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Monday, June 12, 2006

Kotak Securities Reports

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Thanks Puja

Sharekhan Investor's Eye

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Motilal Oswal - ITC

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Thanks Ramesh

ET - Hot Picks for the week

Research: CLSA
Recommendation: Buy
CMP: Rs 159 (Face Value Rs 1)
12-Month Price Target: Rs 210

CLSA has recommended a 'buy' on Hindalco with a 12-month price target of Rs 210. During financial year '07-08, Hindalco should see growth in volumes for copper, as well as aluminium businesses. CLSA is also positive on the medium-term outlook for aluminium, although there could be some softening in base metal prices from current levels.

The management has expressed confidence about the ramp-up of copper output to 350kt in FY07 and scale-up towards full capacity in FY08. The 390-kt alumina refinery expansion at Muri should come on stream by end '06, implying 5% growth in alumina output and 3% higher aluminium output in FY07.

Product mix enrichment supported by higher supply of value-added rolled products from facilities acquired from Pennar Aluminium and control on coal cost will have a positive impact on margins. With rising risk aversion globally, base metals also look vulnerable to near term correction.

Last week, Hindalco cut domestic aluminium ingot prices by Rs8,000/tonne (6%), but with volatile LME prices and local prices above import parity, further adjustments could be forthcoming. Spot prices of alumina, a key input for marginal Chinese smelters, also appear to be weakening.

However, CLSA earnings model assumes average LME aluminium price of $2,300/tonne (13% below current price), LME copper price of $4,500/tonne (43% below current level) and lower copper Tc/Rc margins for FY08 (19c/lb, vs 24c/lb in FY07 ) implying sufficient cushion to the forecasts. After the sharp 36% fall from its peak in early May, Hindalco is trading in line, below historical valuations. In contrast, the broader market remains at a 25-30% premium.

Hindustan Construction
Research: Motilal Oswal
Recommendation: Buy
CMP: Rs 113 (Face Value Rs 1)
12-Month Price Target: Rs 193

Motilal Oswal has recommended a 'buy' on Hindustan Construction with a 12-month price target of Rs 193. HCC's order book in March '06 stood at Rs 9,670 crore v/s Rs 5,380 crore in March '05 (up 80% YoY). As of end March '06, HCC has submitted price bids for projects at over Rs 2,280 crore, while price bids worth Rs 12,250 crore are expected to be submitted in the near future.

The company also submitted pre-qualification bids for 11 projects of Rs 6,570 crore, and expects to submit pre-qualification bids for five new projects valued at Rs 5,500 crore in the near future. During FY06, the company forayed into gas pipelines and EPC hydropower projects.

Realty development is emerging as a key business vertical for HCC, and the company is seeking opportunities in township development. In Lavasa Corp, HCC's stake has increased to 60.5% (v/s 50%). HCC is likely to report net profit of Rs 200 crore for FY07 (up 138%) and Rs 260 crore for FY08.

Based on SOTP, Motilal Oswal's value of the core business of HCC is Rs135/share (14x P/E), Lavasa project is at Rs 33/share and investments at Rs 25/share (at book value) and arrives at a target price of Rs 193 per share. At current market price, the stock quotes at reported PER of 17 times FY07E and 13 times FY08E. Adjusting for value of real estate, subsidiaries and investments, it quotes at PER of 9.1x FY07 and 6.9 times FY08E.

Jindal Steel & Power
Research: Edelweiss
Recommendation: Buy
CMP: Rs 1,311 (Face Value Rs 5)

Edelweiss has put a `buy' on Jindal Steel & Power. Jindal Steel's Q4FY06 results were broadly in line with expectations. Impact of higher volumes across all product segments was neutralised to a large extent by lower average realisations.

Q4FY06 topline rose 7.1% YoY (and 7.7% QoQ) to Rs 670 crore despite higher output in sponge iron, steel products and power. EBITDA declined 4.2% YoY (but increased 17.1% QoQ) to Rs 270 crore and EBITDA margins compressed 470 bps (320 bps higher QoQ) due to additional expenditure on repair and maintenance and refractory relining.

Effect of high interest payments and higher depreciation was offset by high other income and low tax outgo, leading to net profit increasing 2.7% YoY (19.1% higher QoQ) to Rs 150 crore, in line with expectations. The company benefited from new capacities commissioned towards the end of last year, leading to 48%, 16% and 23% higher volumes in sponge iron, steel products and power, respectively in Q4FY06.

For FY06, volumes were higher by 34%, 19% and 16% for sponge iron, steel products and power respectively. However, lower average realisations capped topline growth. Hence, net revenues for the quarter were 7.1% higher (7.7% up QoQ) at Rs 670 crore and FY06 revenues rose 15% to Rs 2,590 crore.

EBITDA in Q4FY06 fell 4% YoY (but up 17% QoQ) to Rs 270 crore and EBITDA margins fell to 39.9% (vis à vis 44.6% in Q4FY05 and 36.7% in Q3FY06). FY06 was marked by a steep fall in steel prices on account of capacity build-up in China and inventory de-stocking.

From March '06, steel prices have started moving up, and the outlook for average realisations is encouraging. The stock price has corrected by 42% in the recent bout of market correction and looks attractive. The company will see increasing proportion of earnings from its power business in years to come.

Research: Sharekhan
Recommendation: Buy
CMP: Rs 436 (Face Value Rs 2)
12-Month Price Target: Rs 552
Shareholding pattern

Sharekhan has recommended a 'buy' decision on Wipro with a price target of Rs 552. Wipro is witnessing strong traction in its existing information technology (IT) service business. In addition to this, the incremental growth from the recent inorganic initiatives has considerably improved the visibility of growth in its global software service business.

The margins are also sustainable at the current level, given the positive pricing environment and the other operating levers (like a higher offshore contribution and utilisation rate) that are likely to cushion any adverse impact of wage inflation on the company's profitability. The company has effectively addressed the two key concerns of a slowdown in its business process outsourcing (BPO) operations and a lack of focus on large outsourcing deals over the past few quarters.

Sharekhan expects the revenue of the BPO business to grow at a rate of 26% (up from 18.6% in FY2006) to Rs 961 crore in the current fiscal. The OPM is likely to improve by 400 basis points to a sustainable range of 17-18%, resulting in a 68% growth in the operating profit over the previous fiscal.

Over the longer term, the company has chalked out a growth strategy that largely involves setting up near-shore centres (non-India offshore centres in Latin America or eastern Europe) and improving the contribution of high margin revenues by introducing more higher value-added services.

Despite the obvious cost pressures like wage inflation and the need to invest in strengthening the domain expertise and geographical reach through organic and inorganic initiatives, Wipro is likely to maintain its profitability at the current level.

One of the key drivers of its profitability would be the turnaround in the performance of the acquired companies as more work is shifted offshore (most acquired entities are based in developed countries and have an onsite-centric business model). We expect the offshore revenue's (in US$ terms) contribution to improve by
around 100 basis points over the next two years.

Chidu ... Devil's Advocate ?

Karan Thapar: Hello and welcome to Devil's Advocate. Now that the Supreme Court has asked the Government on what basis it proposes reservation for OBCs in higher education, I want to ask the Government precisely what explanation will it give. That is the key question that I should put today to one of the minister concern with the issue, Finance Minister P Chidambaram.

Finance Minister the protesting students who met you some 10 or 12 days ago said that you are an ardent advocate for the cause of reservations in higher education for OBCs. Is that a correct description of your position?

P Chidambaram: Those adjectives are their's. I support reservation.

Karan Thapar: So you think that reservation is the right thing?

P Chidambaram: Among all the instruments available to us for affirmative action, the one that is proved most effective is reservation.

Karan Thapar: Explain to me. Many people would say that there is no doubt that steps need to be taken to help the OBCs to get greater access to higher education. Why do you believe reservation is the right way of doing it?

P Chidambaram: Experience tells us that.

Karan Thapar: What experience?

P Chidambaram: The experience of Southern states.

Karan Thapar: What is the experience of Southern states?

P Chidambaram: Let me tell you. It all began in the state of Mysore almost 75 years ago. In Tamil Nadu we have had reservations now for over 60 years. Andhra and Kerala have reservations for over 50 years.

Karan Thapar: Have they succeeded?

P Chidambaram: Yes undoubtedly they have. Let me explain. Once you get a set of parents from the backward communities who are educated, the degrees the graduation the post graduation, then you find the second generation child is able to compete more effectively with children of families who have say 200 years of unbroken tradition of learning.

Karan Thapar: So you are saying that reservations in south India have improved the quality of education for everyone?

P Chidambaram: Undoubtedly.

Karan Thapar: Then let me put you the opposite of that. Because it's widely believed that what you are saying is an illusion. All the centres of excellence which create the reputation for south India that you are referring to, I am talking about the Shankar Netralaya, the National Law College, the IIT Madras, the Indian Institute of Science Manipal there were other medical colleges, none of them have reservations for OBCs and as the sociologist Dipankar Gupta has pointed out in every single one of these the vast majority of faculty are non-OBC. They come from outside Tamil Nadu and they were not part of the Tamil Nadu education system. So clearly if they are proved its because they escaped from reservations not because of it.

P Chidambaram: For every institution that you have given, I can give you institution where there is reservation. There is reservation in Anna University. There is reservation in the Bharathidasan Institute. There is reservation in the medical colleges of Tamil Nadu. There is reservation in number of educational institutions.

Karan Thapar: Shifting to what you have mentioned about medical colleges of Tamil Nadu, because again Dipankar Gupta shows one thing that reservations for OBCs done in the South was to proliferate the number of minority institutions. And the example I want to give you is in fact the medical colleges. Out of the 120 minority medical colleges in India, 74 or 61 per cent are in the four Southern states and Pondicherry. Clearly that is a sign that in fact people are seeking alternatives to reservations as a way of escaping from reservations.

P Chidambaram: You are drawing the wrong conclusion from the right fact.

Karan Thapar: I am not drawing conclusions. Dipankar Gupta, who is the top sociologist, has drawn the conclusion.

P Chidambaram: Mr Dipankar Gupta can have an opinion. You can have an opinion. But you must listen to the other opinion. So just be patient. In Tamil Nadu it all started with government medical colleges. When government medical colleges had reservations the demand was great and the government was not willing to start more medical colleges. So it is in Karnataka, so it in Andhra. Then the private sectors started medical colleges and initially it started with Christian institutions. When Christian institutions were started then the Muslim started their own institutions.

Karan Thapar: Now you have even Telgu language institutions.

P Chidambaram: Then the Hindus started institutions, nothing wrong with that, nothing wrong with private sectors starting institutions.

Karan Thapar: You misunderstood my question. I am not saying there is anything wrong with the private sectors starting institutions. I am saying the reason they are starting institutions is because the quality of education in government institutions, because of reservation, has collapsed.

P Chidambaram: That's not correct. The best medical education in Tamil Nadu is still given by the government medical colleges. There are just I think one may be two private medical colleges in Tamil Nadu. Today Chennai is an admittedly an excellent centre for medical colleges.

Karan Thapar: Mr Chidambaram you are sitting in front of me advocating that reservations have improved the quality of education in Tamil Nadu. The truth is that you yourself didn't go to an institution where there is reservation for OBCs. You went to Loyala College where there is no reservation for OBCs and then you went to Harvard. Your son went to Don Bosco School, Texas University and Cambridge University.

P Chidambaram: You got your facts wrong. I went to Presidency College, which has reservation.

Karan Thapar: For your MA at which point in time affiliation to colleges were not important.

P Chidambaram: Your facts are wrong. I went to Presidency College for my basic under graduate degree where there is reservation. I went to Law College for my law degree where there is reservation. I am not a beneficiary of reservation but I know that reservation brought in students to my class would otherwise have never got in.

Karan Thapar: Mr Chidambaram your son went to Don Bosco School where there is no reservation. Then he went to the University of Texas where there is no reservation and then he went to Cambridge University.

P Chidambaram: My son would have never got the benefit of reservation anyway.

Karan Thapar: Did you not send your son abroad deliberately because you knew that the standard of education in Tamil Nadu had collapsed.

P Chidambaram: No not at all. I am a beneficiary of the educational system in Tamil Nadu and I am proud about the educational system in Tamil Nadu. It can be better that is a different matter. Neither my son nor I are the beneficiary of reservations.

Karan Thapar: You are saying that in fact the real track record and experience that establishes that reservation is good for education in the Southern state, lets accept it.

P Chidambaram: No, not only in Southern states. Now we have evidence that in Maharashtra it has helped. We have evidence that it has helped also in some other states.

Karan Thapar: People would challenge it, lets leave that aside. Lets come to the more basic aspect of this matter. If you believe that reservation for OBCs is right, do you have any idea what percentage of the Indian population is actually OBC?

P Chidambaram: We have empirical evidence that in a state like Tamil Nadu 69 per cent is reserved today.

Karan Thapar: That's the reservation that is not necessary correlated with the percentage of the population.

P Chidambaram: It is because in the state first we have had the Satanand Commission we have had the Ambasankar Commission which have done as best as they can an enumeration of the back ward caste in Tamil Nadu.

Karan Thapar: But then if you are going by the 69 per cent figure in fact the situation is even more confused than I thought because I was going to say that the three disputed figures that we have nationally the Mandal at 52 per cent, the NSSO at 32.1 per cent and the National Family Health Survey 29.8 per cent. Now you are adding to that a 69 per cent figure. Clearly the range goes from 29.8 per cent to 69 per cent and you don't know about it.

P Chidambaram: You ask for empirical evidence and you don't have the patience to wait for the answer. Tamil Nadu we have had the Satanand Commission, the Ambasankar Commission and nobody has challenged that count so far in Tamil Nadu.

Karan Thapar: It may be true of Tamil Nadu, what about nationwide?.

P Chidambaram: In Andhra they have had counts, in Karnataka they have had counts in Kerala they have had counts. And the people of Tamil Nadu, Andhra and Kerala have not challenged those counts.

At the national level, you are right, the only count we have had is Mandal, which was seriously questioned. We have had the national sample survey. The point is when the Mandal was implemented in government jobs, Supreme Court upheld reservation of 27 per cent.

Karan Thapar: But what the Supreme Court didn't comment up on and that is the very issue they have raised now in the latest question and I put to you is what's the basis of it.

P Chidambaram: Well the Government will answer it.

Karan Thapar: Well what answer will the government give.

P Chidambaram: I am not preparing the answer. The concern department will prepare an answer.

Karan Thapar: But is it such a secret that needs preparation.

P Chidambaram: You will have to gather all the material available.

Karan Thapar: This is very interesting. You have already decided that you want 27 per cent reservation for OBCs but you don't know on what basis you want it. Now you have to go back and discover the basis.

P Chidambaram: I am sure the material is there. We are not discovering the basis.

Karan Thapar: You are concocting it.

P Chidambaram: No we are not either. The ministry has to put together all the material available to it to reach the conclusion of 27 per cent. It will be based on material and the material will be put together - wait for the material.

Karan Thapar: But that's your claim. What I am saying to you is that the material available actually is contradictory. The range, which it covers, goes from 29.8 per cent to 69 per cent, that you quoted or at best all you can do is to draw an average from it. Clearly you do not know what percentage of Indians OBC, which is why when the Supreme Court asked you for the basis you are deeply embarrassed.

P Chidambaram: No I am not embarrassed at all. You are completely wrong. Wait for the affidavit to be filed at the Supreme Court. Why are you unwilling to wait for that affidavit.

Karan Thapar: The affidavit will be filed. Why are you unwilling to share with the country the basis of a decision that you have already announced?

P Chidambaram: The offices and the ministry concern will share with it. I am not the minister in charge with the department.

Karan Thapar: But you are part of the group of ministers which is responsible that is why I am speaking to you.

P Chidambaram: Of course. I am satisfied that there is material…

Karan Thapar: Then share that satisfaction with us.

P Chidambaram: Listen to me. That will come in the Supreme Court in a form of an affidavit. Material will be placed. I am not embarrassed. All I am saying is wait for the affidavit.

Karan Thapar: Let me tell you why I want to continue this question. This is the reason I am asking you, the government has announced a decision. The decision we have been told is in fact irreversible. Yet you can't give us the basis of the decision.

P Chidambaram: Yes I can give you the basis. There is a question from the Supreme Court. We have got the Mandal report. We have got state reports, which are all being compiled now. We have got the NSS survey. After all India is only a collection of states.

Karan Thapar: And they are all contradicting each other.

P Chidambaram: They are not contradicting. You have not read a single report. Let me ask you a question. Have you read the Satanand report?

Karan Thapar: No but I have read the NSSO figures and the NSSO figures are nationwide.

P Chidambaram: Please answer my question. Have you read the Satanand report?

Karan Thapar: But they refer only to Tamil Nadu.

P Chidambaram: That is right.

Karan Thapar: I am talking about the nationwide. I am very keen to know what is the basis on which the decision has been taken.

P Chidambaram: If the Tamil Nadu Satanand report is based on evidence, if the Tamil Nadu Ambasankar report is based on evidence that represents 6 crore people who make up the 100 core. Similarly the Andhra reports, the Kerala reports, the Karnataka reports and any other report that will be available in every other state, all that material will be put together, the Mandal will be referred to, the NSS survey will be referred to and a proper affidavit will be filed. Obviously I can't give all that material in an interview lasting 10 minutes.

Karan Thapar: There is something else that also emerges from this. If you are saying that all that material will be put together, clearly it hasn't been put together as yet.

P Chidambaram: Wrong again. It will be put together in the form of an affidavit and will be given to the SC.

Karan Thapar: If it is going to be put together then it hasn't been put together as yet?

P Chidambaram: Listen you are quibbling on words. Let me explain my position. You are quibbling and therefore there is no point quibbling in an interview. The material will be put together; the material is available where Supreme Court asks a question. Suppose the Supreme Court asks what have you done about a particular tax matter. I know the answer but will have to put together the material in a form of an affidavit.

Karan Thapar: This is not a tax matter. This is an issue that affects the future of people in India.

P Chidambaram: Everything affects the people of India.

Karan Thapar: Its an issue that has been challenged. When the government is asked what's the basis on which you have announced 27 per cent reservation in higher education for the OBCs. It's an amazing thing to say the government will answer in due course. The government needs to give an answer today.

P Chidambaram: I am sorry the government does not have to answer you in an interview.

Karan Thapar: Its not me its the people of India.

P Chidambaram: Government will answer in the proper forum in Parliament in the Supreme Court not in an interview conducted by you.

Karan Thapar: But you can't tell the people of India today.

P Chidambaram: I have told you about the material. Shall I say it in Tamil for a change?

Karan Thapar: No don't say it in Tamil.

P Chidambaram: I have given you the material, the state government's report. Let me repeat it once again for you. Several reports done by the state governments counter backward casts. The Mandal report, the NSS report and any other surveys.

Karan Thapar: All of which are contradictory.

P Chidambaram: That's your judgement. We don't believe its contradictory.

Karan Thapar: Its not my judgement. It's a fact.

P Chidambaram: If it is a fact then why are you asking me the question.

Karan Thapar: Because I am trying to prove that you don't have the basis for the decision you made.

P Chidambaram: Go ahead and prove it if it satisfies you.

Karan Thapar: If the people of India listening to this interview come to the conclusion that it does not appear to them that the government have an explanation, what would you say.

P Chidambaram: The people of India are not people entirely of your thinking. The people of India consists of SCs, STs backward class most backward class. They will be quite happy to know the large amount of material is available in every state. Large amount of material is available to support the argument that a significant proportion of seats must be reserved for the OBCs.

Karan Thapar: It sounds to me what you are saying is give us time we will come up with an explanation. We can't give it today but in 8 weeks we will.

P Chidambaram: Sorry that's your conclusion. Let me conclude the way I summarised it. My conclusion is there is ample material, you are simply refusing to see the material, You expect an answer in an interview. The answer will not be given to you in an interview. The answer will be given in a proper affidavit supported by proper documentation in the Supreme Court and in Parliament.

Karan Thapar: And not before 8 weeks. All right that's your answer.

Karan Thapar: We have disputed whether the Government has an explanation to give to the Supreme Court or not. Another issue that the students have raised with you is their demand for a non-political expert committee to review the way reservations have functioned for the last 50 odd years. The Government, in its reply has said that it will examine this demand. Does that mean 'yes', does that mean 'no' or does it mean that you are simply playing for time?

P Chidambaram: As I understand the Government's reply, there is no ground to review whether there should be reservation or not - there is no ground at all.

Karan Thapar: What about reviewing the way they function?

P Chidambaram: If you want to review how the reservation is implemented, it is fairly simple.

Karan Thapar: Not how they are implemented, whether they are functioning effectively.

P Chidambaram: Oh, they are.

Karan Thapar: We all know how they are implemented, what I am questioning is the efficacy.

P Chidambaram: The effect is, as I said at the beginning of the interview, can be seen in the Southern states. Members belonging to the OBCs have risen in the society and in the economy. There is an aspiration among those classes, which cannot be suppressed for too long.

Karan Thapar: If you are so confident that reservations have worked in the Southern states, which many people are strongly and strenuously disputing, then agree to the review, cause the review will presumably prove your point. Why aren't you agreeing to the review?

P Chidambaram: You need to understand that Parliament is competent to make a law and each member of the Parliament represents the people. If the overwhelming view in the country - as you believe it is and which I think is completely wrong - is 'for' reservation and Parliament reflects that view.

Karan Thapar: Then all the more reason to grant a review. Why are you not prepared to not grant a review?

P Chidambaram: I can't speak for the Government because I don't know the Government's position on the question of review.

Karan Thapar: Can I interrupt and tell you what the Government's position is as handed in a formal document by Oscar Fernandes to the students. It said, 'this will be examined'. I am asking you what it means. Does it mean 'yes', does it mean 'no' or does it mean that the 'Government doesn't know'?

P Chidambaram: As I said, I don't know. I have not seen that document.

Karan Thapar: A senior Minister, on a Group of Ministers handling this issue doesn't know what the Government's position is?

P Chidambaram: Wait a minute, the Government's position is a position that will be taken in the Cabinet and a Group of Ministers is 'advisory'. If Mr Fernandes has said it will be examined, I am sure he means every word and it will be examined.

Karan Thapar: But that is not the Government's position. It is only Mr Fernandes' position because the Government's position you said will be taken in the Cabinet.

P Chidambaram: You must give up this habit if quibbling Karan.

Karan Thapar: I am not quibbling.

P Chidambaram: You are. I think you are and many of your viewers will think you are.

Karan Thapar: And many of my viewers may think that I may have actually identified an important and interesting loophole.

P Chidambaram: Nothing. You have not identifies any loophole. If Mr Fernandes said that the matter will be examined, I am sure it is being examined by the concerned Ministry, it will come to the Cabinet for a decision and I cannot now say what will be the decision.

Karan Thapar: All right, let me then ask you your personal opinion, cause I presume as one of the more intelligent members of the Cabinet...

P Chidambaram: In the Cabinet, I will give my opinion.

Karan Thapar: Share it with the country. We look up to you and the country is listening to you.

P Chidambaram: I don't agree with you. A very small section understands English and listens to your programme.

Karan Thapar: Let me ask the question differently - after 50 odd years of reservations and the controversy that they have created, atleast in some quarters, do you believe that a review of how they function would be a sensible thing to do?

P Chidambaram: If review means questioning the justification of reservation, I say 'no'.

Karan Thapar: A review means questioning whether they have worked effectively or not and if it is to be found that they haven't worked effectively, that would end up questioning this justification as well. So, there is no doubt that one could lead to the other, but not necessarily.

P Chidambaram: I would not give my view, which I have to give in the Cabinet, but I know from experience that reservations have helped many members of the OBCs to rise in the Southern states. I am totally convinced about it.

Karan Thapar: If after 50 years of functioning, the very Constitution could have been reviewed and a Constitution review committee set up, which in fact found, despite all the criticisms that had initially arisen, that the Constitution was by and large functioning very effectively. Why then, are you worried about a review of reservation? Reservation is a very small part of the Constitution.

P Chidambaram: I am not worried, that decision will be taken by the Cabinet.

Karan Thapar: When will this decision be taken?

P Chidambaram: Whenever the matter comes to Cabinet.

Karan Thapar: When is that likely to happen?

P Chidambaram: I have no idea.

Karan Thapar: So, in other words this matter may never come to Cabinet because that may be a very effective way of stalling it.

P Chidambaram: Again you are quibbling. When Mr Fernandes said that the matter will be examined, the logical course is that the matter will be examined and placed before Cabinet. From that, you don't jump to the conclusion that it will never come to Cabinet.

Karan Thapar: Let me then come to another issue. The Government has committed itself to extending 27 per cent reservations to OBCs in higher education on the basis of the recommendation of the Mandal report. Your late leader, Rajiv Gandhi, who you revere, in a speech in Parliament on September 6, 1990 effectively showed that Mandal was inaccurate, it was unscientific, it was misleading and in very many areas, it was actually wrong.

P Chidambaram: I know that speech.

Karan Thapar: His conclusion is important. In the end, it may be emphasised that the survey has no pretensions to being a piece of academic research. On what basis then today, as successors to Rajiv Gandhi, do you want to keep pursuing the report?

P Chidambaram: Please remember, after that speech, in 1991, a Congress Government implemented reservation in Government jobs and that has come to stay.

Karan Thapar: So, in other words, Mr Gandhi's position has been forgotten?

P Chidambaram: No, I respect his view.

Karan Thapar: So much so that you want to go ahead with the report that was effectively rubbishing.

P Chidambaram: Please remember, it has been implemented in 1991. This is not the first time it is being implemented.

Karan Thapar: He was deeply critical of the 52 per cent figure.

P Chidambaram: He was.

Karan Thapar: He actually said that this figure includes many castes that are forward castes and many castes that are Scheduled Castes, he disputed that figure.

P Chidambaram: I am aware of that speech, but the fact remains that in 1991, a Congress Government implemented reservation in Government jobs. And now, 15 years later, the demand is to implement reservations in educational institutions.

Karan Thapar: Today, your Government that functions effectively under the tutelage of his widow will be in fact implementing something that he in his greatest speech had deeply criticised.

P Chidambaram: That is a wrong way to look at it. The Government has to reflect the realities and the aspirations of today. Today, there is a Parliament, there are political parties, there are political parties representing the very backward castes as a coalition Government, MPs reflect, I believe, the aspirations of their constituents. If Parliament decides that a Bill must be passed to provide for reservation for Backward Castes in educational institutions, that is not showing disrespect to Rajiv Gandhi, the way you put it, that means we are reflecting the current realities.

Karan Thapar: All right, let's accept your word. A pleasure talking to you on Devil's Advocate.

P Chidambaram: Thank you very much