Sucheta Dalal :Dalmia wants out
Sucheta Dalal

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Dalmia wants out  

Jul 9, 2001

Having created a right royal mess at DSQ Software, its promoter Dinesh Dalmia is looking for an exit route. Dalmia spends most of his time in the US these days, except for short trips to Chennai to resolve the crisis over the DSQ’s increased share capital or to negotiate the sale of his holding. We learn that Ramesh Vangal, the former chief of Pepsi and now advisor to a large foreign group has shown interest in acquiring the company. Vangal was apparently very keen on acquiring DSQ Software several months ago, but then Dalmia was in no hurry to negotiate. Now the tables have turned and Vangal is being very cautious. He is trying to estimate the extent of misstatement and misdemeanor, if any, in DSQ’s allotment of 1.4 crore shares to three Mauritius-based companies, ostensible to acquire US-based Fortuna Technologies. He is also worried about action against the company for duplicate shares issued by Dalmia to Kolkata stockbroker Harish Biyani. Only the National Stock Exchange has issued a show cause notice to DSQ Software. Sebi and the Department of Company Affairs are however taking their own sweet time in investigating the matter. At the same time, several of DSQ’s key officials including the company secretary and the finance chiefs have quietly quit the company.

Following up on CBI

The Central Bureau of Investigation (CBI) categorically linking Ketan Parekh’s Swiss Bank account to Madhavpura Mercantile Cooperative Bank is interesting. So far, the big outflow of funds from the country — Rs 2,900 crore, to be precise — has been through five overseas cooperative bodies (OCBs) identified in the preliminary inspection report of the Securities and Exchange Board of India (Sebi). While there is no hurry to investigate these findings, the CBI claim suggests an entirely new route of siphoning money out of the country. Sources put the money in the Franc denominated Swiss account at over Rs 1,000 crore. Add to this the Rs 800 odd crore that he siphoned out of MMCB in the form of various lines of credit to his many investment companies and pay order; include the Rs 1,200 crore that Ketan had allegedly diverted to the Kolkata brokers and the volumes that seem to have been generated by Ketan Parekh alone becomes mind boggling. Yet, apologists for the brokers insist that there was no price manipulation and the bull-run fuelled by his market operations was entirely in line with the global madness in tech stock.

Inspection procedures

After the collapse of Madhavpura Mercantile Cooperative Bank, the Reserve Bank of India has been hyperactive in containing the damage and has succeeded in deflecting attention away from its own role. But there are those who insist that the flaw lies in RBI’s facile inspection procedures. The inspections, under Section 35 of the Banking Regulation Act are conducted with a set of statements and files, but not through a direct scrutiny of the banks’ books of account, say insiders. Similarly, there is no scrutiny of returns submitted under Section 42 of RBI Act. Banks tend to show pay orders issued and outstanding as ‘other liabilities’, the details of which are almost never asked for. According to sources, the RBI is treating the entire operation of MMCB as ‘Assets-Liabilities Mismatched’ and diluting the gravity of fraudulent and improper transactions conducted in collusion with the management. The Joint Parliamentary Committee which is in Mumbai next week should ask the RBI for reports of all the inspections that it has conducted at MMCB; and also seeks expert advice on the procedures that are being followed by it. Only then should it go into the issue of multiple regulators governing cooperative banks.

It is finally official

For well over a year now, Tractabel has exited its joint venture, Jindal Tractabel Ltd at Vijayanagar in Karnataka. The shares were warehoused with ICICI, which is a lead institution for the Jindals. At the same time, there were frequent and strategically timed news reports in various papers about how the Jindals were looking for other partners to buy the Tractabel stake. Powergen was allegedly in the running, then it was an Indian PSU — BHEL, later it was some others — but there was no deal. The catch: the Jindals wanted to retain a 50 per cent stake in the company and all potential partners wanted controlling interest. Last week’s deal is a sort of capitulation to the Jindals by the institutions — in fact, yet another bail out. Instead of merely warehousing the shares, ICICI and IDBI are now stuck with a hefty 38 per cent in the company, while the O P Jindal companies have merely hiked their stake by 12 per cent for Rs 200 crores. That way, the Jindals have most of their cake and eat it too.

-- Sucheta Dalal