Even as the government offers a slew of new investment opportunities, its sale of the two Centaur hotels in Mumbai continues to blot its copy book. The Comptroller and Auditor General seems to have agreed with Shiv Sena MP Sanjay Nirupam’s contention that the sale of what is known as the Airport Centaur has led to a loss of Rs 145.69 crore. And while the Disinvestment Minister has rubbished the CAG claim, matters are in dire straits at the second Centaur (Juhu) too, which was acquired by renowned hotelier Ajit Kerkar. A week ago, Saraswat Cooperative Bank, which funded a big chunk of the purchase cost, published a repossession notice seeking to acquire its assets under the provisions of the Securitisation Act. The notice was served on Ajit Kerkar, his company Tulip Star Hotels and a mortgagor called Om Builders; it sought a payment of Rs 22.39 crore plus interest accrued from November 2003. This deal too has some interesting connections with the Shiv Sena, whose Supremo Bal Thackeray is still smarting at the Disinvestment Minister’s remarks during the Maruti sell-off. The guarantor to Tulip Star’s loan is Venugopal N. Dhoot, whose brother Raj Kumar Dhoot is a Sena MP in the Rajya Sabha. Interestingly, Suresh Prabhu, also a Shiv Sena MP, was the former chief of Saraswat Bank before he was lured into politics. Some of the connections are a little tenuous, but it is no surprise that people hesitate to tangle with the Sena tiger.
Having bunched so many mammoth divestment offerings together, the government is really turning on the heat to make them a success, especially since the secondary market has refused to lend support by staying buoyant. Every possible trick is being used to make small investors believe that the ‘discount’ to strike price that has been offered in the IPCL issue is the best price at which they will ever get the stock. Finance companies linked to investment banks are marketing loans to high net worth investors as aggressively as telemarketers hawking credit cards and car loans. Normally, the Sebi bars companies from issuing corporate advertisements once the IPOs is announced. But this time Sebi is simply turning a blind eye by declaring that IPO rules do not apply to these issues. So here is the irony. Although the President of India is selling his holding and the money will go to the exchequer, each PSU has launched an advertising blitzkrieg to attract investors’ attention. This is clearly one time when the ministers who control these PSUs are cooperating with the disinvestment process — probably in the hope that it will make India shine brighter and enhance their re-election prospects.
Although the secondary market prices of PSUs mega issues have been correcting downwards in line with the expected influx of liquidity into the stocks, investors have an entirely different problem. They are worried that the bunching of issues will not allow them to roll over their limited savings if the issues are oversubscribed. More importantly, they are irritated at the timing of the issues. At this time last year, most salaried small investors set aside large chunks of money for investment in tax-savings instruments. Thanks to the high wattage advertising, such investors are being led to believe that they are missing a lifetime opportunity to invest in PSU shares. In fact, the recent bull run has ensured that most companies are quoting near about a two-year high and investors will have plenty of buying opportunities even after their listing.
This is a story that could well have been a telecom ad. As people lined the streets to cheer the Mumbai Marathon runners, a municipal worker remained busy sweeping the pavement. Suddenly a mobile phone rings and our worker whips out a nifty little phone. His caller informs him that Anil Ambani had entered the Haji Ali stretch of the race. Our man relays the message to everybody around, including co-workers. He then gets busy with the broom and steps on to the road in order to get a better look, obviously enjoying the looks of disbelief from his audience. Someone asks him if he is a Reliance subscriber. “No”, he grins, “I use a Nokia”. That was his boss calling to inform his about Ambani’s progress, he enlightens us. He then volunteers an answer to our unasked question in good English, “it is (owning a phone) because of other earnings”. Here is a question without any prizes for the answer. Which telecom company missed a big opportunity to cash in on an in-house star?