News Report: The Hindu: 09.05.2010
Govt likely to finalise IPO managers for CIL soon. http://www.thehindu.com/businessline/blnus/14091821.htm
NEW DELHI: The government is likely to appoint six merchant bankers, including the lowest bidder Citigroup, that have been shortlisted for managing the initial public offer of state-owned Coal India Ltd (CIL) within a few days, according to market sources.
Sources close to the development said that the other five shortlisted bankers - Deutsche Bank, Morgan Stanley, Enam, Kotak Mahindra and DSP Merrill Lynch - are expected to match the “near-zero” fee bid of the Citigroup because of the high profile and siz e of the CIL IPO.
Sources said that as against the global norm of 3-5 per cent fee that bankers charge for managing IPOs, Citigroup has bid a tiny fraction of the estimated size of the issue (around Rs 12,000 crore) so as to ensure that a commercial contract can be signed .
“There has been an instance, or two, where government has rejected zero-fee bid because for a commercial contract to be signed there has be some amount on paper,” said one source. He added, “Just to give a perspective, at the current fee while CIL IPO ma nagers are expected to incur $3-4 million in costs - from legal documentation to marketing - they will end up getting just about Rs 200-250 per head (about Rs 12,000-13,000) in all.”
One banker said that although this kind of fee is “unique”, merchant bankers view the costs (or loss) they incur as “advertising cost” and “future investment”, in a country (like India) which is planning to raise Rs 40,000 crore through disinvestment pl an in the near term. “That itself is a big ticket (attraction),” he added.
Isnt above a brilliant deal for India.
Now may pls compare this with below deal-
The appropriate government regularly spend crores of rupees on advertisements to give “publicity” to “Events and Happenings of National Importance”.
The central govt, State govt, municipal bodies mint money from the people of India by way of Income Tax, Service Tax, Wealth Tax, Road Tax, Property Tax, Entertainment Tax, Sales Tax, Professional Tax, water Tax, Toll Tax, Stamp duty, Custom duty, Excise duty, Education cess, VAT, CST, etcetera, and (do not) promises us in return that every penny will be judiciously spend for the well being and welfare of the people.
Now may pls read this-
01.04.2010, While turning the pages of morning newspaper Navbharat Times (Times of India group publication, Hindi language), advertisement published of government of India about primary Education of every Child in the backdrop of Right to Education Act coming into force, page 12, half paged advt. Fair enough.
01.04.2010 while turning the pages of morning newspaper – Free Press Journal, a “news report” struck me – Right to Education Act comes into force finally, center of page 3. The Govt did not spend a penny on advertisement on “Right of primary education of children, a reality”.
Thus, on one hand, the government pays lakhs of rupees to Navbharat Times to give publicity to Right To Education coming into force and on the other hand the Free Press Journal cover the same issue of Right To Education coming into force into their news report and government did not spend a penny.
And thus we are generously Paying to a Person for “Publicity” of “Events and Happenings of National Importance” when that person has itself set up an business venture of Publishing, so as to give “Publicity” to “Events and Happenings of National importance”, FREE OF COST. Aren't we spending our little precious money on something which is available, in fact offered to us, FREE.
It is well within constitutional powers of government to issue a Press Release with binding directives on all persons publishing Newspapers, that they are obliged to cover this news of National Importance in their newspaper. It is understandable when government pay for Public Notices & Commercial tenders which are not in the nature of news of general importance to every citizen of India.
From- Sandeep Jalan (Advocate)
Janhit Manch, Kuber Bhuvan, Bajaj Road, Vile Parle West, Mumbai- 400056.