India Is Now A Space Power
Hurling the Geosynchronous Satellite Launch Vehicle into orbit from Sriharikota marks the maturing of India's space faring capabilities. Besides saving on the costs of launching its own satellites, the country has entered the billion-dollar space launch market.

Moment Of Reckoning
The polls are likely to be milestones for the political parties. In Tamil Nadu, Karunanidhi is poised to hand over the mantle of the DMK to his son Stalin. And in West Bengal, Mamata may find it takes more than aggression to win a mandate.

Breaking Trust
UTI's dealing in Ketan Parekh's favourite shares has been under a cloud and SEBI's report on the stock-rigging scandal reaffirms suspicions. Bogged down with chunks of worthless shares, UTI's credibility has taken a nose dive.

Cold-Blooded Gamble
Sudden, violent skirmishes along the India-Bangladesh border leaves many dead and raises worrisome questions about peace and security in the North-east as a "friendly" neighbour's problems spill over.

Blue Sari Mystery
A dead polo player, a beautiful woman, an unclaimed garment. The Rajasthan High Court orders the police to look into the case.

BUSINESS: UTI

Trading Trust

By V. Shankar Aiyar

In August 2000, an investor put Rs 34 crore in this company at Rs 930 per share. The current price is Rs 1.90.
Company: Cyberspace. Investor: UTI.

The share price of this company rose to Rs 2,553 before falling to Rs 79.65. An investor is left holding one crore shares.
Company: HFCL. Investor: UTI.

This company's Re 1-scrip soared to Rs 1,630 before crashing to Rs 76.90. An investor is holding 1.5 crore shares.
Company: Zee Telefilms. Investor: UTI.

It reads like an investor's worst nightmare come true. So naturally, speculation was rife when Unit Trust of India (UTI) Chairman
P.S. Subramanyam was spotted with RBI Deputy Governor
S.P. Talwar and Global Trust Bank's (GTB) former chief
Ramesh Gelli in a quiet huddle at a wedding in Bangalore in March. Were they discussing the fate of GTB's merger with
UTI Bank, the Sensex or the fate of UTI following the tech meltdown? The last is the most probable.

Between April 2000 and March 2001, UTI's net collections were a mere Rs 323 crore while private-sector mutual funds (MFs) netted Rs 9,885 crore. Its share in resource mobilisation by MFs is down from 89 per cent in 1998 to 2.91 per cent. Worse, the assets under management have fallen from Rs 76,547 crore to Rs 58,017 crore-an erosion of over Rs 18,850 crore. Says Kirit Somaiya, BJP MP and founder of Mumbai-based Small Investor Forum: "The investors' confidence is totally eroded and so is the trust." A perception the 37-year-old behemoth can ill-afford.

Erosion of trust isn't very surprising, though. Since the 1980s, UTI has been battered in every stock market scandal. Its ills have been outlined both in the 1992 Joint Parliamentary Committee report on the securities scam and the Deepak Parekh Committee report of 1999. Yet precious little has been done.

An investment banker reveals the procedure crafty operators follow to place shares or, in their words, "make UTI bakra". First, create a buzz-hit the headline with news about joint ventures, placement and so on. Simultaneously, raise a volume haze in the stock markets. Liquidity is important for UTI to meet redemption demands. Next step is to court temporary investments from foreign institutions. "By the time the proposal reaches UTI, the bakra is cooked," says the banker. That may not be the rule, but the problem with UTI is a surfeit of exceptions.

For over a year now, it has been suspected that the UTI is mirroring the K-10 index (a notional index of Ketan Parekh's favourite shares). Subramanyam has denied this, but SEBI's report on the rigging of shares states that some MFs and "particularly UTI has been maintaining their holding in these scrips" during the meltdown. The pattern of UTI's transactions "appear to have provided the benchmark to the prices of the scrips like Himachal Futuristic Communication Limited (HFCL), Zee, DSQ, Global Tele, etc." which are part of the K-10 index.

Worse, the UTI was buying the Zee Telefilms scrip at Rs 500 when every other fund was selling it. It chose to invest Rs 50 crore in HFCL's non-convertible debentures (NCD) on March 1 when the market was crashing. Were the moves aimed at boosting its own holdings or at bailing out the big bull Ketan Parekh? Equally inexplicable is the decision to go ahead with UTI Bank-GTB merger after an inquiry into price rigging was launched in November 2000.

UTI's holdings in K-10 stocks-101 lakh shares of HFCL, 1.5 crore shares of Zee and 43 lakh shares of Global Tele (see chart)-fuel suspicions that it has a role in the scam. Subramanyam's presence at parties hosted by Channel 9's James Packer had led to speculation about his proximity to operators. Subramanyam dubs this as "baseless".

UTI has booked profits in many of these scrips, Subramanyam claims. True, but what about stocks like Cyberspace whose promoter A.K. Johari is absconding. Interestingly, UTI Securities was a manager (along with SBI Caps) of the private placement. But SEBI is yet to receive any complaints. All pointers indicate that it was a political placement, though Subramanyam denies it.

There are other curious deals-not necessarily political-that are the talk of the market. Last year a broker tried to place Silverline shares at Rs 85 with UTI and was rejected. Surprisingly, the same scrip was placed by another operator at Rs 220-plus levels. It's not just in big buck deals that the UTI has been found to be flat-footed. It invested in portals and media outfits as if it was the California gold rush. Consider these: a 5.5 per cent stake in staryaar-kalakaar.com for Rs 1.2 crore; 11 per cent stake in indiaelectricmarket, a B2B portal, for Rs 4 crore. Among its media choices were Jain Studios, Numero Uno International, R. Basu's Broadcast World Wide and Pritish Nandy's P.N. Communications.

Such investments are bound to worry investors. Subramanyam, though, is still bullish. "One should not over react to the situation. Over a reasonable period, three to five years, tech will be back, it will be the biggest forex earner and will pay back." He has some room for complacency. Six of UTI's schemes find place in the top 10 performers and 11 of its funds have outperformed the sectoral average.

MetroScape

Operation Opera
If he can pull it off, it might well be the highpoint in India's cultural and tourism calendar for 2002. After restoring heritage properties and turning them into highly successful resorts, Francis Wacziarg is now turning to producing a full scale opera in Delhi.
more...

Looking Glass

Calcutta Restaurant: The Hub

Delhi Film Club:
Habitat Film Club

Delhi Bar: Golf Bar

Mashobra Resort: Wildflower Hall