While the Securities and Exchange Board of India’s preliminary report on Manic Monday (Indian Express, August 23, 2004) focussed on trades of Foreign Institutional Investors (FIIs), its information on the biggest domestic traders is probably more intriguing. Of the 12 entities specifically identified, only half are Mumbai based, and most are relatively unknown. Of these, ZGB Holdings operating from Vapi in Gujarat was a big trader in Reliance, IOC and State Bank of India that day. One of Mumbai’s largest traders, and not among those wooed by television channels for views, it is controlled by an unknown Trupti Shah. She short sold nearly 10,000 Infosys in the early minutes accounting for 22.45 per cent of the net sales in the scrip at that time. Another mystery woman is M.V.Radhika. Her sale of Nifty contracts through RLP Securities at one time accounted for 4.12 per cent of Nifty trades in the first few minutes. The other Mumbai traders are Sureshchand S.Jain, Bakliwal Financial Services, Nirshilp Securities, JRD Securities and HJ Securities. Then there is BLB Ltd and SMC Global Group of Delhi who managed to depress prices with their selling; SEBI is still to figure out their play. Others being questioned are Dynamic Equities, PRB Securities and Dalmia Securities of Kolkata as well big sellers such as Salasar Stock brokers, Globe Capital Market, India Bulls and Quantum Securities.
The telecom industry was touted as the shining example of liberalisation. But the Telecom Regulatory Authority of India (TRAI) along with private operators are working hard to convert the private phone experience into a nightmare. For starters, the government has managed to reverse falling tariffs, first through TRAI’s decision that all non-PSU consumers must subsidise a bloated Bharat Sanchar Nigam (while it repeatedly cuts tariffs), secondly that no company can charge under 40 paise a minute for local calls and thirdly the hike in service tax and a new education cess. Since TRAI’s policies protect the public sector phone companies, it tolerates the lapses of private operators as well. What else explains the fact that long after it launch, Reliance Infocom is still unable to bill its subscribers correctly? Or that customers are forced to collect and pay bills at a Webworld, by the act of simply cutting off their out-going connections. Moreover, actual payments are also no guarantee that the amount won’t show up as arrears in the next bill. As for other private fixed line operators, all are equally guilty when it comes to bad customer service and not providing directory assistance.
The End Game
The Securities and Exchange Board of India (SEBI) fought all the way to the Supreme Court to get ColourChem (Clariant) to make an open offer to retail investors. But last week’s judgement provides a mixed ending. Clariant International, the parent company of Colour-Chem challenged the Securities Appellate Tribunal’s order asking it to pay interest (for delaying the open offer) to investors who held their shares continuously since 1998. Last week, the apex court cut the interest payable by Clariant from 15 to 10 per cent but also conceded Clariant’s demand that interest will be computed after deducting the dividend paid since 1998. Disappointed investors argue, ‘‘the court has not recognised the concept of transferability and fungibility applicable to equity shares, where all rights and liabilities transfer continuously to the new owners’’ and makes them eligible to receive interest. They say that companies will now find it profitable to postpone open offers through litigation in the hope that frustrated minority investors would have to sell out and reduce the company’s liability. Other refute this logic. The ruling makes it clear that there will be no escape from making an open offer; in which case, the amount saved due to delay and investor exits , must be balanced by the high cost of litigation and interest. This will more likely be a deterrent to companies who fight companies choosing litigation to open offers for minority investors.
Third PAN card
Ever since 84-year-old Nandlal Pandya was allotted a Permanent Account Number (PAN) in year 2000, he has been fighting to ensure its validity. Pandya began to use the allotted PAN number, assuming that a proper PAN card would follow. It did; but with a different PAN number and a distorted photograph. Since then Pandya has been struggling to get the Income Tax (IT) authorities to rectify the card. After several letters to senior officials, he gets brilliant advise all the way from the OSD to the Chairman (Direct Taxes). The letter May 14, 2004 tells him to forget the existing PAN cards and apply for a fresh one (his third) for a correct number (and pay Rs 60 to get it). What about the fact that Pandya has used the originally allotted PAN for four years? Has someone else been allotted the same number? And what is the guarantee that the Tax authorities will not goof up again? The IT department are too busy serving arrear notices based on wrong computation, to worry about senior citizens like Pandya. But that is another story.