MUMBAI, Mar 18: Four years back when Batlivala & Karani (B&K), one of the leading institutional stock broker, formed an alliance with the HSBC group, its entire empanelment of institutions along with 90 per cent of its staff joined the venture.Over a period of time, as many as five stock exchange memberships (NSE, BSE, CSE, DSE and OTCEI) were transferred in the name of the joint venture.Today, all these assets have been left behind with the joint venture. But contrary to expectations, the Moraraka family is starting afresh on the back of a 100-year plus broking experience.
In today's scenario it is not really necessary to be a member of all large stock exchanges and, hence, it is only the NSE and BSE that B&K is looking at. And while it has no intention of wooing back its employees who currently come under the HSBC banner, it will definitely go all out to revive the empanelment of institutions thus, sending out a clear message that it is very much in the ring.
"We have always been institutionalbrokers. We do not know retail broking. We have enough experience though and this would be called upon to get back into business," said a source at B&K. "We will compete with all institutional brokers including our former partner HSBC."
The focus today has shifted to the B&K office, which incidentally is a leading forex dealer in the country. "It was like fighting Mike Tyson! But it is over now, and we need to get on with things," said a source.What really went wrong? Well nothing unusual. It was something that has happened in several other joint ventures as well: the financial muscle of the foreign partner wearing down the entrepreneurial enthusiasm of the Indian partner.
And as costs soared and the revenues failed to tally due to prevailing market conditions, it was easy for HSBC not to be overly concerned about the losses as it was in the country for the "long term", but for the Indian partner, the losses were far beyond what it could afford.
Sources say that the Asian crises was an eye-opener to theIndian partner. "Let's face it, the Indian broking venture was but a small speck in the HSBC group's global presence and like in other cases witnessed recently, could be closed down one fine morning. The same was not the case for the Indian partner for whom the venture was bread and butter. What is small losses for HSBC are actually huge ones by Indian standards," said a source.
The Morarka family refuses to talk on the issue apart from calling it an "amicable" break up. But that is definitely not the end of the story. "They will definitely be more careful when they go in for a joint venture next time around!".
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
