panch-tattva talk…DVR shares


The shares with differential voting rights (DVR) are yet not popular in India. Tata Motors had issued them some time back and the issue was not welcomed by public in general which was more on account of the conditions then prevailing rather then due to the aversion for DVR shares. The promoters and arrangers/managers ect had to pick them up. Now the same are selling at some discount (about 30pc) and would be a good pick for the fortunes of Tata Motors have become attractive on back of CV sales picking up and expected to gather momentum and on back of successful launch of ‘nano’ which will be supplied in bulk in future. It commands premium at the moment ie those who have booking may get some premium for trasferring to the interested buyer. I think the DVR shares should be issued by promoters as a routine for this will keep them safe from the requirement of proportion contribution to maintain holding level. Secondly the discount on such shares and higher dividend entitlement makes it attractive for the common investor. He happens to to be safer then otherwise because the manipulative power of promoters goes down. The SEBI has not been permitting issues of DVR shares after the first such issue but I think they will come round after the markets here become more mature.

There is no question about India spending ever larger amounts on infrastructure. Rakesh Kumar Chaudhary says in an article in FE (5/10/09) that ‘for every 1pc less spending on infrastructure, there is 1pc loss in GDP. Now point is how to generate resources of high order and not destablise the fiscal and financial balances otherwise aimed at. I gave the solution only a fews back and that was to somehow bring the capital in Indian hand out in the open which is stashed away in form of precious metals. The govt should give some incentives in form of saving on taxes and in form of returning the equal quantity of gold/silver at some time in future. The resource so generated will be without burden of interest but the spending of so raised money has to be 100pc for the purpose of creating infrastructure of the type which may pay back enough returns to take care of the liability created. Thus the need would be fulfilled, the worth will be back in publics hands and the nation will be left with useful infrastructure for a long long time in future.

We had Nifty advancing by more than 2.5pc over the three trading sessions in last week. The cues form Asia this morning are not positive and the mood may rub off on traders in India when the market opens. Some correction was even otherwise due and does not mean end of world, the resumption of upside moves will again be noticed after some time.


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