Turn an Obstacle into an Asset

HBR :LEONARD A. SCHLESINGER, CHARLES F. KIEFER, AND PAUL B. BROWN

11:01 AM Thursday February 23, 2012 

" Nine Things Successful People Do Differently", provides a fabulous summary of what makes the difference between those who succeed and those who don't. 

But, in our experience, it misses one really important "thing': Successful people habitually turn obstacles into assets.

People who succeed at work and in life believe and act as if "everything is a gift." 

Well, maybe not every single thing imaginable. 

But assuming that everything is a gift is a good way of looking at the problems and surprises you'll encounter in any endeavor, such as, for example, in getting a new venture off the ground, obtaining buy-in with your boss, or launching a new product line in an ultra-competitive market.

Why should you react to a problem with gratitude, whether you are trying to start a business or create anything else? There are a number of reasons.

First, you were going to find out eventually what people did and did not like about your idea. 

Better to learn it as soon as possible, before you sink more resources into the idea, venture or product line, etc.

Second, the feedback could take you in another direction, or serve as a barrier to your competitors. 

You thought you wanted to open a restaurant, but a quick survey told you potential customers thought the area was saturated. 

But more than a few of them said they would love a place that simply had ready-to-go take out to heat up at home.

Third, you got evidence. True, it was not what you were expecting or even wanted, but that still puts you ahead of the person who is just thinking about doing something (like opening a restaurant in your neighborhood.) 

You know something they don't, and that is an asset. You are ahead of the game.

But what if it's really bad news. It's a disappointment. 

You were absolutely certain that your boss would approve your idea for a new software program, and she said no in a way that is still echoing down the corridor.

No reasonable person can define what you've encountered as anything but a problem, and most people will try to solve the problem. ("Maybe she will like the idea if I go at it this way instead.") 

That's fine if you can. The problem has gone away and, again, you've learned something that others might not know. (The boss hates Y, but she loves Z.)

But what if you can't solve it? (She hated "Z," too.) Accept the situation to the point of embracing it. 

Take as a given that it won't ever change, and turn it into an asset. 

What can you do with the "fact" that it won't ever change? Maybe it presents a heretofore unseen opportunity.

 Maybe you build it into your product or service in a way that no competitor (having not acted) could imagine. Could you do it on your own? 

Could you take the idea to a competitor and use it as your calling card to look for the next job? Instead of resisting and lamenting it, treat it as a gift and turn it to your advantage.

For a quick exercise showing that this is easier than you think, take a sheet of paper and divide it into three columns. In the left-hand column, list the obstacles and problems that are keeping you from your goal. 

Then spend five minutes figuring out as many ways as possible to solve these problems, and list those in the middle column. 

Show your list of problems and solutions to a friend, and ask them to build on your solutions. When you can't think of anymore solutions, go back to the list of problems in the left-hand column and assume that they can't ever be solved. 

Now take five minutes with your friend and figure out how those problems could be an asset or an unrecognized opportunity. 

Put these assets in the right-hand column. Chances are good that, having completed this exercise, you'll turn at least one of your obstacles into an asset.

The thing to remember is this: Successful people work with what they have at hand — whatever comes along — and try to use everything at their disposal in achieving their goals. 

And that is why they are grateful for surprises, obstacles, and even disappointments. 

It gives them more information and resources to draw upon.

Have classified loan to Kingfisher as NPA: MS Raghwan, Bank of India

ET Now Feb 23, 2012, 03.56PM IST

In an interview to ET Now, MS Raghavan, ED, Bank of India, discusses the bank's upcoming preferential allotment and performance figures. Excerpts:

ET Now: Bank of India has announced that it will be raising capital through a preferential allotment of about 7 crore fresh shares to government of India and to LIC. At what price are you planning to raise money and what will be the exact quantum of shares which will be allocated?

MS R: Though the enabling provision has been passed for 7 crore shares to each one of them, the quantum of shares which are going to be allotted to government of India is to be to the tune of 2.75 crore shares and 2.73 crore shares will be to LIC of India.

By this preferential allotment, the bank intends to mop up around Rs 1800 crore of additional capital. The pricing of the preferential shares will be strictly as per SEBI guidelines.

ET Now: What about your credit growth targets for FY13? Besides the preferential allotment, would there be any further capital raising?

MS R: Actually the industry growth forecast has been reduced to 15% or say 18%. Our bank too is recording 15-18% growth.

In addition to this, if you see our CRAR position, it was very comfortable at 12.17 as on 31-03-2011.

On 31-12-2011 also it was 11.18 but granting that profit during the year has not been taken for the calculation, CRAR almost remains unchanged.

However because of Basel III, the accent has now shifted to core capital. Regarding core capital, as per the prescription of RBI vis-a-vis our bank, for the first three years, in fact, up to 2015 we are comfortable.

Beyond that, we fall short of the core capital. All these measures are intended to mop up the core capital from the year 2015 onwards. Till such time, with the projected credit growth of about 15-18%, our bank is comfortable.

ET Now: Bank of India has an exposure of Rs 575 crore to Kingfisher Airlines. Has the account now been classified as NPA and if yes, what are the provisions you have made in the Kingfisher account for the quarter gone by?

MS R: In fact, the bank had classified the account as NPA as on 31st December 2011. The provisions have already been made, close to about Rs 160 crore we have already made provisions. In the new dispensation, there are eight banks which have classified (the Kingfisher account) as NPA and our bank is one among them.

ET Now: As per the recent news items, would the Bank of India participate in giving further loans toKingfisher Airlines if the consortium decides so?

MS R: There was a consortium meeting held recently in which various aspects were discussed. In this, Kingfisher Airline was asking the bankers to give an interim finance of about Rs 200 crore so that the grounding can be stopped and the airline can continue functioning.

However, there are about eight banks, including Bank of India, which have classified these accounts as NPAs whereas 10 banks have not classified it as NPAs.

It was generally discussed that each one of them will chip in with about Rs 20 crore of further finance.

With the 10 banks chipping in, about Rs 200 crore of finance will be mopped up to enable Kingfisher continue its operations.

As to restructuring, Bank of India has already restructured it once and the account has slipped into NPA. There is no way the account can be restructured again without taking a hit. The economic viability has to be ascertained before any such step is taken. In addition, we are looking at the account getting upgraded before we embark on any such restructuring exercise in the future.

ET Now: Which are the other key sectors where you see stress in the coming months?

MS R: Nothing. Because of the downturn in the economy, projections have brought down the GDP growth to 6.9%. There is a general slowdown which is noticed.

Nothing very pronounced to say that this sector per se is affected. There is some strain visible in telecom and aviation.

In the steel sector too, a little bit of anxiety is cropping up, but I do not say there is any systemic effect. We do not see any great strain in any big sector.

Several banks classify KFA loans as NPAs

ENS Economic Bureau : Mumbai, Fri Feb 24 2012, 01:16 hrs

Banks have started classifying loans extended to Kingfisher Airlines as non-performing assets (NPAs), making fresh exposure to the troubled airline difficult. 

As many as eight banks have already declared their loans to KFA as NPAs as on December 2011. 

If the situation doesn’t improve, the remaining ten banks are likely to classify them as NPAs in the coming weeks, bankers said.

Reiterating its stand on KFA, a senior official of a nationalised bank said, “We have to be satisfied about the viability of the company. There is no point restructuring if the company’s operations are going to be unviable. We had asked them to come up with some fresh funds if the banks were to consider their request for restructuring or bailout. We want to see more funds coming from the company itself. This has not happened.”

As some of the banks had already declared their KFA exposure NPAs, banks will have to take the consortium route to bail out the firm.

 “Some banks have already made provisioning for loans defaulted by KFA. How can we extend more loans? Its networth has been eroded. 

In the Air India case, the approval for restructuring by the banks came after a Group of Ministers okayed sovereign guarantees for Rs 7,400 crore non-convertible debentures,” said a source.

SBI with an exposure of Rs 1,400 crore is the largest lender to KFA.

Bank of India and IDBI Bank are the other big lenders. Experts said KFA’s non-performing loans were last year rechristened and repackaged into subordinated debt, but it defaulted on its obligations.

Dead Account

* PNB has to make a provision of R 435 crore as Kingfisher loans turned bad

* UCO Bank has declared Kingfisher account as NPA

Banks put Rs 9,800-cr NPAs for sale

BS Reporter / Mumbai Feb 24, 2012, 00:02 IST

Banks have turned aggressive in recovering dues from non-performing assets (NPAs), putting NPA properties worth Rs 9,900 crore on the block in the first ten months of 2011-12.

Five states — Tamil Nadu, Uttar Pradesh, Gujarat, Andhra Pradesh and Maharashtra — account for the highest value of NPA properties sold in 2011-12, according to a study by NPAsource.com.

Of the 6,359 units valued at Rs 9,897 crore, Tamil Nadu had the largest NPA properties, worth Rs 1,261 crore, spread across 663 units. Uttar Pradesh came second, with 533 units worth Rs 1,025 crore.

Gujarat, with 349 properties worth Rs 1,023 crore, and Andhra Pradesh, with 1,226 units worth Rs 1,004 crore, came third and fourth, respectively.

While Mumbai was the biggest centre for the disbursement of loans to companies, Tamil Nadu and Uttar Pradesh accounted for the largest NPA properties (by value) in the first 10 months of 2011-12.

Tamil Nadu, UP, Gujarat have highest NPAs in India: study news

domain-b:23 February 2012

Tamil Nadu, Uttar Pradesh, Gujarat and Andhra Pradesh accounted for the highest value of non-performing asset (NPA) properties in 2011-12 according to a new study.

The study, conducted by NPAsource.com,  reveals that out of 6,359 units valued at Rs9,897 crore across India in 10 months of 2011-12 financial year, Tamil Nadu has the largest amount of NPA properties valued at Rs1,261 crore spread across 663 units.

Uttar Pradesh was second with 533 units with a value of Rs1,025 crore, followed by Gujarat with 349 properties worth Rs1,023 crore and Andhra Pradesh (AP) with 1,226 units valued at Rs1,004 crore.

According to Devendra Jain, chairman and managing director, of metals sector consulting firm Atishya Group, ''While Mumbai is known to be the biggest centre for disbursement of loans to corporates, our study has found that Tamil Nadu and Uttar Pradesh have the largest amount of NPA properties by value in the first 10 months of 2011-12. Maharashtra comes at number five in terms of NPA properties by value."

Total NPAs in India as of 31 March 31 2011, exceed Rs 90,000 crore according to Reserve Bank of India statistics, excluding those with co-operative banks, state finance bodies, financial institutions  and non-banking finance companies.


The distribution of NPAs in the system follows the 80:20 rule whereby 20 per cent of borrowers account for 80 per cent of the value of impaired assets. 



The study also revealed that out of the different types of properties given as collateral against loans, commercial and industrial properties worth Rs5,0633 crore spread across 2,925 units accounted for more than 50 per ent of the total NPA properties. Land worth Rs2,793 crore spread across 1,146 land and 2,165 residential units valued at Rs838 crore were the other major categories in NPA properties


The large impaired assets comprise industrial assets having good restructuring potential. ''Our experience shows in value terms that more than 60 per ent of the impaired assets are capable of being restructured or sold as going concerns. 


 The small assets, however, have to be put through a recovery process, where the collateral based funding practice followed by the banking system offers a fair recovery potential,''  Jain, added.


He said the website aims at bridging the gap between the buyers and the sellers of non-performing assets.
"It is designed to facilitate the best deals for disposal of NPAs by updating all the details of available assets in the Indian market,'' Jain says. "We plan to tie up with foreign investors globally who would be interested in acquiring impaired assets in India."
   
Interestingly, globally the figure for impaired assets would run into trillions of dollars, with multiple pitfalls impacting the monetisation of such impaired assets. 


More over, database are scattered and inadequate, nor have they been updated periodically,  leading to inadequate realisation from intrinsic worth of NPAs, lack of visibility and transparency for all stakeholders as well as no access facility of data on NPA for use by prospective investors or buyers. 

Mr.H.S.Gangadhar V/S The Authorised officer, Indian Bank & 3ors

A.IR:629/2010

IA 1129/10 (waiver)  Ld. Counsel appearing on behalf of the petitioner drew the attention of this Tribunal to the order passed by the Hon’ble High Court of Karnataka in WP No.25682/11 more particularly to paragraph 5 of the said order and stated that the Hon’ble High Court of Karnataka was pleased to hold that the order of this Tribunal dt 31.8.2010 is proper and  prayed that the same may be continued. 

Ld. Counsel Shri Muralidhar appearing on behalf of the respondent bank drew the attention of this Tribunal to the dictum laid down by the Hon’ble High Court of Madras in WP No.23708/11 and stated that this Tribunal should not venture to pass any order in the nature of an interim order restraining the action of the Authorized officer under the provisions of the SARFAESI Act unless the pre-deposit under Sec.18 of the SARFAESI Act is made.  

He further stated that the order of this Tribunal directing the petitioner to make the pre-deposit has not been complied with and that therefore the interim order dt 2.5.2011 made in this IA and  further that the interim order dt 31.8.210 made in IA No.1130/10 also should not be extended.

Heard the Ld. Counsel.

A perusal of the order dt 2.5.2011 in this IA reveals that the petitioner has not made the pre-deposit as required under Sec.18 of the SARFAESI Act and it is also seen that this Tribunal has passed interim orders without the pre-deposit being made.  

Therefore this Tribunal is driven to dismiss this IA for the non compliance of Sec.18 of the SARFAESI Act. 

IA 1130/10 (stay);  IA No.1129/10 is dismissed.  Hence this IA is also dismissed.

IA 1131/10 (stay of auction sale notice);  IA No.1129/10 is dismissed. Hence this IA is also dismissed.

IA 1822/10 (stay of auction sale notice):  IA No.1129/10 is dismissed. Hence this IA is also dismissed.

The above order was delivered by the Honble Chair Person of DRAT Chennai on 23rd Feb 2012

Banks in a quandary over Kingfisher exposure

BL: 23 FEB 2012

Banks are caught between a rock and a hard place in the case of cash-strapped Kingfisher Airlines.

On the one hand, established banking practice does not permit fresh exposure to an account which has turned bad and, on the other, banks have too much money at stake to not support the airline, said a banker.

Though there are reports that State Bank of India and Punjab National Bank have thrown a lifeline to the cash-strapped airline, the same could not be confirmed.

Two options

At a consortium meeting held last week to consider the way forward for the beleaguered airline, which is reeling under a Rs 7,000-crore debt mountain, the banks considered two options for extending a lifeline to the airline.

The first option is that the 10 banks, in whose books the Kingfisher account is still a performing asset, would extend Rs 20-crore loan (short-term) each to the airline so that its operations continue for a couple of months.

This move is intended to give the promoter breathing space to bring in equity capital via foreign direct investment.

The second option is that banks want the risk arising from fresh loan exposure to the airline to be spread evenly so that each member of the lenders consortium takes not more than Rs 10-12 crore exposure. While the Kingfisher account has become a bad loan with majority of the public sector banks such as State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India and IDBI Bank, it is still a performing (or standard) asset in the books of 10 banks, including Oriental Bank of Commerce, Indian Overseas Bank, ICICI Bank, Axis Bank, IndusInd Bank and Federal Bank, said an official with one of the consortium banks.

“Most of the public sector banks have given working capital loans to the airline. In the case of these banks, the letters of credit got crystallised and the bank guarantees got invoked.

“So, the account has turned into an NPA. However, it is a standard asset in the case of 10 other banks, which have term loan exposure,” explained the official.

kram@thehindu.co.in

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On the one hand, established banking practices do not permit fresh exposure to an account which has turned bad and, on the other, banks have too much money at stake to not support the airline.

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M/s.Indian Bank V/S Mr.J.Paramanandam & ors

IA 1506/11 (adv.hearing); counter filed.  Heard both sides. This IA is allowed.

IA 1461/11 (impleading petition);  Heard both sides. This IA is allowed.

IA 150711 (to release the title deeds) : R3 to R12 are given up.  Notice given to R1 and R2.

Ld.  Counsel  appearing on behalf of Ld. Counsel Shri Thyagarajan for the petitioner took this Tribunal through various averments made in the affidavit filed in support of the petition and stated that the ‘LIS’ having come to an end in this matter the petitioner is entitled to get back the original title documents that are presently with the bank. 

Ld.  Counsel Shri Kasturi Rangan appearing on behalf of R1 stated that the matter has been settled and that no prejudice would be caused if the original title documents are released after the completion of the payment of Rs.1.00 crore by the first respondent to the bank as agreed to and prayed that this petition may be dismissed.

Ld.  Counsel Shri Balasubramaniam appearing on behalf of the respondent bank stated that the terms of compromise are yet to be fulfilled and that this Tribunal may not release the original title documents at this juncture though the matter has been settled.

Heard the Ld.  Counsel.

In view of the facts and circumstances of the case more particularly in view of the fact that the petitioner viz. Shri A. Ramadas Rao has fulfilled the requirement of the respondent bank in this case it would be appropriate if the following order is passed.

“The Chief Manager, ARMB-I, Indian Bank Zonal Office, Indian Bank Circle Office Building, Chennai is hereby directed to return the original title documents relating to the property situated at No.29, Senthamangalam Village, Sunguvar Chatram Firka, Sriperumbudur Taluk, Kancheepuram District registered as Document. No.418 of 2011 in the office of Sub-Registrar, Wallajabad within a period of one week from today.”

This IA is disposed of accordingly,

RA 28/11 : Call on 9.1.2012.

This order was issued by the Honble Chair Person Of DRAT Chennai on 14th Dec 2012

Pain not yet over: SBI refers 3 cos to CDR for Rs 3430cr

 
Saikat Das :Moneycontrol :Tue, Feb 21, 2012 at 12:04  

India's largest lender the State Bank of India (SBI) referred three loan accounts including Bharati Shipyard (BS), ARSS Infrastructure and Vijai Electricals (VE) to the Corporate Debt Restructuring (CDR) cell. The sum total of credit exposure in these companies would be around Rs 3,430 crore by the bank, sources familiar with the development toldMoneycontrol.com.

The SBI share of loans to BS comes around Rs 1,655 crore out of total exposure at Rs 5,650 crore by a consortium of 15 lenders. The bank lent Rs 773 crore to ARSS out of total loans around Rs 1,600 crore by eight lenders. For VE, it stood at around Rs 1,000 crore as against total Rs 2,200 crore by seven banks.

Credit exposure at a glance:

Company	SBI exposure (Rs in crore)	Total exposure (Rs in crore)
Bharati Shipyard	1,655	5650
ARSS Infrastructure	773	1,600
Vijai Electricals	1,000	2,200

Figures are written on approximate basis.

At the time of CDR proposal submission in the third quarter (Q3), all three companies remained standard assets. Companies have been repaying the interest rate. In anticipation of defaults (before the principal payment becomes due), they were referred to CDR cell. As per RBI norms, a bank has to make provision of 2% on any restructuring of standard asset.

Under the regulatory frame work of the Reserve Bank of India (RBI), the CDR forum caters to an official platform for both the creditors and borrowers to amicably and collectively evolve policies for working out debt restructuring plans.

The CDR cell will make the initial scrutiny of the proposals received from creditors. It happens in two stages: flush stage and final report stage, all related to the economic viability study of the proposal. A loan account can be referred to the CDR cell when at least 75% of the banks (by value) and 60% of creditors (by number) agree to resolve the case under CDR system.

The asset quality concerns cast a shadow on the SBI's Q3 performance. The gross non-performing asset (NPA) ratio stood at 4.61% as against 4.19% in the previous quarter (Q2). The net NPA ratio too rose from 2.04% to 2.22 sequentially.

According to the SBI chairman Pratip Chaudhuri, as much as one fifth of fresh slippages had come from a single company (read Kingfisher Airline).

"So, if you look at the total slippages (net increase) of Rs 6,152 crore, one company alone accounted for around Rs 1,500 crore," the SBI boss said while announcing Q3 results.

However, Chaudhuri did not expect its Air India (AI) exposure turning into an NPA account. The lender has extended a fully secured Rs 1,100 crore loan as cash credit facility to AI.