The sacking of Unit Trust of India (UTI) chairman caused jitters at another institution—the Infrastructure Leasing & Financial Services (IL&FS), which has recently attracted the finance minister’s attention. It is uncanny, but PS Subramanyam was the third chairman of IL&FS to leave in the wake of a securities scandal—and ironically enough, one that did not affect the organisation itself. The first was the late MJ Pherwani—who quit the NSE and the IL & FS chairmanship, in the wake of the 1992 securities scam. The second instance is a little tenuous, but institutional sources point out that the late MN Goiporia, who quit as State Bank of India chairman after the 1992 scam also used to head IL&FS in his previous assignment at Central Bank. Now there is PS Subramanyam who recently took over as chairman from HDFC’s Deepak Parekh.
Who next at IL&FS?
The irony is that Deepak Parekh had quit IL&FS only recently and held dual charge of two large infrastructure institutions for more than three years. Parekh was supposed to give up IL&FS as soon as finance minister P Chidambaram’s insistence led to the creation of Infrastructure Development Finance Corporation—but he stayed on for a long time. However, within months after he quit, IL&FS is headless again. Will Deepak Parekh be asked to come back, or will the post go to the nominee of SBI which holds a five per cent stake in IL&FS? There is also the possibility that a third proposal which has been hanging fire for several years and may be revived—that of upgrading Ravi Parthasarathy from vice-chairman and managing director to head honcho. After all, almost all decisions at IL&FS are already made by the VCMD—whether it is spending on an opulent and expensive building to house the institution, or its plethora of curious business acquisitions from education to transmission or to the proposed ‘bail-out’ acquisition of a legal database firm.
Imagine mega-ambitious Subhash Chandra running a small-scale industry. After the spectacular global collapse of the global satellite telephony company, Iridium; Chandra’s Agrani Satellite Services has been having a tough time raising funds, but it is clearly unwilling to give up. What is curious however, is a report that the Small Industries Development Bank of India (SIDBI) has given in-principle sanction for a Rs 50 crore loan to Agrani. There is nothing small-scale about Agrani—it is clearly a global project with international equity partners such as Alcatel and Arianespace—so how does SIDBI justify its interest in developing this project? Or is it another instance case of doling out funds to the beleaguered ZEE TV group which is struggling to bring back Rs 220 crore lent to another unlisted subsidiary and then on to Ketan Parekh. If financial institutions such as SIDBI are so confused about their core functions and responsibilities, the finance ministry should indeed create a separate department to oversee them from the North Block. Otherwise, it will have another UTI-type of situation on its hands.
While on satellite telephone experiments, there is going to be some slight good news for financial institutions who were led by IL&FS into a large investment in the Motorola-promoted Iridium. These institutions had sued Iridium for recoveries after it filed for bankruptcy in the US. Informed sources say that the restructuring and salvage operations that continue at Iridium will get Indian investors small portion of their money back. Since the Iridium investment has been written off, the payment from Iridium is expected to give a boost to their bottomlines—especially for IL&FS.
NSE’s website hang over
The JPC may have been impressed by the National Stock Exchange’s (NSE) automation, but one cannot say the same about its —nseindia.com. First of all, it has the most deadly flaw for any website to have: it is very slow. If that were not enough, the ticker tape of stock quotations tends to freeze and to stall ever so often. Most appaling, other investment websites update their quotations and NSE indices faster than the official site. But the most frustrating part is to search for shareholding patterns of companies. It does not have an elementary search facility. A slow manual search leads to more surprises. For instance, on the day it announced the suspension of DSQ Software, one did not find the company in its list. But if one is patient enough not to give up and continue to plod painstakingly down the list one may be in for a surprise. NSE, continues to list DSQ Software under ‘S’ because its old name was SquareD Software! Also, DSQ is not the only old name on the list. Chloride India called itself Exide Industries nearly four years ago, but NSE does not seem to recognise this.