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Last September, when he got the first payout, of $2.2 billion, from Abbott, the phone started ringing. "Because people knew we had money, we had so many people approaching us for projects in the infrastructure sector," he said. "These people had no experience and no knowledge and no track record of having built a business in any area. And yet they were coming to us saying we have licenses and approvals. That just didn't sound right or smell right." Each day, they paraded through his office: The investment banker who decided to build a 500 megawatt power plant, the coal trader assured of a government coal allocation, small-time miners with pretty presentations promising land, licenses and financing. "They'd name politicians from the center and the state who had it all tied up for them," he said. "It didn't sound right. Obviously there were things going on in the system." Road and port projects weren't much better, he said. Piramal also looked at investing in engineering and infrastructure services companies, but couldn't make sense of their books. "We couldn't find anything," he said. "People get greedy. In their desire to get good valuations they resort to, if I can say, creative accounting." Today, India's infrastructure companies are known as great wealth destroyers. "Infrastructure investment has become untouchable, a sure way of losing money," said Jagannadham Thunuguntla, head of research at SMC Global Securities. He calculates that four of India's top infrastructure companies
-- GMR Infrastructure, GVK Power and Infrastructure, Lanco Infratech and Punj Lloyd
-- have lost over 80 percent of their value since 2007. A fifth, Larson & Toubro is down 50 percent. Piramal may have dodged a bullet, but shareholders in Piramal Healthcare aren't happy. Despite a $600 million special dividend and share buyback, the share price has sagged since the Abbott deal was announced on May 21 last year. They'd like to see the Abbott cash productively deployed. Instead, much of it is sitting in fixed deposit accounts. Piramal said he really does want to run a pharmaceutical company and be the first Indian company to discover a world-class drug
-- despite his dabbling in telecom, financial services and real estate financing. It's just that pharma can't absorb all his cash. He plans to sell the 5.5 percent stake he picked up in Vodafone Essar for $640 million in a few years, when Vodafone Essar issues shares in an initial public offering, he said. He has also launched Piramal Capital, to make real estate and infrastructure loans, and spent about $50 million to acquire IndiaReit, a real estate investment company. Meanwhile, his thoughts have turned to Boston, where he set up IndUS Growth Partners with a professor from Harvard Business School to look for buying opportunities in the U.S., in security, financial services and biotechnology. And he said he's still planning to spend over a billion dollars on biotechnology acquisitions in North America and Europe. "India was going more towards capitalism than socialism," Piramal said. "I think we're going back. Capitalism went to too much excess. Corruption levels went to the extreme." He said he'll announce his first overseas acquisition by March.
[Associated
Press;
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