• SEBI replaces DIP Guidelines with Issue of Capital and Disclosure Requirements Regulations
• CBDT panel to review new tax code
• Disinvestment to come through FPOs, not IPOs
• Panel to speed up closure of sick companies
• Sistema Shyam goes back to FIPB
• MTNL bids for Nigerian telco
• American Tower Corp eyeing more acquisitions in India
• CBDT has formed an internal committee to review the provisions of the draft Bill. The committee, which includes CBDT officials dealing with investigation, assessment, foreign tax and treaties, tax deduction at source and appeal and judicial work, has also asked all field formations to send in their opinions on the draft Code. The committee is scheduled to submit its report by September 15, 2009 to the Board, which will then be submitted to finance minister Pranab Mukherjee. The restructured income tax slabs and rates, definitions and provisions on tax treaties are some of the areas that the CBDT wants to revisit. (FE)
• To ensure that a large batch of disinvestment proposals hit the primary market this fiscal, the government would depend on the follow on public offers from listed companies, instead of pushing for IPOs, as the shelf of such proposals is nearly empty now. This means 2009-10 may not see new public sector firms debuting in the stock market, after NHPC and Oil India.
• Govt is learnt to have set up an expert group to suggest ways to speed up liquidation of sick companies by resolving the procedural and legal complexities involved as winding up a sick entity involves multiple regulations and often faces long-drawn litigation. The group, which comprises members of the Institute of Chartered Accountants of India (ICAI), is expected to suggest streamlining of court procedures and reducing the time frame for winding up a sick company to 2-3 years. (ET)
• According to sources, Sistema Shyam Teleservices has filed a fresh application with FIPB seeking clearance for its internet subsidiary, after the DoT clarified that an earlier FIPB approval given to Russia’s Sistema for picking up 74% stake in the parent company did not cover the wholly owned unit. DoT said Shyam Internet Services, the internet service provider owned by Sistema Shyam, violated the country’s foreign investment norms as it did not obtain the mandatory FIPB approval despite Russia’s Sistema picking up a 74% stake in the parent company. The issue came to light when Shyam Internet Services, which currently offers services only in Rajasthan, sought DoT’s approval for launching a pan-India service and DoT refused to clear the proposal on the grounds that the company did not have the requisite FIPB clearance. The communications ministry may impose a penalty on the telco over its failure to obtain the requisite clearances for its internet unit. (ET)
• PSU teleco MTNL has submitted a bid to acquire a 75% stake in Nigerian Telecommunications (Nitel). MTNL will now appoint consultants to evaluate Nitel before placing a financial bid for the Nigerian government-owned telco that has both fixed-line and mobile operations (both GSM & CDMA). MTNL will, however, have to compete with 12 other bidders, including global majors such as Africa’s largest telecom operator MTN, the UAE’s Etisalat and Spain’s Telefonica. All bidders will be given access to Nitel’s books to begin due diligence. The deadline for submitting financial bids is October 2. The Nigerian govt’s 51% in Nitel was put up for sale in 2001. The value of Nitel, saddled with huge debts, then was said to be $1.2 b, but the sale fell through Nigeria relaunched the sale process this July. (ET)
• In a move to expand its footprint in the country, American Tower Corporation (ATC) is learnt to be in advanced talks for acquiring a couple of Indian tower companies. The Boston-based tower company is prepared to make significant investments in India but wants to buy at the right price. It is in discussion with a number of players in the Indian market and hopes to make one or even two acquisitions over the next few weeks and months if it gets the right valuations. The co. is looking at an outright purchase but are also flexible to take a majority stake. (BL)
Thursday, September 3, 2009
Wednesday, September 2, 2009
Today's Biz Bit
• Kelkar to ready GST report by Dec
• Nelp to make way for open licensing
• RIL takes IL&FS on board for Haryana SEZ
• US court rejects Sterlite’s Asarco bid, backs Grupo
• SEBI bars Austral Coke from raising capital
• RIL to bid for pipeline project in Mexico
• Reliance Infratel plans Rs 5,000-crore IPO
• According to sources, Govt is making one last attempt to set off the unified goods & services tax (GST) system on schedule, on April 1, 2010 and to smoothen the process, it would give the 13th Finance Commission, tasked with dividing tax revenues between the Centre and states, three more months, till December end, to submit its report. The Commission does this job every five years on a Constitutional mandate, but this time it has a tricky task in hand as it is supposed to make allocations between the Centre and each state, assuming the implications of the new tax regime that will rewrite the division of the indirect tax corpus of close to Rs 2,70, 000 crore. The Commission, chaired by Vijay Kelkar, was supposed to submit its report by October 31, 2009. A final decision on extending the deadline will be taken soon. While the Centre and states have agreed on a dual structure for GST, they are yet to decide on many crucial issues, such as the rates, the minimum threshold for the tax to be applicable and the commodities that would be exempt from it. (FE)
• According to sources, India plans to phase out the annual auctioning of oil & gas exploration blocks under the new exploration licensing policy (Nelp) in favour of an open acreage licensing system (OALP), which will allow energy firms to bid for such blocks anytime of the year, a senior oil ministry official said. OALP will enable bidders to bid for blocks on offer anytime of the year unlike Nelp, which is an annual event. Data for these blocks would be made available to the bidders through the National Data Repository (NDR). India’s upstream regulator, Directorate General of Hydrocarbons (DGH), is in the process of setting up an NDR to collect and preserve valuable data related to India’s sedimentary basins that will be used by energy exploration firms in discovering hydrocarbon assets. (ET)
• Infrastructure Leasing & Financial Services (IL&FS) is learnt to have picked up a “significant minority stake” in the Reliance Industries-promoted SEZ project in Haryana that has struggled to take off despite having started four years ago. IL&FS would not just be ‘a pure financial investor’ but be a “co-promoter” and play a lead role in the management of the $10-billion project, long billed as India’s biggest and most ambitious SEZ project spanning 25,000 acres. The amount of stake that has changed hands and the value of the transaction could not be ascertained as yet. (ET)
• The bankruptcy court in Corpus Christi, Texas, has rejected Sterlite Industries' bid to acquire Asarco, six months after the Indian company had signed an agreement to acquire the beleaguered US copper miner. The Court recommended the offer of Grupo Mexico—the only rival of Sterlite—over the Indian company's bid. The case has been sent to US District Court Judge Andrew S. Hanen in Texas for a final decision, which is expected in four to six weeks. (ET)
• SEBI has barred Austral Coke and Projects from raising any further capital on finding that the company was involved in a fraud amounting to Rs 1,047 crore. Further, it has ordered an investigation into buying, selling or otherwise dealing in the securities of the company. SEBI swung into action following a communication from the Income Tax Department on August 26, which pointed to serious irregularities in the company’s books of accounts based on searches carried out by it on Austral Coke’s premises on June 23. The letter also said that bogus purchases had been claimed to have been made from 29 non-existent concerns, running into several hundred crores. (FE)
• According to sources, Reliance Industries (RIL), India’s largest private sector firm by market capitalisation, is planning a foray into the global pipeline construction business with a bid for building Rs 3,000 crore worth of oil and gas pipeline in Mexico. The Co. will be scouting for opportunities abroad, as its pipeline division itself has the size of a mid-cap company. Mexico’s state-owned oil company, Petroleos Mexicanos, had recently announced it would take bids from international firms to build a $600 million, 230 km, natural gas pipeline to increase transmission capacities in the central and western parts of the country. The award will go to the lead bidder within six months. (BS)
• Reliance Infratel, the tower subsidiary of telecom service provider Reliance Communications (RCom), will file a draft Red Herring Prospectus (DRHP) for its proposed Initial Public Offer (IPO) of around Rs 5,000 crore within a week. This would be second largest IPO after the economic downturn, the biggest being the Rs 6,000-crore IPO by staterun National Hydroelectric Power Corporation (NHPC). Reliance Infratel is looking at raising around $1 billion by offloading a minimum of 10 % stake. The company intends to use the proceeds for its expansion plans, including expansion of its portfolio of telecom towers and footprint. (BS)
• Nelp to make way for open licensing
• RIL takes IL&FS on board for Haryana SEZ
• US court rejects Sterlite’s Asarco bid, backs Grupo
• SEBI bars Austral Coke from raising capital
• RIL to bid for pipeline project in Mexico
• Reliance Infratel plans Rs 5,000-crore IPO
• According to sources, Govt is making one last attempt to set off the unified goods & services tax (GST) system on schedule, on April 1, 2010 and to smoothen the process, it would give the 13th Finance Commission, tasked with dividing tax revenues between the Centre and states, three more months, till December end, to submit its report. The Commission does this job every five years on a Constitutional mandate, but this time it has a tricky task in hand as it is supposed to make allocations between the Centre and each state, assuming the implications of the new tax regime that will rewrite the division of the indirect tax corpus of close to Rs 2,70, 000 crore. The Commission, chaired by Vijay Kelkar, was supposed to submit its report by October 31, 2009. A final decision on extending the deadline will be taken soon. While the Centre and states have agreed on a dual structure for GST, they are yet to decide on many crucial issues, such as the rates, the minimum threshold for the tax to be applicable and the commodities that would be exempt from it. (FE)
• According to sources, India plans to phase out the annual auctioning of oil & gas exploration blocks under the new exploration licensing policy (Nelp) in favour of an open acreage licensing system (OALP), which will allow energy firms to bid for such blocks anytime of the year, a senior oil ministry official said. OALP will enable bidders to bid for blocks on offer anytime of the year unlike Nelp, which is an annual event. Data for these blocks would be made available to the bidders through the National Data Repository (NDR). India’s upstream regulator, Directorate General of Hydrocarbons (DGH), is in the process of setting up an NDR to collect and preserve valuable data related to India’s sedimentary basins that will be used by energy exploration firms in discovering hydrocarbon assets. (ET)
• Infrastructure Leasing & Financial Services (IL&FS) is learnt to have picked up a “significant minority stake” in the Reliance Industries-promoted SEZ project in Haryana that has struggled to take off despite having started four years ago. IL&FS would not just be ‘a pure financial investor’ but be a “co-promoter” and play a lead role in the management of the $10-billion project, long billed as India’s biggest and most ambitious SEZ project spanning 25,000 acres. The amount of stake that has changed hands and the value of the transaction could not be ascertained as yet. (ET)
• The bankruptcy court in Corpus Christi, Texas, has rejected Sterlite Industries' bid to acquire Asarco, six months after the Indian company had signed an agreement to acquire the beleaguered US copper miner. The Court recommended the offer of Grupo Mexico—the only rival of Sterlite—over the Indian company's bid. The case has been sent to US District Court Judge Andrew S. Hanen in Texas for a final decision, which is expected in four to six weeks. (ET)
• SEBI has barred Austral Coke and Projects from raising any further capital on finding that the company was involved in a fraud amounting to Rs 1,047 crore. Further, it has ordered an investigation into buying, selling or otherwise dealing in the securities of the company. SEBI swung into action following a communication from the Income Tax Department on August 26, which pointed to serious irregularities in the company’s books of accounts based on searches carried out by it on Austral Coke’s premises on June 23. The letter also said that bogus purchases had been claimed to have been made from 29 non-existent concerns, running into several hundred crores. (FE)
• According to sources, Reliance Industries (RIL), India’s largest private sector firm by market capitalisation, is planning a foray into the global pipeline construction business with a bid for building Rs 3,000 crore worth of oil and gas pipeline in Mexico. The Co. will be scouting for opportunities abroad, as its pipeline division itself has the size of a mid-cap company. Mexico’s state-owned oil company, Petroleos Mexicanos, had recently announced it would take bids from international firms to build a $600 million, 230 km, natural gas pipeline to increase transmission capacities in the central and western parts of the country. The award will go to the lead bidder within six months. (BS)
• Reliance Infratel, the tower subsidiary of telecom service provider Reliance Communications (RCom), will file a draft Red Herring Prospectus (DRHP) for its proposed Initial Public Offer (IPO) of around Rs 5,000 crore within a week. This would be second largest IPO after the economic downturn, the biggest being the Rs 6,000-crore IPO by staterun National Hydroelectric Power Corporation (NHPC). Reliance Infratel is looking at raising around $1 billion by offloading a minimum of 10 % stake. The company intends to use the proceeds for its expansion plans, including expansion of its portfolio of telecom towers and footprint. (BS)
Tuesday, September 1, 2009
Today's Biz Bit
• Worst over, says govt as GDP grows 6.1% in Q1
• ING Vysya Life owners looking to shed stake
• IL&FS Financial to take over Maytas Infra
• According to data released by the Central Statistical Organisation, the economy grew at 6.1% in the first quarter of 2009-10—an improvement over the sub-6% seen in the previous two quarters as higher government spending boosted demand. However, analysts say a slowdown in consumption and investment growth, as well as lower agriculture growth due to the poor monsoons, could crimp growth in the coming quarters. Nevertheless, GDP growth is at its highest since the collapse of Lehman Brothers in mid-September last year, fanning expectations of a faster recovery. The economy grew at 5.8% in Q4 and at 5.3% in Q3 of FY09. In Q1 last fiscal, though, it grew at a robust 7.8%. India is now the second-fastest growing economy after China, which expanded at 7.9% in April-June this year. (FE)
• According to sources, Indian shareholders of ING Vysya Life Insurance CoExide Industries, Ambuja Cements and Enam Group are looking to divest part of their holdings in the company, with their investments failing to yield much in dividends or valuations.The hunt for a domestic investor is on as ING already holds the maximum permissible foreign investment level of 26%. Exide holds nearly 50% while the combined stake of Ambuja and Enam is pegged at 24%. (ET)
• The IL&FS group will take control of infrastructure firm Maytas Infra in line with a Company Law Board directive. The CLB, based on a Maytas application, has instructed the company to induct IL&FS Financial Services as a promoter and allow it to assume management control, Maytas said in a statement. IL&FS would have a stake of 37.1% in Maytas Infra and will pump in Rs 55 crore to revive the firm. IL&FS, which holds 14.5% shares directly in Maytas, has been allowed to foreclose its rights on 22.6% pledged shares, which would take its total holding to 37.1%. The company will have to make an open offer later to meet the Securities & Exchange Board of India’s takeover norms. Further, IL&FS would have to hold at least 26% stake in Maytas for two years along with the management control. (FE)
• ING Vysya Life owners looking to shed stake
• IL&FS Financial to take over Maytas Infra
• According to data released by the Central Statistical Organisation, the economy grew at 6.1% in the first quarter of 2009-10—an improvement over the sub-6% seen in the previous two quarters as higher government spending boosted demand. However, analysts say a slowdown in consumption and investment growth, as well as lower agriculture growth due to the poor monsoons, could crimp growth in the coming quarters. Nevertheless, GDP growth is at its highest since the collapse of Lehman Brothers in mid-September last year, fanning expectations of a faster recovery. The economy grew at 5.8% in Q4 and at 5.3% in Q3 of FY09. In Q1 last fiscal, though, it grew at a robust 7.8%. India is now the second-fastest growing economy after China, which expanded at 7.9% in April-June this year. (FE)
• According to sources, Indian shareholders of ING Vysya Life Insurance CoExide Industries, Ambuja Cements and Enam Group are looking to divest part of their holdings in the company, with their investments failing to yield much in dividends or valuations.The hunt for a domestic investor is on as ING already holds the maximum permissible foreign investment level of 26%. Exide holds nearly 50% while the combined stake of Ambuja and Enam is pegged at 24%. (ET)
• The IL&FS group will take control of infrastructure firm Maytas Infra in line with a Company Law Board directive. The CLB, based on a Maytas application, has instructed the company to induct IL&FS Financial Services as a promoter and allow it to assume management control, Maytas said in a statement. IL&FS would have a stake of 37.1% in Maytas Infra and will pump in Rs 55 crore to revive the firm. IL&FS, which holds 14.5% shares directly in Maytas, has been allowed to foreclose its rights on 22.6% pledged shares, which would take its total holding to 37.1%. The company will have to make an open offer later to meet the Securities & Exchange Board of India’s takeover norms. Further, IL&FS would have to hold at least 26% stake in Maytas for two years along with the management control. (FE)
Monday, August 31, 2009
Today's Biz Bit
• Existing plants won’t get all sops under new mega power policy
• Finmin lens on industry watchdogs
• SC to decide on govts TDS plea against pvt telcos
• ICAI insurance-specific norms
• Jairam says no more in-principle approvals
• Sterlite gets crucial nods; verdict today
• Suitors jilt WNS after scrip heat
• According to sources, govt is not likely to extend some incentives to be announced in its new mega power policy to existing projects looking to expand capacity. An earlier draft of the policy had proposed similar incentives for both new and existing players, however a committee comprising of officials from the ministries of heavy industries and power will now determine the extent of benefits to be given to brownfield expansion projects under the policy. (ET)
• According to sources, powers of financial sector industry bodies to regulate their respective members, such as merchant bankers and mutual funds, will be reviewed by the government to ensure the autonomy to self-regulate does not lead to lax regulation and a threat to financial markets stability. The finance ministry would review the norms governing self-regulatory organisations (SROs) to ensure there are no loose ends as the current rules were prepared before the global financial crisis precipitated by too much de-regulation and risk-taking. (FE)
• Supreme Court will decide whether private telecom operators are liable to deduct TDS for the payments made to the state-owned BSNL and MTNL for interconnectivity. A bench comprising Justice SH Kapadia and Justice Aftab Alam on Friday issued notice to Bharti Airtel on the plea of the income-tax department. According to the I-T department, the private telecom service providers are liable to deduct TDS under section 194-J of the Income Tax Act in respect of the payments made by them to the public sector telecom service provider for inter-connect /port access charges. Such payments are fees for the technical services provided by the public sector telecom companies. It comes under the ambit of technical services provided for under the act and the private service providers are thus liable to deduct TDS. (ET)
• The Institute of Chartered Accountants of India (ICAI) is likely to come out with insurance-specific accounting standards in the next two to three months. The standards, which will initially come in the form of recommendations, would give a thorough and fair view of accounts of the insurance companies. Currently, there are 32 common notified accounting standards for all companies of various sectors. The new accounting standards would be additional to the existing 32 standards and give more insights about accounts of insurance companies. (ET)
• Ministry of Environment and Forests has abolished the system of in-principle approvals, to put an end to the practice of launching projects without obtaining the final clearance. The move signals that the ministry has begun to take a tough stand on environmental clearances in ecologically sensitive areas. The projects are either cleared or rejected. No more in-principle approvals. The minister pointed out that industrial projects in ecologically sensitive areas, like the Western Ghats, will not be cleared unless their impact on the environment had been studied in totality. (FE)
• According to sources, Sterlite Industries has moved a step ahead of rival Grupo Mexico by securing the support of the US company’s creditors, its workers union, the Arizona Attorney General and state legislators in the race to acquire Asarco. The bankruptcy court at Corpus Christi in Texas is expected to pronounce its verdict on the fate of the Tucson-based company tomorrow as the hearing ended last week. Whichever company US Bankruptcy Judge Richard Schmidt picks tomorrow will wind up owning Asarco. (BS)
• According to sources, several buyout funds and strategic investors have turned their back on WNS Global Services, putting the stake sale plans of global PE firm Warburg Pincus in India’s second-largest BPO firm in limbo. Warburg wants to sell its 50.12% controlling stake in the NYSE-listed company. Technology buyout fund Silver Lake, PE companies Apax Partners and Bain Capital are believed to have lost interest after the initial due diligence, which kicked off on August 10. Also, Genpact is interested in a share-swap deal and not an all-cash transaction that Warburg favours, while EXL, a rival of WNS and Genpact, is also learnt to have backed out of the deal. (ET)
• Finmin lens on industry watchdogs
• SC to decide on govts TDS plea against pvt telcos
• ICAI insurance-specific norms
• Jairam says no more in-principle approvals
• Sterlite gets crucial nods; verdict today
• Suitors jilt WNS after scrip heat
• According to sources, govt is not likely to extend some incentives to be announced in its new mega power policy to existing projects looking to expand capacity. An earlier draft of the policy had proposed similar incentives for both new and existing players, however a committee comprising of officials from the ministries of heavy industries and power will now determine the extent of benefits to be given to brownfield expansion projects under the policy. (ET)
• According to sources, powers of financial sector industry bodies to regulate their respective members, such as merchant bankers and mutual funds, will be reviewed by the government to ensure the autonomy to self-regulate does not lead to lax regulation and a threat to financial markets stability. The finance ministry would review the norms governing self-regulatory organisations (SROs) to ensure there are no loose ends as the current rules were prepared before the global financial crisis precipitated by too much de-regulation and risk-taking. (FE)
• Supreme Court will decide whether private telecom operators are liable to deduct TDS for the payments made to the state-owned BSNL and MTNL for interconnectivity. A bench comprising Justice SH Kapadia and Justice Aftab Alam on Friday issued notice to Bharti Airtel on the plea of the income-tax department. According to the I-T department, the private telecom service providers are liable to deduct TDS under section 194-J of the Income Tax Act in respect of the payments made by them to the public sector telecom service provider for inter-connect /port access charges. Such payments are fees for the technical services provided by the public sector telecom companies. It comes under the ambit of technical services provided for under the act and the private service providers are thus liable to deduct TDS. (ET)
• The Institute of Chartered Accountants of India (ICAI) is likely to come out with insurance-specific accounting standards in the next two to three months. The standards, which will initially come in the form of recommendations, would give a thorough and fair view of accounts of the insurance companies. Currently, there are 32 common notified accounting standards for all companies of various sectors. The new accounting standards would be additional to the existing 32 standards and give more insights about accounts of insurance companies. (ET)
• Ministry of Environment and Forests has abolished the system of in-principle approvals, to put an end to the practice of launching projects without obtaining the final clearance. The move signals that the ministry has begun to take a tough stand on environmental clearances in ecologically sensitive areas. The projects are either cleared or rejected. No more in-principle approvals. The minister pointed out that industrial projects in ecologically sensitive areas, like the Western Ghats, will not be cleared unless their impact on the environment had been studied in totality. (FE)
• According to sources, Sterlite Industries has moved a step ahead of rival Grupo Mexico by securing the support of the US company’s creditors, its workers union, the Arizona Attorney General and state legislators in the race to acquire Asarco. The bankruptcy court at Corpus Christi in Texas is expected to pronounce its verdict on the fate of the Tucson-based company tomorrow as the hearing ended last week. Whichever company US Bankruptcy Judge Richard Schmidt picks tomorrow will wind up owning Asarco. (BS)
• According to sources, several buyout funds and strategic investors have turned their back on WNS Global Services, putting the stake sale plans of global PE firm Warburg Pincus in India’s second-largest BPO firm in limbo. Warburg wants to sell its 50.12% controlling stake in the NYSE-listed company. Technology buyout fund Silver Lake, PE companies Apax Partners and Bain Capital are believed to have lost interest after the initial due diligence, which kicked off on August 10. Also, Genpact is interested in a share-swap deal and not an all-cash transaction that Warburg favours, while EXL, a rival of WNS and Genpact, is also learnt to have backed out of the deal. (ET)
Friday, August 28, 2009
Today's Biz Bit
• Finmin thinks India ready for super monitor
• More investment leeway for foreign venture funds
• No more changes to Press Notes 2, 4: Finance ministry
• 3G spectrum bids to start at 3500cr,WiMAX 1750cr
• Trade policy offers exporters more sops
• Industrial output exceeds expectations, up 7% in July
• Bharti-MTN deal contours ‘may change’
• JSW in talks to buy coal mine in Swaziland; deal seen at $350 m
• Harley Davidson to launch today, sales to start 2010
• According to sources, the finance ministry is considering a proposal to give statutory powers to the high-level co-ordination committee (HLCC) on capital markets, a move that could transform it into a single, super regulator for the entire financial services sector in the likes of the UK’s Financial Services Authority (FSA). Finance minister is expected to discuss the proposal with RBI governor soon. Currently, the HLCC is a non-statutory body comprising representatives of all financial regulators, including the RBI, finance ministry, SEBI, IRDA and PFRDA who meet under the aegis of the HLCC to debate and sort out divergences in policy issues. (ET)
• In a move to not only make life easier for foreign funds and widen the scope for their risk capital, but also boost FDI in the country, RBI has, while giving green signal to some of the FVCFs, said that “if the FVC investor intends to make any private equity investments, then it may have to avail the FDI route”, which means that barring a few sensitive sectors, a FVCF registered in India is free to invest in almost any business in the country. Thus for buying into firms which are outside the 10 select investment options (such as infrastructure, bio-technology, nanotechnology, biofuel, IT-related activities for hardware and software development and few others) being offered, the fund will have to either approach the FIPB for FDIs where the board approval is required, or invest directly in areas where FDI is permitted under the automatic route. PwC’s Punit Shah has been quoted as “Of course, FVCs enjoy certain regulatory benefits under SEBI and FEMA regulations, such as exit and entry pricing and lock-in relaxations. These will not be available for its investments under FDI route, but RBI has certainly made things convenient for the foreign funds.” (ET)
• In a sharp divergence from its earlier opposition to Press Notes 2 and 4 that relaxed FDI in February 2009, the finance ministry has said that it is not planning to recommend further changes to the guidelines. The statement comes a few months after the department of economic affairs (DEA) in the finance ministry had raised objections to the new guidelines, saying they rendered sectoral FDI limits meaningless. Govt’s decision not to alter the Press Notes eases the way for the complex $23 billion share swap deal between Bharti, Indias largest telecom company, and South Africas MTN, one of the first major test cases of the new policy guidelines. (BS)
• The empowered group of ministers (EGoM) has fixed Rs 3,500 crore as the minimum bid price for the auction of 3G wireless spectrum, evoking dismay from telecom companies that see it as exorbitant. But telecom minister A Raja’s announcement that the government hopes to complete the auction of 3G radio frequencies within 90 days came as a relief for mobile firms, which have already begun preparations to launch the new service. The EGoM has also fixed the base price for WiMAX spectrum for wireless broadband services at Rs 1,750 crore and decided that a total of five players would be allowed to offer 3G services in every circle, of which one slot would be reserved for state-owned telcos BSNL & MTNL. (ET)
• Govt has announced the foreign trade policy for 2009-14 in New Delhi wherein it has allowed duty-free import of capital goods, extended the duty refund scheme for exporters, and cut transaction costs for them in a bid to reverse the decline in exports and double outbound sales of goods and services in five years. The new policy shifts focus to 26 new countries to counter the demand slump in traditional markets. The new policy assures stability and continuity of the existing schemes, at least for the next two years. The governments focus will be on export sectors with high employment. Key features of the policy are:
- Export growth targeted to increase 15% annually till March 2011, thereafter 25%
- DEPB scheme to continue till December 2010
- EPCG scheme at zero duty and export obligation relaxed to 50%
- 26 new markets added for incentives under Focus Market Scheme
• Govt has announced that industry output, as measured by the index of industrial production (IIP), grew 7 % in July, the same as the corresponding period in 2008, taking analysts by surprise as much for the magnitude of the growth as the early data release. The announcement was made by Commerce and Industry Minister Anand Sharma while announcing the new foreign trade policy. (BS)
• MTN CEO Phuthuma Nhleko has said that the contours of the deal with Bharti Airtel announced on May 25 may “very well change”, a possible indicator that some issues remain to be resolved even as the two companies attempt to finalise negotiations with regulators in South Africa and India. According to sources, the deal is on course to be completed before the end of September—the latest deadline set by the two companies—but some details relating to payment by Bharti Airtel to MTN and its shareholders remain to be finalised. (ET)
• Sajjan Jindal-owned JSW group is learnt to be in advanced talks to acquire a coal mine in Swaziland, Africa, at an estimated cost of $350 million (Rs 1,680 crore). The move is part of the group’s efforts to secure coal supplies for its forthcoming power projects and is also in line with recent steps by the Indian government to allow domestic companies to buy mines overseas. The group has been carrying out a detailed geological exploration in the EmaSwati Colliery (Mpaka Mine) and Maloma anthracite mine, in the eastern part of Swaziland, which has the major chunk of the country’s over-1-billion-tonne coal reserves. (ET)
• Iconic US cult bike maker Harley Davidson is set to enter Indian markets tomorrow, two years after it was first granted permission to start operations in the country. Sales will, however, begin only by 2010. As a first step, it is looking for local dealer partners to build customer relationships, the Harley-Davidson brand and its business in India for the long term. Harley Davidson was first granted permission to start operations in India in 2007 but it had to keep its plans in abeyance because of a crushing import duty of over 100 per cent. However, two years hence, the cruisers popularity seems to have far outweighed other considerations like price, which is expected to be multiples of lakhs. (BS)
• More investment leeway for foreign venture funds
• No more changes to Press Notes 2, 4: Finance ministry
• 3G spectrum bids to start at 3500cr,WiMAX 1750cr
• Trade policy offers exporters more sops
• Industrial output exceeds expectations, up 7% in July
• Bharti-MTN deal contours ‘may change’
• JSW in talks to buy coal mine in Swaziland; deal seen at $350 m
• Harley Davidson to launch today, sales to start 2010
• According to sources, the finance ministry is considering a proposal to give statutory powers to the high-level co-ordination committee (HLCC) on capital markets, a move that could transform it into a single, super regulator for the entire financial services sector in the likes of the UK’s Financial Services Authority (FSA). Finance minister is expected to discuss the proposal with RBI governor soon. Currently, the HLCC is a non-statutory body comprising representatives of all financial regulators, including the RBI, finance ministry, SEBI, IRDA and PFRDA who meet under the aegis of the HLCC to debate and sort out divergences in policy issues. (ET)
• In a move to not only make life easier for foreign funds and widen the scope for their risk capital, but also boost FDI in the country, RBI has, while giving green signal to some of the FVCFs, said that “if the FVC investor intends to make any private equity investments, then it may have to avail the FDI route”, which means that barring a few sensitive sectors, a FVCF registered in India is free to invest in almost any business in the country. Thus for buying into firms which are outside the 10 select investment options (such as infrastructure, bio-technology, nanotechnology, biofuel, IT-related activities for hardware and software development and few others) being offered, the fund will have to either approach the FIPB for FDIs where the board approval is required, or invest directly in areas where FDI is permitted under the automatic route. PwC’s Punit Shah has been quoted as “Of course, FVCs enjoy certain regulatory benefits under SEBI and FEMA regulations, such as exit and entry pricing and lock-in relaxations. These will not be available for its investments under FDI route, but RBI has certainly made things convenient for the foreign funds.” (ET)
• In a sharp divergence from its earlier opposition to Press Notes 2 and 4 that relaxed FDI in February 2009, the finance ministry has said that it is not planning to recommend further changes to the guidelines. The statement comes a few months after the department of economic affairs (DEA) in the finance ministry had raised objections to the new guidelines, saying they rendered sectoral FDI limits meaningless. Govt’s decision not to alter the Press Notes eases the way for the complex $23 billion share swap deal between Bharti, Indias largest telecom company, and South Africas MTN, one of the first major test cases of the new policy guidelines. (BS)
• The empowered group of ministers (EGoM) has fixed Rs 3,500 crore as the minimum bid price for the auction of 3G wireless spectrum, evoking dismay from telecom companies that see it as exorbitant. But telecom minister A Raja’s announcement that the government hopes to complete the auction of 3G radio frequencies within 90 days came as a relief for mobile firms, which have already begun preparations to launch the new service. The EGoM has also fixed the base price for WiMAX spectrum for wireless broadband services at Rs 1,750 crore and decided that a total of five players would be allowed to offer 3G services in every circle, of which one slot would be reserved for state-owned telcos BSNL & MTNL. (ET)
• Govt has announced the foreign trade policy for 2009-14 in New Delhi wherein it has allowed duty-free import of capital goods, extended the duty refund scheme for exporters, and cut transaction costs for them in a bid to reverse the decline in exports and double outbound sales of goods and services in five years. The new policy shifts focus to 26 new countries to counter the demand slump in traditional markets. The new policy assures stability and continuity of the existing schemes, at least for the next two years. The governments focus will be on export sectors with high employment. Key features of the policy are:
- Export growth targeted to increase 15% annually till March 2011, thereafter 25%
- DEPB scheme to continue till December 2010
- EPCG scheme at zero duty and export obligation relaxed to 50%
- 26 new markets added for incentives under Focus Market Scheme
• Govt has announced that industry output, as measured by the index of industrial production (IIP), grew 7 % in July, the same as the corresponding period in 2008, taking analysts by surprise as much for the magnitude of the growth as the early data release. The announcement was made by Commerce and Industry Minister Anand Sharma while announcing the new foreign trade policy. (BS)
• MTN CEO Phuthuma Nhleko has said that the contours of the deal with Bharti Airtel announced on May 25 may “very well change”, a possible indicator that some issues remain to be resolved even as the two companies attempt to finalise negotiations with regulators in South Africa and India. According to sources, the deal is on course to be completed before the end of September—the latest deadline set by the two companies—but some details relating to payment by Bharti Airtel to MTN and its shareholders remain to be finalised. (ET)
• Sajjan Jindal-owned JSW group is learnt to be in advanced talks to acquire a coal mine in Swaziland, Africa, at an estimated cost of $350 million (Rs 1,680 crore). The move is part of the group’s efforts to secure coal supplies for its forthcoming power projects and is also in line with recent steps by the Indian government to allow domestic companies to buy mines overseas. The group has been carrying out a detailed geological exploration in the EmaSwati Colliery (Mpaka Mine) and Maloma anthracite mine, in the eastern part of Swaziland, which has the major chunk of the country’s over-1-billion-tonne coal reserves. (ET)
• Iconic US cult bike maker Harley Davidson is set to enter Indian markets tomorrow, two years after it was first granted permission to start operations in the country. Sales will, however, begin only by 2010. As a first step, it is looking for local dealer partners to build customer relationships, the Harley-Davidson brand and its business in India for the long term. Harley Davidson was first granted permission to start operations in India in 2007 but it had to keep its plans in abeyance because of a crushing import duty of over 100 per cent. However, two years hence, the cruisers popularity seems to have far outweighed other considerations like price, which is expected to be multiples of lakhs. (BS)
Thursday, August 27, 2009
Today's Biz Bit
• Fund-raising through ADRs may get easier
• Exim Bank window offers 50% capital support to MSMEs
• SC turns down I-T dept plea against Escorts on tax evasion
• I-T dept directs full use of new powers to reopen old cases
• No regulatory hurdles in MTN deal: Pranab
• Coke wins landmark service tax case
• According to sources, govt is examining a proposal to relax rules governing American depository receipts (ADRs) to allow Indian companies access the US market through more liberal offerings. The finance ministry is deliberating on whether Indian companies should be allowed to issue level-I ADRs, which need very few regulatory disclosures. Level-1 issues do not involve issue of fresh capital, but allow overseas companies to diversify their investor base and build a presence in the US market that may help them raise capital later. India currently allows only level-III ADR/GDRs, which involve capital raising and listing on regular overseas exchanges and greater disclosure levels, including costly compliance with US laws. The view against allowing such ADRs has been that it allows the export of Indian equities abroad and does not generate any value for the country. The alternate view is that since the overall regime is inclined towards further liberalisation, it may be time to do away with this restriction. (ET)
• Export Import Bank of India (Exim Bank) has opened a special funding window for micro, small and medium enterprises (MSMEs) planning to export their products to support export marketing initiatives taken up by MSMEs. The bank has also mobilised the Grassroots Business Fund, a US-based not-for-profit organisation, to offer seed capital to MSMEs for building export units. The initiatives are in sync with the country’s thrust on MSMEs. Exim Bank will reimburse 50% of the project cost. The corpus of the new facilityhowever has not been specified. (ET)
• Supreme Court, while dismissing the Income-Tax Department’s petition against Escorts Asset Management Ltd, which had alleged that the assessee had furnished inaccurate particulars to evade tax, has said the assessee was not carrying the business of sale of shares of other companies but was having the shares as investments, thus the loss suffered on the sale of investments was therefore be treated as long-term capital loss.
• Central Board of Direct Taxes ( CBDT) has directed re-opening of all cases under the search and seizure label, income-escaping assessments and deductions claimed from profits and gains on all eligible businesses, now allowed due to amendments to relevant sections Sections 80A, 80IB,132 and 147 which provide for reopening of cases much beyond the present stipulated limit of eight years. The amendments have been made with retrospective effect, from financial year 2003, 2000, 1998 and 1989. CBDT feels its departments across India should reopen all such cases which attract provisions where amendments have been made in the Finance Bill, 2009, with retrospective effect. The plan also requires the companies to furnish complete details of the latest balance sheet and bank accounts during their tax assessment, instead of the current practice of providing details pertaining to only that assessment year. (BS)
• In a strong signal that the $23-billion cash-cum-share swap deal between Bharti Airtel and South Africa’s MTN is in the last lap of being finalised, finance minister Pranab Mukherjee, referring to the meeting Bharti Airtel chairman and managing director Sunil Mittal and MTN president and CEO Phuthuma Nhleko, has said that “There are no regulatory hurdles in the proposed deal.” According to analysts, the minister’s statement puts to rest speculations that the two extensions in the time period of exclusive negotiations between the two companies were due to regulatory hurdles. It also reflect the deal would be sealed by the two sides within the next couple of weeks. (FE)
• In a judgment that stands to benefit contract manufacturers like fast moving consumer goods (FMCG), pharmaceutical and cosmetic majors, the Bombay High Court has ruled that beverage major Coca-Cola could avail of tax credit on the service tax it pays for advertising and promotions. Soft drink manufacturers can now avail of the service tax rebate as CenVat credit against their excise duty liability on concentrates they supply to their contract manufacturers. The ruling stands to benefit companies from other sectors, too, like cosmetics and pharmaceuticals, since they follow the contract manufacturing model and advertise and promote the end-products.
• Exim Bank window offers 50% capital support to MSMEs
• SC turns down I-T dept plea against Escorts on tax evasion
• I-T dept directs full use of new powers to reopen old cases
• No regulatory hurdles in MTN deal: Pranab
• Coke wins landmark service tax case
• According to sources, govt is examining a proposal to relax rules governing American depository receipts (ADRs) to allow Indian companies access the US market through more liberal offerings. The finance ministry is deliberating on whether Indian companies should be allowed to issue level-I ADRs, which need very few regulatory disclosures. Level-1 issues do not involve issue of fresh capital, but allow overseas companies to diversify their investor base and build a presence in the US market that may help them raise capital later. India currently allows only level-III ADR/GDRs, which involve capital raising and listing on regular overseas exchanges and greater disclosure levels, including costly compliance with US laws. The view against allowing such ADRs has been that it allows the export of Indian equities abroad and does not generate any value for the country. The alternate view is that since the overall regime is inclined towards further liberalisation, it may be time to do away with this restriction. (ET)
• Export Import Bank of India (Exim Bank) has opened a special funding window for micro, small and medium enterprises (MSMEs) planning to export their products to support export marketing initiatives taken up by MSMEs. The bank has also mobilised the Grassroots Business Fund, a US-based not-for-profit organisation, to offer seed capital to MSMEs for building export units. The initiatives are in sync with the country’s thrust on MSMEs. Exim Bank will reimburse 50% of the project cost. The corpus of the new facilityhowever has not been specified. (ET)
• Supreme Court, while dismissing the Income-Tax Department’s petition against Escorts Asset Management Ltd, which had alleged that the assessee had furnished inaccurate particulars to evade tax, has said the assessee was not carrying the business of sale of shares of other companies but was having the shares as investments, thus the loss suffered on the sale of investments was therefore be treated as long-term capital loss.
• Central Board of Direct Taxes ( CBDT) has directed re-opening of all cases under the search and seizure label, income-escaping assessments and deductions claimed from profits and gains on all eligible businesses, now allowed due to amendments to relevant sections Sections 80A, 80IB,132 and 147 which provide for reopening of cases much beyond the present stipulated limit of eight years. The amendments have been made with retrospective effect, from financial year 2003, 2000, 1998 and 1989. CBDT feels its departments across India should reopen all such cases which attract provisions where amendments have been made in the Finance Bill, 2009, with retrospective effect. The plan also requires the companies to furnish complete details of the latest balance sheet and bank accounts during their tax assessment, instead of the current practice of providing details pertaining to only that assessment year. (BS)
• In a strong signal that the $23-billion cash-cum-share swap deal between Bharti Airtel and South Africa’s MTN is in the last lap of being finalised, finance minister Pranab Mukherjee, referring to the meeting Bharti Airtel chairman and managing director Sunil Mittal and MTN president and CEO Phuthuma Nhleko, has said that “There are no regulatory hurdles in the proposed deal.” According to analysts, the minister’s statement puts to rest speculations that the two extensions in the time period of exclusive negotiations between the two companies were due to regulatory hurdles. It also reflect the deal would be sealed by the two sides within the next couple of weeks. (FE)
• In a judgment that stands to benefit contract manufacturers like fast moving consumer goods (FMCG), pharmaceutical and cosmetic majors, the Bombay High Court has ruled that beverage major Coca-Cola could avail of tax credit on the service tax it pays for advertising and promotions. Soft drink manufacturers can now avail of the service tax rebate as CenVat credit against their excise duty liability on concentrates they supply to their contract manufacturers. The ruling stands to benefit companies from other sectors, too, like cosmetics and pharmaceuticals, since they follow the contract manufacturing model and advertise and promote the end-products.
Wednesday, August 26, 2009
Today's Biz Bit
• Growth on track, reforms to take it back to 9%: FM
• Tax board orders scrutiny of firms taking AS-11 relief
• On market bans, SEBI tells SC they are remedial,preventive
• 'Get-rich-quick' schemes of the 80s under SEBI lens
• Airtel-MTN deal to follow revised FDI norms
• Finance minister Pranab Mukherjee joined a distinguished panel, 100 CEOs, senior bureaucrats and policymakers on Tuesday to thrash out ‘Mission 2010: The Reform Road Map’. Both Mr Mukherjee and C Rangarajan, chief of the Prime Minister‘s Economic Advisory Council, have pegged the GDP growth for this fiscal at 6-6.5%, after factoring in the drought damage. Mr Mukherjee also said that reforms would continue “in right earnest” to get the economy back to its 9% clip. The good news was the green shoots in industry with basic goods, intermediates and consumer durables doing better in the first quarter. Growth is expected to pick up speed to hit 7-8% next fiscal. (ET)
• Central Board of Direct Taxes (CBDT) has advised its field formations to scrutinise all cases in which companies have amortised foreign exchange losses under the one-time discretion allowed by the government through an amendment to Accounting Standard 11 (AS-11). The scrutiny will assess the nature of foreign exchange losses typically on overseas borrowings. CBDT feels the amendment has substantial revenue implications on corporate earnings since this option, once exercised, is irrevocable. The temporary relief on AS-11 was permitted against the background of the sharp depreciation of the rupee against the dollar, euro, pound and Swiss franc in 2008, as a result of which several companies with significant foreign currency loans had to suffer mark-to-market losses. (ET)
• SEBI has told the Supreme Court in an affidavit filed with it that SEBI is empowered to issue orders prohibiting companies and brokers from accessing the capital market in the interests of investors and while such orders may seem penal but are actually preventive and remedial in nature. It further stated that if the nature and gravity of the misconduct is such that it is likely to affect adversely the securities market or the interests of the investors in general, it is the statutory duty of the board to issue under section 11B of SEBI Act, 1992 such directions as may be necessary to protect the integrity of the market or the interests of the investor including a direction to restrain the delinquent from accessing the securities market. The affidavit came in an appeal filed before SC challenging SEBI order against Bonanza Biotech Ltd (BBL), Design Auto System Ltd (DASL) and their directors in connection with the alleged irregularities in allotment of shares. SC is examining if SEBI has the power to issue orders barring companies and brokers from accessing the securities market under section 11B of the SEBI Act, 1992. (ET)
• SEBI has stepped up its drive against shady entities that operate collective investment schemes (CISs). While exploring the possibility of widening the classification of entities that float CIS, SEBI has initiated legal action against almost 550 entities as on July 31. So far, around 56 CIS entities have been penalised in various courts across the country and the amount initially raised by such entities is expected to have swelled to as much as Rs 3 lakh crore. (ET)
• Bharti Airtel chairman Sunil Mittal and MTN CEO and president Phuthuma Nhleko are understood to have apprised finance minister Pranab Mukherjee on the structure of the deal, underlining that it would be in accordance with the revised FDI norms. The move suggests a positive state of affairs in the ongoing negotiations between Bharti Airtel and the South African telecom operator for a $23-billion complex share-cum-swap deal. According to sources, both chiefs were essentially garnering an informal nod for the deal and they also discussed the new FDI norms. (FE)
• Tax board orders scrutiny of firms taking AS-11 relief
• On market bans, SEBI tells SC they are remedial,preventive
• 'Get-rich-quick' schemes of the 80s under SEBI lens
• Airtel-MTN deal to follow revised FDI norms
• Finance minister Pranab Mukherjee joined a distinguished panel, 100 CEOs, senior bureaucrats and policymakers on Tuesday to thrash out ‘Mission 2010: The Reform Road Map’. Both Mr Mukherjee and C Rangarajan, chief of the Prime Minister‘s Economic Advisory Council, have pegged the GDP growth for this fiscal at 6-6.5%, after factoring in the drought damage. Mr Mukherjee also said that reforms would continue “in right earnest” to get the economy back to its 9% clip. The good news was the green shoots in industry with basic goods, intermediates and consumer durables doing better in the first quarter. Growth is expected to pick up speed to hit 7-8% next fiscal. (ET)
• Central Board of Direct Taxes (CBDT) has advised its field formations to scrutinise all cases in which companies have amortised foreign exchange losses under the one-time discretion allowed by the government through an amendment to Accounting Standard 11 (AS-11). The scrutiny will assess the nature of foreign exchange losses typically on overseas borrowings. CBDT feels the amendment has substantial revenue implications on corporate earnings since this option, once exercised, is irrevocable. The temporary relief on AS-11 was permitted against the background of the sharp depreciation of the rupee against the dollar, euro, pound and Swiss franc in 2008, as a result of which several companies with significant foreign currency loans had to suffer mark-to-market losses. (ET)
• SEBI has told the Supreme Court in an affidavit filed with it that SEBI is empowered to issue orders prohibiting companies and brokers from accessing the capital market in the interests of investors and while such orders may seem penal but are actually preventive and remedial in nature. It further stated that if the nature and gravity of the misconduct is such that it is likely to affect adversely the securities market or the interests of the investors in general, it is the statutory duty of the board to issue under section 11B of SEBI Act, 1992 such directions as may be necessary to protect the integrity of the market or the interests of the investor including a direction to restrain the delinquent from accessing the securities market. The affidavit came in an appeal filed before SC challenging SEBI order against Bonanza Biotech Ltd (BBL), Design Auto System Ltd (DASL) and their directors in connection with the alleged irregularities in allotment of shares. SC is examining if SEBI has the power to issue orders barring companies and brokers from accessing the securities market under section 11B of the SEBI Act, 1992. (ET)
• SEBI has stepped up its drive against shady entities that operate collective investment schemes (CISs). While exploring the possibility of widening the classification of entities that float CIS, SEBI has initiated legal action against almost 550 entities as on July 31. So far, around 56 CIS entities have been penalised in various courts across the country and the amount initially raised by such entities is expected to have swelled to as much as Rs 3 lakh crore. (ET)
• Bharti Airtel chairman Sunil Mittal and MTN CEO and president Phuthuma Nhleko are understood to have apprised finance minister Pranab Mukherjee on the structure of the deal, underlining that it would be in accordance with the revised FDI norms. The move suggests a positive state of affairs in the ongoing negotiations between Bharti Airtel and the South African telecom operator for a $23-billion complex share-cum-swap deal. According to sources, both chiefs were essentially garnering an informal nod for the deal and they also discussed the new FDI norms. (FE)
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