Sucheta Dalal :A Sterlite comeback (6 October 2002)
Sucheta Dalal

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A Sterlite comeback (6 October 2002)  

Investors outraged at the Bombay High Court order, which allowed Sterlite Industries to sweep out their shares from their depository accounts without their consent, as part of Sterlite’s share buyback programme, may have some good news. It is reliably learnt that the controversial buyback move has failed to give Sterlite control over 90 per cent of the outstanding equity.

This means that it cannot delist its shares and trading in the scrip ought to be restarted by the bourses. The depleted floating stock may even boost share prices.

Sterlite was officially listed on the Bombay Stock Exchange (BSE), and was a permitted scrip on the National Stock Exchange (NSE). This means that the BSE will have to restart trading but is probably awaiting a signal from the market regulator — Sebi.

Sterlite’s failed delisting may also strengthen the Sebi’s case that investors felt coerced by Sterlite’s buyback offer; and that the High Court order allowing shares to be swept out of investors’ accounts without their express consent had shattered their confidence in the depository system.

Only official listing While on the subject of restarting trading, the Sterlite scrip could well find itself chucked out of the NSE list soon after it resumes trading on the bourse. India’s largest stock exchange has decided that eight years is a long enough time for the 900 odd companies traded there, to get officially listed on the bourse.

It has sent out notices to around a 100-companies giving them an ultimatum that unless they are listed, their shares will no longer be traded by year-end. Among the few prominent companies that have not yet sought an official listing on the NSE are Sterlite and BHEL. The NSE, we learn, plans to issue another warning at the end of the year and then discontinue trading those companies that still fail to get themselves listed.

Takeover blues

PriceWaterhouseCoopers Consulting India will soon be renamed IBM-Business Consulting. But executives of the former PWC Consulting are extremely unhappy at the move.

Much of their griping posted on the bulletin board is that the big blue’s brand identity will cause confusion among potential consulting clients. They claim that process improvement, strategy, best practices, cerebral analysis, innovation and creativity which are the staple of a consulting company are not associated with the IBM brand.

They claim it is a bit like McDonalds (which is known for inexpensive fast food) starting a gourmet foods division with the same brand. Or Remy Martin selling watches and Reebok selling Vodka, or Adidas selling bikes or even Fidel Castro writing a book on the virtues of free market economies.

Maybe true, but isn’t it possible that PWC’s Consulting prowess could transform IBM’s bureaucratic and average IT consulting business.

Conditional access indeed

The fact that half of Mumbai’s television viewers have had their CNBC India unceremoniously replaced by Bloomberg Television for over a fortnight exposes the dangers of the Conditional Access Bill that was sought to be rushed through parliament recently.

Apparently, CNBC India was yanked off because it incurred the wrath of the Hindujas (over its reportage on the Bofors scandal) who own the cable network IN-Mumbai.

The continued blockage only proves that Sushma Swaraj’s cable bill will neither protect consumers nor the broadcasters, but will only tighten the grip of cable operators and distributors.

In a free market, legislation should permit competition in multi-system distribution as well as the individual connection to viewers’ homes. But in cities like Mumbai, the distribution is a neat duopoly born out of a settlement that followed murderous warfare between the two distributors.

The link to viewers’ homes is carved up into territories by cable operators who are invariably connected to political parties. Competition is kept at bay with violence and the law and order machinery invariably looks away. Ms. Swaraj’s Cable TV Networks (Regulation) Amendment Bill, 2002 ignores the consumers’ right to options, but expects them to pay more for access and set top boxes (costing anywhere between Rs 3000 to Rs 10,000) merely because she says it will benefit them. Is anyone buying this claim?

Oxyrich, anyone?

Manikchand, the gutka and pan masala maker has launched a mineral water called Oxyrich. Its claim: that it contains more 30 per cent more oxygen. Really? We wonder why primary school kids are routinely taught that water necessarily comprises two parts of hydrogen and one part of oxygen?

Maybe Manikchand has made a breakthrough discovery. Or should the Advertising and Standards Council take note?

-- Sucheta Dalal