Different strokes

Guruswamy's wrong numbers Where does Mohan Guruswamy, former advisor to the finance minister get his numbers from? He says that he wanted...

Guruswamy’s wrong numbers

Where does Mohan Guruswamy, former advisor to the finance minister get his numbers from? He says that he wanted ITC’s parent BAT to pay at least three times its present market price to get a controlling interest. ITC trades at around Rs 800, at a P-E multiple of 33. So what is the control’ premium which allows hiking the asking price to an incredible Rs 2,500? It is obviously something cooked up only for BAT. The SEBI takeover code demands an open offer be made for 20 per cent of the public holding, but says nothing about a controlling premium. In practice, there is a premium on control — but that is dictated by the market. India Cement paid a huge premium for Raasi shares to make the offer attractive, and Sterlite bid high to induce Indal shareholders to give up their shares. In case of ITC, the price will be driven up only if there is a competitive bid — but that is unlikely while BAT holds over 30 per cent of the equity. Guruswamy, once a corporate executive knowsthis. He also knows that he cannot apply half a takeover code to BATs potential purchase.Surely, the exercise was just a way to stall the sale.

BSE in hot water The BSE executive director R.C.Mathur has stirred up a hornets nest by targeting SEBI’s senior executive director (investigations), L.K.Singhvi. Mathur has alleged that Singhvi had been kept informed about its tampering with the trading system, to bail out brokers last June. Clearly, the attempt is to discredit the investigation. Moreover, there is at least one issue which Mathur cannot hope to foist on SEBI, and that is his dealings with brokers in the very shares which were being rigged up. These columns, it may be recalled were the first to report Mathur’s personal trades. SEBI has verified these facts and its show cause notice says that the deals raise questions of “impropriety and conflict of interest".

Incidentally, BSE Vice President Rajendra Bhantia who stepped down following disclosures of his connection with the payment crises, didnot get his show cause notice until February 20 — well after the deadline for submitting replies. Every time SEBI tried to serve the notice, his office simply sent it back saying he was not in the city.

CDSLs hasty clearance

SEBI’s findings on the hushing up of the June payment crises raises a simple question. Why was it in such a hurry to clear BSE’s Central Depository when its top brass was aware that BSE needed a thorough clean up before it could start a depository. It’s now learnt that one SEBI Executive Director opposed the clearance. Ms. Dharmishta Raval, ED incharge of legal affairs has submitted a written dissent to the hasty clearance. Raval, however, is amazingly tight-lipped and will not even admit that there is a dissent note, leave alone revealing what she objected to.

Whodunit?

While on CDSL, whose provisional certificate was converted into the final one in record time, we have to go back to the CRB provisional licence for starting a bank. That was issued by the RBI in May1995, three months after D.R.Mehta moved to SEBI. In other words, Mehta was apparently not involved in issuing that provisional licence as we had said in these columns earlier. RBI sources mumble about the spadework having been done earlier, but the actual letter is what counts.

Tailpiece

Now that SEBI is finally getting ready to discard the par value concept or at least reduce par value of equity to a nominal one paise, journalists will finally have the correct nomenclature for dud stock and below par scrips. Instead of calling these, highly-susceptible-to-rigging scrips — penny stock, they can be correctly called paise stock.

The author’s email address is suchetadalalyahoo.com