Investors who did business with El Dorado Guarantee, a brokerage firm belonging to the late Bimal Gandhi who took his own life last year, are discovering how the system mindlessly works against them. On trying to file arbitration proceedings with the Bombay Stock Exchange, they have received letters from the bourse informing them that the brokerage firm has refused to accept any of the three arbitrators on the panel. The BSE offers to step in and appoint an arbitrator, but only if investors pay their own arbitration fees as well as those of El Dorado. The letter recommends that investors should ‘please comply with this in order to safeguard your interests’. Left with a Hobson’s choice many investors have paid up, but two of them Vipin Pujara and Yogesh Desai approached a consumer organisation to take up the issue with the Securities and Exchange Board of India and ask BSE to refund the money with interest. Investors with similar complaints need to write to the regulator too.
Protecting MTNL’s interest
While Communications Minister Pramod Mahajan is busy fighting VSNL’s new management, he needs to spare some time and attention to another telecom major that is still directly under his command. Apart from stripping MTNL’s reserves by investing them in defaulting companies, MTNL is turning extremely lax and arbitrary in its billings and accounts. MTNL like other private operators has moved to a monthly billing system, but due to problems with its bill collection centres in Mumbai seems unable to credit payment cheques for over a month. Subscribers who have surrendered their phones have another problem. MTNL still gives them the royal run-around to return their deposit cheques. Since its staff only answers queries across the table, this involves dozens of trips to its offices with no answers or indications about when the deposit will be refunded. We now learn from an insider that the real problem is an acute staff shortage in the accounts department. So bad is the situation that its Dolphin service apparently sends out bills only once in four months. Shouldn’t Mahajan first set up a committee to put MTNL’s house in order and ensure that payments are collected for services rendered?
While Pramod Mahajan’s MTNL may have bailed out the Maharshtra Krishna Valley Development Corporation (MKVDC), another Maharshtra government promoted company is fast headed for financial ruin. The Congress-NCP regime in Maharashtra is driving the Maharashtra State Road Development Corporation (MSRDC) to a situation where it seems set to default on interest payments. The cash-strapped government has failed to pass on the cess collected on petrol and diesel (over Rs 700 crore) that was meant to finance Mumbai’s many flyovers. Yet, MSRDC is forging ahead with a hugely expensive Worli-Bandra Sealink with no clue about its viability or source of financing. Curiously, MSRDC’s lenders and trustees to its bond issues, who ought to be hitting the panic buttons already, still remain unperturbed. Unless the ruling coalition finds a way to kickstart Maharashtra’s economy and protect its PSU’s, last week’s political reprieve may prove costly for this inactive government in the long run.
Falling interest rates have allowed banks to make hefty profits through treasury operations, which they are using to clean up their balance sheets and provide for bad loans. But they still live in hope and continue to classify some obvious bad eggs as standard accounts. One example is Koshika Telecom, the Vinay Rai group company which was unable to pay up its license fees of nearly Rs 565 crore for Uttar Pradesh and other circles. While most lenders continue to classify it as a standard account, pinning their hopes on the beleaguered Koshika being taken over, only IDBI seems to have declared it a sub-standard account and provided for it too.
Tailpiece: Those opposed to Dr A P J Abdul Kalam’s candidature say that his lack of political experience and knowledge of constitutional matters is a problem. Others say that constitutional law is not rocket science and when you have a rocket scientist as President, how long will it take him to master constitutional issues anyway? Also, aren’t we forgetting that the Indian President has access to the best legal advise in the country; all he has to do is to weigh various options and take the right decisions. Are we saying that Dr Kalam is incapable of that? -- Sucheta Dalal