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Journalism of Courage
Jindal and Tractabel
There are favourites even among steel companies seeking a bailout. Remember the big bailout debate in March-April this year? Even after a committee cleared a partial bailout, IDBI did not give fresh funds to any company all it did was adjust interest payments to avoid a bad loan classification.
We hear that Powergen and other contenders are unwilling to pay the 14 per cent return on investment, which Tractabel was holding out for. But the Jindals have no money, so how are they going to fund the purchase? When last heard, ICICI was working on a warehousing deal for the Jindals, whereby it would hold the 50 per centTractabel stake. In effect, the Jindals will get full control over the beleaguered Rs 1,100 crore project with 50 per cent investment.
Not to be trusted
The fiction about securing debentures through the institution of Debenture Trustees continues to be a big hoax. The trustees, who are always banks or FIs earn a fairly hefty fee for securing the assets of a company but rarely bother to fulfill their responsibilities.
Often their own lending is mixed up with their role as trustees, with the result that they care little for the debenture holders8217; money when a company begins to default on its repayment. Almost all leading banks and institutions have been guilty of reneging on their responsibilities the latest is Central Bank of India, which is trustee to non-convertible debentures issued by DCM Financial Services. The debentures issued in 1996 matured in 1998; predictably the company had no money for repayment. It offered investors a graduated repayment proposal at a lower interestrate.
Three-fourths of the investors accepted it, mainly because there was no choice; but there is no sign of even the interest, a year after the rescheduled payments were approved. The company says that the debenture trustees Central Bank of India have yet to approve the repayment scheme.
The bank has also made no attempt to move for liquidation of the company8217;s assets and repay investors. Clearly, Central Bank8217;s inaction can only be classified either as dereliction of duty or plain collusion with the promoters. A simple cure to this attitude of debenture trustees would force them to make repayments themselves and simultaneously institute a vigilance inquiry against the officials responsible for inaction.
A dollar for your thoughts
A randomly selected bunch of our Economist subscribers recently received letters from publisher David Hanger accompanied by a crisp 1 bill attached to a self-addressed envelope. The dollar is a token of appreciation8217; for their trouble in filling out a 8220;BrandPerception Study8221; form. Isn8217;t the Economist being really cute? Maybe it believes that the US is a globally accepted legal tender. Or, probably that people still use old wooden tables with glass sheets, and would place the there with other memorabilia.
Damned lies and statistics?
The Economist8217;s survey itself is interesting. The brand perception study is all about the relative merits or otherwise of Airbus and Boeing 8212; the questions asked would flummox even frequent fliers with a dazzling collection of free miles. For instance, how many fliers can distinguish between an Airbus 319, 320, 340 or a Boeing 717 or 777 or the Next Gen 737 without looking for a number painted on the craft? How many pay attention to specific advertising from the two companies? These are the easy ones.
The survey listsasks people to rate the aircraft on fuel consumption, legroom, sales, design, technology etc. How does a person keen on earning that little fill out the survey? Probably by closing her eyes andwriting down the first number which comes to mind. Did someone say lies, damned lies and statistics? Or may be the Economist got too random8217; about its sample.
Author8217;s email: suchetadalalyahoo.com
