the target book reviews

Who gains with NSEL-FTIL forced merger?

When NSEL crisis occurred in 2013, nobody imagines that the Government will end up taking back to back irresponsible decisions which would affect a lot of people and cause irreversible loss to its parent company FTIL.

Currently, the order has been passed but not implemented as it is sub-judice, the case of a NSELFTIL merger, forced in my perception, has left me with questions for which only the Government can have the right answers. I read Shantanu Guha Ray’sThe Target Book’, and I feel that it is not acceptable that Government which has not taken any stern action against the real swindlers such as Vijay Mallya and Sahara Boss Subrata Roy but has declared a man who built his empire without any Government help, not fit and proper. I think this is a criminal abuse of power.

What is really baffling is the government deciding to merge NSEL with FTIL 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?

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 about the 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 FTIL shareholders with a Rs 5600 Cr 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 FTIL, 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 privacy of contract between the brokers and their respective trading clients! I can’t wait to see who has the last laugh!

For more information check The Target Book Reviews.

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