Dramatis personae: (L to R) Progenitor Ramesh Gelli, accused Sudhakar Gande, perpetrator Ketan Parekh, Finance Minister P. Chidambaram and benefactor B.D. Narang

It may have something to do with allegations that Ramesh Gelli, the founder of Global Trust Bank, had friends in high places in the previous National Democratic Alliance government, but the now reigning United Progressive Alliance government is intensifying its investigations into the sorry saga of the bank, one that started with its creation in 1994 by one of the country's best known bankers, Gelli and ended in August 2004 (after an RBI imposed moratorium on withdrawals) with its merger with Oriental Bank of Commerce (OBC). The intervening period was replete with the kind of stuff that is a journalist's delight and a CEO's nightmare: a failed merger, allegations of insider trading, more of involvement with a rogue stock trader (Ketan Parekh), and the like.

Things hotted up in early December when Finance Minister P. Chidambaram announced in the Lok Sabha (the lower house of India's Parliament) that criminal cases would be filed by the end of the month against those responsible for the end of the bank. The following day, Oriental Bank of Commerce suspended Sudhakar Gande (GTB's CEO at the time of the merger who had been named OBC's Division CEO) and two other senior execs (both came over from GTB) on the charge that they were "not functioning in the interest of the bank". Gande is working on his defence and would only tell this writer that he has, all along, "been working in the interests of the bank".

Gande's departure was pre-ordained. As one banker who works for a private sector bank puts it: "The move (to suspend him) was for effect as OBC would have anyway sacked him." However, he believes that since GTB's problems can be traced back to "management failure", it is only fair that Gande pays the price. Meanwhile, OBC, one of the best-run banks in the country (See Two's Company on page 90) is proceeding with its GTB-integration. One way or another, an endgame is in sight.

-E. Kumar Sharma

Crippled Kolkata: Hard at work

STOPPAGE
Red Citadel Update
Is Kolkata becoming hell for corporates again? Figure it out for yourself.

No. of bandhs: 6

No. of bandhs in last one month (Nov 15-Dec 15): 3

Issue that provoked most bandhs: Hike in oil prices (3)

Party that called the most bandhs: Trinamool Congress (3)

Number of (large-scale) processions that disturbed life and work: 7

-Arnab Mitra

The Ruias' New Telecom Play
The acquisition of a 9.9 per cent stake in BPL Mobile indicates a new beginning.

Hello There: Essar Group's Shashi (L) and Ravi Ruia

Call it the 0.10 per cent strategy. In what is widely acknowledged as a smart move, Essar Teleholdings, the telecommunications arm of the Essar Group that is run by the Brothers Ruia (Shashi and Ravi), recently acquired 9.9 per cent of the equity of BPL Mobile Communications, a telco that operates in the Mumbai circle, from France Telecom; the latter sold the remaining 16.1 per cent it held in the company to Asian-Pacific Systems, a consortium of foreign investors. Essar currently owns 19.6 per cent of Hutchison Max Telecom, a rival that operates in the same region, and will soon own 30 per cent of Hutchison Essar (not to be confused with Hutchison Essar Telecom, which is a different company offering cellular services in Delhi and holding a 50.81 per cent stake in Hutchison Essar South), a company being created to consolidate all Hutch holdings in India (see Waiting For The Sun, page 128)-Hutchison Max is set to become a 100 per cent subsidiary of this. India's telecom regulations proscribe a single company from owning more than 10 per cent in two telcos operating in the same circle (Essar owns 9.9 per cent; that should explain the first sentence). "I think this is a smart move from Essar, with Hutch's blessings no doubt," says a Mumbai-based investment banker. "Whoever buys into BPL (which, as everyone knows, is on the block) will now have to deal with Essar, which in turn has a massive interest in the Hutch operation in Mumbai."

On its part, Essar maintains that the investment is purely driven by financial considerations. "France Telecom was selling, the price (which has not been disclosed) was good and it is an opportunistic investment," says Vikash Saraf, CEO, Essar Teleholdings. "We will exit the investment whenever we get reasonable returns." That quote is indicative of the Ruias' approach to telecom, a finance-play rather than an operational one (the group once ran a lucrative service in Delhi and still owns 49 per cent of Hutchison Essar Telecom). Indeed, with its 30 per cent stake in Hutchison Essar (there is an option to increase this to 34 per cent) and 9.9 per cent stake in BPL Mobile, Essar's telecom holdings could be worth a cool Rs 5,500-7,700 crore, assuming Hutch, which will make an initial public offering in the next six months and BPL Mobile-it was contemplating an IPO but the battle between BPL patriarch T.P.G. Nambiar and son-in-law Rajeev Chandrasekhar who controls the cellular businesses may put a spoke in that-are valued using the same logic used to value Bharti Tele-Ventures.

Although the investment in BPL is the first outside investment Essar has made in telecommunications, the company could not have found a better sector. Business is booming and even BPL Mobile, plagued by concerns relating to ownership, has managed to grow its subscriber base from 8,91,851 at the beginning of this year to 11,79,435 by the end of November. The purely financial nature of this investment, stresses Saraf, will ensure that there is