After making the same mistakes as his predecessors, Madhu Kannan has quit BSE, saddling it with an expensive and inexperienced management team
On Tuesday, Madhu Kannan, Managing Director and CEO of the Bombay Stock Exchange (BSE) announced plans to quit and join the Tata Group. This was just a day after the Securities and Exchange Board of India (SEBI) announced the new policy framework for stock exchanges, depositories and clearing corporations. It may be a coincidence, but the timing of Kannan’s decision seems to suggest he is throwing in the towel when his attempt to shake the National Stock Exchange’s monopoly had clearly failed.
Mr Kannan, the hotshot imported from New York (he had worked at Merrill Lynch which imploded in 2008 and New York Stock Exchange before that) to turn around a sinking BSE has left it much weaker and more dangerously poised. BSE is saddled with a lop-sided pay structure and a deep divide between a tiny and extremely expensive top management team which has little expertise in running markets (far from turning around sinking bourses) and the rest of the staff. Mr Kannan has repeated the same mistakes of his predecessors, who quit under controversial circumstances and that too, by inflicting a much higher cost to the exchange.
BSE’s shareholders, who are mainly brokers, watched silently in the hope that he would manage to list the exchange at a good valuation and give them a good exit price. Mr Kannan’s expensive management team, comprising a number of US citizens (some of Indian origin), were expected to attract foreign institutional investors to invest. However, SEBI’s new rule of pre-empting 25% of the profit every year is a big damper and worried shareholders and staff are beginning to ask questions. Interestingly, the BSE’s average daily turnover was around Rs6,400 when Mr Kannan took over in 2009 and has shrunk to just Rs2,800 crore. Profits are also down, although the salaries of its top brass have sky-rocketed. This is probably something that Mr Kannan brought from the New York Stock Exchange (NYSE) and Merrill Lynch. Consider the messy trail Mr Kannan leaves behind:
This is BSE’s third failed experiment with a SEBI-supervised / chosen professional management team. Strangely enough, this does not seem affect its “public interest directors” or its board. While there are many angry and unhappy shareholders and employees at the bourse, the exchange’s board of directors seems to be unconcerned. BSE is set to sink further unless its true owners – the stock brokers who hold most of the shares – wake up and act collectively.
Around 42% of respondents in India surfed online to look for jobs in the last three months
A majority of Indians prefer to use the Internet for banking and other financial services than shopping online, shows a new survey. Almost 57% of Indian respondents using the Internet prefer to bank online and use other financial services due to hassle-free easy access and time-saving features of online banking, according to the survey conducted by research firm Ipsos.
Checking information on products and services online comes a close second at 53%, while 50% shop for products online. Around 42% of respondents in India surfed online to look for jobs in the last three months, the survey said.
"Online banking has made things much easier for the people and it saves a lot of time. It has eliminated the hassle of the traditional way of banking where one had to stand in the queue and fill up several forms," Ipsos India head (marketing communication) Biswarup Banerjee said.
Most of the banks in India have introduced customer-friendly online banking facility with advanced security features to protect customers against cybercrime.
"The easy registration process for net banking has improved customers' access to several banking products, increased customer loyalty, facilitated money transfer to any banks across India and has helped banks to attract new customers," he added.
The Indian results closely track the global trends as well. Conducted among 19,216 people from 24 countries, the survey showed banking and keeping track of finances, shopping and searching for jobs are the main tasks of Internet users around the globe.
Overall, 60% of people surveyed used the Web to check their bank account and other financial assets in the past 90 days, making it the most popular use of the internet, Ipsos said.
Globally, shopping was not too far behind at 48%, the survey showed, and 41% went online in search of a job. In terms of country preferences, almost 90% of the respondents in Sweden use e-banking. Online banking has also caught on in a big way in nations like France, Canada, Australia, Poland, South Africa and Belgium, the survey showed.
The Germans and British come on top for using online shopping with 74% of respondents in both countries having bought something online in the past three months. They are followed by 68% of respondents in Sweden, 65% in the US and 62% in South Korea.
While a section of agitating jewellers have called off the strike, jewellers associations from Mumbai will take the decision in a day or two
New Delhi: Bullion traders and jewellers on Friday called off their 21-day nationwide strike after meeting united Progressive Alliance (UPA) Chairperson Sonia Gandhi and Finance Minister Pranab Mukherjee who assured them that their demand for rollback of excise duty on unbranded jewellery would be considered.
"We have notified all our members to call off the agitation with immediate effect," Dinesh Jain, Director of Governing Board, All-India Gems and Jewellery Trade Federation, told PTI.
Most of the jewellery shops would open from Saturday, today being holiday on account of Good Friday.
Traders are estimated to have lost Rs20,000 crore due to the strike which began on 17th March after presentation of the Budget on the previous day.
Jewellers, however, threatened that strike would resume again if the proposal to levy excise duty of one per cent is not withdrawn in the Finance Bill, which is expected to come up before Parliament early next month.
"The strike has been suspended till 11th May, as the Finance Minister has assured us on a decision on rollback on excise duty and customs duty by first week of May," Mr Jain said.
Delhi-based All India Sarafa Association General Secretary Surendra Jain also said that their members have also agreed to suspend the strike.
Some of traders who met Mr Mukherjee, said the Finance Minister has assured them that their grievances with regard to levy of 1 per cent excise duty on unbranded jewellery would be addressed.
Before traders met Ms Gandhi, Congress General Secretary Janardhan Dwivedi said the party has asked the government to consider jewellers' demand sympathetically.
But, the Bombay Bullion Association President Prithviraj Kothari said, "We and other associations will meet tomorrow or day-after to decide whether to continue strike or open our shops."
Mumbai-based All India Gems and Jewellery Trade Federation also said that they would decide on the next course of action after consulting 153 affiliated associations.
Central Board of Excise and Customs (CBEC) Chairman SK Goel said that Mr Mukherjee has assured traders that he would address their concerns at the time of consideration of the Finance Bill 2012 in Parliament and "associations have agreed to withdraw the strike".
"We will decide on calling off strike... industry lost nearly Rs20,000 crore due to this strike and the government lost nearly Rs1,200 crore (in revenue)," All-India Gems and Jewellery Trade Federation Chairman Bachhraj Bamalwa said after meeting with the Finance Minister.
Meanwhile, Gem and Jewellery Export Promotion Council (GJEPC) Chairman Rajiv Jain welcomed the assurance given by the Finance Minister and appealed to all jewellers in the country to resume their day to day business operations as early as possible
"The Finance Minister also assured that the import duty imbalance for jewellery imported under Free Trade Agreement from Thailand and other issues faced by the gems and jewellery exporters due to recent announcements in the budget will be looked into," the GJEPC said in a statement.
On 16th March, a day before jewellers began their strike, gold prices in the national capital were ruling at Rs28,140 per ten grams. In Mumbai, gold rates stood Rs27,760 per ten grams.
India, the world's largest gold consumer, imported 967 tonnes of precious metal in 2011. Gold is the second biggest commodity imported after crude oil.