Sucheta Dalal :Vora's challenges (24 December 2001)
Sucheta Dalal

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Vora's challenges (24 December 2001)  



One person who is feeling rather pleased at the outcome of National Housing Bank (NHB)-ANZ Grindlays’ settlement is IDBI chairman P.P. Vora. Vora, who headed NHB until recently, had done the unimaginable and made a case for NHB from almost nothing. The result: NHB has walked away with a cool Rs 1,065 crore at the end of seven years and was even holding out for more, until prodded by the apex court to close the deal. If that were not enough, NHB hopes that State Bank of India too will come up with a settlement offer and put more funds in its kitty. Vora however has moved on to bigger challenges at IDBI. His first battle is to salvage the Dabhol Power Company by steering a successful takeover of Enron’s equity and re-negotiation of the power purchase agreement; the second is to find a way to make the steel companies viable through some drastic measures, in order to salvage IDBI’s huge exposure to the sector. Will he succeed again? Only time will tell.

Studying in style

The International School of Business, which recently kicked off to a high-powered launch at Hyderabad is formally affiliated to three top international business schools— the Wharton School of Business, the Kellogg School of Management and the London Business School (LBS). Its website claims that ISB is different from other top business schools in several ways. The differences it lists include its focus on the total person, on specialisation and its belief in the individual. But in immediate terms, this difference translates into a spectacularly luxurious learning experience, which makes the good old IIMs look like really poor cousins. Let alone academic campuses, its facilities such as air-conditioned amphi-theatres, restaurants and dining hall catering fine food, coffee bars, swimming pool, laundries, wired classrooms and fancy wired residential apartments (four bedrooms and studio apartments)—would be considered a high luxury in most Indian company, including Infosys. But the ISB style goes a step further. The marble for its flooring was imported from Nepal and since the lawn refused to grow fast enough for the inauguration, that too was flown in from abroad. The small resident faculty lives at a local five star hotel, because their residential accommodation has literally sprung a leak. All this naturally comes at a fancy fee of Rs 10 lakh plus. It will be interesting to see how many Indian companies which rushed to play sponsor and figure on its power-packed board can afford the expensive students that it will churn out.

Munde’s muttering

Gopinath Munde should get an award for sheer brazenness. He has played a key role in landing Maharashtra’s power sector into a complete mess. As an opposition leader, Munde was Enron’s biggest baiter and as deputy chief minister heading the Shiv Sena-BJP government his first job was to cancel the Dabhol Power Company (DPC) deal. Within months, Munde did an about-turn and bare facedly championed its renegotiation, and let it return with thrice the capacity and phoney cost-reduction claim. If that were not enough, his government grossly exaggerated demand-supply claims to propose three unnecessary power projects in the State. Today, when MSEB is struggling to deal with the consequences of DPC and has put on hold the projects cleared by Munde (to be set up by BSES, Reliance and Ispat), he is audaciously berating the government for not sanctioning ‘a single additional megawatt of power in the last two years’. All this while the financial institutions too admit that Maharashtra is in no position whatsoever to buy power from Enron’s massive second phase of over 1,400 MW. Is it a mere coincidence that Munde has turned vocal about the power sector when DPC is up for sale and yet another re-negotiation?

Evergreening or munificence

The financial institutions are unusually benevolent to the defaulting Jindal Vijaynagar Steel. Not long ago, they wanted to convert, its shares, quoted at just around Rs 1 each into debt at their par value ( Rs 10). A few months later they shelled out fresh funds to acquire 35 per cent of Tractabel’s equity and allow Sajjan Jindal to throw the Belgian company out of the Jindal Tractabel Power project. Barely has that deal been inked when Jindal Tractabel Power Company (now fully under the Jindal’s control) is found using up resources to buy up a hefty 11.63 per cent of the promoters’ stake in Jindal Vijaynagar—although it is not clear whether the shares were purchased at market price, at par or at a premium. The Jindals reportedly claim that the deal was a strategic investment, but to outsiders it seems just another way to divert the funds of the profitable power company, right under the munificent eye of the institutions.


-- Sucheta Dalal



 



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