Sucheta Dalal :DefaultersR17; campaign (22 September 2002)
Sucheta Dalal

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Defaulters’ campaign (22 September 2002)  



Defaulter companies that have been sent notices under the Asset Reconstruction Ordinance are ganging up to defeat the Bill in Parliament. Their plan: to spread disinformation that the recovery efforts are only aimed at enabling a few large corporate houses to take over some potentially profitable companies for a song; to encourage litigation by all those who have received notices under the Ordinance; and to lobby politicians to defeat the bill in Parliament.

Would politicians dare to oppose an Asset Reconstruction Bill when NPAs have mounted to Rs 1,10,000 crore and the government is just paying out Rs 20,000 crore to bailout UTI, IDBI, IFCI? They would. But given that the cost of ‘lobbying’ politicians is so high these days, wouldn’t it be better if defaulting industrialists repay part of their outstanding loans and re-negotiate payment terms? The borrowers’ attitude suggests that never did intend to repay their loans.

Crackdown on badla

SEBI officials made a big breakthrough in their effort to crack down on illegal badla operations at Ahmedabad and Kolkata. Sources say that Sebi officials actually witnessed the illegal trades at Ahmedabad and have gathered enough evidence to prosecute several operators.

It is also learnt that an examination of their books could lead the trail to big operators in Mumbai. It is not yet clear if Sebi made a similar breakthrough in Kolkata; but the hectic activity by Ahmedabad operators to find sources who could ‘negotiate a settlement’ with Sebi officials and let them off suggests that Sebi may have hit the bull’s eye this time.

Goodbye Mehta

Within days after Tata Sons sent a legal notice to its director and economist Fredie A. Mehta over a flat belonging to its subsidiary Ewart Investments, Mehta has resigned from the Tata holding company. Mehta was chairman of Ewart Investments, and stories about how his son Kayumars Mehta came to occupy a flat belonging to it have been whispered among Tata circles for several years.

The story goes that Ami Ghista, a statutory tenant of the flat who passed away in November 1998, had mysteriously adopted Kayumars Mehta just a few months before her demise. When questioned, Mehta was allegedly unable to provide adequate proof about the adoption ceremony and the validity of the adoption and the tenancy claim is being questioned by Tata Sons. Interestingly, Fredie Mehta is the fourth Tata chieftain to go out under a cloud. The others were—Minu Mody, Rusi Mody, Ajit Kerkar. Even the late Darbari Seth had fallen out with the group, but he quit without any public acrimony.

Rampant manipulation The rampant manipulation of Hexaware continued on Friday. After the steep 13 per cent fall on Thursday, the scrip was pushed up Rs 5 to close the week at Rs 88.45. It also recorded is highest ever volume of 1.46 crore shares.

What makes this little known company (formerly part of Aptech Ltd) so attractive? The annual report for the period ending December 31, 2001 certainly provides no clues.

In fact, against a tiny net profit of Rs 1.6 crore, its ‘appropriation’ towards the diminution in value of investments in various subsidiaries is a whopping Rs 62.8 crore. A perceptive reader points out that this provision has not been treated as an item of ‘expense’ as it ought to be. Since it is an expense for the year, it has to be deducted from the profit, in which case, Hexaware would have shown a big loss for the year.

Also, the company purchased shares of Bconnect Worldwide Limited for Rs. 12 crore. Given that Bconnect had a turnover of just Rs 25 lakh and losses of around Rs 30 crore, why would Hexaware be buying such expensive shares? Since the auditors have found nothing wrong, may be the regulators need to take a closer look at why the company is suddenly such a darling on the stock market.

Friends? Foes?

They may be fighting each other in court over the investment in Iridium India Ltd. But Motorola has obviously forgotten to obliterate all traces of its earlier close friendship with Infrastructure Leasing & Financial Services Ltd. (IL&FS).

While searching for Motorola’s Indian telephone numbers on its international website (www.motorola.com) we found its Mumbai address listed at the posh IL&FS Towers at Bandra-Kurla complex. On dialling the number listed on the website it connected to IL&FS. Surprised, we called again.

This time we asked to be connected to Motorola, and were helpfully given another number for the company. Isn’t it time Motorola updated its website?


-- Sucheta Dalal



 



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