January 22, 2001

Gujarat Ambuja-ACC
The Tatas and the Seksarias may have won round one, but Gujarat Ambuja’s controversial acquisition of the Tata stake in ACC threatens to turn into a long drawn battle. SEBI had ruled that the Tata sale of ACC shares did not amount to a takeover and had backed up its view with an opinion from the Attorney General. The ruling had allowed Gujarat Ambuja to acquire the 14.5 per cent Tata holding in ACC at Rs 370 a share (when the market price of the shares was just Rs 110) without having to make an open offer to retail investors. However, a set of angry shareholders challenged the ruling. The Court in turn decided to send it back to SEBI for reconsideration. The question is, will SEBI stick to its original ruling, or will it ask Gujarat Ambuja to make the open offer, and restore the credibility of its takeover regulations? SEBI could well approach the Attorney General for another opinion. After all, his first opinion was obtained when Gujarat Ambuja Cement had acquired only half the Tata stake. Now that the Tatas who had once declared ACC was a Tata company no longer hold any shares in it, and the Seksarias have two board positions and the Tata stake there is certainly room for a different — one which could make ACC an expensive acquisition for the Seksaria. It is likely to get more interesting everyday.

Unlikely consultant
A part of the BSE’s battle over payment of registration fees, is a stream of suggestions from it to the regulator suggesting new ways for it to raise resources. The message is — tap anybody but the brokers. For instance, the BSE says that companies raise loads of money from the markets at hefty premia and yet have to service only the face value of the shares issued by way of dividend payments. The BSE suggests that if SEBI had levied a one per cent fee on the issue size it could have raised crore of rupees during the primary market boom. While conceding that SEBI has recently started levying fees for filing of offer documents, the BSE opines that “it is unfathomable why SEBI chose to ignore this avenue of income from entities who were the biggest beneficiaries of a thriving capital market”. Another lucrative segment which the BSE wants SEBI to tap is corporate takeovers. It has told the Supreme Court that powerful individuals and groups are willing to pay as much as twice the market price to corner strategic bloc of shares. Since SEBI spends a lot of time monitoring takeover battles, “it would be in the fitness of things to levy a fee on both, the target and the predator individual/group”. At this rate, the BSE will be demanding consultancy fees from SEBI instead of paying it registration fees.

Our take is…
Business programmes on television are always in American and not in the Queens’ English; it probably has to do with the dominating influence of large American FIIs and mutual funds and their research reports which are written for a foreign audience. Business television which is more international than the press follows this trend. So nobody on TV ever ‘looks ahead’ they are always ‘going forward’; also nobody has a simple ‘opinion’, they have a ‘take’ on specific stocks or an entire industry. SEBI’s recently announced disclosure and ethics code is all set to bring Business Television up to speed on some other global norms too. Unlike the press, business television has thrived on stock tips and index predictions. Not a single interviewer was let off without being asked to predict the Sensex over the next few hours/days or weeks or escaped badgering by the anchors for a few stock picks. More dangerously, there were programmes offering instant investment advice by experts who owed no responsibility to the viewers. In a smart move, the regulator has ensured that its disclosure norms do not impose any ham-handed ban on giving out tips. Instead, it is very subtle. All it says is that anyone offering an investment tip to the general viewing public should put their money where their mouth is. The impact of SEBI’s action is already visible.

Tailpiece: Another fall out of SEBI’s far reaching disclosure rules is that people will finally get access to annual reports of the National Stock Exchange and the National Securities Depository Ltd. Yes, both these efficient, profitable and otherwise transparent companies have been extremely shy about making this document public.

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

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