April 24, 2000

India changes?
How much of a splash does a dot.com portal make when it wraps its advertisements around the country’s largest English newspaper and also takes over its front page? Apparently, the big splash was a bit of a damp squib. As ideas go, Nestle did it first when it bought up the front page of a Mumbai tabloid nearly seven years ago to launch its chocolates (At that time, the Times of India had refused to sell its front page). The gimmick got big media mileage, advertising awards and loads of debate over the ethics of a newspaper selling its front page for money. This time, the same trick, though bigger and much more expensive, merely created a squawk among the big dot.com spenders. ‘‘How much?’’, they wanted to know. Newspaper insiders say it is a multiple of an eight-digit number. In other words, it burnt up an entire ad budget (for dot.coms) for the shelf life of a few hours. Those curious enough to log on to the site last Sunday morning were in for a bigger surprise. Hey, India was in no hurry to change its name. The site took off only after 1.p.m. Did someone say that India was changing or is it more of the same thing?

Essar v/s Arvind Mills
Take a look at the difference. The Ahmedabad-based Arvind Mills defaults on a $75 million External Commercial Borrowing (ECB) and its foreign lenders slap it with a legal notice. The lending banks, who ought to have been alerted well before the default, now realise that the company has not been able to pay interest on its term loans as well and appoint a nominee director. Contrast this with the Essar Group. Essar Steel has already defaulted on two foreign borrowings and ECB of $40 million in March 1999 and the $250 million Floating Rate Note issue on July 20, 1999, but nobody has slapped any legal notices even nine months to a year after the default. Instead, investors are generously willing to take a 39 per cent cut in value. In fact, foreign lenders do not even seem worried that all Essar companies have defaulted on repayment obligations to financial institutions, even though Essar Steel has a third and bigger foreign borrowing of $ 335 million for export credit advances, only part of which is backed by guarantees. Are foreign investors complacent because they are confident of the Ruias’ clout? Or, are they, as unsecured investors, simply willing to write off their investments?

Expensive proposition
The property bubble of 1994-95 continues to take its toll on the Bandra-Kurla complex, the financial district which was supposed to decongest Nariman Point in South Mumbai. The crash in prices, combined with high land acquisition rates, bigger taxes on new properties and the cost of fancy office buildings has made it into the most expensive commercial property in the country. There are no takers except for ICICI whose super-glitzy building is complete, the even fancier IL & FS building and the National Stock Exchange building which are under construction, the rest of the district is in the doldrums. The Diamond Bourse and Convention Centre have run into rough weather and Unit Trust of India’s seems under the weather for other reasons. ICICI is also suffering from problems of plenty. It has over 15,000 sq.ft. of vacant space after its subsidiary I-Sec refused to move in. Its old office building lies forlorn and empty because the sale to the SEBI is not complete. All in all, a very expensive move.

Three cheers
The retirement dates of bank chairmen, barring extensions, are known on the day they join service as junior officers. Yet, the government cannot put in place a succession plan .Yet, instead of demanding that those responsible be punished, we are merely relieved when the neta-babu set get their act together and clear three appointments to Punjab National Bank, Allahabad Bank and Union Bank. There are at least 10 more to go. In fact, barring SBI, every top Indian bank is headless, including chronically-sick Indian Bank and United Commercial Bank. This is probably the FM’s way of retaining the public sector character of nationalised banks.

 

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

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