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| Sudarsan Chit Fund: The latest in a long
line |
When
Chennai-based Sudarsan chit fund faced a run on deposits last month-par
for the course in a city used to finance companies going under or
their promoters going underground-its Managing Director R. Velayuthan
requisitioned the services of a dea ex machina. The personage in
question was his wife K.R. Vijaya, a buxom Kollywood (that's how
the Chennai film industry is known) actress of yore best known for
her portrayal of sundry goddesses. It was she who issued a public
statement emphasising her spouse's innocence and promising that
every investor would be paid back in full.
Since 1996, a series of similar events have
dented the reputation the Tamils have of being conservative (ha!)
and good in math. More than 12 lakh depositors have collectively
waved goodbye to around Rs 1,945 crore. This, despite Tamil Nadu
being the first state to pass an investor-protection legislation,
Tamil Nadu Protection of Interests of Depositors Act. The Economic
Offences Wing (EOW) of the state police, and the special courts
that were created have had little impact. If anything, the get-rich-quick
schemes have become more innovative
Thus far, the EOW has had 573 cased registered
with it; 111 have been settled satisfactorily with investors being
paid in full; and in 15 cases, the promoters have been jailed (seven
unlucky souls are spending 13 years in prison). But eow Inspector
General K.R. Shyam Sundar believes there is much that remains to
be done. ''Of the Rs 1,945 crore, only Rs 401 crore has been recovered.''
And some of the promoters have disappeared.
The EOW tracked takeover tycoon P. Rajarathinam rather ingeniously
(from his IP address on a e-mail response), but the man is believed
to have fled the country after obtaining a stay on one of the cases.
Disillusioned investors, victims of their own
greed and their misplaced faith in the credentials of the promoters,
rely on the Federation of Investors' Association to keep the fight
going. Run by 72-year-old D. Ramamoorthy, the association has now
decided to open negotiations with defaulters directly. ''We have
approached the various agencies to give us freedom to initiate our
own negotiations,'' says Ramamooorthy whose sense of urgency is
driven by a recognition of his own frailty. ''There is much to be
done and no political will to do them,'' he sighs. In Andhra Pradesh,
he points out, Chief Minister Chandrababu Naidu has at least listened
to hapless investors. In Tamil Nadu, none of the last three chief
ministers have met with the Federation. Oops!
-Nitya Varadarajan
SENSE(X)
Where's It Headed Now?
The Sensex slips 6.3 per cent
in five trading sessions ending July 26. What's up, doc?
Faut-Il
Brûler la bourse?" asked
a July 23 headline in France's leftist daily Liberation. Loose translation:
Should we burn the exchange? That incendiary question was provoked
by a 40 per cent drop in the CAC 40 over eight weeks. Other exchanges
around the world weren't spared either: the nasdaq Composite breached
its September 2001 low to touch 1,229.05 on July 23; the Dow Jones
Industrial dropped 23 per cent the same day; and the FTSE 100, 21
per cent. Closer home, the Bombay Stock Exchange Sensex lost 206
points in five trading sessions ending July 26. And when the market
reopened the following week, it rapidly plummeted to a nine-month
low of 2,955.10 before rising to 3,030 by the day's close.
So, is the Sensex back to tracking the NASDAQ?
Deepak Mohoni, a Mumbai-based investment analyst thinks so. "The
connection between global indices and Indian indices is high when
the markets are weak". That means the Sensex could test its
September 2001 lows much like the Nasdaq Composite did. "The
markets could go down five to seven percent from current levels,"
predicts Alok Vajpeyi, coo, DSP Merrill Lynch Investment Managers.
In the long run, though, he claims, the markets will move significantly
up. That's optimistic, and it is also goes against what John Maynard
Keynes had to say of the long run.
-Roshni Jayakar
LAND GRAB
"Jharkhand Want
More"
The CM's intervention could end
the messy Tata Steel-state government stand-off.
The
legacy of the now-extinct zamindari system and political wrangling
is holding up the renewal of a lease deal between Tata Steel and
the Jharkhand government (Tata Steel's facility is in Jamshedpur,
Jharkhand). The government wants back-dues of Rs 6,000 crore. If
Tata Steel (sales of Rs 7,693.11 crore, profits of Rs 204.90 crore,
and reserves of Rs 3,077.99 crore in 2001-02) were to pay this amount,
the result on its financials would be catastrophic. Jharkhand cm
Babu Lal Marandi has now promised a speedy resolution, but with
his own revenue minister Madu Singh pushing for the Rs 6,000 crore,
it ain't over till the fat lady sings.
-Debojyoti Chatterjee
A Brief History Of The Disputed
18,000 Acres
1907-1912: The Indian government hands
over the land to the Tata Group as freehold-this is listed in the
books of account as the Tata Zamindari.
1928: The Indian Government allows the
Tata Group to collect revenues from tenants farming parts of the
land.
1947: Indian Independence.
1956: The Bihar Land Reform Act is passed.
The state government makes no distinction between agricultural and
industrial land. Tata Steel presses its case that industrial land
cannot be equated with Zamindari even if it has been so designated
in the books. The state government finally buys this argument.
1967: Chief Minister Karpoori Thakur's
government claims Tata Steel has no right to the land. A court battle
ensues.
1985: Thanks largely to the efforts
of then Tata Steel head honcho Russi Mody and then Chief Minister
of Bihar Jagannath Mishra, the fight ends in an out of court settlement.
The terms: A new 99-year lease is to be drawn with retrospective
effect from 1966. The renewal period (not on the title of the land
but on rentals and revenue) is set at 30 years.
1996: The movement for a separate state
of Jharkand (Jamshedpur is part of this) delays the renewal of the
lease.
2000: Jharkhand (now a state) wants
all the revenue for itself (none to go to Bihar). It claims a revenue
loss of Rs 5,900 crore from Tata Steel's transfer of several subleases.
Tata Steel rubbishes the claim.
2002: Jharkhand CM Babulal Marandi promises
to exercise his authority and renew the lease.
HIC! CUPS
See No Harm
The government clamps down hard, really hard,
on surrogate advertising.
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| Apple juice or whisky? That's the question |
It's a Rs 9,000-crore
industry that contributes Rs 18,000 crore to the exchequer through
taxes and it is miffed with the government's effort to deny it its
rightful share of sip. The proposed ban on surrogate advertising,
could, if enforced strictly, choke the liquor industry. ''We know
what we can't do now,'' says Kalyan Ganguly, President (Breweries
Division), UB. ''We have to get innovative.''
For instance, UB can't advertise its Kingfisher
brand of mineral water although it sells close to a million cases
a year. And so, the industry, which spent Rs 300 crore on surrogate
advertising last year, almost a third of it on mass-media, prepares
itself for a future where it will have to launch, build, and sustain
brands without advertising.
The genesis of the latest chapter in liquor
advertising is a show-cause notice issued by the Ministry of Information
& Broadcasting to four television channels, Zee, Star, Sony,
and Aaj Tak for carrying surrogate advertising. Most channels responded
by blacking out surrogate ads for liquor brands altogether. The
amount involved is a piffling Rs 55-60 crore, about 1.5 per cent
of the total TV ad pie.
The liquor industry's argument that some of
the brands being advertised are genuine extensions has found few
takers thus far. ''To us what matters is the government's guideline
on what's surrogate and what's a genuine extension,'' says Raj Nayak,
Executive Vice President (Sales & Marketing), Star Network.
To nip what it considers a problem in the bud,
the government is also considering legislation that will disallow
liquor companies from classifying advertising and promotional spend
as expenses. Our take: if it bothers the government so much, why
not ban the product altogether?
-Shailesh Dobhal
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