Sucheta Dalal :MSRDC's moves (21 Dec 2003)
Sucheta Dalal

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MSRDC's moves (21 Dec 2003)  

With the Worli-Bandra link, literally stuck mid-sea, the cash-starved Maharashtra State Road Development Corporation (MSRDC) has grandly announced another sea link to connect a suburb of Mumbai. Since the corporation finances its activities through bond issues, it is not quite clear who will fund the new project while the expensive Worli-Bandra link remains in limbo and is of doubtful viability.

MSRDC probably hopes to raise some money by handing out the Mumbai-Pune Expressway and the broadening of the old NH-4 on an operation and maintenance contract. But that too may face its share of problems. For instance, it promises an income bonanza for bidders but gives no specific details.

Knowledgeable sources also say that if MSRDC is allowed to give out a construction contract (for the four-laning) to private parties then how is it different from the Public Works Department (PWD)? And why should the PWD not be asked handle NH-4? Potential bidders also complain that MSRDC advertisement inviting bids for the Expressway has prescribed a networth requirement for bidders, but gives no estimate of the size of the tender, making it difficult to make proper bids unless one has inside information. MSRDC managing director recently said in a newspaper interview that the corporation plans to revive two township projects along the Expressway that were part of the original plan. But that too finds no mention in the advertisement inviting bids.

Postal ballots

The majority of Indian companies dislike the concept of postal ballots. They claim that the process is expensive and cumbersome and doesn’t get an adequate response. Yet, investor activists lobbied successfully to force companies to decide key corporate issues on the basis of postal ballots. However, they now find that the implementation process needs careful scrutiny and refining.

Consumer activist, Prof. J. P. Singh of IIM Ahmedabad quotes from Avery India’s ballot paper which says that shareholders holding non-demat shares “are advised, in their own interest, to get their signatures verified by their Banker/Depository Participant (DP) by affixing a rubber stamp/ seal mentioning name and address of the Bank / DP and name, stamp and signature of the Manager”. Prof. Singh wonders if this implies that the vote would be cancelled if it were not verified? The additional burden to investors in getting their signatures verified was never conceived in the postal ballot process.

Can companies introduce such conditions on their own? And isn’t the company adding to its own time and cost burden by taking on the task of comparing signatures of physical shareholders with their signature on their records before counting the votes? Having said that, how are companies ensuring that they send the ballot papers to the correct addresses? For instance, Prof. Singh, who holds his shares in physical form, has yet to receive his own ballot paper. Incidentally, small shareholders must participate in the postal ballot process if they want a say in company decision and to move towards greater shareholder democracy.

Midas touch

Here is a little nugget from abroad on Vedanta, the first Indian company listed on the London Stock Exchange. Its chairman Brian Gilbertson who used to be chief executive of BHP Billiton had collected a $12.5 million lump sum payment from the company in addition to a $1.5 million lifetime pension, although he held the job for barely six months. At Vedanta, he was given 1.84 million shares of the company, just for agreeing to become chairman. The company was listed at 390 pence and disclosures by the company reveal that the float included half of Gilbertson’s shares, giving him a neat pile of another $8.5 million. However, the money that he collected may be going towards paying off his UK tax liabilities. Yet, Gilbertson’s quick collection is giving him the reputation of having a Midas touch —at least as far as his personal income is concerned.

Impersonating Guru

After a spate of controversies at the Institute of Chartered Accountants of India (ICAI), its elections last week had some predictable drama. A power point presentation, purportedly by S.Gurumurthy, Convener of the Swadeshi Jagran Manch (SJM), which is opposed to large multinational accountancy firms was circulated by email to many members. The message clearly sought to cash in on Gurumurthy’s following and SJM’s known stand to influence the voting. It was later discovered that the email was mischievously fabricated and not sent by Gurumurthy at all. Responding to a member’s query, Gurumurthy said, “I did not send any power point presentation. In fact I received one like you did”. Now, a section of CAs are demanding that the ICAI Council should investigate who resorted to dirty campaign tricks and disqualify the person/firm from the election process. Clearly, the Jogi-Judeo episode is creating unsavoury ripples at otherwise sedate elections to various professional and academic bodies.

-- Sucheta Dalal