January 17, 2000

Who gets the SEBI jobs?

With T S Krishnamurthy moving to the poll panel, one very eligible contender for the SEBI chairman’s post is out of the race. Unless the government comes up with a complete outsider like G V Ramakrishna (who is now rated as the best regulator so far), the bets are in favour of Chairman D R Mehta getting an extension. But there is a serious hitch and it relates to a case filed against the change in rules, which gave Mehta a five-year term. He had told the court that he would not offer himself for re-appointment on completion of his term. Whether this bars him from getting an extension will probably be decided by the Attorney General, but it will make the government look foolish — a country of one billion people and a huge financial sector finds it impossible to find anyone fit to takeover as SEBI chairman. If true, the financial system needs an urgent shakeout.

A race for the board

The finance ministry, it is learnt, is working on a major revamp of SEBI in order to stop it from being a one-man show run by the chairman. A part of the plan was to revamp the organisation and bring in two full time directors in addition to the chairman. This was to happen only after D R Mehta’s term ended in February. So, in addition to the race for the chairman’s job, there is a quiet race to become full-time board directors of SEBI. Naturally, the SEBI executive directors see themselves as top contenders. But this too has a hitch. The revamp cannot happen if D R Mehta gets an extension because it would seem like a dilution of his powers. Also, many of the senior most executives in SEBI are simply there on deputation from other cadres and cannot automatically assume that they will bag the posts. Will the chairman’s extension dash the ambitions of his juniors or will the government simply avoid decisions and settle for an even more difficult status quo?

Enron Oorja

Reaching out to academics is always good strategy for the corporate sector and Enron Power Company is doing just that. It has launched Enron Oorja, a forum to look at alternate sources of energy at the IIT Powai and the effort is being kicked off with a guest lecture. One of the speakers at the lecture is Enron CEO Sanjay Bhatnagar. The second one is a surprise — Dr Kirit Parekh, once the most vocal critic of the Enron project.

Different rules for different people

The more one thinks of it, one can only support the bank unions’ charge that industry associations want banks shut down in order to avoid paying back their dues. The CII recommended closure of Indian Bank, United Commercial Bank and United Bank of India would involve retrenchment of 75,000 workers. Contrast this with the situation of companies which are rescheduling loans and seeking bailouts. None have been forced to cut costs or retrench staff — not even a compulsory VRS. One of the most beleaguered corporate group in the country shows a hefty increase in its wage bill. The minutes of the heads of institutions’ meetings seldom, if ever, discuss retrenchment or cost cutting. Management change is a no-no. Instead the institutions are now financing the takeover of group companies so that fresh lending can be justified and NPAs avoided. Now that the bank unions are talking tough and the FM claims that he will not bailout sick banks, it will be interesting to see if any tough debt recovery action is also initiated.

Future valuation

The ICICI share has shot up from below Rs 100 to Rs 130. Reason: a huge advertisement announcing its plans to start internet trading and web-based businesses. But investors may not have read the fine print. ICICI is only making an announcement — nothing starts until February-end. ICICI is not busy getting its software and infrastructure in place. Then why make an announcement?. To get the valuation silly. At Rs 130, the price is still over Rs 100 short of what its CEO believes is the correct evaluation of the scrip.

 

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

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