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Journalism of Courage
India8217;s largest, showpiece petroleum company, ONGC Ltd, has an annual forex payment liability of 6 billion but it cannot hedge its foreign exchange risk. In fact, Prof. Anil Agashe of Symbiosis Pune points out that ONGC could save around 20 million merely by hedging. I learn that this is easier said than done. A top PSU source says, 8216;rules8217; do not permit PSUs to use all available financial instruments and hedging in the real sense, the 8216;principle8217; being that PSUs must not get into 8216;speculation8217; and that even so-called 8216;trading8217; done by PSUs is actually a tendering process because the 8216;system8217; does not permit individuals to be 8216;trusted8217;. The source himself concedes that this condition is not as stupid as it sounds, because there have been scams even on short-term parking of funds. Don8217;t we remember the Portfolio Management Schemes of 1992, where Ministers decided which bank would get PSU funds and collected kick-backs? This, however, means that PSUs are losing potential profits. As far as the government is concerned, 8216;8216;it does not count if you have lost profits, but if you cause a loss, you8217;ve had it8217;8217;. The consequences are a vigilance inquiry, frozen pension proceeds and probably prosecution. What is worse, the bean-counters will probably examine each single transaction instead of judging performance 8220;on a sigma of calls over time8221;. The simple solution is privatization or at least independent management with minority government holding. But that8217;s unlikely to happen soon.
Revenue loss
Low profile
Ask a market person who is the biggest individual investor today and he will probably say Rakesh Jhunjhunwala. But those in the know insist that India8217;s Warren Buffet is not even known. He is Prof. Shivanand Mankekar, a hugely successful investor who obsessively maintains a low profile. With several decades in the stock market and scores of his students entering the market every year, he is known to a large swathe of the investment community, but not to the public. His son Kedar is also a teacher and investor. The father-son duo has an uncanny knack of picking up the best possible scrips, way before they turn into market favourites. According to the grapevine, his net worth runs into hundreds of crores. He is credited with having picked Pantaloon, Ind Swift Laboratories, Spanco Tele etc. well before their prices soared.
Major rejig
The RBI has been looking closely at the Sahara Group8217;s para-banking operations for well over a year, so it is interesting that a public inquiry has begun now. Informed sources say that the group with intensely private finances was asked to clean up its operations in order to avoid drastic action. The group has always denied any problems but a lot of changes have happened in one last year. Sahara signaled that its finances are as strong as ever by doubling its bid to get the Indian cricket team to wear its logo. At the same time, it sold the airline business after initial denials. The fat losses in the aviation business became public only after the deal. The corporate grapevine insists that the entertainment business is also up for sale, which is again denied by the group. The official line on the real estate front is also that things are hunky-dory, but Amby Valley its expensive township near Mumbai, has suddenly acquired a new logo, spelling and identity. It is not clear if this is part of a government ordered clean-up, or the group8217;s 8216;managing worker8217; is only reorganizing operations after a long and secret illness.
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