Different Strokes

Check these companiesWhen FIIs were first allowed into India, the fear of hot money entering the country had led FM Manmohan Singh to ann...

Check these companies

When FIIs were first allowed into India, the fear of hot money entering the country had led FM Manmohan Singh to announce that only reputed foreign investors would be granted registration. SEBI’s decision to grant registration to Prudential Insurance Company of America on October 5 is set to stir up a hornet’s nest and seems to have dropped this criteria. Consumer Education and Research Centre, Ahmedabad, has written to SEBI and the RBI about Prudential’s dubious track record. Following litigation, the company agreed to pay US $ 35 for misleading the policy holders, to return at least $ 410 million collected unlawfully from policy holders and to pay a fine of $ 1 million on being convicted for destruction of documents. Operating out of 30 US states, it was initially accused of unjust enrichment to the tune of a whopping $ 2 million and had affected 10.7 million life insurance policies sold over 13 years. It has even been accused of “deliberately training its agents formisleading, misrepresenting and defrauding the policyholders.” CERC has provided detailed background on Prudential and and wants to know if it is in the interest of Indian investors to have such a company registered in India. A month ago, disinvestment panel chairman G. V. Ramakrishna had cited the example of Prudential to show that foreign companies can also be amazingly unscrupulous. This paper had reported his warning. That Prudential was granted registration soon after only proves how easy it is to slip past criterions. However, since SEBI’s approval is subject to RBI’s concurrence, there’s still chance that the approval would be rejected.

Go open-ended now

After five years, Morgan Stanley Growth Fund (MSGF), which made a controversial debut, declared a dividend this year. Its NAV, which had languished at around Rs 7 for many years, is now a respectable Rs 18.49 (on October 8) — this makes it one of the best performing close-ended listed mutual fund over a three-year period. In fact, the fundhelped push up NAV by mopping up a large quantity of units from the market while they languished well below par value. Investors are happy about the performance, but not at the market price, which at Rs 10.95 is at a huge 40 per cent discount to NAV. Naturally, they want a fair exit route at near about the NAV. Stockbroker Ajit Sanghvi has demanded that MSGF, like many others funds, should make the scheme open-ended and release, what he estimates as Rs 1,500 crore of unit holders’ wealth by giving them an exit opportunity. The argument is simple. MSGF managed to shore up NAV only because it could mop up units from investors who sold at a huge loss, now it is time that those who held on were given an exit option. There may initially be some redemption pressure, but if MSGF is confident of maintaining its current level of performance until redemption, then many investors may not opt out. So far, Morgan Stanley has not responded to the broker’s demand, but if more investors join in, they may have nochoice.

Salaries and perks

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After the hefty rise in salaries of the top three executives at ICICI, it is the turn of HDFC Bank. A circular sent last week announced a hefty rise in the pay package of the MD Aditya Puri. He is now set to earn Rs 2.25 lakh per month, with another Rs 11,000 of cash perks, gratuity, club memberships etc. Plus, a bonus to be decided by the board. There are some hidden perks not listed in the circular, such as buying the wife’s paintings for the bank’s art collection and holding exhibitions of her paintings. All in all, a deal that should stop other investment bankers grumbling about the folks at ICICI.

Hamara ICICI

The ICICI-Bajaj Auto love affair continues. ICICI’s simultaneous foreign (ADR) and domestic issue had brought down Bajaj Auto’s share of ICICI’s equity in percentage terms, but not to worry. Hamara Bajaj continues to steadily mop up ICICI stock. An analyst friend says that ICICI’s bond issues shows a rise in Bajaj’s holding from 26 to 29 millionshares since August this year. What does Bajaj know that nobody else does?

Author’s email: suchetadalal@yahoo.com

Algerian-French artist’s work vandalised at Kochi art gallery over ‘obscenity’ allegations

India2 hr ago

Algerian-French artist Hanan Benammar's linocut prints were vandalised by two artists at an international exhibition in Kochi. The exhibition, curated by Anushka Rajendran and Damian Christinger, was organised by the Kerala Lalithakala Akademi and opened on October 18.

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