Indian promoters were known as masters of extracting cash from projects, even those that ended up losing money. The most common ruse was ‘gold-plating’. Here a business approached a bank with a proposal to build a project, say a steel mill, costing $2 billion. Of this a portion – $1.5 billion, for instance – would be funded through bank loans, while the remaining $500 million would come as equity put in by the owners. The trick was that the entrepreneur knew the steel mill could actually be built for $1 billion. The difference between the amount raised from the banks and the true cost – in
...more
