Sucheta Dalal :Highway Robbery (12 October 2002)
Sucheta Dalal

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Highway Robbery (12 October 2002)  

It’s difficult to believe that the Maharashtra police are unable to stop the spate of robberies and killings that are destroying what is left of the economic viability of the Mumbai-Pune Expressway.

Are the police so busy protecting politicians and film stars that they have no spare cops to protect paying commuters? Or is this another attempt by bureaucrats and politicians to sabotage the Expressway and hand it over to the private operators?

After the recent attack on a senior Telco director forced industry associations to turn up the heat, the Maharashtra State Road Development Corporation (MSRDC) has announced plans to set up a special force to police India’s most modern road.

In fact, MSRDC is grudgingly fulfilling various promises that were part of the original Expressway proposal but were perversely discarded by the NCP-Congress government. Under the original plan, the Expressway was supposed to have an Information Technology city near Dehu Road, a township at Chowk, petrol stations with food courts and rest rooms complexes.

Had these been set up as planned, the Expressway would have been more viable, less deserted and not such a happy hunting ground for highway robbers. Victims of the highway robberies should consider suing MSRDC for damages.

After all the toll of Rs 100 per trip is not merely for right of way, but is also supposed to ensure safe passage and basic amenities as well.

The regulator disagrees

Is the market regulator unhappy with the delisting committee’s recommendations? The committee had recommended that companies seeking to delist their shares from Indian bourses should follow the reverse book-building route to determine the exit price.

However, frequent leaks to the media, attributed to Sebi sources, suggest that the regulator would rather follow the open offer formula under the takeover rules (26-week average of high-low prices) for delisting too. But these Sebi officials seem to forget a couple of facts. First, that a delisting committee was set up because a large number of investors complained that companies, especially multinational companies, had delisted their shares at ridiculously low prices.

Secondly, that the committee studied a sample of 26 and 52-week average prices and found that due to the continuous bearishness over the last year, these were in fact lower than the buyback price offered by most multinational companies. Adopting the takeover formula would only have angered investors and invited many more complaints.

Why then are Sebi officials predicting that the board (which is due to meet on October 21) will reject the reverse book-building mechanism? Is the regulator being unduly influenced by companies and investment bankers who dislike the reverse book-building concept because it gives ordinary shareholders a say in deciding the exit price?

It’s the product, stupid

The market share of Hindustan Lever’s Liril brand has dropped from 14 per cent to three. So, company executives along with a business daily waxed long and eloquent about how to fix Liril’s advertising and get the consumer back. Should the girl in a bikini come back or just the waterfall? Was the wrapper green enough? And should the freshness be icy or lemony? Heck, maybe it is the product that needs fixing, not the ads. I certainly know of someone who won’t touch the brand after finding several pieces with gravel on them (and reported it to the company).

Lakme seems to suffer from a similar syndrome. The company’s marketing effort involves spending megabucks on fashion shows and happening events, designed exclusively for the nation’s glitterati—a few thousand people who, as this paper pointed out last week, ‘wouldn’t be caught dead with a Lakme…’ When it comes to paying customers, the company often turns terse and high handed.

Insurance claims

The opening up of the insurance sector has given Indians so many new options that today you can get a Rs 1,000 dental cover every time you buy a particular brand of toothpaste. Yet, the pre-liberalisation schemes continue to treat consumers with disdain.

The Consumer Education and Research Centre of Ahmedabad has filed a public interest litigation against what it alleges are ‘arbitrary and malafide actions’ by Mediclaim policy issuers. It alleges that once a claim has been made, insurers find excuses to refuse a renewal of the policy. These companies are apparently unmoved even by clients with a long track record of regular renewals.

While the court has issued notices to the insurance company, only the outcome of the case will tell us whether multiple options is equal to more protection.

-- Sucheta Dalal