Wockhardt Life Science Ltd (WLS) continues to irritate shareholders over its use of company funds. A shareholder points out that WLS received Rs 190 crore from the sale of its IV fluid division to Baxter India, of which Rs 157 crore is reflected in its books, but investors still did not get any dividend.
Instead, in a two-year period, over Rs 101 crore was given to Merind, its 95.81 per cent subsidiary as share application money, in order to help it tide over its financial problems. Surprisingly, Merind in turn, invested Rs 61 crore as share application money in an unnamed ‘mystery’ company. In FY2002, Merind was purchased by a private holding company of Wockhardt’s promoters called Khorakiwala Holdings & Investments Pvt Ltd, for a sum of Rs 9.28 crore. This was based on a valuation report. But investors want to know what happened to Merind’s Rs 61 crore investment in the ‘mystery’ company? Maybe it is making money, but since Merind is no longer a subsidiary of WLS, it’s investors have no answers.
A point to note is that Sebi’s corporate governance regulations became applicable two years ago, but Wockhardt has one lone independent director, while the others are senior management officials.
Even H.F. Khorakiwala resigned from the board in 2001 without any explanation. Did someone say that having rules would lead to better governance?
Soaring profits but...
While the stock market is celebrating spectacular profits earned by public sector oil companies, consumers of petrol are both perplexed and curious. They are told that the surge in profits is mainly due to the scrapping of the administered price mechanism and sale of crude at international prices.
But are these profits at the expense of the consumer? The new-found freedom has turned oil companies from profitable to super-profitable; but consumers have no way of knowing whether each price increase and decrease in the new regime is fair, adequate and justified.
Do they pay significantly higher rates at every spike in world oil prices and enjoy just a trifling reduction at every trough? And if there is no competition to keep prices in check, can they depend on government to protect their interests?
Significant six months
In a sudden bout of nervousness, the Reserve Bank of India, has pushed back by six significant months its ban on co-operative banks sanctioning loans and lines of credit to directors and their relatives. Its not that co-operative banks have turned cleaner or careful, but the RBI seems to have succumbed to political pressure and deferred implementation of the new rule.
At the end of six month, there will, in all probability be a new governor at the RBI and the present incumbent would have joined the ranks of the politicians, albeit in the Rajya Sabha.
At one time, the headquarters of ICICI and Unit Trust of India (UTI) were among the half-a-dozen buildings in South Mumbai that represented raw financial muscle. Today they stand vacant, after the organisations have shifted to the swank new financial district at Bandra-Kurla. And there aren’t many ready buyers for the buildings either.
ICICI’s former headquarters is in fact, lying vacant for over three years. In the year 2000, discredited stockbroker Ketan Parekh wanted to buy the building as a symbol of his ‘Triumph’. Instead, his artificially created rally fizzled out and claimed UTI as a victim. Now, UTI hopes to recoup some of its losses by selling the building. Will it have better luck at selling its headquarters than ICICI?
Barista, the coffee chain that changed the concept of ‘hanging out’ for Indians is in the throes of major change — not all for the better. Service has declined along with its prices.
Slow and sloppy service, missing paper napkins and sugar packets are increasingly routine. Even the news magazines have disappeared from its racks, and our sources say that there is a story behind it.
Barista has now launched what it calls “Partners’ scheme”. It makes its pitch with a fancy presentation of its deal to ‘partner’ with it for product sales — this includes magazine displays at its outlets, joint contests and promotions etcectra.
The cost: Rs 5,000 per month for each of its 130 outlets. That amounts to a whopping Rs 6.5 lakh per month and it probably explains why the magazines have vanished from its racks.
Tailpiece: Trust the aggressive ICICI Bank to find an advantage in adversity. Apparently, some panicky depositors prematurely pulled out their fixed deposits during the recent two-day run on the bank. When the panic blew over and they wanted to put their money back, it was only allowed at a lower interest rate.
-- Sucheta Dalal