NSE top honchos earn fat packages
 
The National Stock Exchange (NSE) is these days enjoying the benefits of a virtual monopoly position and this has brought with it substantial rewards for its senior management. NSE’s consolidated net profit for FY09 stood at a whopping Rs750 crore, compared to Bombay Stock Exchange’s (BSE) Rs212 crore.
  
Now here is a look at how these riches have made life sweeter for the top management at NSE. Some 1.5% of NSE’s consolidated net profit is what its MD, Ravi Narain and deputy MD, Chitra Ramkrishna earned between them in FY09. If you include the earnings of J Ravichandran, director (F&L) and the company secretary, VPs and AVPs, the figure comes to Rs22.58 crore, or 3% of consolidated net profit.
 
Ravi Narain is now being given a three-year term extension, which will keep him at the helm till 2013. His total compensation last year was a whopping Rs6.89 crore (excluding perks and first class air travel), Ms Ramkrishna’s compensation touched Rs4.21 crore. Compared to them, BSE MD & CEO Madhu Kannan earned Rs 1.6 crore and MCX-SX MD Joseph Massey received Rs 1.39 crore.
 
Take a look at the proposed break-up of the compensation package of the two NSE heads for FY10. Ravi Narain’s gross salary per month is Rs13.875 lakh and Ms Ramkrishna’s is Rs8.75 lakh, with performance linked pay subject to a maximum of 60%. The actual percentage is not in the public domain. The perquisites for both add further to these numbers—they are entitled to accommodation and club membership fees, details of which are not provided. Medical allowance and Leave Travel Allowance are at the rate of one month’s salary per annum. Plus there are the usual company maintained car with driver, telephone expenses and leave benefits.
 
NSE has vigorously maintained its near-monopoly position. This is evident from its recent introduction of zero transaction cost in currency derivatives and interest rate futures and cross margining. NSE is a market leader in both cash and futures segments with nearly 70 per cent and 98 per cent market share, respectively. BSE, on the other hand, is still struggling to maintain its 30 per cent market share. NSE’s recent move to reduce trading costs in futures and options (F&O) and cash segments by 10 per cent may further hurt BSE’s and Multi Commodity Exchange’s (MCX) revenues and force them to revise their strategies.
 
 

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Protecting
'Unauthorised development' in Delhi was given official protection instead of punitive action by the Delhi Government through Section 3(2) and (3) of the National Capital Territory (NCT) of Delhi Laws (Special Provisions) Act, 2009, says Shailesh Gandhi, a central information commissioner (CIC) under the Right to Information (RTI) act.
"I had heard about mafia protection for illegal activities, but am surprised that protection is offered by the Government under the garb of a law," he says relating the following story.
 
Such official protection has been revealed through RTI queries. For instance, one citizen asked for proof of whether a mobile tower erected on top of an existing building had been given permission as required under the law by the MCD. Only after some coaxing it was revealed that no permission was given. Despite a complaint to the municipal commissioner and police commissioner and a promise of action by the public information officer (PIO) there was no action for several days to bring down the tower which could pose a hazard, endangering the lives of people staying in those buildings.
 
The additional commissioner (engineering), says Gandhi, has revealed the fact that out of 4,532 mobile towers in Delhi only 2,015 have the requisite permissions and 2,517 are without MCD permission! Thus large corporates are putting up the mobile towers on the terraces of existing buildings without legal permission.
 
The additional deputy commissioner of police undertook an inquiry and came to the conclusion that the police cannot take any action since all 'unauthorised development' in Delhi has been given official protection by the Delhi Government under Section 3(2) and (3) of the NCT of Delhi Laws (Special Provisions) Act, 2009.
 
What’s more stunning, he says is the grave potential misuse of the process. To install a mobile tower, MCD has specified that stability certificate will be accepted only if it is issued by one of the five agencies approved by it to ensure that the building is not likely to be endangered by putting additional load on top. One of the approved agencies is IIT Delhi. 
 
In one such hearing at the information commission, this is what was recorded: "The Appellant had pointed out there are two certificates issued for the same address. The PIO has stated that the faculty members in IIT issue a stability certificate based on the drawings provided by the client in which the address is mentioned. The PIO also states that no records are maintained by the IIT of the drawings.
 
The stability certificate provided by IIT states, ‘This building is safe and capable of resisting the forces and moments which may be increased or altered by reason of the additional structures for 15 meter three-legged tower with GSM and MW antenna.’
The wording of this certificate appears to indicate that it is certifying the stability as existing whereas the PIO described that it is a certificate based on a drawing with an address which is not verified at all. Given the fact that the IIT does not maintain any copy of the drawing with itself, this process appears to have great potential for misuse.
 
Statutory bodies which permit these towers and IITs would do well to take a look at these practices which may have the potential of endangering safety. Alternately people may discover that there is no need for such certification in which case it would be done away with."
 
Although this is just an example, it gives an indication of some fundamental reasons for the steady decline in the rule of law and decadent governance. Some key elements for this decline are flouting of the laws by major corporates, who operate without permission in over 50% of cases. MCD will not take action against these corporates while the Delhi government offers legal protection to unauthorised activity by major corporates and a premier academic institution issues safety certificates in a manner which is completely flawed, says Gandhi.
 
The CIC further says this is a potent combination whereby conscious collusion and inactive passivity leads to a society where the rule of law is effectively subverted by the powerful, leading to a decadent governance structure and institutions and citizens need to find ways to correct this.

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COMMENTS

M K TYAGI

5 years ago

Section 3(2) and (3) of the NCT of Delhi Laws (Special Provisions) Act, 2009.
should be agitated in Legislative Assembly. Alternatively Centre for Public Interest Litigation should come in action.

More malls to come up
Nirmal Lifestyle, a large shopping mall at Mulund (a Mumbai suburb); Inorbit, a shopping mall which caters to the suburban consumers of Mumbai & Navi Mumbai (Malad and Vashi) and Star Shopping Centres Pvt Ltd (who promote the StarCentres chain of malls) are in the process of building new malls by next year. Nirmal Lifestyle is in the process of launching Phase 2 of its mall in Mulund, says a top company official. The mall will be operational by December next year.
 
“We have invested Rs400 crore in Phase 2 of Nirmal Lifestyle and we are looking at independent projects in the next financial year in different places,” says Dharmesh Jain, chairman and managing director, Nirmal Lifestyle.
 
The global downturn has not stopped retailers from expanding, but the number of malls supposed to come up by 2010–2012 has come down drastically, said an industry expert. “In 2007 there were 400 malls which were coming up across the country till 2010-2012 but now we have only 100 malls coming up by 2012, out of which I think 15-20 malls only will be operationally successful malls,” says Anuj Puri, chairman and county head, Jones Lang Lasalle Meghraj, a global real estate services firm specialising in commercial property management, leasing, and investment management.
 
The retail industry in India is worth $410 billion currently out of which about $20 billion is modern retail, which includes malls and chain stores, says Puri.
 
Inorbit is coming up with three more malls within next year (at Hyderabad, Pune & Bengaluru) with an investment of over Rs1,000 crore in these new projects.
 
Inorbit is inaugurating a new mall at Hyderabad, which is one of the largest malls with 800,000 sqft of retail built-up area which will be operational by next month. Hypercity in Hyderabad—which occupies 100,000 sqft, has already been in operation since July 2009. “We are looking at a soft launch by early next month with two of our anchor stores—Shoppers Stop and Lifestyle and a few others,” says Kishore Bhatija, director, Inorbit.
 
The Hyderabad mall will have 150 stores and the second will come up in Pune at Nagar Road which will occupy around 500,000 sqft. The Pune mall will be operational by August next year. The third project in the pipeline is an Inorbit mall in Whitefield, Bengaluru (capacity of 400,000 sq ft) which will be operational by December next year.
 
“I feel the retail business has a lot of potential if you apply the right kind of strategy. We have seen a healthy growth in our business as we expanded from Malad to Navi Mumbai, Vashi,” says Mr Bhatija.
 
Star Shopping Centres Pvt Ltd, another mall owner, is planning new chains. The company is promoted by Shilpa Malik, president and chief executive officer and Pranay Sinha, managing director. Both were the brains behind the famous Select Citywalk in South Delhi, and formed their own company in 2008 after the success of this mall.
 
The company is coming up with its first project in Bengaluru by the end of the first quarter of the next fiscal and is planning to build 10-12 new mall chains across the country. “Our first shopping centre is modelled on the designs of High Street (the mall chain in Portadown, UK) which offers the benefits of an organised shopping mall and also the benefit of visibility that High Street gets,” says Ms Malik. Mumbai’s Phoenix Mills, which was converted into a mall, is built on the High Street model.
 
“We are trying to come up with different formats of malls like lifestyle centres, destination centres, etc. All our shopping centres will be (based on) a revenue plus rent-share platform,” says Ms Malik. For example, an apparel store will shell out   12% -18% of its revenue, while food outlets may have to part with 20% of their revenues.
 
Kishore Biyani’s VC firm, Future Venture, has a stake (the VC is not ready to reveal the percentage) in Star Shopping Centres. Future Venture is planning an IPO to raise funds for Star Shopping Centres.
 
Star Shopping Centres has also tied up with Deepak Fertilisers and Petrochemicals Corp Ltd who own the Ishaniya mall in Pune. They have also inked a deal with Bhasin Infotech & Infrastructure Pvt Ltd, a Delhi-based developer, which owns the Grand Venezia in Greater Noida. Star Shopping Centres will be delivering their expertise in conceptualisation, planning, strategising and marketing for the two malls. The Grand Venezia will mainly cater to tourists from across the globe.

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