March 26, 2001

Into Cyberspace
Arvind Johri, was among the first and the fastest to cash in on the Information Technology mania. He quickly transformed his company, Century Finance to Cyberspace Infosys Ltd — a clear attempt to ride on the Infosys brand name. His own brokerage firm Century Consultants was the vehicle for a massive ramp up of its scrip, taking it to a dizzy 1,480 before it crashed to under Rs 30 on Friday last. Yet, he attracted no regulatory attention as his stock blazed a trail that fooled some of the biggest corporate and political names in the country. Johri, was no crude operator — he was suave, erudite and came across as a visionary. His considerable presentation skills were backed by a doctorate in finance and a law degree. Another important prop was a prominently displayed photograph in his office of the Prime Minister inaugurating his software technology park — Cybertrone at Lucknow. That is probably why SEBI’s divisional chief in charge of surveillance had called up the BSE surveillance officials about Johri’s ‘powerful’ connections when they first began to investigate the strange movement of the Cyberspace scrip a couple of months ago.

Cyber connections
Among those taken in by Johri was the international consulting firm PriceWaterhouse Coopers. It has tied up with Cyberspace for an E-learning company headed by the former chief of IBM India’s software operations. Jardine Fleming was also impressed into acquiring a six per cent stake in the company at Rs 1,200 each. Moreover, since Johri’s global vision was backed by generous salaries and hefty stock options, he also attracted top class software professionals such as — the former country head of Lotus, former head of Lotus Professional Services, a senior UK-based executive from IBM Software and entire teams of professionals came in with a healthy order book of ready business. Over 170 shocked employees were summarily forced to resign last Saturday and are now being harassed by the police for minor complaints filed by creditors against Cyberspace. In the meanwhile, Johri and his entire family have vanished to the USA and most of his board directors are unavailable to employees. Makes you wonder whether Cyberspace would have thrived had it not been for Johri’s greed and short-sightedness.

The hit list
It must be said for Cyberspace, that those who have been hit by it are as impressive as its price movement. Apart from all those mentioned above are HDFC Bank, which would end up with a hit for bank guarantees that are bound to be called by the National Stock Exchange (NSE). Then there is 5 paise dotcom (the brokerage firm owned by one of the best financial portals Indiainfoline.com) which was among the first internet brokerage firms and as its name suggest, slashed brokerage charges to 5-paise. The company is understood to have been hit for an unaffordable Rs 3 crore due to a rouge sub-broker who has apparently vanished. The question is whether the sub-broker was even registered.

High Stakes Job
At one time, he was the shining light of the broker community — today M G Damani, former President of the Bombay Stock Exchange attracts as much anger. If it wasn’t bad enough that the brokers lost the fight against broker turnover fees, his recent statements against the BSE office bearers are also, strangely enough, not winning him any friends among members. In fact, brokers are now chafing at the enormous salary that he draws as Chairman of the BSE-promoted Central Depository of Securities Ltd (CDSL). A top office bearer of the exchange confirms that he draws a whopping Rs 48 lakhs per annum, a membership to an exclusive five star club, plus, car, conveyance and other travel expenditure. Just by way of comparison, the Managing Director of the much larger National Share Depository Ltd (NSDL) probably draws about a sixth that amount (CDSL does not have a Managing Director).

Unraveling dotcoms
Like everybody else, Microland Computers’ big diversification into dotcoms is coming unstuck. The group, which charmed Murdoch as well as management biggies such as Mackinzie’s Rajat Gupta into investing with is facing serious trouble with some of its smaller companies such as Itspace.com and media2india.net. ITSpace has already been attracting too few eyeballs to justify its existence, moreover it has been hit by technical problems. For the second time recently, the site could not be updated for over a week. Another project Media2India.net, which was a sort of web based advertising space selling experiment is also in trouble. After a fairly good kick off with MSN and a couple of other international portals signing up with it, Media2India has gone steadily south. Inside sources say that it won’t be long before Kar is forced to take the tough decision to wind it up.

Updated weekly.

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

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