January 29, 2001

The Lemming race
Ever since the OTCEI announced a turnover of Rs 25 crore during its first evening trading session, there is a lemming-like rush by stock exchanges to announce similar plans. The BSE, which has a daily turnover of over Rs 5500 crore wants a slice of the evening action – so do Delhi, Calcutta, Ahmedabad and the Interconnected Stock Exchange. Isn’t it time the bourses should take a good look at OTCEI’s real trading volumes? The Rs 25 crore volume on the first day was in fact a double count of buy and sell trades. This translates to just Rs 12.5 crore, that too with the support of friendly brokers. Day two turnover was down to Rs 6 crore, on day three and four it was a mere Rs 4 crore. The brokers’ clamour for the introduction of evening trading seems absurd when their own back offices are creaking under the strain of the already long trading hours. It is also amusing that the OTCEI’s desperate bid to find a niche and to survive has set off a so many copycat sessions.

Virus warning!
Thanks to the National Informatics Centre (NIC), most government departments have extensive websites which are regularly updated. The Department of Company Affairs, under former secretary T S Krishnamurthy, became even more pro-active and actually responded to email queries. The effort came to a halt under his successor Dr P L Sanjeeva Reddy. Now that there is a new secretary at the DCA there are indications that it is becoming people friendly again. But there is a catch. A well know corporate watcher who had written to Dr Reddy with “suggestions regarding Employees remuneration and Corporate Identity Numbers’ was gratified when he finally received a response with two attachments – both had viruses and had to be deleted unopened! Maybe the NIC should post a statutory warning on government sites, which says – Asking questions could be hazardous to the health of your computer.

War of the depositories
It was inevitable. With M G Damani as chairman of the Bombay Stock Exchange (BSE) promoted Central Share Depository Ltd. (CDSL), an aggressive challenge to the National Share Depository’s (NSDL) market leadership was a foregone fact. His first target was the alleged misuse of shares held in the broker pool accounts — the regulator has supported this too. The next move was a circular issued by the BSE saying that payouts on settlement will only be into CDSL members’ accounts, unless specifically requested. This move smacks of restrictive practices, but the NSDL has yet to lodge a protest yet.

Damani in the meanwhile has taken the battle right into NSDL territory. Last Thursday, he made a marketing pitch to a packed gathering of NSE brokers. He started by telling them, how he had spearheaded the fight against turnover based registration fees charged by SEBI through the Brokers Forum and expressed confidence that the Supreme Court would rule in their favour. His next pitch was to make them Depository Participants (DP) for a mere Rs 2.5 lakhs fee plus infrastructure costs. Brokers who are tired of the bureaucratic approach of bank DPs and resent the charge-structure of NSDL (when orders are routed through sub-brokers the NSDL charges are doubled and eat into brokers’ earnings) are in a mood to grab Damani’s offer and acquire a second DP account. It will be interesting to see how the NSDL reacts to CDSL’s aggressive tactics.

Cementing a cartel
Five cement companies with a ten per cent cut in production have managed to increase their prices by as much as 50 per cent. Interestingly, the cement economics are such that the cement cartle is completely unaffected by protests from builders –mainly because the same builders have continued to buy cement at higher rates. A leading builder tells us, that the cartel is simply taking advantage of the domestic v/s international price situation. While the rest of industry complains about dumping by overseas manufacturers, the cement industry is unaffected. Imported cement with a 20 per cent duty is more expensive than the cartelised price and the cartel thrives. The question is why have cement cartels not been formed before? Our builder source has a simple answer – because the Tatas controlled ACC those days and refused to be part of the cartel.

Updated weekly.

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

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