Promoter-driven firms

This refers to ‘When promoters rule’ (March 30). It is true that almost all the large conglomerates in India are “ruled” by promoters. It is a misconception that absolute power is necessary for faster growth. Promoters taking actions that are self-serving and detrimental to minority shareholders’ interests are not uncommon. Also, the risk of fraud, corruption and non-compliance in promoter-driven companies is disproportionately high. Even the share of these companies in the overall bad debts in the banking system has also been on the increasing.

As these companies focus on growth with least attention to ethical standards of conducting business, the chances for occurrence of frauds are also high. Also, the collateral damage to the markets due to malpractices in these conglomerates is enormous. Here, the role of the regulator assumes significance. It is the regulator, through formulation and strict implementation of stringent compliance framework and periodical and compulsory scrutiny, that can prevent unethical business practices in these family-owned companies.

Kosaraju Chandramouli

Hyderabad

Mining equipment

Apropos, ‘India to start exporting coal from FY26’ (March 30), the government must consider abolishing the discretionary power of DGMS (Directorate General of Mines Safety) to grant approval for mining machinery for underground coal mines.

The responsibility of mines safety and productivity lies with mine owners, who should be given full autonomy to decide which machinery is best for their mine. DGMS seems to be more inclined to only approve, renew obsolete technologies and has shown reservations in accepting advanced foreign mining equipment and technology.

Prem Amarr Bhasin

Sydney, Australia

Adani group shares

Adani group has sought more time to pay ACC, Ambuja debt, and had earlier initiated the prepaying $2.15 billion of margin-linked loans. In limelight post the Hindenburg report, the group was seen to have a high debt/loan overhang even as its gross earnings to debt is nearly double the limit for companies to stay within the safe financial health threshold. The group is since seen servicing its debt obligations in a bid to shore up the price of its stock.

The report, for right or wrong reasons, has been a leveller of sorts, a timely catharsis in the repair of group’s own image and the reputation of the Indian market.

R Narayanan

Navi Mumbai

Angel tax

With reference to ‘Angels and the demon’ (March 30), the inclusion of non-resident investments in domestic unlisted companies under the latest angel tax provisions would be a setback both for investors and companies, especially in the prevailing funding winter in PE/VC investments in India.

This warrants disclosure of the excess consideration received by global investors from the sale of unquoted shares over and above the fair market value, hitherto applicable only for domestic investors. Billions of dollars in angel funding have flowed into Indian start-ups, and incumbent angel investors, in successive rounds of funding these small entities, are likely to pocket substantial capital gains on exit.

As aptly pointed out, imposing tax on capital raised by start-ups from non-residents is illogical and impact the very sustenance of these entities.

Sitaram Popuri

Bengaluru

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