Govt to issue notices to 119 erring telecom companies

New Delhi: In the face of allegations of huge financial irregularities in 2G spectrum allocation, the government today said show-cause notices will be issued to 119 licencees for suppressing facts and also for missing the roll-out obligations under the terms and conditions of licence, PTI reports.

“We believe that some of the companies might have suppressed facts, might have got an undue advantage in accessing licences,” telecom minister Kapil Sibal told journalists.

Asked about the revenue loss to the exchequer due to the allotment of spectrum at 2001 prices—as was pointed out by the CAG—the minister said, “The CAG has stated this. This is something which the ministry will decide and we will apply our mind individually to each case.”

The notices will be issued to 119 licencees, of which 81 are under both categories of ineligibility for licences and 38 have not met roll-out obligations as spelt out in the licences, Mr Sibal said. He, however, declined to name the companies which would be issued show-cause notices.

 According to sources, the names of some new operators that figures in the lists are Uninor, S Tel, Loop Telecom and Videocon.

The licencees would be given 60 days time to respond to the notices and each case would be dealt with separately, Mr Sibal said. “After studying their response, a decision will be taken on whether these (licences) need to be cancelled or a penalty should be imposed,” the minister said. The ministry will start issuing the notices in the next 3-4 days, said senior officials in the Department of Telecommunications.



Stocks of companies with political links beaten down

The scam-polluted environment spells doom for stocks of companies with suspected links to political figures and parties

Even as the skeletons keep rolling out of the cupboards of Indian officials and politicians, companies that are seen to have affiliations to politicians are paying the price for their connections. Investors have suddenly found reason to turn sceptical about the links of some corporates to the political class and they are losing losing confidence in these companies. As such, the stocks of several companies have taken a severe beating in this scam-polluted environment.

As if the 2G spectrum fiasco and the scandalous tapes involving high-profile bureaucrats, industry leaders and journalists in a power-broking drama weren't enough to unsettle the markets, the recently unearthed bribes-for-loans scam has only fuelled the fire. Several companies and their promoters suddenly find themselves on the radar of nervous investors, who fear more dirty linen may be washed in public.

Indeed, among the companies that have seen substantial erosion in their market valuations are those whose promoters share strong equations with some influential political leaders in the country.

For instance, HCC's stock has plunged 38% from its level earlier in the month. It turns out that the controversial Money Matters Financial Services is associated with Lavasa Corporation-a subsidiary of HCC-for whom Money Matters acted as an agent to sell its properties. Lavasa was also hauled up by the Environment Ministry last week, for some violations, and this is keeping investors on tenterhooks. Promoter Ajit Gulabchand is close to agriculture minister Sharad Pawar.

IRB Infrastructure's chairman and managing director Virendra D Mhaiskar is also known to be close to Sharad Pawar. The IRB stock has hit Rs195 from Rs270 in a matter of weeks. Jaypee Infratech and HDIL are also companies which were associated with Money Matters Financial Services, which arranged loans for them early this year. Jaypee is seen to have considerable influence due to its affiliation with Uttar Pradesh chief minister Mayawati. The Jaypee has plunged 22% since 12 November 2010. HDIL's managing director Sarang Wadhawan is seen to have connections with leaders in the both the Congress and the Shiv Sena. The HDIL stock has sunk 32% since 10 November 2010.

On a different note, IVRCL and Nagarjuna Constructions seem to have suffered a crisis of confidence post the death of popular leader YS Rajasekhara Reddy in a helicopter crash last year. The stocks of IVRCL and Nagarjuna have been quite weak throughout 2010. In November they tanked 22% and 20% respectively.
These companies, while capable of executing large infrastructure projects, had benefited from YSR's focus on infrastructure development in Andhra Pradesh.

This sharp fall in stock prices is not a comment on the quality of these companies, but rather a turnaround in market perception. For long, companies with strong political affiliations have been known to find a favourable place in investors' minds, given the muscle power and flexibility that came along with keeping such company. However, this very 'advantage' that seemed to work so well in favour of these companies seems to have suddenly turned into a weakness.




7 years ago

It looks like you are right upto some extent as its not applicable to all the scrips having connection to politicians.

Ninad Avasare

7 years ago

Except TATA and IT companies , most of the other company do have links with politicians.


7 years ago

But what about the big daddy - Reliance goup? when it comes to political influence they are the biggest one..



In Reply to Kaushik 7 years ago

Yes you are right.
Infact both Ambani brothers have good link with politicians.
I think therfore why ADAg stocks plunged down.


7 years ago

In the end, one finds that all assets turn into liabilities!

High Mark gets green signal from RBI to start credit bureau

High Mark will be the country's fourth credit bureau after CIBIL, Experian and Equifax

High Mark Credit Information Services today became the fourth credit information company in the country to receive the approval of the Reserve Bank of India (RBI) to operate as a credit bureau.

The other three that in operation are Credit Information Bureau of India (CIBIL), Experian Credit Information Company of India and Equifax Credit Information Services. TransUnion International Inc holds a 19.99% stake in CIBIL.

Experian started operations in India in August this year, and was followed by Equifax, which commenced operations last month, in partnership with Bank of Baroda, Bank of India, Kotak Mahindra Prime Ltd, Religare Finvest Ltd, Sundaram Finance Ltd and Union Bank of India.

The RBI issued provisional licenses to Equifax, Experian and High Mark in April 2009 for setting up credit bureaus. In November 2008, the central bank allowed foreign direct investment of up to 49% in credit information companies, with a ceiling of 10% of the total voting rights for any single investor group.

In July this year, Micro-finance Institutions Network (MFIN), a network of more than 40 micro-finance companies, invested Rs2 crore for a 5% stake in High Mark. The credit information to be provided by High Mark will be useful for the business of these companies, more so at a time when the micro-finance business has been afflicted by mass defaults on loan repayments in the states of Andhra Pradesh, Karnataka and West Bengal.

Experian, TransUnion and Equifax are the largest credit bureaus in the world. High Mark is a start-up promoted by Professor Anil Pandya and Anuj Desai. According to media reports, venture capital firm Battery Ventures bought a 10% stake in High Mark for about $1 million last year. In 2005, Professor Pandya founded High Mark and in 2007 the company applied to the RBI for a license to operate as a credit bureau.




6 years ago

Kindly provide me the mail id of Mr Anil Pandya or Mr Anuj Desai.

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