Since the year 2013, when the NSEL crisis broke, nobody would have imagined the Government taking such a massive step of announcing the merger of NSEL-FTIL. Currently, the order has been passed but not implemented as it is sub-judice, the case of a merger, forced in my perception, has left me with questions for which only the Government can have the right answers. I choose to stay my ground as someone keenly interested in knowing which way the dice finally rolls—whether executive overreach drives more loss than gains or a more rational outcome awaits.
What is really baffling is the government deciding to merge NSEL with its parent 63 moons unilaterally! My question to everyone is plain and simple, what exactly about this decision is laudable? Does it in any way aim to salvage shareholders sentiments or make a case for Make in India or simply even make sense? Burdening 63,000 shareholders of 63 moons, shocking foreign portfolio investors (who by the way hold roughly 13% of the stake) and bearing negatively on ‘Make in India’ by curtailing limited liability, what precisely is the rationale behind the move? How do we justify the use of section 396 of The Companies Act in the manner that it might jolt the life out from the concept of limited liability corporations? Are we ready to let go of something so fundamental to the idea of promoting entrepreneurship in today’s India that looks to pioneer ‘Make in India’? To begin with—that can’t even be an argument! I am also perplexed by the government citing other forced mergers, apparently, to put forth the idea of how healthy it can be. Here, what aboutthe fact that those were mergers with parties that were state-owned and that had agreed to the merger. It beats me when the government claims to be acting in the interest of the public because it is not very clear as to who that ‘public’ is and what those ‘interests’ are? All things kept aside, the merger burdens the shareholders with a Rs. 5600Cr liability—how is it then in larger public interest. With the Vodafone issue still un-remedied, the perception we might just be creating with such acts of executive overreach is that of being an economic destination that has lots to sort out on the economic front—certainly not in public interest anyway! And, I conclude by saying that for a reputed company like 63 moons, merging defunct company, NSEL in this case, with it can only dent its perception in the market. Besides, what everybody talking about this fiasco forgets that NSEL has no liabilities as all the transactions are under the privity of contract between the brokers and their respective trading clients! I can’t wait to see who has the last laugh!
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September 2020
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