Different Strokes

Delisting junk companies

A recent news report says that SEBI favours the delisting of thousands of junk companies from all bourses — those which were not traded in years and had no real investors. The sentiment is fine, but the hitch is that the Chandatre panel set up by SEBI itself has made delisting of junk companies extremely difficult. For instance, the BSE alone could be rid of thousands of junk companies and improve its surveillance of the remaining if allowed to do so. But there are other problems. By SEBI’s criteria, these companies are not treated as having `vanished’ for the purposes of action against the promoters. They are only delinquent in paying listing fees. This means that ifSEBI decides to allow bourses to get rid of junk companies, it would also have to classify them under the `vanished’ tag and initiate action to recover investors’ money, as demanded by investor groups. If SEBI makes things easier for stock exchanges, it will only make things tough for itself.

Fire, fire

ICICI’s fancy new building, estimated at over Rs 250 crore, has already had its first mishap. Though the papers called it a tiny fire, we hear that the staff had to stay away for a few days and that the damage caused by burning plastic and furnishing was not inconsequential. While ICICI is going to be spending more money to repair the damage, there is no sign of it finalising the sale of its old office building, which seems unlikely to fetch more than Rs 70-odd crore. SEBI is apparently willing to cough up more than the Birlas or HLL were ready to offer (based on a HDFC valuation), but even that will not happen until SEBI finds a buyer for its present premises. Shareholders who are already unhappywith ICICI’s top brass giving themselves hefty pay hikes, are watching its lavish spending with disquiet. One small shareholder writes to say that its former JV partner — Prudential — has moved to a smaller office after splitting with ICICI. Has the ICICI board ever asked any questions about its lavish ways, he asks. We’ve no answers.

Bulls Vs bears

The BSE is beginning to feel the bite of the new teeth acquired by its senior officers after the unceremonious sacking of former executive director R C Mathur. The usual tussle between bulls and bears is on again, and a top BSE director asked to see the trading position of a big time bull operator in the market. For the first time, BSE officers apparently refused point blank. The BSE claims to be worried about the safety of the market and has even been alerting the regulator. The broker was asked to cough up a hefty ad hoc margin, but even that left him unfazed, he asked them to name the sum and he would sign a cheque. The BSE probably has reason toworry, but this time it is going to find it tough to bully its officers into bending any rules.

Author’s email: suchetadalal@yahoo.com