It is celebration time. HCL Technologies has attracted ‘investor interest’ of Rs 20,000-odd crore and the regulator is also happy. But we think that SEBI ought to worry instead. ‘Investor interest’ of this scale happened only because large (above 500 shares) applicants did not have to pay a single rupee as application money. The field was thus wide open for creating investor hysteria. A source says that a fund manager, who runs a $ 40 million fund, told him that his organisation had cleared an application for $150 million, since there is no money needed. He does not expect to be allotted more than $ 5 million. It would be interesting to find out how many applications were of this absurd size. This is not on. All over the world, IPOs through the book building route do give a lot of flexibility to investment bankers, but the regulators need to look at the realities of the Indian market place. Issuers ought to be asked to collect some application money at the higher end too, not because big investors may not pay, but because it leads to unwarranted expectations at the retail level. Nobody has learnt any lessons from Morgan Stanley. SEBI must realise that every time there is investor hysteria and they burn their fingers, the entire market collapses. It’s no use making blind comparisons with the West. Indian ground realities (such as the absence of any feasible redressal mechanism) have to be taken into account while evolving rules.
HDFC Bank-Times
Bank It was a deal waiting to happen for two years. TimesBank was first offered to HDFC Bank a couple of years ago but the asking price was considered far too high. Times then looked at dozens of other suitors — Indian and foreign. All the while it issued denials about a possible sale. Market circles see the merger as the media group’s attempt to stick to its core competency—publishing. Times Guaranty, its other foray into finance, has dwindled to near non-existence after expensive write-offs. Its fancy office has been converted into a glitzy music shop and it has been relegated to a tiny corner which befits its new status. Bankers wonder whether Times Bank’s super-posh branch at the Times Building will also move out. The bet is that it will, sooner or later. The only non-core business that remains with the group is the TimesCard which is co-branded with Citibank cards. Some argue that a co-branded card which simply rides on the advertising space available through its main publications fits with the core business. But that remains to be seen. After all, Star TV’s attempts to launch a co-branded card with ANZ Grindlays has been put on the backburner.
Railways and marketing
Firebrand Railway Minister Mamata Bannerjee realises the bad financial situation of the Indian Railways. Probably for the first time the Railways are furiously marketing their freight carriers to corporates through ‘own your wagon’ schemes and by offering warehousing facilities on Railway land at key nodes. This marks a shift from the Railways’ belief that they could continue to hike freight charges endlessly. Under the new initiatives, car makers such as Maruti, TELCO and Hyundai are shifting part of their distribution to the Railways. HLL and Nestle are switching over. Nestle now moves 80 per cent of its goods by rail and HLL — which hopes to capture the tea supply on trains with pantry cars — has shifted 10 per cent of its business so far. The private sector now hopes that Ms Bannerjee will disband catering monopolies and allow a makeover of stations by offering office and advertising space to pay for the costs.
Still Bombay meri jaan
Shiv Sena supremo Bal Thackarey apparently bristles if anybody refers to Mumbai as Bombay. But apparently it is not so simple to extinguish a name that existed for more than a century. The names of legal statutes for instance cannot be changed as easily. So the Bombay Motor Vehicles Act of 1958 and The Bombay Highways Act of 1955 will even march into the next millennium with their names intact.
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