By Shivakumar G Malagi
Banks don't want to lend to them, policymakers are hesitant to make plans for them and customers don't know what to expect of them
Once counted among India's highest taxpayers, the hot-shot mining barons of Bellary are the new untouchables in town. Banks don't want to lend to them, policymakers are hesitant to make plans for them and customers don't know what to expect of them.“Miners are a wounded lot today. Our output is falling and we are merely trying to keep our heads above water, dealing with each day as it comes. Our assets are not being utilised, we are not generating any working capital and there is so much uncertainty. No buyer or steelmaker is willing to sign long term arrangements because you don't know when the mine will be shut as every day brings a new order either from the court or government,“ rues Mr Tapal Ekambaram of Tumati Mines. A reputed mine ownerturned politician, who had spent nearly Rs 60 crore on the 2008 assembly polls, has reportedly turned defaulter with a couple of banks and is now having second thoughts about contesting the coming elections in the state.
“Forget the elections, I will be forced to declare bankruptcy if we do not get back our mining license. I can't live upto people's expectations this time as I have had no money coming in for the last two years and can't offer to spend hugely on elections. I have decided instead to concentrate on other business with whatever money I have left,“ he says.
The bad times began in July 2010 when the Karnataka government banned iron ore exports and the deathknell sounded the following July when the Supreme Court banned iron-ore mining in the state.Worried miners began to borrow heavily from banks to sustain their businesses and flamboyant lifestyles. Banks too rushed to offer credit to their high-end clients, but it's a different story today. With no end in sight to the crisis, these same banks are now breathing down the necks of miners for repayment of loans and are beginning to see mining and infrastructure as high-risk.
The tiny branch of the State Bank of India in the mining town of Hospet , which saw a staggering 2,000 per cent increase in withdrawals after the 2003 Chinese boom, is today busy issuing notices for repayment of loans and advertisements in newspapers calling for e-bidding of the once staggeringly wealthy mining barons' immovable properties.
Only last Saturday, the SBI Hospet branch issued an advertisement inviting bidding for two windmills owned by a reputed mining family of Hospet with political interests for nonpayment of a loan about Rs 37 crore, that would have been a paltry sum for miners just a few years ago. An official with the SBI Bellary branch estimates the district has bad loans of about Rs 2,000 crore on account of the mining crisis. And almost every miner, irrespective of whether he has political interests, is a thirdgeneration member of an old mining family, or is a veteran heading a listed or unlisted firm, admits he has been going through hell recently,.
Bellary-Hospet Mine Owners' Association general secretary, Hothur Mohammed Iqbal says no miner even wants to think about his bad finances as there is no solution in sight at present. “The saying Ooper sherwani aur ander pareshani! (Well dressed on the outside but worried sick inside) applies to the miners today as they are trying to maintain an aura of all is well, when the reality is so different. Most of the miners , who failed to make the right investments when the market was upbeat, are in a lot of trouble financially. Most of them will be stretched to meet the Supreme Court's penalties. They are paying for the deeds of the mining mafia,“ he laments.
A number of miners and mining contractors say they are victims of a system that gives them the Hobson's choice of either playing by its rules or not playing at all. Those who have borrowed from moneylenders, and have not diversified their business interests are the worst hit. Most miners are also facing a huge liquidity crisis as buyers are hesitant to touch their properties for fear that they may have been attached by an investigating agency probing illegal mining. Those who do offer to buy, quote half the property's value, making the sale untenable.
In the circumstances most are dreading paying the penalties imposed by the Supreme Court. The department of mines and geology has issued notices to as many as 63 lease operators imposing penalties for illegal mining as recommended by the CEC.
Once counted among India's highest taxpayers, the hot-shot mining barons of Bellary are the new untouchables in town. Banks don't want to lend to them, policymakers are hesitant to make plans for them and customers don't know what to expect of them.“Miners are a wounded lot today. Our output is falling and we are merely trying to keep our heads above water, dealing with each day as it comes. Our assets are not being utilised, we are not generating any working capital and there is so much uncertainty. No buyer or steelmaker is willing to sign long term arrangements because you don't know when the mine will be shut as every day brings a new order either from the court or government,“ rues Mr Tapal Ekambaram of Tumati Mines. A reputed mine ownerturned politician, who had spent nearly Rs 60 crore on the 2008 assembly polls, has reportedly turned defaulter with a couple of banks and is now having second thoughts about contesting the coming elections in the state.
“Forget the elections, I will be forced to declare bankruptcy if we do not get back our mining license. I can't live upto people's expectations this time as I have had no money coming in for the last two years and can't offer to spend hugely on elections. I have decided instead to concentrate on other business with whatever money I have left,“ he says.
The bad times began in July 2010 when the Karnataka government banned iron ore exports and the deathknell sounded the following July when the Supreme Court banned iron-ore mining in the state.Worried miners began to borrow heavily from banks to sustain their businesses and flamboyant lifestyles. Banks too rushed to offer credit to their high-end clients, but it's a different story today. With no end in sight to the crisis, these same banks are now breathing down the necks of miners for repayment of loans and are beginning to see mining and infrastructure as high-risk.
The tiny branch of the State Bank of India in the mining town of Hospet , which saw a staggering 2,000 per cent increase in withdrawals after the 2003 Chinese boom, is today busy issuing notices for repayment of loans and advertisements in newspapers calling for e-bidding of the once staggeringly wealthy mining barons' immovable properties.
Only last Saturday, the SBI Hospet branch issued an advertisement inviting bidding for two windmills owned by a reputed mining family of Hospet with political interests for nonpayment of a loan about Rs 37 crore, that would have been a paltry sum for miners just a few years ago. An official with the SBI Bellary branch estimates the district has bad loans of about Rs 2,000 crore on account of the mining crisis. And almost every miner, irrespective of whether he has political interests, is a thirdgeneration member of an old mining family, or is a veteran heading a listed or unlisted firm, admits he has been going through hell recently,.
Bellary-Hospet Mine Owners' Association general secretary, Hothur Mohammed Iqbal says no miner even wants to think about his bad finances as there is no solution in sight at present. “The saying Ooper sherwani aur ander pareshani! (Well dressed on the outside but worried sick inside) applies to the miners today as they are trying to maintain an aura of all is well, when the reality is so different. Most of the miners , who failed to make the right investments when the market was upbeat, are in a lot of trouble financially. Most of them will be stretched to meet the Supreme Court's penalties. They are paying for the deeds of the mining mafia,“ he laments.
A number of miners and mining contractors say they are victims of a system that gives them the Hobson's choice of either playing by its rules or not playing at all. Those who have borrowed from moneylenders, and have not diversified their business interests are the worst hit. Most miners are also facing a huge liquidity crisis as buyers are hesitant to touch their properties for fear that they may have been attached by an investigating agency probing illegal mining. Those who do offer to buy, quote half the property's value, making the sale untenable.
In the circumstances most are dreading paying the penalties imposed by the Supreme Court. The department of mines and geology has issued notices to as many as 63 lease operators imposing penalties for illegal mining as recommended by the CEC.
