Sucheta Dalal :Not judgement errors (1 September 2002)
Sucheta Dalal

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Not judgement errors (1 September 2002)  

The Unit Trust of India (UTI) chairman has established a no-nonsense reputation and is working hard to fulfil his mandate by revamping the organisation and through ruthless efforts to recover investors’ money.

Why then did he fall into the trap of certifying the misdemeanours of his predecessors as ‘errors of judgement’? The UTI chief’s statement flies in the face of the Tarapore committee’s findings. It is contrary to anecdotal evidence, which says that speculators dumped ramped up stocks on UTI. This was confirmed by Sebi’s investigation that followed the stock market collapse. What else explains the large chunks of Zee, DSQ Software, Himachal Futuristic and Global Tele stocks being purchased by UTI even after the crash? In fact, one of the most astounding aspects of UTI’s second debacle in three years is that nobody has been punished, censured or indicted for the losses to investors and the colossal breach of trust. The government is also in no hurry to amend the UTI act.

Yet the Indian exchequer could end up paying as much as Rs 18,000 crore (from 1998 onwards) for the two UTI bailouts. You are doing a great job Damodaran, but why defend UTI’s sordid past?

Heading for a divorce?

The Tatas seem ready to walk into yet another controversy. If the skirmish over investing Rs 1,200 crore into the loss making Tata Teleservices was not enough, an unnamed official seems to have told a business daily that a ‘divorce’ could be the likely outcome of the VSNL-Tata marriage.

The exact quote was, ‘It is like a marriage that one gets into expecting some minimum benefits. But we find we have got a raw deal. And we see no reason not to seek a divorce’. Sources confirm that they are extremely ‘unhappy’ with the VSNL deal and that they are being given a royal run-around by BSNL on the interconnectivity issue. They admit that if the situation does not improve they would have no option but to seek legal redress and point out that the shareholders agreement does provide for a return of the stake under certain conditions. As for carrying out the threat, sources say that the statement about an actual divorce may have been a little rhetorical. Unfortunately for the Tatas, the VSNL honeymoon seems to have ended almost as soon as the marriage agreement was inked. Part of the distrust stems from their own, ill-advised move to invest over Rs 1,200 crore in Tata Teleservices.

And what with WorldCom causing further losses and the IPOs of Intelsat and Inmarsat being shelved–almost nothing is going right with the deal. It remains to be seen if the Tatas make history by being the first group to reverse a divestment.

Orange privileges?

Some say that Orange probably spends as much time organising so-called ‘privileges’ for its subscribers as it does selling its cellular services.

The result is expensive colour brochures offering discounts on a range of products, mainly five-star hotels and resorts, pricey restaurants, cameras, toys, music and in Mumbai a home delivery service for a tiny range of products ranging from toothpaste ad brushes, shaving kits, tomato puree, tea, oil and biscuits.

Most of this is supposed to be home-delivered in 72 hours. But place an order and you discover that your cell phone subscription neither makes your shopping simpler or hassle free. One irate customer discovered that 78 hours after placing an order, five items out of an order of 10 were not in stock and hence nothing was delivered. Several frustrating phone calls later, Orange promised to tell us the rationale for its expensive side business of getting deals for subscribers and whether they appreciated its efforts.

A week later, we are still waiting for an answer, but would welcome feedback from readers who used the services. Also, we suspect that subscribers prefer lower bills to expensive brochures, discounts and privileges that they hardly use.

Tailpiece: In Mumbai’s clubby financial world, you can jump from one firm to another or close down several businesses but still land on your feet, because the powerful ‘club’ rallies around to get you placed.

The capital market is abuzz with reports that one such investment banker, who needs a fresh career, may end up as BSE executive director. They are not quite sure that the BSE needs a party animal to head it, even if this person does get invited to all the right financial sector parties

-- Sucheta Dalal