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Journalism of Courage
Breaking the ice?
Breaking the ice is the theme for HDFC8217;s latest annual report, but Chairman Deepak Parekh seems to have decided to use a sledgehammer to break it. UTI is Target Number 1. No, he does not mention UTI, but read on. According to Parekh, FIIs have forced companies to improve business practices through their investment and disinvestment strategies, but 8220;domestic institutions on the contrary have been more ham-handed in forcing this change8221; and have sought to appoint nominee directors on the boards of several well-managed companies. This, he says, may be against the spirit of corporate governance as these directors, representing a group of investors, 8220;would have access to information not available in the public domain8221;. Their actions could lead to charges of insider trading. He suggests that if independent directors do not perform as expected, then investors, instead of being compelled to vote with their feet, should vote in a more effective board. True. But institutional investorsin India have yet to show the spine to demand a change unless directed to do so by the government. Parekh himself had said this. These directors, he says, should take decisions 8220;which are in the interest of shareholders and not take positions beneficial to the nominating institution8221;.
Son et lumiere or heavy artillery.
That is not all. The HDFC chairman, has also quite correctly, used the heavy artillery against government and policy-makers as well. Sample this: 8220;The country has seen another year of the longest running son et lumiere spectacle of a lot of sound and very little light. It8217;s been another year with the same script of marginal improvements and several missed opportunities.quot; He says that one good budget for housing cannot correct the evils of over 50 years. The opaque and often corrupt approval process, high stamp duty, harassment of buyers and lenders by 8220;resource-deficient revenue authorities8221;, artificially high housing prices for determining stamp duty are some constraints thathe cites. He criticises the Rent Control Act, which he says has adversely affected access to housing market for the poor. Curiously, the Act is vociferously defended by one of his closest politician friends.
Brazen planting
The planting of false business stories is getting more brazen everyday. The best part is that nobody complains. They are always positive images of companies on the verge of seeking more money from banks and FIs to fund their white elephant projects. Industrialist plant them but remain off-the-record. The stories serve their purpose of having huge loans cleared by banks and FIs. If asked to clarify, the industry breezily attributes the 8220;mistakes8221; to the journalists. Readers rarely notice mistakes. This writer has now discovered that even when reports about potential takeovers and loans are splashed with the greatest detail in newspapers, the same industrialists commit almost nothing in writing. Even the lending institutions have very few details on record about repaymentpromises and sale of assets. So forget about probes, nothing will ever be known until the loans are ready for a write off.
Tractabel and trouble
Even as ICICI is trying to find a way to give Tractabel an exit from the Jindal Tractabel Power Project, there has been more trouble. The project which was to be commissioned in early-June, is understood to have suffered a setback of several months when a major turbine went bust at commissioning stage. It is also learnt that since the Jindals and Tractabel have a 50:50 partnership in the company, and locating a buyer willing to pay off Tractabel without getting a majority stake is difficult, ICICI is considering the possibility of a risky warehousing deal. Risky because locating a buyer for the Tractabel 50 per cent will continue to be difficult and will also give the beleaguered Jindals effective control with just half the equity.
Author8217;s email: suchetadalalyahoo.com
