May 29, 2007

life in general: approaching indian monsoon clouds

Since last 3 years I go to a cool source -- -- for checking easy-to-see satellite images of various regions of our Earth but in particular the India part. This is mainly to get an idea of how much cloud cover is around, a thick presence of which will indicate good rains and a complete absence will mean high temperatures if it is summer time.

Have a look below at today's satellite image and see how clouds are gradually gathering intensity in the Arabian Sea and Indian Ocean that will hit the shores of western India in the next 2-7 days and become its first monsoon rains. The southern parts of Kerala's coast is already experiencing first monsoon rains.

May 28, 2007

life in financial markets: what is sebi trying to hide?

The information commissioner of CIC (Central Information Commission), the Right to Information Act's Appellate Authority, has on May 18, ruled on a Securities and Exchane Board of India-related (Sebi-related) appeal that has significant implications for capital market intermediaries and investors. Hearing an appeal by an individual who was not given information under the RTI Act by Sebi and SAT (Sebi's appellate authority) on observations recorded by Sebi on the offer document of five schemes of Birla Mutual Fund.

Sebi and SAT had rejected the individual's RTI application on the grounds that the third party, Birla MF, had objected to disclosing Sebis' observation card on the fund's offer documents. The CIC has upheld the individual's contention that Sebi's observations on any offer document should be subject to the principle of "public purpose" and not be subject to veto of the third party. It has asked Sebi and SAT to reexamine the individual's RTI application under the principle of "public purpose" and "public activity" and revert to the individual within a month.
The implications of this are significant. Any individual in the country can ask for important to-and-fro communications between Sebi and the market intermediaries and issuers to be made public by emphasising the interactions are in the nature of public activity since it connects to public interests (public = investors).

Here is the entire extract of the CIC's ruling.

May 24, 2007

life in journalism: allowing self to be manipulated

In India, at least, 80-90% of newspaper/magazine/tvchannel newsreports/featurestories what is not being laid down in front of readers is the mention of the names of all those individuals or companies who did not comment or responded to the questions posed by the journalist for his/her story. This is a trend that started around 10 years ago and is now widely prevailing in the Indian media.

This is because, in the last 10 years, 8-9 out 10 editors in India feel (wrongly in my view) that if a company CEO or a political leader does not comment to their publications/TVchannels then readers will think these publications/TVchannels are less worthy or something like that. These 8-9 out of 10 editors will, however, occasionally allow a 'no comment' quote to creep in if the company/individual in question is not in their favoured/feared list.

Two things happen because of this brutal obsession with not being transparent about individuals/companies refusing to go on record:

1. The companies/individuals realise that they can get away with anything by just refusing to respond to a journalist's call or email or put forth any excuse like "he/she is travelling", "he/she is busy", "he/she is occupied with the preparation for the board meeting" or something like that. They are, therefore, able to manipulate the media and this works against the interests of the readers/viewers.

2. Since some comments have to appear in a story the editors make the lives of the journalists by telling them to "anyhow", "no matter what" or even
"beg" to get the companies/individuals to comment in their stories. Do you, as a reader/viewer, approve of this?

If very few companies/individuals are going on the record for any story then that does not mean that story should not be written. Most of the time the journalist has data/info to write out the story whether or not the company/individual goes on the record or not.

In my view, readers/viewers in India are really being taken for a ride by many media editors and even many journalists who willingly adhere to their editors' demands.

May 16, 2007

life in general: criminal wastage of electricity by big consumers

Bombay gets electricity continuously 24 hours a day even during summer times except for some residential pockets in the suburbs. Power which would otherwise gone to non-Bombay areas of Maharashtra is diverted to Bombay to ensure this continuous supply as a result of which those areas encounter 5-15 hours power blackouts every day.
Bombay consumers, particularly the largest consumers which include shopping malls, movie theatres, hotels, corporate offices, ought to get into their heads that they should conserve the precious electricity that is bestowed upon Bombay. But the ground reality is ugly. Most of these big consumers disregard the importance of conservation.
For instance, yesterday, I had gone to attend a conference at ITC Grand Central Hotel at Parel (10 kms north of the southernmost tip of Bombay) and I noticed some sheer criminal wastage of electricity.
It was just 6 pm, and since its summertime in Bombay now there is very good daylight till 7.30 pm, and yet the hotel lobby whose windows are near the open space outside, was lit by a large number of bulbs. I clicked a photo of the lit lobby from my camera phone. In the photo, notice the lit chandeliers with 5-6 bulbs in each plus embedded bulbs on the roof and at the far end of the photo as well as on the right side of the photo you see bright light coming in from the windows from the natural sun-lit day outside. I think the hotel must be keeping these lights on throughout the daytime too.
There was worse. In the toilet I saw two TV screens next to each other above the urinals. These were on and playing a business channel. Now, what's more important? A Bombay hotel visitor watching news when he urinates? Or a non-Bombay consumer having electricity to switch on light in his toilet during night? The Maharashtra state government bodies and the Bombay Municipal Corporation which directly or indirectly regulate these hotels and other big power consumers turn a blind eye to such criminal wastage of electricity. Its disgraceful.
This part was added on 12 Oct 2008:

Two months back, on 12 August 2008, I came across another example of mindless use of electricity. See the pic alongside. I clicked it in the men's toilet of PVR movie theatre at Oberoi Mall in Goregaon East. There are three TV screens (the ones showing orange-coloured visuals) visible here but there were 3-4 more.

May 14, 2007

life in general: there is nothing good about going to a prostiute whether as a local or as a tourist

Men are generally aware of exploitation of women and children in prostitution but can get tempted by a widely prevailing attitute of acceptance of having sex with prostitutes, or 'sex workers' as they are wrongly termed by the media.

Today, I came across two in-depth reports--you can read them here and here--which re-awakened my mind to the horrors of prostitution. It is not the first time I have read about such horrors but Prerana's insightful and articulate reports based on their real-life and close interactions with prostitutes in Bombay made it reinforced in me the evil of prostitution.

I have a take on the laws relating to prostitution. In almost all the countries, including India, the law aims to punish the prositutes for soliciting (despite knowing the ground reality that there would hardly be a woman who would in an environment of free choices ever prefer to offer her body to a man for money and that they are almost always forced or deceived into the profession) but not their customers. I have no doubt in my mind that prostitution can be stopped only if the customers are put behind bars and no penal action taken against the prostitutes.

In fact a civil society would actively encourage the acceptance and integration of prostitutes in the mainstream without looking down upon them. It is the man who visits a prostitute who should be taken to task by the law. The pimps and agents who force women and young girls and boys into prostitution are motivated to do so because of the high number of customers and the resultant profits. Its high time we cut off the penis...ooops...the demand!

I am serious. We men have to realise that it is just not right dominate, control and exploit women and children.

May 07, 2007

ipo scams & sebi's horn swaggling

Lead managers (big investment banking firms like Kotak Mahindra Capital, Citibank, DSP Merrill Lynch and so on) appear to be going scot free in the primary market IPO (initial public offer) scams cases of the last 2 years. This and more in a story I wrote for Outlook (main weekly), where I am presently working, around two months back.

Here goes that story:


The stock market watchdog, Sebi (Securities and Exchange Board of India), continues to bark in the matter of scams pertaining to IPOs (initial public offers), as it has been doing so since the one and a half year. It has dealt out 10-15 interim orders in this time. But like the bite is missing from a barking dog so are the final orders from Sebi!

On April 26, in its latest IPO-related interim order, Sebi uncovered what it says is a listing-day "manipulation of order book (on the trading system of NSE and BSE) to
create artificiality in the market" on the first day of listing of six IPOs this year. Six day-traders and one broker would place large buy orders at price much lower than prevailing and cancel their orders as the trading day progressed with a miniscule fraction getting converted into trades (all Sebi orders are put up on their website).

A few days later, in its law-making role, amended IPO norms to make grading of all IPOs mandatory. Companies, tapping public money for the first time, will now compulsorily have to get one or more of four credit rating companies—Crisil, Care, Icra and Fitch—to assess its fundamentals vis-a-vie existing listed companies in the same sector. They will be graded from 1 to 5 with a lower number representing weaker fundamentals. 

But Sebi chairman, M. Damodaran, has time and again elaborated that the grading will not indicate the investment worthiness of the IPO at the issue price or book-building price range. The unstated implication is that of investors not necessarily benefiting from a grade 5 IPO if the issue price has more than factored in the strong fundamentals.

Inversely, weak fundamentals due to lack of track record, will not always hurt investors if
the issue price is kept low enough to warrant the risks involved. Grading idea has been around for exactly a year emanating as it did from a perceived lack of some kind of guidance on IPOs and Sebi, in April '06, permitting IPO issuers to voluntarily seek rating. By the end of last year no one came forward and Sebi started resorting to unofficial force on IPO issuers to seek rating. One of them, Celestial Labs, had mentioned in its Sebi-filed prospectus that it had not opted for grading. But, through BSE, Sebi made it go for grading and the company filed a revised prospectus later.

But investors, particularly cautious ones, are more or less capable of sifting the chaff from the wheat. What is required for a control on the abuse of the allotment of shares and authenticity of disclosures in prospectuses and post-IPO corporate announcements.

Jayshree Dhabaria, a young retail investor from Bombay, says: "Allotment in reasonably

fundamentals-sound IPOs doesn't really happen and you have to block very high

application money to get a little allotment."

Sebi has still not framed final charges against around 110 operators (including 85

financiers and 25 executants) who rigged 21 IPOs in 2005 to corner higher allotment

through the use of over 45,000 benami applications backed by corresponding number of

benami demat and bank accounts. Interim orders were issued by Sebi last year against

DPs and depositories for failure to follow 'know your client' norms. Lead managers to the

IPOs have been let off even though they failed to weed out multiple application bids as

required by Sebi's IPO norms.

Which is probably why barefaced manipulation persisted into one more year manifesting

itself in the 2006 IPOs. And Sebi was forced to sit up and take notice when the price of

one IPO issue of Rs 64.50 crore (Rs 4.3 crore capital and Rs 60.2 crore premium),

Atlanta, shot up from its early September issue price of Rs 150 and a first day listing high

of Rs 208 to Rs 1,446 in mid-January. Amounting to an almost 10 times rise in price it

represented an extreme case given that in the same timeframe Sensex had risen by just

1.2 times.

Sebi started investigating the Atlanta case in January and issued an interim order on

February 22. The prima facie findings by Sebi laid bare a stark picture of a sleazy

operation involving promoters and their associates, market operators and mutual funds

and FIIs.

First, within a week of listing on September 25, MFs/FIIs who were allotted 20.5 lakh

shares of the 43 lakh shares issued in the IPO, sold off 19.4 lakh shares. Sebi doesn't

reveal their names but a look at the bulk deals data on NSE and BSE (shares traded

during a day by any investor exceeds 0.5% of the share capital gets reported as bulk

deals) reveal the sales by four FIIs—ABN Amro Bank N.V London (1.96 lakh shares),

Credit Suisse Singapore (1.61 lakh), Marshall Wace A/c Kuvera (1.31 lakh) and

Somerset India Fund Rhode (1.31 lakh)—and one domestic MF, Prudential ICICI (1.85


All these 8.05 lakh shares sold by these five were on the first day of listing itself at prices

ranging between Rs 188 and Rs 202. Interestingly, the first two FIIs are among the top 15

P-note issuing FIIs in the country.

Sebi found that the major net purchasers in Atlanta from listing day till end of December

were five groups of investors. The largest among them was controlled jointly by Manish

Marwah and Dilip Nabera through 16 entities and they cornered Atlanta's shares from the

market pumping up the market price and jacking up their holding in Atlanta from 3.5%

on September 30 to 6.3% on October 31 and further up to 7.3% as of December 31. Since

they didn't disclose their crossing of 5% they violated Sebi's takeover norms.

Then Sebi found that Atlanta's reported rise of sales (139%) and net profit (1788%) for

the quarter ended December 31 were not backed up by proper evidence of revenue

receipts and accounting records. Atlanta also failed in using a project-earmarked Rs 42.5

crore of IPO proceeds for the project. Its promoters diverted Rs 20.9 crore of it to pay for

preferentially issued convertible warrants to themselves in December which would entitle

them to 18 lakh shares after 18 months. In the same preferential issue warrants worth 9

lakh shares were issued by Atlanta to Marwah/Nabera group.

Sebi's interim order in Atlanta case prohibited further dealings by company promoters,

officials and associates and by the entities of Marwah/Nabera. But it kept quiet on the

motives of FIIs/MFs in selling 95% of their allotment in a week after listing. Market

sources say there is a pre-IPO arrangement between promoters and the funds in such

cases whereby the funds are promised exit on listing day at a profit of 20-100% over the

listing price.

Interestingly, the bulk deals data for this year also reveal that two P-note issuing FIIs,

Deutsche Securities Mauritius and BSMA, were purchasers – Deutsche buying 0.85 lakh

shares at Rs 1030 on January 5 and another 1.5 lakh shares at Rs 231 on April 4, and

BSMA buying one lakh shares at Rs 1265 on January 25. According to a broker, who did

not wish to be named, "operators like Marwah and Nabera are known to indirectly fund

large purchases by FIIs in stocks like Atlanta to maintain the price level." With regard to

Furthermore, Sebi's order lists details of cornering of Atlanta shares by another group

headed by Atul Shah through seven entities. No prohibition was issued on them and as a

result at least 1.09 lakh shares have been sold by one of their entities, Rajshah

Enterprises, through a bulk deal on April 18 at a price of Rs 395.

Market sources say that there are at least 5-10 more IPO cases similar to that of Atlanta

involving same operators. Sebi has so far not reported any action taken in those cases.

The horror stories continue to haunt investors in IPOs. Says Dhabaria: "Using these

revelations as a yardstick I don't think I will ever invest in an IPO for fear of being taken

for a ride. Investors like me will want to push the panic button."

But the next Sebi move might very well be introduction of price bands on the first day of

listing of an IPO given the findings of order book manipulation in its April 26 interim

order. But, again, in this newest expose Sebi has failed to connect the bloated but

unexecuted orders with their actual impact on executed trades.

Moreover, the trading price on listing day itself was 20-80% higher than the issue price

and so orders at 30-100% lower than those traded prices were actually closer to the issue

price. For instance, Pochiraju Industries, whose issue price was Rs 30, was traded

between Rs 46 and Rs 60 on the listing day, February 9. Four of the Sebi-targeted

operators who put large orders in this stock did so at a range of Rs 25 to Rs 30, very close

to the issue price.

None of the brokers Outlook spoke wanted to go on record with their views on Sebi's

conclusions but the general impression was that Sebi should make up it minds whether it

wants to encourage or discourage inflated prices on first day of listing or leave it to

market forces. Said one: "Sebi is barking up the wrong tree by going after orders at close

to issue price; instead it should take stringent action in Atlanta-type cases which are

ruining the integrity of the market."

The IPO juggernaut rolls on and the investors continue to be taken for a ride.

May 06, 2007

life in general: cowardly exploitation of labour

How many of us in cities and towns would know that behind the roads we drive on, the buildings we stay in (or work in or shop in or watch a movie in), and the other amenities behind which infrastructural construction has taken place, lie a horrid story of labourers' exploitation?

This newsreport covers a protest demonstration in Bombay outside the Labour Commissioner's office this week seeking a halt to such exploitation.

The demonstrators issued a press release later. Here is what it said:

First Floor, Haji Habib Building, Naigaon Cross Road , Dadar (E), Mumbai, P.No. 022-24150529
Press Release 3 May,2007

More than 3000 laborers-workers from various slum communities of Mumbai today assembled at the Labour Commissioner office to assert and demand for their rights entitled under various labour welfare legislations. Declaring themselves not to be unorganized rather 'unprotected', demanded their due share against their contribution in building and running Mumbai, the financial capital of this country. In the afternoon a delegation of labourers and activist met Shri Sanap, Labour Commisioner Mumbai. The delegation made him aware of the violations and non-implementation of various labour welfare legislations that are in place but are not being implemented. Specific examples of non-implementation of Inter-State Migrant Workers Welfare Act of 1979 and Contact Labour Welfare and Regulation Act of 1970.

He agreed to immediately look into select cases of violations of rules by contractors and principle employers which include many government authorities like MMRDA & BMC. He also approved of the demand of having full registration of all the worker-labourers and will work towards the implementation of the same.
It is well known that out of the total of 60 lakh slum dwellers, more than 11 lakh are inter state migrant workers who are engaged in construction and allied activities and thus the real builders of the city. Ironically these people, who are building homes for others are themselves homeless and their homes are being demolished to hand over the land for real estate development or beautification projects.

It was demanded to have single window counters for the labourers where all their grievances can be settled and all information regarding their rights be provided. The officials also expressed their concern to the liberalization of the labour laws whereby even the powers and authority of the labour welfare department and officials are being eroded and diluted under the SEZ Act, which the delegation demanded to be repealed.

Demand for consultation with worker's organizations and unions before drafting bill for providing security benefits to the un-organized sector workers was also made. On the lines of National Rural Employment Guarantee act, enactment of an act providing for employment guarantee in urban areas was also made.

Lal Babu, Mohan Chavan, Simpreet Singh (
9969363065), R Ghosalkar, Medha Patkar