Why did you sell-off Ind Global to Arthur Andersen?
It is a question of perception. The decision to merge Ind Global with Arhtur Andersen was based on mutual need. As a small merchant banker with many years of experience in the industry I found that the industry was consolidating and I thought of a merger with a firm which has global presence would be ideal. Myself and Munesh Khanna, country head of corporate finance at Arthur Andersen met informally, discussed about the merger and it clicked well. That's how this merger took place. While, for me the choice of Arthur Andersen with its international presence having 2,300 professionals in 46 countries seemed a necessity, they too were looking out for a critical masses. We have the `brand equity,' we are active in IPO market and the mergers and acquisition field, we are listed among the top 20 merchant bankers in the country. So, buying out our intellectual capital would give them an opportunity for open offers, for buy back of shares and for medium-sized IPOs and rights issues. Our combined strength would see anaggressive player in corporate India, with the focus being on cross-border operations using Arthur Andersen's global reach. In many ways it is beneficial to me and my employees and above all to the business.

What would be your role in the new environment?
My role would remain the same. With the combined strength of both the teams I would continue to spearhead the corporate finance activities of Arthur Andersen. It is a question of what is good for clients and the business. In the new environment I would get a larger platform of Arthur Andersen and cross-border reach.

How do you see this trend taking its toll in India ?
If you see what is happening in banking industry whether it is commercial or investment the `big is becoming more beautiful' than ever before. Mergers have happened in the US, they are now happening in EU and soon they would happen in Asia too. It is a trend one can not avoid. In India, though, there are 90 members only five to six merchant bankers are well known. Mergers used to be a phenomenon in the manufacturing sector then and we would witness this trend taking place in the service sector now. For instance, in the broking industry how many brokers are making money? The institutional businesses have gone to the top 10 broking firms. The retail business is not all that exciting. Either one has to wither away or consolidate. I am in a business of advising corporate houses on restructuring and I stand justified to have restructured my organisation as well.

Why only a few merchant bankers such as JM Morgan Stanley, DSP Merrill Lynch, Kotak Mahindra Capital Company etc are very active in the primary market. What happens to others?
Again, globally the maturity of markets leads to consolidation. The number does not matter. What matters here is the quality of service. If top three-four merchant bankers take away 85 per cent of the total business in the primary market, this is the way the market moves. It is up to the issuer to decide whose service he would like to take for the purpose. The quality of service comes first. These three merchant bankers are preferred the most because they give quality services, have bigger and better balance sheets and distribute the securities better. As a user of the service, the promoter would like to pay more and get the best. This is a user's prerogative. No one can force the relationship between the merchant banker and the promoter. There could be a variety of factors to choose the relationship.

How could the investors' confidence be ensured in the primary market?
Investors' confidence is directly proportional to the money that he makes in the market and the liquidity he enjoys from the investment he makes. In the case of the book-building process, the liquidity seems to be suffering because the number of shareholders in recent issues is becoming very minimal. The investors' interest or confidence in the primary market is going to be poorer because the retail investor, who is not as stronger as the institutional investor, is going to hold on for five to six years. So, because of the lack of liquidity and the poor quality of issues in recent times the investor's confidence seems to be vanishing in the primary market.

Pricing has been a major concern in recent public issues. Do you think free pricing is an effective mechanism or should there be a concrete formula for price determination?
The subject of pricing has been discussed for quite sometime. Leave the market to find its price. Formulas can not increase the investors' confidence. The market is a place where the willing buyer and seller meet together. If the retail investor is not capable of understanding the market, he should not come to the market asking for protection. Free pricing is an accepted concept and the merchant banker who manages the issue has to justify the price. The IPO of Creative Eye is an example where they first pulled back the price because there was no demand and then they re-launched it at a lower price acceptable to investors. This is how the market functions. If the time is bullish, everything goes well. In a bad market even a good thing doesn't go well. There can not be a concrete formula for price determination or stock valuation. In an open market, protecting the investor by pricing would not be helpful in the long run. Market regulations are there but how many promoters are able to come out with sensibleIPOs in the last three months in the tech industry. Market always evolves by itself.

What could be done to ensure the quality of public issues when many of them are not even traded after listing, blocking the investors' money?
The quality of public issues would be decided by investors. There are parameters laid down by the Securities and Exchange Board of India (Sebi).

We have improved our disclosure standard. The retail investor must know of the risk he is taking before investing. In India we have reached a certain standard in terms of disclosure that is being re-visited by Sebi to further improve upon. If the investor has no access to information let him stay away from the market. The market would decide about the quality of the issue. In my opinion, the book-building process has reduced liquidity. In the absence of liquidity and depth, the quality of IPOs would suffer. Even quality issues would suffer at this count. We have to really re-visit whether the book-building is a good mechanism. At the end of the day, the function of the price and the time becomes vital. In a boom market, everything gets sold and in a bad market nothing gets sold.