Dubai New Crisis And India

DUBAI DEBT CRISIS

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TEAM MEMBERS ANISH JITHIN MAHESH MITHUN ANJALI ASWATHY V MEENU NEENA PRIYA M SEENA TANIYA

INTRODUCTION

q Dubai debt crisis sounds new alarm for tightening risk management. 

q Lehman Brothers led to a financial crisis on the global scale. 

q The latest Dubai crisis once again highlighted the urgency of crisis

CAUSES OF CRISIS  ‘Oasis of Opportunity’   Dubai encapsulates free-market

economy. 

 Dubai had announced that it

wanted to postpone its debt obligations by six months.

CONT….  Not a country rich with oil

resources. 

 To attract world entrepreneurs .   Foreign institutional investors   State-owned Dubai World is a

holding company having

EFFECTS  Projects with different countries, may be

 

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delayed( resulting in cost increase), or dropped, or prolonged. Unemployment problem may arise in Dubai. Foreign Institutional investors, who have business ties with Dubai World, may face loss. Banks in Dubai may face crisis. Recovery from last year's economic recession.

Effects On Indian Banks  Bank of Baroda : Bank of Baroda has

some real estate exposure to Dubai -accounting to around five per cent of its loan book.  State Bank of India: The bank has an exposure of Rs 1,443 crore or 0.2 percent of total assets in the UAE, which the bank claims as insignificant.  Even as banks are denying that they will be impacted materially by the present Dubai debt crisis, RBI has directed banks to reveal their exposure to

Effects On Indian Companies  3i Infotech-The company says it has an office in    

Dubai, but has no exposure to Dubai World. Aban Offshore: The oil exploration company has deployed six rigs in West Asia. DLF : According to the company, it had not exposure to Dubai real estate. Larsen & Toubro : L&T has around Rs 90-115 crore exposure, in the form of receivables, from its clients in Dubai, mainly in civil construction SPICEJET: Dubai Government-owned Isthimar owns 13 per cent stake inSpicejet.

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And other Indian companies like Voltas, Unitech, Nagarjuna construction Co.Ltd, Omax, Punj Lloyd, Rolta, India bulls real estate etc are likely to affect this crisis

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How it affects India

A large number of Indian workers, especially from Kerala, work in Dubai.

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Some construction workers are likely to lose their jobs in Dubai. It may have some repercussions on Kerala’s economy, which is substantially dependent on Gulf money.

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Since the global financial meltdown, many low-paid workers in the Middle East havealready lost their jobs.

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The Dubai debt crisis may further worsen their woes.India’s property markets have deeper links to Dubai and Indian real estate maybearthe brunt of Dubai’s financial woes, even though many property developers are denying any such problem. India has got significant exposure to Dubai through exports and imports.

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Even gems and jewellery industry may be impactednegatively with many Indian firms having links to Dubai’s world-famous bullionmarkets.

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A substantial portion of India’s inward NRI remittances come from UAE

CONCLUSION  The situation is very fluid and time is

difficult for Dubai. On one side sovereignty of Dubai is at stake and other there are chances of severe default in payment. What route the existing ruler choose, time will tell. In any of the scenario the Dubai dream run if not over is facing the glitches.

K N A H T Y OU