'Beverages almost always largely consist of water'

Coming to Terms
Beverages, biases and politics

These days `beverage' is getting more than average attention. "Coke and Pepsi stumble in India," reads the headline of Amelia Gentleman's article dated August 22 in International Herald Tribune (www.iht.com).

She mentions that Coke has received about 2,000 calls, in response to print ads `inviting Indians to visit its plants to see how the beverage was made'. It seems `experience has shown that consumers are often reassured by the sight of the water filtration process in the factory'.

The Tatas have spent more than $1.3 billion to acquire beverage companies overseas, write Thomas Kutty Abraham and Pratik Parija on www.bloomberg.com, in a report about the latest buy by Tata Tetley of 30 per cent of Energy Brands Inc, US, for $677 million.

One learns that the Tatas thus get the `opportunity to be present in the unfolding crossover space in the beverages market' even as consumer trends in the US are changing.

"While US sales of soda fell for the first time in at least two decades last year, unit sales of non-carbonated drinks such as flavoured water and sports drinks rose 14 per cent to $18 billion, according to industry journal Beverage Digest."


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Negatives outnumber positives for accountants, much to the glee, perhaps, of all foes of bean counters

Four negatives and two affirmatives

Those reading the Bard's plays, with an accounting frame of mind, may find that there are fewer instances of `negative' than `positive' tucked among the thousands of lines of comedies, tragedies, histories and poetry.

One of the only two occurrences of `negative' happens `impudently' in The Winter's Tale; and the other `negative' is spotted in plural with `conclusions to be as kisses,' in Twelfth Night, where the Clown says, "If one were not to count if your four negatives make your two affirmatives why then, the worse for my friends and the better for my foes." Not too differently, negatives outnumber positives for accountants, much to the glee, perhaps, of all foes of bean counters.

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Financial closure in the context of PPP (public private partnership)

Zero Base
It doesn't pay to keep financial closures indefinitely open-ended

Financial closure may not show dramatically, the way locked vaults or barred gates do. So much so, you may be pardoned for not knowing that financial closures have been happening too closely around us. For instance, the Jadcharla-Farukhnagar road project in Andhra Pradesh, awarded to the GMR consortium achieved financial closure on Friday. Financial closure of the Nagarjuna power project coming up at Yellur in Udupi district is expected next month.

Financial closure is a phrase that affects industry, as one learnt at a recent seminar on `Surface Transportation — emerging opportunities and technology' held in Chennai. Speakers from major construction firms appealed to the Government to complete land acquisition prior to financial closure of the projects. "Sometimes a land acquisition dispute over a 400-metre stretch could stall a 400 km highway project," said Ng Chin Meng, executive director of IJM India Ltd, speaking at the seminar. "This could lead to losses of several crore of rupees to the executing private company." Apt theme, therefore, for a zero base, is financial closure.


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When fears mount, security measures breach their earlier confines and expand limitlessly.

Thus have we swept suspicion from our seat and made our footstool of security

After passing through multiple walls of security check, you may yet feel insecure, especially if a stray `what if... ' were to pop up in the mind. Relax, just a normal sign of living on the edge. Fears are so solidly real, be they about liquids or whatever, that they throw security into a fluid state once again and trigger stricter measures of screening and newer initiatives.

Such as, the Interior Ministers from the EU (European Union) putting their heads together to tighten up airport security; and the EU justice commissioner pledging {euro}350,000 `for research into liquid explosives,' as http://news.moneycentral.msn.com reports. `Security unchanged at smaller airports', says a headline in The Powell River Peak, Canada; and it can either mean welcome relief or fresh concern. More a norm, though, are `troubled skies,' as rues a headline on www.guardian.co.uk, in a story on `positive profiling' and strip-searching in response to `the heightened state of nerves'.


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Making a living of directorships?

Professionals as directors vs professional directors

Directorships for a living may sound alluring. But that is not healthy for corporate governance, feels Mr M. Damodaran, Chairman of the Securities Exchange Board of India (SEBI).

When speaking at meeting organised by National Law School of India University and the National Foundation for Corporate Governance, a few days ago, Mr Damodaran —

urged companies to refrain from appointing non-shareholder directors;

emphasised the need for a proper evaluation process to rate the performance of the board members;

decried the filling of board slots with those who make it a profession of becoming directors; and

supported the idea of only professionals being appointed as directors.

Significant statements, these are, coming as they do from the market regulator. How are the professions of chartered accountancy and company secretaryship reacting to these? Here are a few comments from professionals in the field.


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Pesticide residues - the newest pest in the air

Zero Base

Dose of poison when pesticides enter food chain
The newest pest in the air is the widespread unease about pesticide residues in foods that we take. Justified, therefore, is a zero base approach to the issue of pesticide in foods.

For starters, pesticide is "an agent used to destroy pests," as Merriam-Webster Online Dictionary defines. And `pest' is "plant or animal detrimental to humans or human concerns (as agriculture or livestock production)." Compact Oxford English Dictionary describes the word as "a substance for destroying insects." Pesticide is "biological, physical, or chemical agent used to kill plants or animals that are harmful to people," explains www.bartleby.com. "In practice, the term pesticide is often applied only to chemical agents."

Questions that bother us these days are: "Does my food contain pesticide residues? Could those pesticides harm my family or me? What does the government do to ensure that pesticides used on food-crops are safe?" Just the posers you will find, top on www.epa.gov/pesticides/food, a page in the US Environment Protection Agency's site. Document 40-CFR-180, from Code of Federal Regulations, is about `tolerances and exemptions from tolerances for pesticide chemicals in food'.


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Hutchinson Essar Ltd vs BPL Communications

When a mega merger runs into rough weather
Marriages, they say, are made in heaven. As a corollary, break-ups are the handiwork of earthlings. Not rules that apply to the corporate world, you may say. Yet, a parallel between life and business is that any heavenly deliverance the unhappily engaged may look forward to doesn't usually come without the purgatory of courtroom battles.

Take the case of Hutchinson Essar Ltd vs BPL Communications, before the Bombay High Court. The deal came unstuck, after a much-hyped coming together, but before the eagerly awaited exchange of vows and eventual consummation. The mega-merger, as it was once called, has now morphed into a petition for arbitration in the civil jurisdiction, running to about a hundred pages, filed by Christopher J. Foll, Chief Financial Officer of Hutch. Facts, as narrated by the petitioners, make an interesting read for professional accountants who would like to study merger mechanics.

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'Tread softly, that the blind mole may not hear a foot fall'

Coming to Terms

Foul moles and unpleasing blots

The first meaning of mole, on www.bartleby.com is "a small congenital growth on the human skin, usually slightly raised and dark and sometimes hairy, especially a pigmented nevus."

Mole is "a benign growth on the skin that is formed by a cluster of melanocytes (cells that make the pigment melanin)," reassures Dictionary of Cancer Terms on www.cancer.gov. Shakespeare's Cymbeline speaks of Guiderius who had upon his neck `a mole, a sanguine star... a mark of wonder.' In Twelfth Night, Viola says, "My father had a mole upon his brow." Hear Oberon, in A Midsummer Night's Dream, bunching up mole with harelip and scar, as marks `despised in nativity'.

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A reactive tactic with a game name is the Pac-Man defence...

Zero Base
Do you have a defensive cocktail to ward off the raiders?

Only weeks earlier, Tata Sons, the holding company of the Tata group, had buzzed the fear alarm by saying it would raise its stake in Tata Steel in two stages through a preferential issue of shares. The trigger, ostensibly, was that Mr L. N. Mittal was visiting India, after his victory over Arcelor.

"The steel industry is highly fragmented and considerably vulnerable, and the only safeguard is to increase our stake over time," reasons Mr Ratan Tata to justify the stake increase.

While there can be endless debate on Mr Mittal's wonderment at the Tatas feeling vulnerable, it may be worthwhile studying the various options available to companies when faced with the prospect of hostile takeovers.

For starters, hostile takeover is the opposite of the `friendly' variety. A hostile takeover "goes against the wishes of the target company's management and board of directors," defines www.investorwords.com.



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'Company law is the core competency of company secretaries'

Guarding the turf from predatory professionals
For starters, MCA21 is an ambitious e-governance initiative of the MCA or the Ministry of Company Affairs (www.mca.nic.in). It is aimed at `repositioning MCA as an organisation capable of fulfilling the aspirations of its stakeholders in the 21st century'. MCA21 facilitates the filing of eForms; and the project is designed `to fully automate all processes related to the proactive enforcement and compliance of the legal requirements under the Companies Act, 1956.'

A 66-page Process Handbook on the site will tell you that in certain cases, "a certificate from the Chartered Accountant or Cost Accountant or Company Secretary in whole-time practice is also required to authenticate the particulars contained in the eForm." An example it gives is of the eForm for creation or modification of charges. "Professionals (Chartered Accountants, Company Secretaries, Cost Accountants and Lawyers) who interact with MCA and companies in the context of the Companies Act," reads a portion in the Handbook that lists the types of users of Digital Signature Certificates for MCA21 purposes.

The ICSI sees this is as a rub on the wrong side. The Institute isn't particularly pleased that the Ministry has allowed other professionals to encroach into the practice area of company secretaries.


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