Sucheta Dalal :To Court
Sucheta Dalal

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To Court  

Jun 4, 2006

The disinvestment of state holding in Maharashtra Scooters Ltd (MSL), a joint venture with Bajaj Auto, has gone into a new spin as the Maharashtra government is getting ready to take the issue to court. It may be recalled that MSL and Bajaj couldn’t agree on the fair price of the 27% government holding and decided to appoint an arbitrator to hammer out the true value; who came up with a figure of Rs 153 per share. This is higher than what Rahul Bajaj was willing to offer (he had once refused to go above a double digit figure), but probably half the price that the government and shareholders hoped to get in a raging bull market. Especially since MSL’s biggest asset is its 3% holding of Bajaj Auto and Bajaj Hindustan shares that have appreciated sharply in the Bull Run. The state now wants to go to court in order to get a higher price. Sources close to the action say that no bureaucrat wants to be accused of selling the company cheap. Meanwhile, Bajaj Auto seems to be in no hurry either, since it already controls the company and can afford an additional delay.


Going wrong


How can the Sensex go up when everything around us is falling apart?, asks a reader. The first rains in Mumbai exposed the hollow claims of our politicians about the city’s preparedness for the monsoon. Despite last year’s death and destruction, the Mumbai Metropolitan Development Authority (MMRDA) headed by the Chief Minister has left deep, uncovered killer trenches along several crowded arteries of Mumbai. Most of these are on the doorsteps of high-usage areas such as shops, hotels, offices and temples and are just waiting to trap people in the slippery sludge. But nobody seems to pay a political price for such gross unconcern for public safety anymore. That is because our political parties are too busy running down the Election Commission and the President of India or framing legislation to protect their illegal properties or offices-of-profit. Isn’t it interesting that the latest drugs and alcohol binge of Rahul Mahajan and his late secretary does not surprise anybody in Mumbai’s business circuit? The stupendous wealth and dubious tastes of several politicians are open secrets in Mumbai’s business and political circuit. But they wield considerable power and are able to suppress or divert investigations into everything from murder to illegal enrichment. In fact, businessmen complain that politicians these days are not satisfied with enormous pay-offs that drive up project costs—they (or their progeny who usually act as agents) demand a stake in companies because this form of wealth is relatively easy to conceal and encash. Yet, we expect investors to ignore all this, as well as rising inflation, interest rates and artificial petrol prices and celebrate economic numbers.


Fire escape


Did you know that the innocuous and low-profile Fire Department in cities such as Mumbai wields enormous power to allow builders to extend their Floor Space Index (FSI)? We learn that the fire department can sanction the building of a ‘fire escape passage’ around a structure that is several meters wide. This passage gives enormous additional FSI to malls, hotels and shopping places since it is excluded from the municipal corporation rules that require a minimum open space around a building. We learn that the template for such clearances was created by a politically-connected fire chief who died a few years ago and has since been actively exploited by builders and industrialists to add to their built-up area especially in shopping malls. Every precious square foot of built up space in Mumbai costs tens of thousand rupees in upmarket areas and the space is invariably bundled into the purchase price under what is known as the ‘super built up’ area. Thanks to the fire department, a recently acquired hotel has enhanced the entire circumference of its prime property by a few meters. Another important bonanza is that there is no FSI restriction on creating parking space. The same hotel has rapidly constructed a massive multi-storeyed parking space near the airport, which can fetch hefty parking charges, literally by the hour. Is it any wonder that the government is dragging its feet over the creation of a real-estate regulator who may codify the rules and kill the elasticity that is currently exploited by our industry groups?


Got pirated


In the US, poor Opal Mehta and her author Kavvya Vishwanathan got pilloried, got ruined and got banished, but in India, she just got pirated. Kavvya Vishwanathan was the teenager who signed a $500,000 two-book deal with Little Brown and Co and whose movie rights were snapped up by Steven Spielberg’s DreamWorks. But her publishers pulled the plug and withdrew the book when the plagiarism scandal hit the world press. However, for India’s canny book pirates, Kavvya is clearly a saleable proposition because her Indian origin invokes enormous public curiosity. So the chick-lit Opal Mehta is being hard-sold at traffic signals in Mumbai along with Amartya Sen, Tom Friedman and even books like Freakanomics.


-- Sucheta Dalal