Sushma Swaraj's outburst

There is a lot of truth in what Sushma Swaraj told the parliament today. Why were Quattrochi and Anderson let off easily? Hands of Sonia Gandhi and Rahul Gandhi are obviously not clean. The government should investigate all those corruption cases which engaged the nation's attention during Congress and UPA regimes. Narendra Modi has no right to go soft on any alleged criminal acts involving Sonia Gandhi, Shashi Tharoor or anybody else.

At the same time, these criminalities cannot justify any inappropriate behaviour on the part of Sushma Swaraj or the chief ministers of Rajasthan and M.P. They need to resign or they would deserve to be sacked.. India is not so talent-challenged that these three are indispensable.

Janus-faced justice

We have reached an unfortunate state when it is impossible to have faith in judiciary. Dayanidhi Maran is supposed to have misused his ministership to set up 'a telephone exchange' in his house to be of use for Sun TV channel. The alleged shenanigan occurred when he was Telecom Minister during 2004-07. As long as he was in office, the misuse of power, if any, was not noticed and therefore no action was taken.

After 2007, many reports started appearing regarding his alleged misuse of office which amounted to criminal acts also causing loss to the exchequer. After UPA lost power, CBI became active in investigating the alleged criminal offences. A powerless poor person would have been taken into custody straightaway and cases filed in the courts of law (perhaps we should not call them courts of justice). The hapless person could not have sought judicial intervention and he would be rotting in jail.

But Dayanidhi Maran is neither powerless nor poor. So he would be treated differently. The Madras High Court at last decided that CBI could take him into custody to facilitate investigation. But the Supreme Court, as the apex court, does not want individual liberties to be tampered with. For the Supreme Court, the matter is simple: If there had been financial loss to the government, Maran would now pay it up and be done with it. Simple and Solomonic! Can we hope that the apex court will be so conscious of civil liberties in all cases!

Justice Vaidyanathan of the Madras High Court is now reduced to an ignoramus of law. He audaciously referred to his 'judicial conscience'. Following are his words of ignorance:

He said: “My judicial conscience prevented me from enlarging the petitioner on bail.”

“I find that the petitioner [Dayanidhi Maran] has been involved in serious offences, wherein allegations of corruption, cheating and causing wrongful loss to the exchequer of the government to the tune of crores of rupees, have been attributed.”

The judge said: “I find prima facie the exact role of the petitioner being the Union Minister for Communications and Information Technology, in misusing his office for his wrongful gain by obtaining telephone connections illegally in the name of BSNL officials…”

Earlier the judge found “considerable force” in the Additional Solicitor-General’s contention that when a number of undertrials were languishing in jails even for petty offences, Mr. Maran should not be extended any special concession by enlarging him on bail, as serious allegations of corruption, cheating and causing wrongful loss to the exchequer have been made against him.

It is not clear how a person with 'judicial conscience' was allowed to become a High Court judge. The damage that was sought to be done by Justice Vaidyanathan has been undone by the superior wisdom manifesting as Supreme Court judges.

In the Supreme Court, Attorney General Mukul Rohatgi, appearing for CBI referred to the facts of the case to stress that it was a huge corruption case and said, "Maran used clout in government to fix lines for use of the huge media house Sun TV that his family runs."

Justice Thakur and Justice Gopala Gowda could not tolerate this nonsensical argument. They almost asked, "So what?" In other words, what is wrong if a minister misuses his power? Who are the lesser mortals to question him?

"Is it a matter of prestige for you to arrest him? Nobody should get away after causing public loss. .. but custodial interrogation?. How did you assess the 1-crore loss? You say no bills were raised. Anyway he is willing to pay? You raise the bill now and he will pay up," Justice Thakur thundered. 

Such is the court's concern for civil rights. As long as  we have 'considerate' judges, no harm will come to honest people like Dayanidhi Maran.

RBI's call on uncertainty

Yet another monetary policy review by RBI took place on Tuesday, the 4th of August. RBI schedules most of its monetary policy reviews on Tuesdays.

Policy rates and Reserve Ratios remain unaffected. Inflation expectations by households (three-month ahead and one-year ahead) are inching up. This could be one of the key factors that precluded reduction in policy rates. After all, it is not a secret that expectations by households are more realistic than those by professionals.

What was surprising was the Governor's optimism on reduction in uncertainty.
" Significant uncertainty will be resolved in the coming months, including the likely persistence of recent inflationary pressures, the full monsoon outturn, as well as possible Federal Reserve actions."

Don't we know that no sooner that one uncertainty is resolved, than another one readily crops up? For example, the declining trend in oil prices may see a drastic reversal if and when the IS takes over some oil fields.

The Governor also made a debatable comment on merits of a committee. According to him, the proposed Monetary Policy Committee will come under less external and internal pressure than the Governor. Really?
Committee's independence depends on its members. If most of the members are nominated by the government, it is self-delusional to expect the Committee to be really independent.

It appears that the Governor prefers an 'accommodative stance' towards the government.

Speaker's role

Lok Sabha Speaker, Sumitra Mahajan suspended 25 Congress members on 3rd August for five consecutive sittings for persistently and wilfully obstructing the House. It is the Speaker's responsibility to ensure that the House functions in a conducive atmosphere and therefore whoever obstructs the proceedings need to be shown the door.

If anything, the Speaker had delayed her action inordinately. The House has not functioned for a week because of the melee caused by Congress. The Speaker has erred by suspending only the foot soldiers while the abjectly misleading leader, Sonia Gandhi has not been evicted.

This is not a confrontation between one party and another. It is an issue of allowing an important wing of democracy, the legislature, to function. The Speaker has at last woken up to her responsibility and done what she is supposed to do. Better late than never.

Chairman of the Rajya Sabha also should exercise his lawful authority and evict the disruptionists. It is not a question of which party is in power and which is in opposition. Citizens of the country expect their representatives in the Parliament to do their work and their work is certainly not to disrupt the Houses.

It is shocking that The Hindu claims that the Speaker's action is abdication of responsibility. If taking lawful action against unruly elements amounts to abdication of responsibility, we should all abdicate our responsibility.

Cholamandalam Investment and Finance Company - 37th AGM

CIFCO's 37th AGM was at The Music Academy (the main hall), Chennai on 31st July. The attendance was much thinner than the one for IDFC the previous day.

Shareholders were mainly concerned about the dividends declared by the company despite handsome financial results. The dividend payout ratio (the proportion of dividend to earnings ) is as low as 12% for 2014-15. The company is following an increasingly conservative policy vis-a-vis dividends. Company's Chairman, M.B.N.Rao, sought to justify this saying that the company is conserving funds for future business. Can the same argument be not advanced to reduce emoluments to top management?

The company has raised Rs.500 crore from one Dynasty Acquisition (FDI) Ltd. as compulsorily convertible preference share. A shareholder wanted to know the identity, owners and address of this company. The chairman did not respond. Raising Rs.500 crore from just one entity and not sharing details about this entity does not speak well of the company. (This was clarified by the company's MD on 3rd August when it was taken up with him. The Managing Director clarified as under:

"1) Why Rs.300 crore FCCPS was shown as a part of issued capital as on 31st March, 2014 and not 31st March, 2015. The amount was converted in 2010 itself.

When preference shares are redeemed, the redemption acts as an automatic extinguishment of issued capital. However, the same position is not the case when preference shares are converted in to equity shares – this does not automatically result in an extinguishment of the issued capital. We would need to apply specifically for capital reduction approval. Therefore, we continue to carry the issued capital in our books. However, subscribed  / paid-up capital will turn to zero upon conversion.

2) Who are the owners of Dynasty Acquisition (FDI) Ltd. ? What is the address of the company?

Dynasty Acquisition (FDI) Ltd., is a Foreign Corporate incorporated in Mauritius. 100% of the beneficial interest in Dynasty Acquisition (FDI) Ltd. is collectively owned by the following private equity funds:

Apax VIII-A L.P., Apax VIII-B L.P., Apax VIII-1 L.P. and Apax VIII-2 L.P (collectively, "Apax VIII funds").

Address of the Dynasty Acquisition (FDI) Ltd.:33, Edith Cavell Street, Port Louis, Mauritius" ).

It is interesting to note that Dynasty Acquisition (FDI) Ltd. will make capital gains of nearly 75% on conversion into equity in September, 2015 if the share price continues at the present level. Being Mauritius-based, the beneficial owners will be exempt from capital gains tax also. 75% Return in one year is a bonanza.

At the beginning of the meeting, the Chairman took shareholders' permission to have his speech which was circulated as read. One shareholder objected and insisted on the Chairman reading it. Thus, twenty minutes were unnecessarily wasted.

Making AGMs purposeful

Annual General Meetings are supposed to enable shareholders to get to know their companies better and to give suggestions for better performance of the company. The Board of Directors and the top management may not agree with all suggestions, but they are expected to consider the views of shareholders objectively and also to respond to them.

Sadly, what is observed in many AGMs is the unfortunate fact that a lot of time is wasted over petty issues and consequently major issues are ignored. Thus, AGMs like our Parliament become dysfunctional. It appears that the Boards are only too happy that most discussions focus on peripheral issues like compliments. Some shareholders engage in filibustering giving scant respect to time.

Some meetings are held in small venues. We don't know whether these companies want to discourage members from attending the meeting.

Most Chairpersons do not even attempt to regulate proceedings in a purposeful way. Recently, a well-known company held its AGM in the smaller hall at The Music Academy, Chennai. Many shareholders had to keep standing. The Chairman was insouciant to the melee that was happening outside which interfered with the meeting whenever the only door was opened which was quite often. Was the Chairman doubly happy?

Vital questions posed by the shareholders are left unanswered. Recently, a question was raised about subscription of Compulsorily Convertible Preference Shares with a face value of Rs.500 crore by just one entity. The Chairman preferred to ignore this and was waxing eloquent on conservation of capital by keeping low the dividend payout ratio.

There are a few shareholders who are present in almost all AGMs in Chennai and who make it a point to speak and expose their ignorance. It is a pity that neither the Chairman nor other shareholders object to conversion of AGMs into semi-comic shows.

IDFC's disorderly AGM

IDFC conducted its 18th AGM at Kasturi Srinivasan Hall of The Music Academy on 30th July. The Hall was too small to accommodate the shareholders and company officials. The Chairman had the black humour to say that when he entered the Hall, he thought that the place was eminently suited for 'compact' conversation with shareholders.

Many shareholders complained about the smallness of the venue and the unprofessional way in which registration of attendees was handled. It was extremely noisy because of disgruntlement of shareholders outside the hall and whenever the only door to the hall was opened, the meeting was obviously disturbed. But the Chairman Rajiv B.Lall was unperturbed. He was perhaps glad that shareholders would air their grievances about arrangements for the AGM and therefore there would be little discussion on the company's performance. His tactics succeeded. Despite the continuing melee outside the hall which was audible inside, the Chairman did not try to do anything about it even once. If this is the style he follows in the company, the company is doomed.

Several shareholders complained that they did not receive the annual report. This happened last year also. Grievances regarding the company's website were also expressed by many. It is strange that the company's annual report for 2014-15 was not uploaded in the website till the previous day. If SEBI has no guideline on this, it is time SEBI looked at this issue seriously.

Many were pleasantly surprised that IDFC's gross NPA as on 31st March was only 0.7% (Serious deterioration is seen as on 30th June, 2015.)

The Chairman cleverly spent a lot of time speaking on the proposed IDFC Bank. He expected the shareholders to clap / rejoice when he repeatedly mentioned that every single share in IDFC is entitled to automatic allotment of one share in the bank. The shareholders know the difficulties encountered by new banks and therefore there was hardly any enthusiasm among them. Lall then cracked the age-old joke of an economist making a prediction without mentioning when the prediction would come true. (He was trying to say that the bank would do well in the long-run, when we are all dead?) Because of the cheerless atmospherics in the hall, this joke also fell flat.

It must be admitted that Lall was tenacious till the very end and he never gave up the pretence that he was very mindful of shareholders' views. The disarming smile on his face never disappeared. He adopted the same style in the last AGM also. He was the only one who spoke on behalf of the company. Even the Secretary had no role. He could do this because whenever anyone complained about the company, without trying to verify the facts from from his executives, he profusely apologised. Is he so confident about the company's weaknesses? For example, quite a few equity holders complained about the company's telephonic (non-) response. Lall did not care to have this problem verified. After a long time, another shareholder (?) came to the company's rescue and said he did not face any problem. It is noteworthy that Rajiv B.Lall is the 'executive' chairman. In the meeting, one got the distinct impression that perhaps he is too pleasant-mannered and tolerant to be an effective leader.