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Journalism of Courage
Six weeks ago, SEBI was emphatic that stock exchanges would commence rolling settlements in November even if it meant that improved efficiency would hit trading volumes. Naturally, brokers were unhappy with SEBI8217;sdecision, but they remained silent. At that time a top broker told us, quot;Nothing will happen. When the time for implementation approaches, there will be a postponement until the end of the financial year8221;. Those days, SEBI was pushing for rolling settlements so aggressively that it was impossible to believe that brokers would have their way. That is, until last Wednesday. Suddenly, coinciding with a risk management committee meeting at SEBI, the market was rife with rumors about the postponement of rolling settlements. The meeting itself did not even discuss postponement, but every pink paper speculated about the postponement the next day. On Friday, one paper said that that the SEBI chairman indicated that rolling settlements would have to be postponed because the markets were not ready, the next day another paper contradicted this. The confusion continues, but the next three weeks should show how much brokers continue to influence regulatory decisions.
Paying for investors
BSES decided to do it. Its Chairman R V Shahi, says that reporting unclaimed deposit amounts in annual reports is mandatory although the sums involved are far smaller than unclaimed dividends. In case of BSES nearly Rs 25.4 lakh worth of dividends have remained unclaimed in 1998-99 and the figure for the previous three years was Rs 32 lakhs, Rs 18 lakhs and Rs 30 lakhs respectively. The idea is that instead of simply transferring these sums to the General Revenue Account of the Central Government, it can be used in efforts to protect investors.
Cultivating netas and babus
At the big conclave of Marwari industrialists at Rajastan recently, oneindustrialist made news when he said that when he had set up plants elsewhere in the world he never had to meet the Prime Ministers and Presidents of those countries. Interestingly, at my first meeting with the same industrialists8217; India-based brother they have since split into two separate groups, he described to me at length their close friendship with the Prime Ministers and Presidents of each of the countries in which they had operations. Even the then Indian Prime Minister, I was told, used to visit them quietly, but maintained a distance in public. More curious is the fact the industrialist who complained about the system spends a lot of his time hobnobbing with Indian politicians and bureaucrats, although he is a NRI and has little business in the country. Clearly it pays to cultivate heads of State and their babus everywhere in the world, notwithstanding the complaints.
Worrying signals
The saga of bad loans, cost-overruns, interest-waivers and loan-recalls discussed at every inter-institutional meeting of the financial institutions paints a scary picture of the financial health of corporate India. Adding to their woes has been the pressure to lend to the north-eastern states which are wracked by terrorism and industrial backwardness. Lending to companies in the region was usually backed by State government guarantees. However, now that it8217;s time to invoke the guarantees the States are unable to pay. They want the financial institutions to bear half the liability arising out of the invocation of guarantees. So far the FIs have refused. Is it any wonder then that the North East Development Finance Corporation, famously announced by former Finance Minister Manmohan Singh a few years ago, has simply refused to take off?
Beleaguered Modern
The institutions are set to pay a big price for a former IFCI chairman8217;sunstinted support to the Modern Group. Already in deep financial trouble, atechno-economic feasibility by A F Ferguson has only yielded more bad news. Modern Thread8217;s Yarn and Woolen Division are unviable and the Paraxylene/PTA project has been abandoned. Interestingly, as against an outstanding debt of Rs 222 crore, its yarn division received one bid for a paltry Rs 42 crore inclusive of Stamp duty and no other obligations.
Author8217;s email: suchetadalalyahoo.com
