The community's boardroom coup means little as C Sivasankaran continues to drive a hard bargain.

By R Sridharan

On April 10, 1998, B. Ramachandra Adityan, the 62-year-old media baron spearheading the Nadar community's battle to reclaim the Tuticorin-based Tamilnad Mercantile Bank (TNMB) -- No. 19 on The BT Best Banks '98 -- went a-calling on his family deity in Kayamozhi village in Tuticorin (Tamil Nadu). Among other things, Adityan prayed for divine intervention in the Nadar community's four-year-long battle to buy back the 67 per cent stake in TNMB that the Rs 3,300-crore Essar Group (Essar) picked up in October, 1994, and subsequently sold to non-resident Indian businessman C. Sivasankaran in October, 1997.

At first glance, it appears that Adityan's prayers have been answered. For, soon after returning to Tuticorin, he managed to secure a majority on the bank's 10-member board. With two more friendly heads on board, Adityan can now draw upon the support of six directors for the Nadar cause. While Essar's representation on the board remains at one, the Reserve Bank of India (RBI) has three nominees.

Adityan quickly got the board to reverse an earlier resolution, of January, 1996, approving the transfer of TNMB shares to the Essar Group. Smiles Adityan, chairman, Nadar Mahajan Bank Share Investors Forum: ''This is a major victory for our cause.''

Is it really? Sivasankaran, the chairman of the Rs 261.97-crore Sterling Group, is nonchalant about the boardroom coup. Speaking from his residence in Freemont, California, Sivasankaran asserts: ''There is no question of weakening of my position. Let them (the TNMB and the Nadar community) do what they want. I'll wait patiently.''

His confidence may not be misplaced. Sure, in October, 1996, the RBI rejected the TNMB board's January, 1996, resolution to transfer shares to Essar. And the latter's decision to sell the stake to Sivasankaran -- who holds the power of attorney for the shares -- is being contested in the Madras High Court. But as the RBI has already said that it will stand by the verdict of the court, Adityan's latest manoeuvre is but a morale boost for the Nadars.

For, assuming that the RBI does agree to the transfer, if the courts so decree, the board's refusal will not hold water. After all, the RBI can always reconstitute the board. Adds Jayant Thakur, 32, the owner of the Mumbai-based chartered accountancy firm, Jayant Thakur & Co.: ''Unless the TNMB board can prove that the transfer will go against the interest of the bank, and those involved with it, it cannot refuse to register the shares.''

What the Nadars do have, however, is strong political backing. Apart from fellow Nadar Sarath Kumar, the Dravida Munnetra Kazhagam politician, the All India Anna Dravida Munnetra Kazhagam (AIADMK) leader J. Jayalalitha is championing their cause. In fact, the TNMB issue even found a mention in the AIADMK election manifesto. While Jayalalitha has, apparently, brought up the issue with Prime Minister Atal Behari Vajpayee, the government is expected to let the courts and the RBI decide, one way or the other.

Sivasankaran -- who does not lack friends in the Bharatiya Janata Party -- is not averse to selling the 67 per cent stake to the Nadars. However, he wants Rs 186 crore for the 1,87,600 shares that he holds the power of attorney to. Says Sivasankaran: ''As far as I am concerned, the issue is purely commercial. If the Nadars really want to own the bank, they should raise the needed money.'' In the same breath, Sivasankaran says he is prepared to lower his asking price if the TNMB promises to set aside a part of its profits for a ''cause'' like community education and health.

But there's a huge gap between his price and the Rs 60 crore that the Forum managed to raise in October, 1996. Worse, Adityan may have already exhausted the financial potential of the strongest supporters of his cause. That's why he is insisting on the Rs 100-crore price-tag put up by Essar, in its ''gentleman's agreement'' with the Nadars in June, 1997. But he'd better not bank on it.

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