SEBI to hire professional agency to educate investors

The objective of the investor education programme is “to create general awareness on securities market, various products available in securities market and facilitate the participation of the retail investors in the securities market to invest with knowledge,” SEBI said

Mumbai: Capital market regulator Securities and Exchange Board of India (SEBI) will launch a big investor education programme through short films, TV and radio commercials in English and regional languages, reports PTI.

To spread the awareness drive, it plans to hire a creative agency having annual revenue of at least Rs100 crore in the past three fiscal years.

The objective is “to create general awareness on securities market, various products available in securities market and facilitate the participation of the retail investors in the securities market to invest with knowledge,” SEBI said.

The selected agency will provide creative services including production of short films, TV commercials, radio spots and printing advertisements to carry out “SEBI’s Investor Education and Awareness campaign” across the country.

Besides, there will be a separate agency for release of the creative work to various media.

Inviting expression of interest (EOI), the regulator said the agency to be contracted will have to provide in-depth knowledge on the communication strategy to be followed for this campaign.

“The main functions of the agency will be the creation of advertising products which will successfully convey the desired message to the target audience...” SEBI added.

The awareness campaign will be done through five 25-30 minutes short films, ten 30 seconds TV commercials, ten 30 seconds radio spots and ten print advertisements.



Investor Education

5 years ago

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Vedanta to merge Sesa Goa, Sterlite to create $20 billion entity

The decision to synergise activities in oil exploration, mining and non-ferrous metal will save the group Rs1,000 crore per annum, Vedanta Resources’ chairman Anil Agarwal told reporters after meetings of the boards of the merging entities in Mumbai on Saturday

Mumbai: In a major revamp, billionaire Anil Agarwal-led metal and mining major Vedanta Resources Saturday decided to merge Sterlite Industries with Sesa Goa to create a $20 billion controlling entity for simplifying its group structure, reports PTI.

Merger of Sterlite Industries and Sesa Goa will lead to a new entity, Sesa Sterlite which will be the seventh largest natural resources company in the world.

The decision to synergise activities in oil exploration, mining and non-ferrous metal will save the group Rs1,000 crore per annum, its chairman Anil Agarwal told reporters after meetings of the boards of the merging entities here in the western Indian city.

Vedanta’s 38.8% stake in oil and gas producer Cairn India, which was acquired last year, will also be transferred to Sesa Sterlite with the related debt of $5.9 billion.

“This transaction is a natural evolution, leading to simplification of the Group’s structure,” Mr Agarwal said.

Shareholders of Sterlite will get three shares of Sesa Goa for every five shares held, as per the swap ratio fixed.

Eventually, they will become shareholders of Sesa Sterlite to be listed on bourses, after receiving regulatory approvals, including that of shareholders of the concerned companies.

Besides Cairn India, seven other group companies including Hindustan Zinc, Bharat Aluminium, Talwandi Sabo Power and Australian Copper Mines will become subsidiaries of Sesa Sterlite in which the London-listed Vedanta Resources will hold 58.3% stake.

However, Vedanta Resources will continue to directly control its African operations. This is the second restructuring attempt by the group after it faced opposition to the proposal in 2008.




5 years ago


The I in BRIC: Indonesia or India

What do Indian telecom companies have to do with Indonesian coal? The short answer is everything, at least for investors in emerging markets

Every country has numerous types of property. The interests in property are governed by the peculiar laws of any country. Many investors believe that the law will determine the value of the property, but as the Nobel Laureate Ronald Coase pointed out in his famous theorem, the law itself probably does not make much difference because if there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights. But in emerging markets there are transaction costs. The most glaring is poorly defined property rights. In India the property right was a license to use parts of the radio spectrum for second generation (2G) mobile telephones. In Indonesia the property right was a license to dig for coal.

In 2008 the corrupt telecom minister, Andimuthu Raja, helped by some well-connected tycoons was able to engineer a rigged auction of licenses to use the 2G spectrum that may have cost the Indian treasury as much as $39 billion. In February 2012, the Indian Supreme Court revoked 122 licenses declaring the sale “arbitrary and unconstitutional”. The court ordered the telecom regulator to reallocate the licenses by an auction to be held in four months.

The court was on solid legal grounds. The common law rule is that fraud cannot convey good title. This is quite logical, because it provides a disincentive to crooks, who may not profit from their acts and an incentive to buyers to investigate ownership before they buy. It is also a very important limit to the pervasive corruption that infects not only India, but all emerging markets.

Despite the validity of the ruling, it will have some far-reaching consequences. Three foreign telecom companies including Norway’s Telenor, Russia’s Sistema and Etisalat of United Arab Emirates made a mistake common for foreign investors in emerging markets. They trusted their sellers or just assumed that it was part of the business culture. Nigerian Internet scammers make a good living on the presumption that corruption is so prevalent that deals, no matter how nefarious, will be respected. Whatever their logic, these three companies stand to lose the billions they invested in networks based on the assumption that their licenses were valid.

The press on the ruling has also been mixed. The Indian muck-raking news magazine Tehelka called the court’s action “judicial over-reach” that resulted from “the abject capitulation of the executive”. One commentator stated that “India has become a banana republic in which the banana is peeled by the Supreme Court. Never has ‘brand India’ been so damaged.” Incredible India has become Undependable India”.

The truth is just the opposite. The Supreme Court’s actions go to the heart of any investment. All investing is a bet on the future. The future is filled with risk. The more investors can limit risk, the more likely they are to invest. Strict adherence to rules and well-defined property rights are the most important criteria for attracting foreign investment.

Contrast India’s license revocation with Indonesia. Gossips lament that the ‘I’ in BRICs now stands for Indonesia and not India. The shareholders of Churchill Mining would disagree.

The Nusantara Group is an Indonesian mining company controlled by Prabowo Subianto, a retired general, once the son-in-law to former president Suharto and future presidential candidate. Nusantara held licenses to mine coal in East Kalimantan on the Indonesian part of the Island of Borneo. These expired in 2006 and 2007.  A small British company called Churchill Mining bought interests in the licenses after the local government declared them available.

In 2008 Churchill discovered a giant coal deposit, estimated to be in 2.73 billion tonnes. It is the second-largest reserve in Indonesia and the seventh-largest in the world. Based on the authority of its license, Churchill invested more than $40 million in the project.

Within months of announcing its discovery, Churchill found that their property rights in the discovery were in question. The same local government that had declared that Nusantara’s license expired backtracked. They extended them which, if upheld, would nullify Churchill’s claims.

Churchill sued in the local courts but predictably lost. A final appeal to the Indonesian Supreme court could take years and a representative of Indonesia’s president Yudhoyono said that the issue was a local matter and denied any knowledge of the case.

It would be easy to dismiss these incidents as isolated cases, but they are not. They are part of the risk of any investment either direct or indirect. Before any emerging market can live up to the BRIC hype, it has to enforce property rights. India has proved that it is the ‘I’. The real problem has to with the C and the R.

(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages. Mr Gamble can be contacted at [email protected] or [email protected])



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