity may not grow the book aggressively in the present financial year. The card company will work to arrest and bring down defaults, improve asset quality and make all efforts to stop making losses.

I recall my helpless plight at the SBI branch a few years back (where my family has multiple relationships), when a persistent card salesman almost drove me mad. He repeatedly clamored “sir, it’s FREE. All that you need do is just sign up. We need no salary slips, no documentation, nothing. We are issuing it because of you’re a privileged customer having excellent relationship with us for all these years”. My express statement that I already hold lifetime FREE cards from a few other banks made no difference to his sell-I-will attitude. Wanting to put an end to that nag and sparing a benign thought to his desperate pitch, I had obliged.

Not being a great spender, I’d never used the card till date. But now after a couple years, I receive email from SBI saying that my Annual Fees are due. Yes, on the FREE card thrust upon me asking no documentation and just because the bank thought we are good credit risks and it wanted to treat its A-Listers well.

Now I understand why they play dirty. The report quotes Crisil -

the company's delinquencies have shown an increasing trend and as on September 30, 2007, they were at 5.6 per cent on the past dues basis of over 90 days' past dues against 4.4 per cent a year ago. Along with the rise in defaults, the card company has also seen a rise in its costs. SBI Cards' credit costs increased to 20.8 per cent in the half-year ended September 2007 from 8.3 per cent in the year ended March 2007 and 6.2 per cent in 2005-06.

The company suffered a loss of Rs 150 crore in 2007-08. Asked about any plans to put more capital in FY09 to support business, the SBI chief said, "In March 2008, the bank had infused Rs 250 crore into SBI Cards. At present, there are no plans to pump additional capital, unless it makes losses."

So what does the beleaguered card company do? Go fleece the A-Listers and earn their ire too. I think of the big American banks busy writing down billions of $$ because of bad lending practices. Isn’t there a good consulting opportunity for SBI?

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"Small world, people !"

Michael Gordon in FT calls the Private Equity bluff –

“So now we know. The boom in private equity, which was promoted as the superior business model, based on patient capital, superior management and an alignment of interests, was nothing more than a trick of financial engineering - and a clumsy one at that. The magic of leverage works both ways, as we are discovering…. Private equity as we have come to know it is all about debt - lock, stock and sinking barrel. There may have been better management and better incentive structures in the deals of recent years. But they really contribute nothing to the overall return when compared with the impact of the leverage in the capital structure.”

But before Gordon could call global PE bluff, I’ve called that of the Indian PE masters. Here is my local, factual account. If leveraging had done them in globally, here in India they've been wrecked by smart owners that palmed off sizeable chunks at fabulous valuations. Now they are left to lick their wounds. Small world, huh?

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"No, thanks Ms.Kochchar"

Chanda Kochchar, JMD and CFO of ICICI Bank put up a brave face while announcing her bank’s Q4 results.

This is how she defended additional provisions (in Q4 accounts) because of her bank’s MTM losses in the US – “"We have no sub-prime assets but only exposure to CDOs and CLNs. We have seen no deterioration of our portfolio. The provisioning is only for the MTM losses due to widening of credit spreads. In fact, post March 31, the credit spreads have tightened and we have made a saving of $16 million (Rs 64 crore)….”

In lay terms that means – We haven’t directly make any loans to risky homeless borrowers in US. But we financed some of their crafty lenders by buying their CDO and CLN. Our losses are already deep, so no scope for further plunging. Still we see only a mild recovery, so we prepare you for the worst now so that our shareholders don’t get mass cardiac arrests later. We never hoped the market will improve, but there is a little blip on the screen which we sincerely pray isn’t a dead cat bounce.

ICICI Bank's total exposure to CLNs and CDOs was estimated at $1.6 billion (Rs 4,240 crore), comprising 70 per cent of Indian corporates. The bank has seen an 8 per cent rise in provisions during the fourth quarter to Rs 948 crore, as against Rs 876 crore during January-March 2007. Most of the other private sector banks, such as Axis Bank and HDFC Bank, have seen significant rise in non-tax provisions and contingencies mainly due to provisions for derivatives. ICICI Bank, however, did not disclose the details of its derivative deals.

The bank's net interest margin (NIM) stood at 2.40 per cent as against 2.28 per cent in the corresponding quarter last year. Its cost of funds (COF) has eased to 7.4 per cent from 7.5 per cent. Net non-performing assets to advances increased to 1.55 per cent from 1.02 per cent. Its capital adequacy ratio stood at 13.97 per cent.

Now wait a minute. That NIM pricks me. If the bank’s COF is 7.4% and NIM is 2.4%, why do they choke my mail box with personal loan offers at 15% + processing charges of 1.5%? That means their overheads are unusually high at 5.2% (15% - 7.4% - 2.4%). I can live with their administrative costs of say 2% more, so it should come to me at a cost of 12% (COF 7.4% + NIM 2.4% + 2% admn. cost) at the most. ICICI marketing should have an enormous resilience to resist its CRM analytics that signals “here’s a good credit risk. Lend to him at 12%”

Poor chaps at ICICI marketing can't do much if their super intelligent bosses decide to screw it all up by financing bad lenders in the US and thought they could pass on the cost of such hits to low risk clients in India. That explains the 3% loadings (offered interest of 15% - optimal interest of 12% at which I would’ve taken the loan) they try to push down my throat.

I say “No Thanks!!!”

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