The Hindu Business Line : Leaving a mark on the BSE

FROM the Harshad Mehta to the Ketan Parekh scams, from demutualisation of the stock exchanges to the highs and lows of the equity market, she has seen it all.

As a CA and MBA in Finance from Mumbai in 1984, it was quite a task to find a suitable match for Ms Deena A. Mehta, who went on to become the first and only woman president of the Bombay Stock Exchange in 2001.

From 1984 to 86 she worked in Crompton Greaves and took a break when her first son was born. On returning, she looked at the BSE membership of her husband. But that involved going to the ring, and she had a battle on her hands, as no woman did that!

"All the BSE directors tried to dissuade me saying this is not a woman's job. Normally the interview takes two minutes; mine took two hours. Their last line of defence was there are no toilets for women in the ring and we can't provide one for you! I said: Don't worry I'll take care of myself!"

To be the only woman in a hall of 2,000 would have been daunting but "because I was highly qualified I got a lot of respect because in those days there were few professionals going into the ring".

After the Parsi man with whom she went to the ring, sold his company, she was ready to enter her husband's firm. But when it came to partnership, Ms Mehta found that the law allowed only male heirs — husbands, sons, nephews, etc — and women were barred.

The fighter in her rebelled and she moved an amendment which took four years to materialise. Meanwhile she worked on her husband's membership, acquired in 1984 at Rs 1 lakh (today it costs Rs 1 crore) and got her own BSE membership in 1994 at Rs 55 lakh, when it was opened to professionals.

In 1989, the BSE's average turnover was Rs 200 crore, with the peak being Rs 400 crore. Today, the combined turnover of the exchanges is Rs 4,000 crore.

By the time the ring closed in 1995, about 50 women had registered even though 20 to 25 came to the ring regularly, and NSE had come on the scene. Through her career Ms Mehta, currently the managing director of Asit C. Mehta Investment Intermediaries, Mumbai, has been an activist, a reformer and a champion of technology.

"People think the BSE has lagged behind the NSE in computerisation. But even in 1989 we had ordered a computer from the US but the configuration we wanted was so advanced, they wouldn't export it for security reasons," she recalls.

A tough point in her career was the 2001 crisis in the BSE with the Government and SEBI pressing for demutualisation of the exchanges in order to move away from the practice of brokers running stock exchanges.

"For 11 or 12 months we could not participate in the board meetings of the exchange," she says, adding that blaming the government and SEBI for mishandling the whole affair that "eroded investor confidence in the equity market. It happened because essentially they were looking for scapegoats and wanted to prove they were doing something"

She thinks now SEBI has become much wiser, particularly in handling "the penny stocks problem. Had it happened in 2001, all the leading players would have been shut down.

Today, they've just said don't deal with these shares or these customers. Wherever there is a problem, they're just blocking it, but at that time they were just shutting down brokerages, as that of Shankar Sharma or Anand Rathi (who was then BSE President and she was Vice-President). I was on the board of Anand Rathi Investments and he had 40,000 investors with DP accounts and they were not allowed to operate their accounts for a few days, which was terrible."

On equity as an investment option, Ms Mehta says, "People have no choice; they have to include equity in their portfolio. With low interest rates you have to understand the equity market and be part of it.

For long, the Government and the banks managed your funds and gave you 12 per cent returns, but now they're clearly saying: We can't do that anymore; you better manage your funds. In such a scenario, investors will have to look for good companies, understand their intrinsic value, growth prospects and invest."

She advises investors to track their portfolio because in a global economy, the fortunes of even the best of companies are linked to global events.

So if these change, investment decisions will change too. Compared to previous bull phases that were sector specific — leasing companies, technology, and the like — today some companies across sectors are were performing well and rewarded by investors. But, she warns, equity investors have to keep in mind the risk-reward scenario. "If the market can go up by 50 per cent, it can fall too similarly."

As for a bubble, she says today SEBI "is more vigilant and acting more responsibly" but investors should track company performance and keep away from speculative stocks. Ms Mehta finds equity participation in India "pathetic.

There are 35 crore bank accounts, 4.5 to 5 crore Income Tax payers, one crore depository account holders but there are only 20 lakh active cash market investors and around one lakh derivatives investors.

But she is confident the number will increase. "If we're to grow at 8 per cent on a regular basis, people will have more money in their pockets.

"I've conducted 1,000 investor education programmes in 15 years and can see a shift happening. You have to manage your finances according to your needs and obligations; if you're 20 you can take more risks; at 40, you'll need money for children's higher education, at 50 your child/children will get married, at 60, your regular income will stop. So based on your age and obligations, you have to plan your investment."

She can see more interest in equity, even in a place like Kashmir.

"We're in 21 States today; five years ago when I conducted investor programmes in Baramullah people would say: `Madam, kyo waqt barbad kartey ho, we're going to join Pakistan. What is the value of Indian paper?' But today we have nine offices in different parts of Kashmir. In Bihar too we're putting up terminals in small places like Sitamarhi and Chapra."

Ms Mehta encourages more women to invest in equity as she thinks that more women on the scene "could change the focus from speculation to investment, which is absolutely necessary." But that doesn't mean women are level-headed and refrain from speculation.

"I know two of the biggest speculators in Mumbai who are women. Also, there is a family of brokers where all the three daughters are heavy punters. So we can't generalise, but if you talk of women's empowerment, the biggest empowerment is women managing the family's finances; this can change the face of India."

Roadmap for investors

EQUITY should be looked at as an investment option. "Today, whatever common sense we hav, is thrown away when it comes to the stock market. People think it is easy money, fast money and a lot of money. And you can double your money! Well, this is not a kaun banega crorepathi show." Ms Mehta asks investors to act responsibly and not think that just because they own blue chips they will be insulated from the ups and downs of the market. "Don't encourage people to do wrong; if or when there is a big fall everybody gets hurt, even those who don't invest in equity." She recalls how after the Harshad Mehta scam people could not get their payments from clients. "Whether the textile or some other market, they would be told: `Abhi tau share market down hei'!"

She also frowns on day trading. "If you must do it, you should be able to take full delivery. Day trading is like swimming with your hands tied. At 3 p.m. you have to square up. Lot of my investors ask for day trading tips, but we don't encourage it. Also, we don't do margin trading. Several investors say,

"We're going to delay payment, so charge interest. But I know the day I do that, they'll take it as a new facility. There are different ways of doing this business and I have no problem with that!"

Response may be sent to rasheeda@thehindu.co.in

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