Soaring food prices, who finally benefits?

The soaring food prices which is taking inflation rates to disturbing highs raises an important issue.

Who benefits from these rising prices of food articles from potatoes and onions to rice? It is time the government brings out a white paper of food prices.

For instance, take the prices of the pusa variety of basmati rice produced in the Punjab. Farmers get Rs 12-15 per kg for the paddy but this is sold for Rs 150 per kg in the retail shops.

It is a well known fact that it is the traders and middlemen who are making the money. It is the same with every other food item grown by the farmers.

QIP quota needs lock-in

Since Sebi has been on a pro-investor decision spree, particularly with reference to mutual funds, there is one issue that needs immediate attention and that is the qualified institutional placements.

As of now, there is no lock-in period for the shares that they are allotted and this is unfair to the retail small investor.

They can sell whenever they want and make a killing.

The QIPs get placements at a discount and get a huge quantity of shares.

In 2009, there were 44 QIP issuances through which corporates raised Rs 32,558 crore.

Controversy continues

The controversy over extending the trading hours by an hour in the morning is still raging. One interesting point that has emerged is that from 7am to 9am when the Singapore Nifty is being traded there are hardly any transactions.

According to broker Mohan Vijyan it is barely .01 per cent, so the fear of the National Stock Exchange that the business is running away to Singapore is unfounded.

There are hardly any volumes. So if the hours are being extended only to make up for the business which is going to the Singapore Stock Exchange, then it will hardly serve the purpose.

So, why should the whole market suffer for nothing.

Even more important is the fact that trading on the Indian exchanges is lackluster on the whole. The bulk of the trading it is said takes place during the opening of the market and the close of the market.

Hope for minority shareholders

This week, there was good news for the minority shareholders. During the hearing of the Cadbury case, where Cadbury sought to evict its minority shareholders under Section 100 and 104 of the Companies Act, the judges were in favour of the minority shareholders to the extent that they said the company should send notices to all the 8,000 or so minority investors and a decision will be taken only after their views are heard.

These investors had objected to their being forcibly evicted from the company without even being given a fair deal.

Earlier, Cadbury had made four buy back offers to reduce its number of shareholders.

It is understood that several companies, mostly multinationals resort to Section 100 of the Companies Act which refers to reduction of capital.

This is unfair to the minority shareholders who are treated as squatters or third class shareholders. One looks forward to the official written order of the court on the Cadbury case which is expected this week.