Companies run by
family members of some politicians are like every other company. And
they are not, as these four practices that run through their businesses
and have aided their meteoric rise show. Talk about business growth and opportunity. In the last five years, Theon Pharmaceuticals, controlled by the immediate family of former railways minister Pawan Kumar Bansal, has increased in size from Rs 15 crore to Rs 152 crore. Elsewhere, in the same period, Rs 757 crore of cash has come into seven companies owned by Anand Kumar, the brother of former Uttar Pradesh chief minister Mayawati.
Robert Vadra, the son-in-law of Congress president Sonia Gandhi, has quietly assembled a real estate business estimated in the region of about Rs 300 crore. And YS Jaganmohan Reddy, son of the late Andhra Pradesh Congress leader YSR Reddy, has seen his wealth increase six-fold, to Rs 446 crore, in the space of just two years. These are growth rates that would make even a blue-blooded corporate go green with envy. In times that have been tough and trying, these four blueblooded family members of politicians in power have built businesses from scratch. These companies are like every other company. And they are not, as these four business practices, which have aided their meteoric rise, show.
They have been selling shares at big premiums
Robert Vadra aside, the others have been selling shares in their fledgling companies to outside investors at a premium—usually hefty—even as the promoters themselves subscribe at par value. Thus, the promoters are able to pump cash from external sources into the company without diluting their equity stake much. The most recent case is that of a company promoted by the family members of Pawan Kumar Bansal, the former railways minister who resigned earlier this month following corruption charges against one of his nephews.
Company filings with the Ministry of Company Affairs (MCA) show that in March 2011, the board of Mirage Infra passed a resolution to issue 4,000 shares to a non-promoter shareholder, Rajeev Garg, at a premium of Rs 990 per share, which brought in Rs 40 lakh into the company. However, a year later, in March 2012, the Mirage board approved the issuance of 46,000 shares at their par value of Rs 10 each to three family members of Bansal's extended family. Pawan Kumar Bansal declined to respond to a questionnaire sent to his office.
Similarly, companies owned by Anand Kumar, Mayawati's brother, have received huge capital infusions by issuing shares to outside investors. ET was the first to report this, in January 2013. For example, DLA Infrastructure, which had a net profit of Rs 2.2 crore in 2009-10, garnered Rs 100 crore by selling its shares at a premium. Another company, Dia Realtors, with a net profit of Rs 4.5 crore in 2011-12, collected Rs 71 crore.
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