May 15, 2000

Another Committee?

SEBI's hastily-convened meeting to discuss the tightening of primary market rules last week raises some interesting questions. For instance, why are stock exchange representative discussing IPO rules instead of being concerned with listing requirements or secondary market issues such as margins and price manipulation? Why was SEBI's primary market Advisory Committee (PAC) not called in for the discussion? Could it have something to IT companies being allowed to go public with a mere 10 per cent equity offer? SEBI says that it plans to tighten the three-year track record for companies, but it is pertinent to ask how and why it was relaxed in the first place? Had the PAC discussed the tightening of IPO norms, these questions would probably have been raised and embarrassed SEBI, So a set of market intermediaries who have little to do with the Primary Market discussed the issue and helped make news for a day.

Carries no conviction

Finally the party seems over. The ICE is running out and nobody is taking even the Finance Minister's assurances of no investigation seriously. The ICE scrips which are leading the race to break stock indices (mainly the K-10 scrips) - Himachal Futuristic and Satyam dropped in value two days in a row, Global Telesystems was down below Rs 1,000 on Friday, Zee continued to crash and is now below RS 500, forcing analysts to predict that it will have little option but to scale down its ambitious proposals, and Padmini Polymers, a scrip which had shot up from RS four to RS 257 (its 52 week high) has dropped to RS 51 - it was over RS 100 when the FM said that possible price ramping would not be investigated. Interestingly, Fridays 144 point fall in the BSE sensitive index also saw ICICI crash Rs 14. A bear market, it seems asks too many questions about profits and NPAs which a bull market simply ignores.

Not dead yet

Iridium, one of the most expensive international projects to go belly-up, made world headlines when it was switched off, but the story is not yet over. We picked up some interesting little tidbits. Apparently, Iridium has not entirely been shutdown but remains alive over the African continent, where an expedition deep in the jungles is completely dependent on the system to stay in touch with civilisation. Various charitable foundations and multilateral agencies are apparently paying a lot of money to keep the contact going. Also, lenders to Iridium, including our very own financial institutions that were gungho about the project, are slowly realising that it was one thing to write off equity, but they should probably have secured the debentures with something more concrete from Motorola, such as performance guarantees. Angry lenders and partners are even beginning to question the price at which Motorola has sold some equipment to Iridium. The lenders hope that the sale and dismantling of Iridium's costly equipment including a possible recycling and use of the 66 odd satellites may help them get back some money.

Name-game continues

Did the newspapers not report that ICICI and IL&FS's subsidiary Investsmartindia had settled their dispute over the domain name Investsmart? Reports said that ICICI had agreed to hand over the site to Investsmart after the two had filed consent terms. The site however, tells a different story. We went to Investmart.com for a lark and guess what, it led straight to ICICI.com. Surprised we tried again with the same result. Obviously, consent terms are not necessarily followed by compliance, which may require more court directions. Incidentally, we also looked up Investmartindia.com and found that it is still an IL&FS venture. For good measure we also checked investmart.com without the India suffix - it was a site under construction, while Investsmart with an s - links to a site called individualinvestor.com. Maybe ICICI decide to ride out the controversy and simply hold on to the domain name or maybe it will go to court again.

 

Updated weekly.

The author's e-mail address is: suchetadalal@yahoo.com

Other columnists:

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