Sucheta Dalal :NASSCOM is the way (3 November 2002)
Sucheta Dalal

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NASSCOM is the way (3 November 2002)  



The late Dewang Mehta would have been thrilled. More than a year after his death, his tireless work to catapult NASSCOM into the international league and create a strong brand image for India’s IT prowess in the highly competitive world market is being remembered and recognised—that too by India’s most influential industry association. Last week NASSCOM was held up as the model to follow at two important seminars in Mumbai, both convened by the Confederation of Indian Industry (CII). First, it was Hindustan Lever chairman Vindi Banga telling listeners at the Manufacturing Summit that the NASSCOM model should be followed in order to promote the India brand.

Less than a week later, it was management guru C.K. Prahalad praising NASSCOM at CII’s summit for the consumer goods sector. Prahalad said that despite the intensely competitive nature of the IT business, NASSCOM managed to project a cohesive and unified face to Indian policy makers and the world; and that is what the rest of Indian industry needs to do too. It is probably just a coincidence, but the Indian born Prahalad also happens to be a consultant to HLL’s parent Unilever.

Wither NDS?

The RBI’s credit policy last week triggered a huge spurt in debt market volumes with trading turnover on the National Stock Exchange (NSE) touching a new high Rs 8,565 crore on October 30. The NSE’s record turnover makes one wonder what happened to the RBI’s plan to use the Negotiated Dealing System (NDS) to segment the market and eliminate brokers by asking banks to trade among themselves.

The NDS has remained a sort of back office reporting mechanism, which provides an information pipeline to the Clearing Corporation of India, which incidentally has taken off very nicely. It is possible that the RBI thought better of its plan to fragment the market and get rid of brokers because banks are loath to trade without their assistance.

Or, it may have realised that it is the brokers who drive trades by gathering information and constantly structuring new deals. Also, the surge in trading from debt market mutual funds, which have witnessed a big boom, the banks would have found themselves cut off from the best deals and placements. In which case the RBI would have been accused of fragmenting the market.

No Sensex future?

Although the Bombay Stock Exchange (BSE) has yielded market leadership to the National Stock Exchange (NSE), its 30 scrip sensitive index (Sensex) remains far more popular than NSE’s Nifty as a market benchmark. This should make Sensex an ideal futures product, but strangely, the BSE cannot get its derivatives trading off the ground and has even sought permission from the regulator to wind it up.

These developments have upset traders in derivatives, because the possibility of trading in Sensex futures now seems remote. In fact, India will probably be the only market that does not offer a futures contract on its most popular index.

Would the NSE find it embarrassing to offer a Sensex based futures contract? Probably; but it is more worried about being accused of unfair competition. Maybe the regulator could step in and clear the way for Sensex future—or at least a shadow product.

Bad times

The Securities Appellate Tribunal (SAT) couldn’t have come at a worse time for Gujarat Ambuja Cement (GACL) as well as its “strategic interest” ACC. Just when the SAT has ruled that it wants the regulator to take another look at whether GACL’s acquisition of ACC shares amounts to a change in management control, the profits of both companies have plummeted.

Gujarat Ambuja’s net profit is down 62.7 per cent on higher sales, while ACC registered a 70 per cent drop in net profit. This means that even if Sebi decided that GACL needs to make an open offer to retail investors at the high price that it paid the Tatas, the company may run short of funds to do so. In which case, the regulator could well force GACL to offload the shares in the market leaving the Tatas the only winners in the imbroglio.

Orange bonanza

Subscribers to Orange’s cellphone service have received an unexpected bonanza. Thanks to some problems with its billing system, subscribers have received a Diwali baksheesh. Orange has been messaging users that the October bills would reach them in the first week of November—if the problem gets fixed. But this is one time when nobody is really complaining


-- Sucheta Dalal



 



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