Sucheta Dalal :When lightning strikes (27 May 2002)
Sucheta Dalal

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When lightning strikes (27 May 2002)  

Even if we make allowances for poetic license, it strains the imagination to picture how lighting would strike from a clear blue sky. No other political statement has been parsed with as much frustration by Indian investors in recent times. In the end, the soaring stock indices on Friday indicate that the capital market has simply decided to discount the poet PM’s rambling utterances and ignore all the war rhetoric until it actually happens. Nobody in the financial sector is quite clear why the PM says one thing and does an about-turn the next day. And although he may have reacted angrily in Parliament when Sonia Gandhi levelled a direct allegation, the truth is that ordinary people are equally perplexed at the PM’s propensity to retract what he says. In fact, if the PM’s credibility were a listed stock, then the last few weeks would have seen Dalal Street’s punters hammering it into oblivion.

The forgotten man

When Home Trade and its partners, the Giltedge Group of Companies hit the headlines, one of the first things one noticed were their comprehensive websites. Suddenly the Home Trade site that popped up instantly does not open anymore. As for the Giltedge Group of Companies, it has been wiped clean off cyberspace. Also, there is something curious about the manner in which Sanjay Agarwal, after a brief disappearance, returned to Nagpur and gave himself up. While Agarwal and Ketan Sheth are in custody the third key man—the low profile Nandkishore Trivedi—has vanished from the scene. Those who were closely associated with Home Trade say that Trivedi was the brain behind the group and Agarwal its public face. The official documents of the two companies seem to confirm this. Trivedi is described as the man who ‘looks after the day-to-day financial and treasury operations at EDIL (a promoter of Home Trade)’. Moreover, he is a director in the scores of companies spawned by Home Trade, Ways India and Giltedge and even held a chunk of shares jointly with Sanjay Agarwal. Yet, the authorities and the CID are not even making an attempt to trace Trivedi or to question him. This somehow does not seem to be an oversight but a deliberate omission, especially since the grapevine says that investigators have noticed that large chunks of money has been directly remitted to Mauritius, where would have access to it.

Information gaps

While on websites, this one should be of academic interest to Rahul Bajaj, who is agitated that MNCs delisting from Indian bourses will provide little or no information to the public or their competition. Infrastructure Leasing and Financial Services (IL&FS) probably boasts the most impressive list of shareholders but it is impossible to find out who they are, or anything else unless you approach the company itself for information. The institution has a spanking new building at Bandra Kurla complex which cost it several hundred crores of rupees, but when it comes to real estate in cyberspace it turns coy. It is not as though IL&FS is backward about adopting technology. Its vice-chairman is the India Commissioner on the Global Information Infrastructure Commission; its subsidiaries Investsmart, and Schoolnet have comprehensive web presence and it runs an email service called Homenetmail. That is where you find a list of IL&FS’s shareholders: Unit Trust of India (UTI), HDFC, State Bank of India, Central Bank of India, International Finance Corporation, Washington, Orix of Japan, HSBC and the Government of Singapore. Should IL&FS too be forced to divest 24 per cent of its equity and be listed?

End of Shanti

With Tata-AIG having withdrawn its Shanti scheme (where the nominees of those who were lucky enough to die on six pre-declared public holidays, were in for a Rs 1-crore jackpot) another celebrity endorsement (this time by the highly credible Naseeruddin Shah) has ended. I had written about the dangers of celebrity endorsements long before the Home Trade fiasco (Financial Express, November 27, 2000, titled Bond Branding and Brand Ambassadors) and pointed out that brand ambassadors in the financial sector assumed the role of financial advisors. The specific case in point was Amitabh Bachchan and his endorsement of a financial institution’s products. Yet, neither Sebi nor the Reserve Bank of India could trouble themselves to examine the issue. Ironically, Sebi chose to remain silent, even though its rules for initial public offerings specifically ban celebrity endorsements. Will they now wake up and put some regulations in place?

-- Sucheta Dalal