• Govt to keep tabs on FDI in restricted areas
• Quarterly CAG review of PSU a/cs soon
• Govt plan to cap board size of CPSEs at 12 put on hold
• No service tax on road construction: CBEC
• SEBI moves SC to ascertain whether states can overrule central laws
• Tax dues can claim priority over private debts:SC
• Accord industry status to real estate & housing sector: CII
• Audi plans big, to foray into tier-II cities
• Unitech in talks with OBC to sell office building at Saket
• ThaiBev in race to acquire United Spirits stake
• According to sources, govt will step up vigil against attempts by foreign firms to gain backdoor entry into restricted sectors, where they are not allowed to invest, through bogus partnerships with Indian firms. FIPB will examine all domestic and international relationships between foreign and Indian partners of companies seeking to enter restricted sectors such as telecom and retail to ensure that Indian partners are not mere dummies of the foreign firm. To prove that Indian investors are really in control of the JV that makes the downstream investment, they have to show that they do not have any relationship with the foreign partner anywhere else in the world that would compromise their independence in taking important decisions in the JV. (ET)
• According to sources, the Comptroller and Auditor General of India (CAG) has already drawn a three-phased audit system to be adopted for the accounting year 2008-09 according to which CAG will review the accounts of state-run companies on a quarterly basis to ensure better corporate governance as against the current practice of reviewing only the audited financial accounts. CAG is learnt to have also zeroed in on 80 entities including all listed government companies, the navratnas, category 1 miniratnas and statutory corporations such as the Airports Authority of India and National Highways Authority of India and a presentation on the new system has already been shown to these entities which have accepted the proposal. According to the new system, the CAG will examine the accounting policies of the PSUs immediately after they come out with their first quarter results. In cases of companies that do not prepare their quarterly or half-yearly results, the regulator will begin the review in November or December. (ET)
• According to sources, plan of the department of public enterprises (DPE) to limit the size of boards in public sector companies to not more than 12 directors has come unstuck after running into stiff opposition from various administrative ministries. The plan was to cap the total number of directors in boards of central public sector enterprises to 10 or 12 to make them more efficient and to ensure that they were compliant with a key corporate governance clause which stipulates that 50% of directors of listed companies should be independent. The Standing Conference of Public Enterprises (SCOPE), an apex body of public sector firms, had earlier raised objections to the proposal, saying that the size of the board of directors should be left to the concerned company and concerned administrative ministry. (ET)
• Central Board of Excise and Customs (CBEC) has issued a circular clearing the air on taxation of construction, repair, maintenance and management of roads. It states that construction of roads is not a taxable service, though repair, management and maintenance of roads will attract service tax. The circular comes after CBEC received several representations from the industry highlighting divergence in practices followed by service tax department officials. (ET)
• SEBI has moved the Supreme Court seeking its adjudication on the issue of whether a state legislature can pass a law to override laws such as Securities Law and Companies Law passed by Parliament. Challenging the validity of Sardar Sarovar Narmada Nigam (Conferment of Power to Redeem Bonds) Act, 2008, SEBI said if it is allowed to operate, it will dissuade the investors and institutional investors to invest in bonds issued by government companies. SEBI has sought transfer of all the cases which relates to challenging the Act of 2008, facilitating premature redemption of DDBs issued by Sardar Sarovar Narmada Nigam, to the Supreme Court. The cases are pending in the high courts of Gujarat and Bombay. (ET)
passed the Act of 2008.
• Supreme Court has ruled in a batch of petitions filed by various banks challenging the High Court verdicts that in recovering debts or enforcing security interests, the state’s right to sales tax dues will have priority over claims of banks, financial institutions and secured creditors. SC also clarified that the judgment would not preclude the banks from realising their dues by taking recourse to other proceedings as permitted under law. The DRT Act or Securitisation Act, creating first charge in favour of the banks and FIs in lieu of their dues, cannot be given over-riding effect and the right of the state to recover sales tax cannot be frustrated merely because a bank, FI or secured creditor had initiated action for recovering debt, etc, it added. (FE)
• Confederation of Indian Industry (CII) has submitted a report to the government seeking comprehensive reforms in the real estate and housing sector and suggesting that the real estate and housing sector should be accorded “industry status” and the integrated township development activity be accorded “infrastructure status. According to CII, the industry status would bring about a major transformation in terms of outlook of the industry, would stimulate investments and inculcate corporate culture and industry discipline, which will immensely benefit both economy, in general and consumers in particular. (FE)
• German auto major Audi is learnt to be planning to foray into tier-II cities like Ludhiana, Jaipur and Lucknow. At present Audi has dealership in Delhi, Guragon, Chandigarh, Ahmedabad, Banglore and Mumbai, among others. Audi’s decision is based in the encouraging response from the northern region, which contributes nearly 50 % of its total sales in the country. (BS)
• Real estate firm Unitech is learnt to be in talks with Oriental Bank of Commerce (OBC) to sell its office building in Saket, New Delhi in a deal expected to fetch Unitech around Rs 500 crore. The co is also learnt to be simultaneously in talks with 7-8 wealthy individuals to sell floors in that office, in the event of a deal with OBC not working out. While the negotiation process with Oriental Bank of Commerce has been initiated, negotiations with 7-8 wealthy property investors too is underway. (ET)
• According to sources, Singapore stock exchange listed ThaiBev has emerged as one of the front runners to buy stakes in Vijay Mallya-led United Spirits (USL) and has initiated formal talks with USL about ten days back to explore a strategic deal. ThaiBev is owned by Thai-based billionaire Charoen Sirivadhanabhakdi and has emerged as a suitor even as USL is locked in advanced discussions with drinks giant Diageo for a substantial minority stake sale. ThaiBev and USL could strike a JV facilitating Charoen’s entry into rapidly expanding Indian market, with the latter also buying a substantial stake in Whyte & Mackay. (ET)
