Sucheta Dalal :Not us says Fortuna (2 July 2001)
Sucheta Dalal

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Not us, says Fortuna (2 July 2001)  



The mystery about DSQ Software’s so called merger with Fortuna Technology only deepens by the day. The company had passed a resolution allotting 1.4 crore shares at Rs 675 each to three Mauritius-based companies last year. The purpose was to acquire Fortuna Technologies, a California-based company. I now have an email from the managing director of Fortuna Technologies TC Ashok saying ‘I would like to clarify that the three Mauritius companies you mentioned in your article neither own Fortuna, nor Fortuna owns them’. He says: ‘I own Fortuna USA 100 per cent and Fortuna USA does not own any other company’. Instead he owns Fortuna Technologies India Pvt Ltd, which works exclusively for Fortuna USA. The question then is who did Dinesh Dalmia allot 1.4 crore shares to in a hush-hush EGM last December? Also, what kind of governance and disclosure practices are reflected in him getting away with such falsehoods? Clearly, there is a need for Sebi to make its corporate governance code and disclosure rules work.

There is more

The mystery of the DSQ Software shares does not end here. There is a flurry of activity on the CSE to have 10 lakh shares deposited by the stockbroker Harish Biyani released to him. Sources say that these are the same shares whose distinctive numbers are identical to those of a lot of 1.4 crore shares issued to three Mauritius-based companies in March this year for the acquisition of Fortuna Technologies. We also learn, that Biyani, who until recently had no money at all and was declared a defaulter for his inability to pay Rs 30 crore to the bourse, has suddenly offering to cough up a hefty Rs 26 crore (in installments) as settlement. The condition is that his suspension be revoked, his card reactivated, the balance money waived and the controversial DSQ shares which are in CSE’s custody released to him. Kolkata operators believe that somebody is desperate to get the DSQ soft shares released to hush up the problem of duplicate numbers.

The margin bug

The Kolkata bourse, which has been at the hub of the Scam of 2001, had some extraordinary admissions to make to the Joint Parliamentary Committee (JPC) last week. CSE executive director Tapas Datta told the JPC this wonderful story about how the bourse’s margin calculation system had a serious flaw (bug). When the value of margin payable increased above a certain number ( the ED called it ‘number of fields’) the margin payable simply showed up as zero. The exchange blames it on the software supplier, who absolutely denies the charge. The upshot of the incredibly convenient ‘bug’ was that the margins of the largest brokers, who have now been declared defaulter, could not be correctly calculated. The bourse apparently realised the enormity of the flaw only when it was hit by huge defaults. But how does the bourse explain other decisions such as collecting cheques for margin payments instead of debiting brokers accounts (the cheques promptly bounced) or, why it was adjusting capital deposited by members for their exposure limits against margins payable them. It is no wonder that the Rs 500 crore margin claimed by the president Kamal Parekh when the scam first hit the CSE had vanished upon closer inspection.

Transferring trusteeship

ICICI has announced that it is getting out of the debenture trustee business and has admitted to be involved in 78 litigations in connection with its role as debenture trustee. According to sources the bank has sold and transferred its entire trusteeship business to the tiny United Western Bank. That may have got ICICI out of a jam, but does nothing for the poor investors who continue to run from pillar-to-post for redemptions and interest.

Urge to merge

The interesting thing about the Batata-BPL merger is that its rivals too are making the most welcoming noises. It clearly heralds a scenario where those in the cellular business will feel the urge to merge if they want to remain in competition. What the smaller players are careful not to say as openly, is that the combined Tata-Birla-AT&T-BPL muscle in the form of a $2-billion company poses the first real challenge to the vaulting ambition and relentless strides of Reliance Industries in the telecom business. Reliance with its 15 bids for the fourth cellular licenses was in the race to bag 22 out of the 24 national cellular licenses. Add to that its presence and plans in basic telecom and its dominance would have been bad news for consumers as well as the competition. The response to the Batata-BPL alliance indicates that more mergers may be in the offing, which would, hopefully intensify competition and lead to a further reduction in tariffs.


-- Sucheta Dalal



 



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