Disinvestment Issue Mismanaged: Mitra

He said while on one hand the government and the Securities and Exchange Board of India (Sebi) are coming down harshly on the merchant bankers for bringing in bad quality issues to the market, the PSU disinvestments from 1991 onwards have been classic cases of badly managed exercises.

This is despite there being several models of very successful disinvestment programs in various developed and developing economies, he said.

He also ridiculed the Association of Merchant Bankers of India for suggesting to the regulatory authorities to make it compulsory to appoint one Indian lead manager for international offerings by Indian companies.

Even the merchant banking division of our biggest institutions or banks have little international presence or experience. For successfully completing international mandates, Indian intermediaries need to have a market capitalisation of USD 3-5 billion and the requisite international expertise. The Indian players have neither.

Mitra also felt that world over to acquire expertise in any field, a company in that field is generally taken over by large investment banking corporations. Large Indian institutions need to do exactly the same by acquiring small firms abroad and investing in the expertise.

According to Mitra, stock markets have completely ignored the small tinkering of irrelevant and insignificant tax benefits that the government has been providing.

He said: When the capital market in India was hoping for a full waiver of income tax surcharge for the corporate sector, waiver of tax on dividend income, it got MAT, with a relaxation for only six companies.

Mitra called for a change of old fashioned mindset to international standards at all levels.