April 17, 2000

Deficient disclosures?
On March 27, after the Indian stock exchanges had closed for the day, ICICI Bank issued a press release which said that ‘(A)t a recent board meeting’ its board of directors had decided, among other things, to make an additional provision of Rs 13.5 crore under the US GAAP to provide for certain non-performing loans. This provision happens to be just under half of ICICI Bank’s profits. The very same day, or to be precise March 28, was the day on which ICICI Bank was to list its American Depository Shares on the New York Stock Exchange. The press release, it said, was part of the ‘process in connection’ with its ADS issue. We went to ICICI Bank’s website to check when this recent board meeting would actually have been held. Surprise, surprise. The last board meeting was on March 17, a good ten days earlier, following which it had announced a 45 per cent interim dividend and its listing symbol on the NYSE. Why did ICICI not announce the additional provision on March 17? Did it suppress the information for 10 days to prevent its stock price from dropping just before the ADS issue? (Prices did drop eight per cent on the NSE after the news was out and there is another story there). The disclosure and its timing is important because the ADS placement is benchmarked against the closing price on the BSE. We checked with sources in SEBI and the finance ministry to see if they could explain the delay. Why should any company be allowed to refer to ‘a recent board meeting’ at a time when it has an issue to be placed? The response from one of these two agencies was, shouldn’t the US Securities Exchange Commission be asking this question? Another wondered why FIIs had not raised a stink? Surely it is still open for the Indian regulator to ask some questions.

Nasdaq blues
The three-day decline in the Nasdaq, ending with the 355 point crash on Friday has unnerved Indian punters. For those who like to look behind the news there is plenty to watch. For instance, one business paper carried the first-ever interview with the media-shy Ketan Parekh, the man touted as the Pied Piper for a set of 10-odd scrips. The interview it seemed was meant to talk up the market. KP expressed confidence in the economy and in software stocks and plugged his favourite scrips Satyam Computers, Global Telesystems, Himachal Futuristic, DSQ software and Zee Telefilms. It now seems badly timed since the Nasdaq crashed another 355 points the same night. How the market moves next week will not only determine the fate of KP stocks but also whether the Pied Piper has lost his touch. KP is not alone in talking up the market. With a slew of media companies poised to hit the market with IPOs, several of these are part of the chorus, so are Mutual Funds who are running scared that NAVs will keep pace with the Sensex and redemption demands will jump. The song goes, ‘Don’t run away, the ICE may be melting but the party ain’t over as yet’.

The bahu speaks
Some things will never change in the Indian corporate sector. Last week, Nita Ambani, the elder bahu of the Reliance family spoke about how to spend money. A few well dropped hints and Reliance top executives, their wives and children turned up at the IMC to mark their presence and pay obeisance to the business house. The media, also tipped in advance, turned up in large numbers and went on to create the picture of incredible public and media interest in what the lady had to say. Notwithstanding the publicity, those who stayed say that the speech was a damp squib. Mrs Ambani did not speak of the best places to shop for diamonds or designer rags, but about social work and her charity efforts. While we are all for the Ambani’s charitable efforts. We also hear that Nita Ambani in particular, has created a remarkable township for Reliance employees at Jamnagar and is really serious about transforming Harkisondas Hospital, but the business house has a long way to go before it stakes a claim for being truly socially conscious. Why, even Infosys has done a lot more for their employees and the community. The Tatas of course are way ahead.

 

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

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