The Hindu Business Line : Is the argument of greater good, good enough?

Story so far: I happen to visit the market regulator's office on a day when IMSS, the new surveillance software, was being launched. The Integrated Market Surveillance System skims through 3-4 gigabytes per day and applies nearly 30 types of filters, I learn. With such a sophisticated surveillance engine in the hands of the market regulator, will events such as the IPO (initial public offer) scam that rocked the bourses not long ago be things of the past, I wonder.

Episode 153

Or, will there still be things that IMSS would miss? With that question I had wrapped up the previous episode a couple of weeks ago. "As a life member of the Tamil Nadu Small Investors Association, we had lengthy discussions on the changes SEBI (Securities and Exchange Board of India) would make as a market regulator. Unscrupulous elements in the market are very smart and they are always one step ahead of SEBI in all aspects, begins the mail from Lion M. Thanga Velu." An expectation gap? Well, I read on. "It can arm itself with the latest technology, but it cannot regulate the market without support from the Government."

Thanga Velu is of the view that unscrupulous traders can buy peace by funding political parties. "Hence, nothing will happen, the market is going to be manipulated at the cost of small investors, who have neither the muscle nor the money power to fight the market manipulators or get their grievances addressed by the regulator," laments his mail.

"Has SEBI identified the companies and their promoters who cheated investors to the tune of Rs 10,000 crore a decade ago by promoting new companies, called for subscription to equities, collected the money and vanished from the scene?" Is it impossible to locate them? "Nothing is going to happen in spite of technical capability. Sorry." The confidence of small investors in the market must be restored quickly.

As if to balance, here is a mail from Sriram Kannan, who feels that installation of the new surveillance system will surely help the regulator in monitoring and controlling the market movements. "The best thing about any surveillance software is that it can give us information without compromising on time. This becomes critical in today's 14K levels, as any southward movement that starts and ends without a warning could leave many small investors high and dry, making it difficult for companies to attract new investments."

Sriram hopes that during sessions of `financial calamity' the new system will enable the regulator identify abnormal market movements and prevent the market from being carried away by a bunch of `uncaring institutions and individuals.' Perhaps they did that when the index fell 400 points every day for two days last week. "FIIs (foreign institutional investors) and HNIs (high net worth individuals) have the financial clout to strike back when the market turns weak, but the confidence lost by small investors during an unexpected dull phase would severely affect both the primary market and the secondary markets," cautions Sriram.

"The IMSS may generate reports which point to possible artificial inflation of share prices and other manipulations, but SEBI should study the reports to indicate real-time abnormalities," says P. V. Sudhakar Rao, Deputy Manager, SBI, Ongole. "Only then will the objective of the costly software be fulfilled and investors' interests protected."

Trailing retail

"Dear Swati, your column carried many interesting thoughts and insights on the shape of things to come (or size of shops that would survive?) in the retailing space. As a professor teaching `Business Environment & Strategy and Entrepreneurship,' I am interested in taking this kind of dialogue forward among management students and industry players in places such as Madurai," says S. Gnanaharan. He feels that students and small businesses should be sensitised to the issue. All the best, Gnana.

"Dear Swati, I read your column with much interest. I am with a non-profit organisation in Washington DC (www.walmartwatch.com) which tells a new, more truthful Wal-Mart story," writes Joy Bernstein, Press Secretary, Walmart Watch, US. "We are a clearinghouse for activists, policymakers, and those who have an interest in challenging Wal-Mart and other big-box stores to be responsive to the needs of different communities." A campaign of Five Stones and The Centre for Community and Corporate Ethics, informs the site. "We have a lot of studies and reports on the impact of Wal-Mart all the way through the supply chain. We also have a daily service of all the clips on the top stories of the day involving Wal-Mart, and I think you might find that helpful," writes Joy.

"At Wal-Mart Watch, we bridge the gap between ordinary citizens and community organisations concerned about Wal-Mart's unchecked growth and negative impact on our society. Our aim is real change — transparent and lasting — to benefit all Wal-Mart communities, and now that Wal-Mart looks like it is coming to India, that includes you too. To this end, we challenge the world's largest retailer, Wal-Mart, to become a better employer, neighbour and corporate citizen." Sounds like reasonable goals. "I am available to talk to you any time, and would be happy to answer any questions you might have. We have an outstanding research department, so if I do not have the answer immediately, I will try and find it for you. I look forward to hearing from you. Sincerely Joy Bernstein." Good luck with your work, Joy.

"Will the neighbourhood shops continue to flourish even after the giant retailers begin marching down our streets? My answer is in the negative," reads another mail from Gnana. "Retailing is one of the most fragmented industries in the country. So, changes in the external environment — though they are gradual — are never grasped and appreciated by industry players. Petty shops will not close all of a sudden, but perhaps gradually. Some will survive; and with some ingenuity or outside help, a few will be able to reinvent themselves. And, who knows, Mani's Petty Kadai could be one of them. But definitely they will not be able to survive without public (meaning customers') support. The new format, bigger and organised players know how to add value to the customers." A happy thought this must be for Wal-Mart.

Mahanth Krovi, an ICWA student mails in to say that he wants to know more about the stock market, mutual funds and derivatives. Good, Mahanth. May be, reading of a business daily should help, even if it be for only 10 minutes.

"Every week you share your thoughts on various issues. Great job," compliments Saravanan KR from Tiruchi, working in TCS BPO (Chennai). "Today's supermarkets are for mostly the `A' class people, while the `B' and `C' classes go to petty shops. The main advantages of petty shops are proximity to residences, and credit facility for customers. In a developing country `B' class (the middle class?) grows at a higher rate. So the petty shops won't be affected in any way." I should tell Mani, the shop owner!

"Dear Swati, just like the ecosystem requires the existence of the `small ant' and the `big elephant' to ensure proper balance, the entry of MNCs and retailers with deep-pockets into the Indian market will not wipe out shops like Mani's," assures Sriram's mail on the retail issue. "The entry of MNCs is sure to shake up the retail industry. While it is necessary to ensure there is fair competition in the market, care should also be taken that predatory pricing does not kill the budding industry. A churn in the HR (human relations) aspect is also bound to happen, as companies, both home-grown and multinational, set shop and try to poach the best talent."

Sriram adds: "Though nothing can be said for certain about the legal, commercial and HR policies that will evolve in the days to come, it would be advisable if the retail regulator, retail consumer rights handbook, and so on, are devised before the impending retail explosion really happens." Interesting.

"This would solve two major issues. One, any new policy or regulation that needs to be issued can be easily addressed if a regulatory system is devised beforehand. And two, it sends a strong signal to the world business community that India is proactive and supportive in all aspects of business dealings." Thanks Sriram.

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Fields vs factory

An urgent office work took me to Kolkata last week. The mood was not too upbeat in the city, what with a politician on fast and heated exchange of charges and counter-charges filling the air. With a few hours to spare before heading to the airport for my flight back to Chennai, I decided to head to Singur.

"Are you sure?" asked the driver. "Section 144 has been clamped." Oh, prohibitory orders, I mused, but still I wanted to see a farm before it became a car factory. He was appreciative of my eagerness, and drove through bypass roads to reach a farm.

"My name is Kashinath," said a farmer, in one of the huts. "They want to buy my land for the new factory." I had no ready answers for Kashinath, except to give my card, as if it would help. "Without land we don't know how to survive," wailed his wife. "Whatever we know is to sow and reap... " Meanwhile, a few jeeps with cops were speeding down the road, and the driver said, "Memsahib, chalen?" Is displacing people the price of growth or the tariff for development? Is the argument of greater good, good enough? These and more questions were swimming in my mind, even as fertile fields swept by through the taxi window. Send in your thoughts by Friday.

Blog at: http://Swati-CA.blogspot.com

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