INCOME TAX
CII`s Budget wishlist: Up IT exemption limit,no FBT, surcharge
Delhi : Industry chamber CII on Monday asked for raising income tax exemption limit by Rs 50,000, but did not call for another stimulus package in the full Budget for 2009-10 expected in July by the new UPA Government.A chamber delegation, led by CII Vice President Hari Bhartia, has had pre-Budget interactions with Revenue Secretary P V Bhide today. The delegation demanded that the Budget should have measures to promote investment, remove Fringe Benefit Tax and surcharge on corporate income tax , required to upturn the slackening economy.
Tax breaks for gas production to cost govt Rs 40,000 cr
Delhi : The government will lose Rs 40,000 crore in revenues if natural gas production is given tax breaks, the revenue department in the finance ministry has opined, an assessment disputed by experts.Revenue secretary PV Bidhe met petroleum minister Murli Deora on May 29 and is believed to have expressed reservations on the grant of seven-year exemption from payment of income tax to natural gas production, a senior government official said.Though the Cabinet had guaranteed exemption from payment of income tax on oil and gas production from areas awarded under the New Exploration Licensing Policy (Nelp), the finance ministry last year said the fiscal incentives were only for oil.
Misc. - Direct Tax
Effective tax compliance rate of India Inc declines in ? 08-09
Delhi : IN A little over a month from now, Pranab Mukherjee will present his Budget for 2009-10. He must be very busy putting final touches to the proposals right now. In many ways, his job will be more difficult this time than his predecessor. The growth rate of gross domestic product has fallen sharply last year, industrial production has grown at a substantially lower rate and the spectre of job loss and salary cut is still haunting the nation. The Budget has to address all these problems and take measures to boost the economy. He has another big task ahead ? broadening up of welfare measures for the poor. That is, higher social sector spending. But the question is where will the money come from?
CUSTOMS
Dumping duty on fluorescent lamps from Vietnam, China
Delhi : Prices of compact fluorescent lamps (CFLs) imported from China and Vietnam may move northwards, with the Finance Ministry imposing a definitive anti-dumping duty on such imports from these two countries. A definitive anti-dumping duty usually lasts for five years, unless revoked earlier. The definitive anti-dumping duty would be applicable from November 21, 2008, the date of imposition other provisional duty. The recommendation to levy definitive anti-dumping duty on CFL imports from China and Vietnam was made by the Designated Authority in the Commerce Ministry in end February 2009
SERVICE TAX
Can contract be bifurcated to decide tax jurisdiction? Article
Delhi : he issue of taxability of offshore services was settled by the Supreme Court in case of Ishikawa (288 ITR 408) wherein it was observed that there are two conditions which are required to be met in order to bring the income from services in the tax net in India. The two conditions both of which are to be met are that services should be rendered in India and that the services should be utilised in India. Thus where services are rendered/provided outside India, then the consideration therefore will not be taxed in India even if the services are utilized in India. The Apex court also held that whatever was paid by a resident to a non-resident cannot be taxed in India unless there is sufficient territorial nexus with India.
SEBI
Sebi proposes to fund class action suits
Maharashtra : In the first move of its kind in the country, the Securities and Exchange Board of India has decided to finance investor associations that propose to fight collective suits - which resemble US or European-style class action suits - in Indian courts.The stock market regulator will announce detailed guidelines on this shortly and has introduced a new clause in the regulation for the Investor Protection and Education Fund that was notified recently. Sebi has already made a one-time contribution of Rs 14 crore (Rs 140 million) towards this fund.
Misc. Corporate Laws & Other Commercial Policies
Airline safety: India likely to seek more time from US
Delhi : The civil aviation ministry is expected to ask the US Federal Aviation Administration (FAA) for more time to strengthen safety and oversight standards in Indian airports, after the US regulator raised concerns about the level of compliance with global standards in the country. A team from the FAA is expected to visit India in June for another inspection of the country’s airport facilities, but Indian officials said they would request the Americans to delay the visit by a month.The Indian civil aviation secretary, M Madhavan Nambiar, and the Directorate General of Civil Aviation (DGCA) head Nasim Zaidi, are in any case expected to brief the US regulator about the measures taken by India to upgrade security and safety standards.
Fairplay panel plans drive to ‘educate’ cos
Delhi : The Competition Commission of India (CCI), which got enforcement powers recently, plans a campaign to educate companies about the practices that may put them on the wrong side of the law, before it starts action against errant firms on its own.The commission will reach out to corporate houses across the country in June to tell them what practices have to be stopped immediately, said a commission official who asked not to be named.For example, predatory pricing, or selling cheaper than the rival’s product to capture the market, will be considered legal so long as the consumer benefits from it.
Audit & Acc - Misc.
Accounting norm changes help major cos boost earnings
Delhi : Relaxations in AS 11, the Accounting Standard that deals with the ‘effects of changes in foreign exchange rates’, may have helped quite a few large companies report a better profit picture for March 2009.Even as top financial companies in the US are said to have benefited from a less stringent Accounting Standard that allows flexibility in mark-to-market accounting, some of the leading Indian companies such as Tata Motors, JSW Steel, Sterlite Industries, Ashok Leyland and Bharat Forge have come up with an improved earnings picture in March 2009 as a result of the amendment to AS 11 and some could even have slipped in to losses in FY-09 had they not chosen to adopt the changes.
Accounting for rate regulated entities Article
Delhi : Many governments regulate the pricing of essential services such as natural gas, water and electricity. The objective is to provide price protection to consumers while providing a fair return to the supplier. These regulatory mechanisms have created significant accounting issues under IFRS, which does not have any elaborate guidance on the subject.The accounting for rate regulated entities is now on the agenda of the International Accounting Standards Board (IASB) and a separate project has been set up to deal with it. The IASB intends to publish an Exposure
Draft (ED) in July 2009.
Finance & Money Markets
Misleading regulations can kill unsecured debt market Article
Delhi : The corporate bond market is a stated strategic focus area for financial sector regulation in India. When the SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (“Debt Regulations”) were notified about a year ago, the intention was to kickstart the corporate bond market. However, avoidable ambiguity prevails, with bad interpretation by merchant bankers and the media being left undisturbed by the Securities and Exchange Board of India SEBI.The Debt Regulations purport to provide a regulatory framework for corporates to raise debt and list such debt on stock exchanges. The debt instruments could either be issued in the form of a “public issue” i.e. inviting the public to subscribe to debt instruments or by way of “private placements”, where only select invitees numbering less than 50 could initially subscribe.
Rise in NPAs to spoil revival: Crisil
Maharashtra : While the euphoria that India Inc is making a comeback is gathering momemtum due the bull run on the stock markets and the better-than-expected GDP numbers, there are concerns that indicate that all might not be well. Rating agency Crisil, a subsidiary of Standard & Poor’s, has cautioned that the Indian economy is still going through a period of stress and downturn risk is not completely bottomed out as yet. The likely growth in non-performing assets (NPAs), a trigger for the global growth to dither, is raising its ugly head in India as NPAs of corporates is set to grow three times.
RBI to let SBI guarantee Tata Motors debt issue
Maharashtra : The Reserve Bank of India (RBI) will allow the State Bank of India (SBI) to guarantee the recently-concluded Rs 4,200-crore non-convertible debenture (NCD) issue by Tata Motors. A source close to the central bank said that RBI had decided to exercise what the person described as “regulatory forbearance” in case of the Tata NCD issue, which means it would be exempt from the ban on banks guaranteeing corporate bondsIn reaching this decision, RBI was mindful of the fact that the interest of investors would be jeopardised, if the guarantee were to be withdrawn after the event, the source, who requested anonymity, said.An RBI circular issued last Friday clarifying that existing regulations do not permit banks to guarantee corporate bond issues had spooked investors who had invested in the issue.
Govt eyes Rs 10,000 crore from PSU stake sales in 12 months
Delhi : THE new UPA government at the Centre plans to raise Rs 10,000-crore through stake sales in stateowned units over the next one year, more than what the previous UPA government achieved during its entire five-year tenure.With the Left off its back, the Manmohan Singh-led government is planning to unveil its disinvestment agenda in the coming budget, complete with annual targets, a finance ministry official said.“The government has fixed a target of Rs 10,000 crore from disinvestment proceeds over a 12-month period starting July 2009,” said the official, who requested not to be named.“The government is preparing a blueprint that will identify the public sector units where the state’s holding can be diluted at the earliest.
Funds pitch for higher cap on single-stock investments
Maharashtra : SOME large domestic mutual funds are asking market regulator Sebi to revise a rule that prevents them from investing more than a tenth of an equity scheme’s assets in a single stock or equity-related instrument. The main trigger for the request is that the rule is constraining or will constrain these schemes from increasing their investments in shares of Reliance Industries, usually at the vanguard of a bull stock market rally. Reliance Industries’ weightage in the benchmark S&P Nifty index of the National Stock Exchange has been on the rise, increasing by over 2% since the beginning of the year.
Pre-Budget 2009
Budget for fiscal fitness and economic growth
Delhi : Having completed the complex exercise of Cabinet formation, the Government’s focus is on the legislative business ahead. As Finance Minister, Mr Pranab Mukherjee, told a TV channel recently, he hopes to present the Budget early in July 2009 and get it passed by the end of the month. He recognises that any delay will call for a further vote on account. The Minister obviously banks on the strength of the ruling party and its allies to avert the vote on account. What is of interest to all are the contents of the Budget. Obviously, it will have to take measures to spur growth.
Tuesday, June 2, 2009
Saturday, May 30, 2009
31st May 2009
INCOME TAX
Depreciation on intangibles in M&A - a case to re-look Article
Delhi : With India Inc actively pursuing mergers and acquisitions route for their expansions, and valuations reaching dizzying heights, the consequent availability of tax deductions on goodwill and other intangible assets has become a sore point. The income-tax law way back in 2000 had made considerable amendments dealing with business reorganisations which made `M&A` tax neutral, however, scope of some of these provisions need to be revisited especially the issue of depreciation on cost of intangibles, since it has a significant tax impact .
CUSTOMS
Ministerspeak lifts steel stocks
Maharashtra : Mr Virbhadra Singh, the new Steel Minister, said the ministry will consider additional import tax on steel to protect the domestic industries from cheap imports on an urgent basis.“An immediate key challenge is the disparity between Indian and global steel prices, consequent to the recent economic slowdown,” the Steel Minister said.
VALUE ADDED TAX
Tax signals crisscross broadcasting Article
Delhi : Consider these examples of cascading effect of indirect taxation: A television channel company acquires satellite rights of a blockbuster movie from an Indian company, such rights being in the nature of ‘copyright’, would attract Central Sales Tax (CST) / State VAT (value added tax).
COMPANY LAW
Investor interest priority: Khursheed
Delhi : Minister of state for corporate affairs (independent charge) Salman Khursheed said the government will protect small investors byensuring transparency in the working of the corporate sector. “Our concern will be the aam aadmi. The priority for the government is to give protection to every investor.
IRDA
IRDA wants private cos to have a whistle-blower policy
Maharashtra : Private insurers will have to put in place a “whistle-blower” policy, allowing employees to raise concerns internally on possible irregularities in financial reporting and governance weaknesses. In a draft of its first comprehensive norms on corporate governance, insurance regulator IRDA has proposed prompt action against insurance companies that do not follow these norms aimed at protecting policyholders’ interest.
Banking Regulation
Reserves see biggest growth in a year
Maharashtra : Foreign exchange reserves have recorded their highest growth in more than a year in the week, following the general election results, reports Our Bureau in Mumbai. Investment by foreign institutions in the stock market and an increase in the value of non-dollar assets have helped push up the value of forex reserves.
Moody`s puts 13 Indian banks on watch
Maharashtra : Rating agency Moody`s has placed 13 Indian banks, including State Bank of India [Get Quote], ICICI Bank [Get Quote] and Punjab National Bank [Get Quote], on watch for possible downgrade under a global review of systemic support available for the banking sector.Others banks under review are Bank of Baroda Get Quote, Bank of India,
Misc. Corporate Laws & Other Commercial Policies
A Raja calls for cheaper rates, early auctions
Delhi : My first priority is to have early auctions for both 3G and WiMAX spectrums. We will see that it happens within the first three months. I will work hard towards reduction of STD and local tariffs. With so many new players, there is enough competition in the market to bring down tariffs. The new government has set a target of bringing down STD tariffs to 25 paise/minute and local call rates to 10 paise/minute in two years.I will soon be meeting BSNL trade unions over this issue.
Deora cooking new gas scheme for rural poor
Delhi : Petroleum minister Murli Deora had signed off from his Shastri Bhawan office earlier this month as a satisfied man. Besides reining in fuel prices and acquiring oil assets abroad, he ensured that gas production started at the Krishna-Godavari basin within a reasonable timeframe, despite several hurdles. On Friday, when he resumed office for another term, he was greeted with the news that oil production from the country’s largest reserves in Rajasthan is awaiting his green signal.
Jaiswal mulls price hike to fire up coal
Delhi : In a move that could trigger demand for increasing electricity tariff, coal minister Sriprakash Jaiswal said the government may consider increasing the price of coal depending on the economic situation. Any decision in this regard would, however, be taken after concurrence with the Prime Minister.
Sharma gets ready to tackle slowdown, won’t review FDI norms
Delhi : Commerce and industry minister Anand Sharma said his ministry would look at the possibility of more incentives for the industrial and export sectors that are battling with economic slowdown and would hold discussions with the finance ministry on suitable measures to be taken in the next budget.The minister said while India was expected to maintain its exports of $164 billion in the current fiscal,
Finance & Money Markets
Consider Mistry, Rajan reports: Govt to financial markets panel
Maharashtra : The High-Level Coordination Committee (HLCC) on Financial Markets is meeting tomorrow to chart a road map for the government’s reforms agenda for the sector.The government has already sent a note to HLCC members highlighting recommendations by committees led by Percy Mistry
Depreciation on intangibles in M&A - a case to re-look Article
Delhi : With India Inc actively pursuing mergers and acquisitions route for their expansions, and valuations reaching dizzying heights, the consequent availability of tax deductions on goodwill and other intangible assets has become a sore point. The income-tax law way back in 2000 had made considerable amendments dealing with business reorganisations which made `M&A` tax neutral, however, scope of some of these provisions need to be revisited especially the issue of depreciation on cost of intangibles, since it has a significant tax impact .
CUSTOMS
Ministerspeak lifts steel stocks
Maharashtra : Mr Virbhadra Singh, the new Steel Minister, said the ministry will consider additional import tax on steel to protect the domestic industries from cheap imports on an urgent basis.“An immediate key challenge is the disparity between Indian and global steel prices, consequent to the recent economic slowdown,” the Steel Minister said.
VALUE ADDED TAX
Tax signals crisscross broadcasting Article
Delhi : Consider these examples of cascading effect of indirect taxation: A television channel company acquires satellite rights of a blockbuster movie from an Indian company, such rights being in the nature of ‘copyright’, would attract Central Sales Tax (CST) / State VAT (value added tax).
COMPANY LAW
Investor interest priority: Khursheed
Delhi : Minister of state for corporate affairs (independent charge) Salman Khursheed said the government will protect small investors byensuring transparency in the working of the corporate sector. “Our concern will be the aam aadmi. The priority for the government is to give protection to every investor.
IRDA
IRDA wants private cos to have a whistle-blower policy
Maharashtra : Private insurers will have to put in place a “whistle-blower” policy, allowing employees to raise concerns internally on possible irregularities in financial reporting and governance weaknesses. In a draft of its first comprehensive norms on corporate governance, insurance regulator IRDA has proposed prompt action against insurance companies that do not follow these norms aimed at protecting policyholders’ interest.
Banking Regulation
Reserves see biggest growth in a year
Maharashtra : Foreign exchange reserves have recorded their highest growth in more than a year in the week, following the general election results, reports Our Bureau in Mumbai. Investment by foreign institutions in the stock market and an increase in the value of non-dollar assets have helped push up the value of forex reserves.
Moody`s puts 13 Indian banks on watch
Maharashtra : Rating agency Moody`s has placed 13 Indian banks, including State Bank of India [Get Quote], ICICI Bank [Get Quote] and Punjab National Bank [Get Quote], on watch for possible downgrade under a global review of systemic support available for the banking sector.Others banks under review are Bank of Baroda Get Quote, Bank of India,
Misc. Corporate Laws & Other Commercial Policies
A Raja calls for cheaper rates, early auctions
Delhi : My first priority is to have early auctions for both 3G and WiMAX spectrums. We will see that it happens within the first three months. I will work hard towards reduction of STD and local tariffs. With so many new players, there is enough competition in the market to bring down tariffs. The new government has set a target of bringing down STD tariffs to 25 paise/minute and local call rates to 10 paise/minute in two years.I will soon be meeting BSNL trade unions over this issue.
Deora cooking new gas scheme for rural poor
Delhi : Petroleum minister Murli Deora had signed off from his Shastri Bhawan office earlier this month as a satisfied man. Besides reining in fuel prices and acquiring oil assets abroad, he ensured that gas production started at the Krishna-Godavari basin within a reasonable timeframe, despite several hurdles. On Friday, when he resumed office for another term, he was greeted with the news that oil production from the country’s largest reserves in Rajasthan is awaiting his green signal.
Jaiswal mulls price hike to fire up coal
Delhi : In a move that could trigger demand for increasing electricity tariff, coal minister Sriprakash Jaiswal said the government may consider increasing the price of coal depending on the economic situation. Any decision in this regard would, however, be taken after concurrence with the Prime Minister.
Sharma gets ready to tackle slowdown, won’t review FDI norms
Delhi : Commerce and industry minister Anand Sharma said his ministry would look at the possibility of more incentives for the industrial and export sectors that are battling with economic slowdown and would hold discussions with the finance ministry on suitable measures to be taken in the next budget.The minister said while India was expected to maintain its exports of $164 billion in the current fiscal,
Finance & Money Markets
Consider Mistry, Rajan reports: Govt to financial markets panel
Maharashtra : The High-Level Coordination Committee (HLCC) on Financial Markets is meeting tomorrow to chart a road map for the government’s reforms agenda for the sector.The government has already sent a note to HLCC members highlighting recommendations by committees led by Percy Mistry
Friday, May 29, 2009
30th May 2009
SEBI
SEBI issues norms for mobile trading
Maharashtra : Stock trading using the mobile phone is likely to get a push, with SEBI issuing on Thursday a draft framework for securities trading using wireless technology. SEBI said it is exploring, through these guidelines, the possibility of extending the existing framework for Internet trading to enable use of wireless technology for securities trading. The guidelines for Internet-based trading were put in place by SEBI in January 2000.Quite a few brokers are already providing Web sites with low bandwidth to enable GPRS-based mobile phone users to access their Internet-based online trading platform.According to SEBI’s proposed framework, brokers who provide Internet-based trading services are eligible to use wireless technology for the same.
IRDA
‘LIC need not sell equity to meet 10% stake ceiling’
Delhi : India’s biggest investor in stock markets—Life Insurance Corporation—can stay invested more than 10% in blue-chip companies but cannot raise its stake beyond the threshold, imposed by regulator IRDA, in case of fresh investment. The Corporation, which has an equity market exposure of over Rs two lakh crore, had been having problems relating to the ceiling of 10% for investment in a listed entity as it has significantly higher stake in a significant number of major Indian corporate.“LIC has no immediate pressure to pare its existing equity in the companies,” IRDA chairman J Hari Narayan said adding that the ceiling will apply to companies in which stake of LIC is less than the limit.
Misc. Corporate Laws & Other Commercial Policies
No boundaries for SEZ mergers
Delhi : THE government has decided against applying an area limit of 5,000 hectares for special economic zones (SEZs) if two or more such zones are merged, clearing the way for big SEZs in the country.Amending the SEZ rules, the government has also allowed developers more freedom to select a location by defining ‘vacant land’ where a special zone can be set up as land where there are no functional ports, manufacturing units, industrial activities or structures in which any commercial or economic activity is in progress. As per the SEZ (second amendment) rules published in the Gazette of India this week, the Centre may consider on merit the clubbing of contiguous (adjoining) existing notified SEZs even if the total area of the resultant zones exceeds 5,000 hectares
Audit & Acc - Misc.
Finance ministry plans special Satyam audit
Delhi : A decision on this will be taken after the tax authorities go through the report of the Serious Fraud Investigations Office (SFIO), which they have requested from the corporate affairs ministry.“We have written to the Ministry of Corporate Affairs to provide us the SFIO report on Satyam Computer,” a source said.Recently, the income-tax authorities conducted a special audit of the accounts of several firms including DLF, which got a tax notice of about Rs 400 crore.
Finance & Money Markets
Banks rework CDR terms
Maharashtra : The clauses on corporate debt restructuring (CDR) are being reworked in view of the huge foreign exchange exposure of several companies, which have already opted for restructuring debt or are on their way to seeking approval for one. The CDR core body at the IDBI Bank will issue a circular with the changed clauses shortly.This follows discussions among banks which are members of the CDR mechanisms over settlement of foreign exchange dues. These include payment obligations towards foreign currency convertible bonds (FCCBs), forward contracts for hedging business operations and speculative positions taken by companies through exotic derivative products.
INTERNATIONAL BUSINESS
GM says bondholder panel supports sweetened offer
General Motors Corp. said Thursday a committee of bondholders has agreed to a sweetened deal proposed by the U.S. government to erase the automaker`s unsecured debt in exchange for company stock.The news came in a regulatory filing that spells out the Obama administration`s game plan for what it hopes will be a speedy Chapter 11 bankruptcy reorganization that will leave GM with a much smaller debt load and the U.S. government as the dominant shareholder.A person familiar with GM`s plans said it was "probable" that the company would file for bankruptcy protection on Monday. The person didn`t want to be identified because the plans were still under discussion with the U.S. and Canadian governments.
Fed May Buy More Assets to Bolster Balance Sheet (Update2)
The Federal Reserve may step up asset purchases to prevent its balance sheet from contracting until policy makers are convinced an economic recovery has taken hold, Fed officials and analysts said.Demand for some of the Fed’s emergency programs has waned as the grip of the credit crunch loosens, with loans to banks shrinking 48 percent since Jan. 1. The main tool to keep the central bank’s holdings from falling from the current $2.08 trillion would be more purchases of Treasuries, said analysts including former Fed Governor Laurence Meyer.
MERGER & ACQUISITION
AB Group may not buy L&T`s stake in UltraTech
West Bengal : Aditya Birla Group is unlikely to buy Larsen & Toubro’s (L&T) 11.5% stake in its subsidiary UltraTech Cement, as it does not want to launch the mandatory open offer, which, if successful, would scale up its equity in the cement company to 86%, a person familiar with the group’s thinking said.Requesting anonymity, the person said the Birlas did not wish to spend money for scaling up their stake in UltraTech in which they already hold a comfortable 55% stake. If fully subscribed, the required open offer coupled with L&T’s stake, would raise the Birla group’s stake in UltraTech by 31.5%, an exercise which would cost around Rs 2,700 crore at Thursday’s price.
Sanofi pulls out of race for Shantha; GSK in fray
Delhi : British drug major GlaxoSmithKlinePharmaceuticals is in advanced talks to buy at least a 51% stake from French company MerieuxAlliance in Shantha Biotech after the other contender, Sanofi Aventis, dropped out of the race, two persons privy to the development said.“Only a fewmatters relating to the valuation need to be finalised,” a senior industry executive said, asking thatneither his name nor that of his company be revealed.Sanofi Aventis is understood to have come to the conclusion that the privately-held company’s product portfolio was not attractive enough for it to proceed with negotiations, one of them said. .
IFAC
IFAC 2008 Annual Report Highlights Initiatives During Credit Crisis and Need for Convergence to Global Standards
Delhi :
The International Federation of Accountants (IFAC) released its 2008 annual report today, highlighting initiatives to help restore global financial stability and, in addition, describing how some of IFAC`s core work-developing international standards and guidance-became even more relevant in the current economic environment."As a result of the crisis, some of the ideas IFAC has been communicating for decades are resonating with greater force," said Ian Ball, Chief Executive Officer. "Chief among these is the need for convergence to global standards.
SEBI issues norms for mobile trading
Maharashtra : Stock trading using the mobile phone is likely to get a push, with SEBI issuing on Thursday a draft framework for securities trading using wireless technology. SEBI said it is exploring, through these guidelines, the possibility of extending the existing framework for Internet trading to enable use of wireless technology for securities trading. The guidelines for Internet-based trading were put in place by SEBI in January 2000.Quite a few brokers are already providing Web sites with low bandwidth to enable GPRS-based mobile phone users to access their Internet-based online trading platform.According to SEBI’s proposed framework, brokers who provide Internet-based trading services are eligible to use wireless technology for the same.
IRDA
‘LIC need not sell equity to meet 10% stake ceiling’
Delhi : India’s biggest investor in stock markets—Life Insurance Corporation—can stay invested more than 10% in blue-chip companies but cannot raise its stake beyond the threshold, imposed by regulator IRDA, in case of fresh investment. The Corporation, which has an equity market exposure of over Rs two lakh crore, had been having problems relating to the ceiling of 10% for investment in a listed entity as it has significantly higher stake in a significant number of major Indian corporate.“LIC has no immediate pressure to pare its existing equity in the companies,” IRDA chairman J Hari Narayan said adding that the ceiling will apply to companies in which stake of LIC is less than the limit.
Misc. Corporate Laws & Other Commercial Policies
No boundaries for SEZ mergers
Delhi : THE government has decided against applying an area limit of 5,000 hectares for special economic zones (SEZs) if two or more such zones are merged, clearing the way for big SEZs in the country.Amending the SEZ rules, the government has also allowed developers more freedom to select a location by defining ‘vacant land’ where a special zone can be set up as land where there are no functional ports, manufacturing units, industrial activities or structures in which any commercial or economic activity is in progress. As per the SEZ (second amendment) rules published in the Gazette of India this week, the Centre may consider on merit the clubbing of contiguous (adjoining) existing notified SEZs even if the total area of the resultant zones exceeds 5,000 hectares
Audit & Acc - Misc.
Finance ministry plans special Satyam audit
Delhi : A decision on this will be taken after the tax authorities go through the report of the Serious Fraud Investigations Office (SFIO), which they have requested from the corporate affairs ministry.“We have written to the Ministry of Corporate Affairs to provide us the SFIO report on Satyam Computer,” a source said.Recently, the income-tax authorities conducted a special audit of the accounts of several firms including DLF, which got a tax notice of about Rs 400 crore.
Finance & Money Markets
Banks rework CDR terms
Maharashtra : The clauses on corporate debt restructuring (CDR) are being reworked in view of the huge foreign exchange exposure of several companies, which have already opted for restructuring debt or are on their way to seeking approval for one. The CDR core body at the IDBI Bank will issue a circular with the changed clauses shortly.This follows discussions among banks which are members of the CDR mechanisms over settlement of foreign exchange dues. These include payment obligations towards foreign currency convertible bonds (FCCBs), forward contracts for hedging business operations and speculative positions taken by companies through exotic derivative products.
INTERNATIONAL BUSINESS
GM says bondholder panel supports sweetened offer
General Motors Corp. said Thursday a committee of bondholders has agreed to a sweetened deal proposed by the U.S. government to erase the automaker`s unsecured debt in exchange for company stock.The news came in a regulatory filing that spells out the Obama administration`s game plan for what it hopes will be a speedy Chapter 11 bankruptcy reorganization that will leave GM with a much smaller debt load and the U.S. government as the dominant shareholder.A person familiar with GM`s plans said it was "probable" that the company would file for bankruptcy protection on Monday. The person didn`t want to be identified because the plans were still under discussion with the U.S. and Canadian governments.
Fed May Buy More Assets to Bolster Balance Sheet (Update2)
The Federal Reserve may step up asset purchases to prevent its balance sheet from contracting until policy makers are convinced an economic recovery has taken hold, Fed officials and analysts said.Demand for some of the Fed’s emergency programs has waned as the grip of the credit crunch loosens, with loans to banks shrinking 48 percent since Jan. 1. The main tool to keep the central bank’s holdings from falling from the current $2.08 trillion would be more purchases of Treasuries, said analysts including former Fed Governor Laurence Meyer.
MERGER & ACQUISITION
AB Group may not buy L&T`s stake in UltraTech
West Bengal : Aditya Birla Group is unlikely to buy Larsen & Toubro’s (L&T) 11.5% stake in its subsidiary UltraTech Cement, as it does not want to launch the mandatory open offer, which, if successful, would scale up its equity in the cement company to 86%, a person familiar with the group’s thinking said.Requesting anonymity, the person said the Birlas did not wish to spend money for scaling up their stake in UltraTech in which they already hold a comfortable 55% stake. If fully subscribed, the required open offer coupled with L&T’s stake, would raise the Birla group’s stake in UltraTech by 31.5%, an exercise which would cost around Rs 2,700 crore at Thursday’s price.
Sanofi pulls out of race for Shantha; GSK in fray
Delhi : British drug major GlaxoSmithKlinePharmaceuticals is in advanced talks to buy at least a 51% stake from French company MerieuxAlliance in Shantha Biotech after the other contender, Sanofi Aventis, dropped out of the race, two persons privy to the development said.“Only a fewmatters relating to the valuation need to be finalised,” a senior industry executive said, asking thatneither his name nor that of his company be revealed.Sanofi Aventis is understood to have come to the conclusion that the privately-held company’s product portfolio was not attractive enough for it to proceed with negotiations, one of them said. .
IFAC
IFAC 2008 Annual Report Highlights Initiatives During Credit Crisis and Need for Convergence to Global Standards
Delhi :
The International Federation of Accountants (IFAC) released its 2008 annual report today, highlighting initiatives to help restore global financial stability and, in addition, describing how some of IFAC`s core work-developing international standards and guidance-became even more relevant in the current economic environment."As a result of the crisis, some of the ideas IFAC has been communicating for decades are resonating with greater force," said Ian Ball, Chief Executive Officer. "Chief among these is the need for convergence to global standards.
Thursday, May 28, 2009
29th May 2009
CUSTOMS
Customs duty exemption for Tamiflu drugs
Delhi : The Central Board of Excise and Customs (CBEC) has allowed duty free import of one million capsules of Tamiflu 75 mg (Oseltamivir Phosphate).The imports would be carried out by Roche India Ltd on behalf of the Indian government. This has been allowed to create a buffer stock of the drug, Oseltamivir Phosphate, which is used for the treatment of H1N1 influenza.An official release said that the buffer stock is to be maintained by Roche India Ltd on behalf of the Indian Government for supply to the Government only.The customs duty exemption order has been issued on the recommendations of the Department of Health and Family Welfare, the release added.
EXCISE
More excise sops only after review of end-user benefits
Delhi : Further cuts in excise and service taxes this fiscal will depend on whether industry has passed on the benefits of the cuts so far to consumers. The finance ministry has started taking stock of the extent to which various sectors have passed on the benefits of the sops already announced to end-users. “We have to assess to what extent the industries have passed on the benefits of the cuts to end-users before taking a call on further cuts. We are starting the stock-taking process,” finance secretary Ashok Chawla said. As part of the third stimulus package, the government had announced a 2% cut in excise duty for all products that attracted an excise rate of 10%. Service tax was also cut by 2%. This was besides the 4% across-the-board cut in excise duty in December 2008
SEBI
SEBI may relax rules to help companies raise funds for their arms
Maharashtra : The Securities and Exchange Board of India (Sebi) is considering a proposal to exempt infrastructure companies from the current rule that restrains parent companies from raising money through public issue of debentures for funding group companies. Industry officials say the move is aimed at boosting the corporate debt market by making it easier for companies to tap this mode of fund raising. Also, many infrastructure companies are waiting to tap the debt market to fund their projects housed in special purpose vehicles.
RBI
Banks must promote financial literacy: RBI
Chandigarh : Reserve Bank of India has asked both the private as well as public sector banks to set up more Financial Literacy and Credit Counselling Centers (FLCC) in every district and has suggested the lead banks to hold a public meeting every quarter in each district to address grievances of the bank customers.RBI’s high level committee headed by deputy governor Usha Thorat has made this recommendation in its report based on the feedback that barring a few, most of the operational centers were not performing the intended role and were promoting the bank’s products, providing investment advice etc. Also arm’s length distance with the parent bank was not maintained by some centers, which often gave an impression that such centers were an integral part of the bank. Lead banks are lenders assigned by RBI in a specified area to promote banking services and financial literacy.
IRDA
Irda plans valuation roadmap in 15-20 days
Maharashtra : At a time when some life insurers are planning to list on Indian bourses, the Insurance Regulatory and Development Authority (Irda) is working on a methodology to arrive at their valuations. According to senior Irda officials, the regulator will come up with the roadmap in 15-20 days. Irda is in talks with the Institute of Chartered Accountants of India (ICAI) for coming out with a uniform method for valuations.
Finance & Money Markets
Govt banks say room for rate cut
Maharashtra : In view of Finance Minister Pranab Mukherjee’s remark that he will ask banks for a “benign plan of action” to stimulate economic growth, public sector banks have indicated that there is room for further cuts in lending rates. Private sector banks, however, say they will first focus on reducing their cost of funds.Bapi Munshi, president, treasury at India’s third-largest private sector lender, Axis Bank, said, “We cut our prime lending rate (PLR) by 50 basis points (bps) recently after a 50 bps cut in April. We have not cut our deposit rates recently, unlike some other banks. We need to first take a call on deposit rates.”
Sensex jumps 3.83% on firm global cues
Maharashtra : The key benchmark indices clocked smart gains after Finance Minister Pranab Mukherjee said reviving growth momentum is a top priority for the government. Media reports that the government is considering a proposal to do away with fringe benefit tax, aided the rally. Firm global markets also supported the domestic bourses. World stocks rose on a strong US consumer confidence index.Banking, metal and realty stocks led the rally. The BSE 30-share Sensex was up 520.41 points or 3.83%. The barometer index moved past psychological 14,000 mark.The market was volatile. Stocks surged in early trade tracking firm Asian equities. After extending gains in mid-morning trade, the market came sharply off the higher level in early afternoon trade. The market firmed up again later. It surged in late trade.
Cos’ overseas borrowings fall 73% to $298.63 m in April
Maharashtra : Resource mobilisation by India Inc through external commercial borrowings/foreign currency convertible bonds in April was sharply down by 73 per cent to $298.63 million vis-À-vis $1.113 billion in the previous month.Indian companies’ ability to raise funds from overseas markets is a function of investors’ appetite to take long-term exposure and interest rate arbitrage. Bankers pointed out that last month many overseas investors refrained from taking an exposure to India due to the ‘event risk’ on account of the general elections. Moreover, it was cheaper to raise funds in rupees than in foreign currency.
INTERNATIONAL BUSINESS
GM Debt-Equity Swap Fails Before Bankruptcy Deadline
General Motors Corp. failed to get 90 percent of its bondholders to swap their claims for stock, pushing the largest U.S. automaker closer to bankruptcy.The principal amount of notes tendered was “substantially less than the amount required by GM” and, as a result, “the exchange offers will not be consummated,” the company said today in a statement. GM faces a government-imposed June 1 deadline to restructure or file for bankruptcy.
MERGER & ACQUISITION
Automatic CCI nod for M&As of sick cos Delhi : The Competition Commission of India (CCI), which will soon start scrutinising and clearing big corporate M&As, will give automatic approval to such deals if one of the parties involved is in financial distress, the regulator told ET. CCI, which has already opened its doors to complaints of anti-competitive practices suchascartelisation and predatory pricing, is now finalising the merger regulations. Once these are notified, it will be mandatory for all big corporate deals to get CCI’s endorsement that they will not adversely affect competition in the market. The regulator can also direct the parties to exclude certain businesses from the purview of the deal to protect healthy competition in the market.
Customs duty exemption for Tamiflu drugs
Delhi : The Central Board of Excise and Customs (CBEC) has allowed duty free import of one million capsules of Tamiflu 75 mg (Oseltamivir Phosphate).The imports would be carried out by Roche India Ltd on behalf of the Indian government. This has been allowed to create a buffer stock of the drug, Oseltamivir Phosphate, which is used for the treatment of H1N1 influenza.An official release said that the buffer stock is to be maintained by Roche India Ltd on behalf of the Indian Government for supply to the Government only.The customs duty exemption order has been issued on the recommendations of the Department of Health and Family Welfare, the release added.
EXCISE
More excise sops only after review of end-user benefits
Delhi : Further cuts in excise and service taxes this fiscal will depend on whether industry has passed on the benefits of the cuts so far to consumers. The finance ministry has started taking stock of the extent to which various sectors have passed on the benefits of the sops already announced to end-users. “We have to assess to what extent the industries have passed on the benefits of the cuts to end-users before taking a call on further cuts. We are starting the stock-taking process,” finance secretary Ashok Chawla said. As part of the third stimulus package, the government had announced a 2% cut in excise duty for all products that attracted an excise rate of 10%. Service tax was also cut by 2%. This was besides the 4% across-the-board cut in excise duty in December 2008
SEBI
SEBI may relax rules to help companies raise funds for their arms
Maharashtra : The Securities and Exchange Board of India (Sebi) is considering a proposal to exempt infrastructure companies from the current rule that restrains parent companies from raising money through public issue of debentures for funding group companies. Industry officials say the move is aimed at boosting the corporate debt market by making it easier for companies to tap this mode of fund raising. Also, many infrastructure companies are waiting to tap the debt market to fund their projects housed in special purpose vehicles.
RBI
Banks must promote financial literacy: RBI
Chandigarh : Reserve Bank of India has asked both the private as well as public sector banks to set up more Financial Literacy and Credit Counselling Centers (FLCC) in every district and has suggested the lead banks to hold a public meeting every quarter in each district to address grievances of the bank customers.RBI’s high level committee headed by deputy governor Usha Thorat has made this recommendation in its report based on the feedback that barring a few, most of the operational centers were not performing the intended role and were promoting the bank’s products, providing investment advice etc. Also arm’s length distance with the parent bank was not maintained by some centers, which often gave an impression that such centers were an integral part of the bank. Lead banks are lenders assigned by RBI in a specified area to promote banking services and financial literacy.
IRDA
Irda plans valuation roadmap in 15-20 days
Maharashtra : At a time when some life insurers are planning to list on Indian bourses, the Insurance Regulatory and Development Authority (Irda) is working on a methodology to arrive at their valuations. According to senior Irda officials, the regulator will come up with the roadmap in 15-20 days. Irda is in talks with the Institute of Chartered Accountants of India (ICAI) for coming out with a uniform method for valuations.
Finance & Money Markets
Govt banks say room for rate cut
Maharashtra : In view of Finance Minister Pranab Mukherjee’s remark that he will ask banks for a “benign plan of action” to stimulate economic growth, public sector banks have indicated that there is room for further cuts in lending rates. Private sector banks, however, say they will first focus on reducing their cost of funds.Bapi Munshi, president, treasury at India’s third-largest private sector lender, Axis Bank, said, “We cut our prime lending rate (PLR) by 50 basis points (bps) recently after a 50 bps cut in April. We have not cut our deposit rates recently, unlike some other banks. We need to first take a call on deposit rates.”
Sensex jumps 3.83% on firm global cues
Maharashtra : The key benchmark indices clocked smart gains after Finance Minister Pranab Mukherjee said reviving growth momentum is a top priority for the government. Media reports that the government is considering a proposal to do away with fringe benefit tax, aided the rally. Firm global markets also supported the domestic bourses. World stocks rose on a strong US consumer confidence index.Banking, metal and realty stocks led the rally. The BSE 30-share Sensex was up 520.41 points or 3.83%. The barometer index moved past psychological 14,000 mark.The market was volatile. Stocks surged in early trade tracking firm Asian equities. After extending gains in mid-morning trade, the market came sharply off the higher level in early afternoon trade. The market firmed up again later. It surged in late trade.
Cos’ overseas borrowings fall 73% to $298.63 m in April
Maharashtra : Resource mobilisation by India Inc through external commercial borrowings/foreign currency convertible bonds in April was sharply down by 73 per cent to $298.63 million vis-À-vis $1.113 billion in the previous month.Indian companies’ ability to raise funds from overseas markets is a function of investors’ appetite to take long-term exposure and interest rate arbitrage. Bankers pointed out that last month many overseas investors refrained from taking an exposure to India due to the ‘event risk’ on account of the general elections. Moreover, it was cheaper to raise funds in rupees than in foreign currency.
INTERNATIONAL BUSINESS
GM Debt-Equity Swap Fails Before Bankruptcy Deadline
General Motors Corp. failed to get 90 percent of its bondholders to swap their claims for stock, pushing the largest U.S. automaker closer to bankruptcy.The principal amount of notes tendered was “substantially less than the amount required by GM” and, as a result, “the exchange offers will not be consummated,” the company said today in a statement. GM faces a government-imposed June 1 deadline to restructure or file for bankruptcy.
MERGER & ACQUISITION
Automatic CCI nod for M&As of sick cos Delhi : The Competition Commission of India (CCI), which will soon start scrutinising and clearing big corporate M&As, will give automatic approval to such deals if one of the parties involved is in financial distress, the regulator told ET. CCI, which has already opened its doors to complaints of anti-competitive practices suchascartelisation and predatory pricing, is now finalising the merger regulations. Once these are notified, it will be mandatory for all big corporate deals to get CCI’s endorsement that they will not adversely affect competition in the market. The regulator can also direct the parties to exclude certain businesses from the purview of the deal to protect healthy competition in the market.
Wednesday, May 27, 2009
28th May 2009
Audit & Acc - Misc.
Restore audit limit for non-CAs, ICAI urges to Maharashtra govt
Delhi : Objecting to the Maharashtra government’s decision of removing the audit limit for non-CAs government-authorised auditors, the accounting regulator Institute of Chartered Accountants of India (ICAI) has urged to restore the audit limit of Rs 1 lakh at the earliest. No audit limit enables the auditors to perform audit of trusts of any size. ICAI president Uttam Prakash Agarwal told FE, “In case a CA fails to discharge his duties properly, disciplinary mechanism is in place but in case of the government-authorised auditors, no such mechanism exists presently.”
Reform IR accounting procedures Article
Delhi : THE accounting procedure if the Railways (IR) is not commercial in nature and therefore its financial results don’t convey its true financial health. As a result, corrective measures cannot be taken in time. Banks and other financial institutions cannot appreciate IR’s financial results and it becomes difficult for them to decide whether to extend a loan to the railways or not. In 2003-04 ADB while sanctioning a loan to IR put a condition that it must reform its accounting procedures on commercial lines. Not much progress has been made so far in this regard. Indian Railways’ accounting procedure is on ‘realisation basis’ whereas commercial accounting is on ‘accrual basis.’ However, with minor modifications the current accounting procedures of IR may be brought on par with commercial accounting procedure.
Finance & Money Markets
Indian HNIs bitten by overseas realty bug
West Bengal : THE slump in global realty markets has thrown open opportunities for Indian high networth individuals (HNIs). The near 25-35% fall in property prices in Australia, the US, the UK, South Africa and markets closer home such as the Gulf and Singapore, has triggered a huge surge in demand from Indian buyers keen to invest in overseas property. Realty brokers claim Mumbai and Delhi — which usually lead the pack in overseas property deals — are witnessing nearly 100% growth in such transactions since February with some 25 to 30 such transactions taking place every month. Brokers claim buyers in Surat, Bhubaneshwar, Jaipur, Ahmedabad, Vadodara, Kolkata and Amritsar are also showing interest. “It’s really a good time to buy property overseas since prices in most of these markets are even cheaper than in some top Indian cities. The demand is more in Dubai, Malaysia, Singapore, Thailand, Australia and London,” CB Richard Ellis CMD (South Asia) Anshuman Magazine told ET.
A better repository for forex surpluses
Delhi : The ongoing financial crisis exemplifies the hopes that once used to be reposed on the dollar and SDRs by international bankers, money-managers and developing economies. Initially alluded to as ‘paper gold’, the SDR has always been as strong (or, as weak) as its constituents—its composition being, US$ (44%), Eur (34%), Japanese yen (11%) and sterling (11%). But that precisely is what is occasioning discomfort in China. Gyrations in the value of the dollar vis-à-vis other major currencies and SDRs are especially worrisome for China since, very often, they imply a weakening of the world’s first-ranked reserve currency. The story is complete once one appreciates the mammoth sums that Beijing has invested in US Treasury Bills. Already in September 2008, Beijing had invested more than 60% of its entire, $1.9 trillion balance of payments surplus in official US debt instruments! The forex holdings of the other three Bric economies at that time were Russia ($475 billion), India ($253 billion) and Brazil ($201 billion).
New norms make ‘secured’ debt costly business for cos
Maharashtra : A NEW rule in the financial markets has stumped several companies and lending institutions, forcing some to hold back their bond offerings. A week ago, capital market regulator Sebi decided that companies raising money through ‘secured’ bonds and debentures should make sure the papers issued are fully backed by assets. The move could change the way companies mop up debt in the local market. For years, companies sold debentures with an underlying security that was worth a fraction of the amount raised. For instance, an issuer selling Rs 200 crore of bonds to bulk investors such as insurance firms, mutual funds and banks usually does it by creating a security of, say, Rs 1 crore or even less. The security shown could be a small property owned by the company selling the secured bonds.
State-run banks to cut lending rates - report
Delhi : Indian state-run banks plan to cut lending rates by 100-150 basis points in about two weeks on a finance ministry directive to follow the Reserve Bank of India (RBI) lead, the Economic Times said on Wednesday.The cut is expected before June 12, when Finance Minister Pranab Mukherjee is scheduled to meet the chiefs of state-run banks to help boost loan growth, the newspaper said.Officials at State Bank of India, Bank of Maharashtra, UCO Bank, Corporation Bank and Bank of Rajasthan confirmed the development, it said. The central bank has slashed its key short-term lending rate by 425 basis points since mid-October last year, but the benchmark lending rates of five major commercial banks have fallen less than 200 basis points since then
Insurance roars back to life in Apr, riding on LIC growth
West Bengal : After suffering a 6% decline in first premium income (FPI) in fiscal 2008-09, the life insurance industry is back on the growth path. The first month of the current financial year (2009-10) saw a 29% growth in FPI, thanks to Life Insurance Corporation (LIC). LIC, whose FPI dipped 10% during the previous fiscal, recorded a 69% growth during April 2009.
FMC suspends trading in sugar futures
Maharashtra : Forward Markets Commission (FMC) on Tuesday suspended futures trading in sugar even as the trade was betting on further liberalisation after the Government recently lifted the two-year ban on wheat futures. Rajeev Agarwal, Member, FMC, said, "We have suspended launch of new sugar contracts till December 31. The decision was taken with abundant caution considering the demand-supply position and inflationary concern". According to the directives of the FMC, no new sugar contracts will be launched, NCDEX said in its circular to members and added that the FMC has further directed that the permission already granted for yet-to-be-launched contracts stands suspended till December 31 unless notified otherwise
INTERNATIONAL BUSINESS
Google increasingly battles Facebook in search biz
Intl : Google has long been the king of search, dominating rivals including Yahoo Inc. and Microsoft Corp. But it increasingly sees social networks such as Facebook as challengers to its search engine, a company official said Monday. As people search out advice online for everyday, personal decisions, the standard list of links served up by Google is not seen as intimate or trustworthy.
JPMorgan’s $29-billion WaMu windfall turned bad loans into income
Delhi : JPMorgan Chase & Co. stands to reap a $29 billion windfall thanks to an accounting rule that lets the second-biggest US bank transform bad loans it purchased from Washington Mutual Inc into income. Wells Fargo & Co, Bank of America Corp. and PNC Financial Services Group Inc. are also poised to benefit from taking over home lenders Wachovia Corp., Countrywide Financial Corp. and National City Corp, regulatory filings show.
MERGER & ACQUISITION
Etisalat-Swan gets DoT NoC to buy Allianz Infra
Delhi : Telecom service provider Etisalat-Swan has bought out Allianz Infratech, marking the first acquisition among the new companies who were given telecom licences last year. Etisalat-Swan has also got a ‘no-objection certificate’ from Department of Telecom (DoT) for the deal, which is estimated to be worth a few hundred crores. Allianz had applied for telecom licences on a pan-India level, but was given permission to launch services in only two circles — Madhya Pradesh & Bihar.
Restore audit limit for non-CAs, ICAI urges to Maharashtra govt
Delhi : Objecting to the Maharashtra government’s decision of removing the audit limit for non-CAs government-authorised auditors, the accounting regulator Institute of Chartered Accountants of India (ICAI) has urged to restore the audit limit of Rs 1 lakh at the earliest. No audit limit enables the auditors to perform audit of trusts of any size. ICAI president Uttam Prakash Agarwal told FE, “In case a CA fails to discharge his duties properly, disciplinary mechanism is in place but in case of the government-authorised auditors, no such mechanism exists presently.”
Reform IR accounting procedures Article
Delhi : THE accounting procedure if the Railways (IR) is not commercial in nature and therefore its financial results don’t convey its true financial health. As a result, corrective measures cannot be taken in time. Banks and other financial institutions cannot appreciate IR’s financial results and it becomes difficult for them to decide whether to extend a loan to the railways or not. In 2003-04 ADB while sanctioning a loan to IR put a condition that it must reform its accounting procedures on commercial lines. Not much progress has been made so far in this regard. Indian Railways’ accounting procedure is on ‘realisation basis’ whereas commercial accounting is on ‘accrual basis.’ However, with minor modifications the current accounting procedures of IR may be brought on par with commercial accounting procedure.
Finance & Money Markets
Indian HNIs bitten by overseas realty bug
West Bengal : THE slump in global realty markets has thrown open opportunities for Indian high networth individuals (HNIs). The near 25-35% fall in property prices in Australia, the US, the UK, South Africa and markets closer home such as the Gulf and Singapore, has triggered a huge surge in demand from Indian buyers keen to invest in overseas property. Realty brokers claim Mumbai and Delhi — which usually lead the pack in overseas property deals — are witnessing nearly 100% growth in such transactions since February with some 25 to 30 such transactions taking place every month. Brokers claim buyers in Surat, Bhubaneshwar, Jaipur, Ahmedabad, Vadodara, Kolkata and Amritsar are also showing interest. “It’s really a good time to buy property overseas since prices in most of these markets are even cheaper than in some top Indian cities. The demand is more in Dubai, Malaysia, Singapore, Thailand, Australia and London,” CB Richard Ellis CMD (South Asia) Anshuman Magazine told ET.
A better repository for forex surpluses
Delhi : The ongoing financial crisis exemplifies the hopes that once used to be reposed on the dollar and SDRs by international bankers, money-managers and developing economies. Initially alluded to as ‘paper gold’, the SDR has always been as strong (or, as weak) as its constituents—its composition being, US$ (44%), Eur (34%), Japanese yen (11%) and sterling (11%). But that precisely is what is occasioning discomfort in China. Gyrations in the value of the dollar vis-à-vis other major currencies and SDRs are especially worrisome for China since, very often, they imply a weakening of the world’s first-ranked reserve currency. The story is complete once one appreciates the mammoth sums that Beijing has invested in US Treasury Bills. Already in September 2008, Beijing had invested more than 60% of its entire, $1.9 trillion balance of payments surplus in official US debt instruments! The forex holdings of the other three Bric economies at that time were Russia ($475 billion), India ($253 billion) and Brazil ($201 billion).
New norms make ‘secured’ debt costly business for cos
Maharashtra : A NEW rule in the financial markets has stumped several companies and lending institutions, forcing some to hold back their bond offerings. A week ago, capital market regulator Sebi decided that companies raising money through ‘secured’ bonds and debentures should make sure the papers issued are fully backed by assets. The move could change the way companies mop up debt in the local market. For years, companies sold debentures with an underlying security that was worth a fraction of the amount raised. For instance, an issuer selling Rs 200 crore of bonds to bulk investors such as insurance firms, mutual funds and banks usually does it by creating a security of, say, Rs 1 crore or even less. The security shown could be a small property owned by the company selling the secured bonds.
State-run banks to cut lending rates - report
Delhi : Indian state-run banks plan to cut lending rates by 100-150 basis points in about two weeks on a finance ministry directive to follow the Reserve Bank of India (RBI) lead, the Economic Times said on Wednesday.The cut is expected before June 12, when Finance Minister Pranab Mukherjee is scheduled to meet the chiefs of state-run banks to help boost loan growth, the newspaper said.Officials at State Bank of India, Bank of Maharashtra, UCO Bank, Corporation Bank and Bank of Rajasthan confirmed the development, it said. The central bank has slashed its key short-term lending rate by 425 basis points since mid-October last year, but the benchmark lending rates of five major commercial banks have fallen less than 200 basis points since then
Insurance roars back to life in Apr, riding on LIC growth
West Bengal : After suffering a 6% decline in first premium income (FPI) in fiscal 2008-09, the life insurance industry is back on the growth path. The first month of the current financial year (2009-10) saw a 29% growth in FPI, thanks to Life Insurance Corporation (LIC). LIC, whose FPI dipped 10% during the previous fiscal, recorded a 69% growth during April 2009.
FMC suspends trading in sugar futures
Maharashtra : Forward Markets Commission (FMC) on Tuesday suspended futures trading in sugar even as the trade was betting on further liberalisation after the Government recently lifted the two-year ban on wheat futures. Rajeev Agarwal, Member, FMC, said, "We have suspended launch of new sugar contracts till December 31. The decision was taken with abundant caution considering the demand-supply position and inflationary concern". According to the directives of the FMC, no new sugar contracts will be launched, NCDEX said in its circular to members and added that the FMC has further directed that the permission already granted for yet-to-be-launched contracts stands suspended till December 31 unless notified otherwise
INTERNATIONAL BUSINESS
Google increasingly battles Facebook in search biz
Intl : Google has long been the king of search, dominating rivals including Yahoo Inc. and Microsoft Corp. But it increasingly sees social networks such as Facebook as challengers to its search engine, a company official said Monday. As people search out advice online for everyday, personal decisions, the standard list of links served up by Google is not seen as intimate or trustworthy.
JPMorgan’s $29-billion WaMu windfall turned bad loans into income
Delhi : JPMorgan Chase & Co. stands to reap a $29 billion windfall thanks to an accounting rule that lets the second-biggest US bank transform bad loans it purchased from Washington Mutual Inc into income. Wells Fargo & Co, Bank of America Corp. and PNC Financial Services Group Inc. are also poised to benefit from taking over home lenders Wachovia Corp., Countrywide Financial Corp. and National City Corp, regulatory filings show.
MERGER & ACQUISITION
Etisalat-Swan gets DoT NoC to buy Allianz Infra
Delhi : Telecom service provider Etisalat-Swan has bought out Allianz Infratech, marking the first acquisition among the new companies who were given telecom licences last year. Etisalat-Swan has also got a ‘no-objection certificate’ from Department of Telecom (DoT) for the deal, which is estimated to be worth a few hundred crores. Allianz had applied for telecom licences on a pan-India level, but was given permission to launch services in only two circles — Madhya Pradesh & Bihar.
Tuesday, May 26, 2009
27th May 2009
INCOME TAX
I-T dept finds Rs 1,200 cr in frozen demat accounts
Delhi : The I-T department has found over Rs 1,200 crore lying unaccounted in lakhs of frozen demat accounts across the country and has sought a detailed probe on the possibility of their use for illegal transaction and tax evasion.The department has now sent the reports of such accounts to the respective Chief Commissioners of Income Tax (CCITs) in various parts of the country to check the veracity of such accounts in their regions.More than 6.5 lakh frozen demat accounts were taken under scanner and investigated by the income tax department in December last year on the suspicion of huge evasion of taxes and ‘benami’ transactions.
Misc. - Indirect Tax
Cenvat rate taxes Ministry
Delhi : There is a difference of opinion in the Finance Ministry on the way the Cenvat rate (excise duty rate) should move in the coming days. Different groups are pulling in different directions. Some senior officials advocate that the median Cenvat rate should remain at 8 per cent, the level at which it was fixed after the interim Budget. But others in the Revenue Department think that the rate needs to be raised at the earliest to the pre-December 2008 level of 14 per cent.
Misc. Corporate Laws & Other Commercial Policies
Short of cash, govt plans to revive disinvestment ministry
Delhi : The government plans to resurrect the ministry of disinvestment in a bid to raise resources by selling its shareholding in public sector companies. Sources said Montek Singh Ahluwalia, former deputy chairman of the Planning Commission, was a front-runner among the names shortlisted to head the new ministry. The new disinvestment minister is likely to hold Cabinet rank.
Govt may relax FDI caps for insurance, defence production: Nath
Delhi : The new UPA Government may liberalise the entry of foreign direct investment in defence production and insurance, and reform the civil aviation policy, senior Cabinet Minister Kamal Nath has said. "I think there is some room ... we can liberalise the defence sector ... We need more capital in insurance. We should be looking at it. We will see how we frame it and structure it. We are all for getting in more capital in our insurance sector," Nath said in a panel discussion on a private TV channel.
Interest subsidy scheme for state utilities likely
Maharashtra : The Centre will soon decide on the establishment of a national electricity fund (NEF), with a corpus of Rs 1,00,000-1,50,000 crore, to finance the development of transmission and distribution (T&D) systems by state utilities, earlier proposed by the Planning Commission to reduce T&D losses.The Congress-led government, in its second term, plans to introduce an interest subsidy scheme instead of the NEF, with an annual budgetary allocation of Rs 10,000-25,000 crore.
Audit & Acc - Misc.
Banks advised to replace CAs with qualified auditors
Delhi : Accounting regulator, Institute of Chartered Accountants of India (ICAI) has asked the private and public-sector banks to hire the services of qualified auditors instead of chartered accountants who render ‘compilation engagement’ services.In a compilation engagement, a chartered accountant uses his accounting expertise as opposed to the auditing expertise to collect, classify and summarize financial information.
Finance & Money Markets
Banks increase margin to 25% on housing loans
Delhi : n what could reverse the effects of lower interest rates on home loans, some financial institutions have increased the margin requirement on housing loans to 25%. By doing so the financiers have made owning a home difficult, as people will have to contribute a higher sum from their own pockets.LIC Housing Finance and HDFC have increased the margin requirement to up to 25%, which means they would finance only up to 75% of the house cost.
Rupee may appreciate to 46 a dollar in 12 months: Goldman Sachs
Delhi : Rupee is likely to appreciate to 46 a dollar in the backdrop of a stable government at the centre and relatively resilient domesticrupee.jpg Where Re comes from & goes Forex Converter Remittances made easy demand, says a report by global financial servicesgiant Goldman Sachs."We expect the INR to appreciate further from current levels as the stable government and relatively resilient domestic demand become key catalysts for foreign inflows," the report said, adding that the Indian currency "may touch Rs 46 to a dollar within 12 months".Noting that there are significant pressures for rupee appreciation, the report said that the Indian currency gained about 5 per cent against dollar since the victory for the Congress-led UPA in the general elections.
Foreign investors can cut comex stake by Sept
Delhi : Deadline for foreign investors to bring down their holdings in commodity exchanges to below 5% has been extended by three months till September 30.Holding more than 5% of equity in these exchanges after the deadline by a foreign investor or entity, including persons acting in concert, will be considered as a violation of the Foreign Exchange Management Act (FEMA), a statement released by the department of industrial policy and promotion (DIPP) said.The move will give Goldman Sachs, Intercontinental Exchange (listed with the New York Stock Exchange) and Fidelity more time to comply with the new regulations. While Gold Sachs and Intercontinental hold 7% and 8% stakes, respectively, in National Commodity and Derivatives Exchange (NCDEX), Fidelity holds around 9% stake in Multi Commodities Exchange (MCX).
Overseas investors indulge in profit booking
Maharashtra : The FIIs who have been net buyers of equity for Rs 11,580 crore in May so far, have sold equities for a net amount of Rs 1,750 crore in the last three trading sessions of last week. (On Monday though, they were net buyers for Rs 428 crore.Market-men said that FIIs could be taking advantage of the market’s rally to dizzying heights after the election results were announced.The price-to-earnings ratio of shares has gone up from about seven or eight to around 15 now even when liquidity is hard to access and nothing has changed fundamentally. Such a rise is unwarranted for. “The FIIs have started to re-think on this exuberance and have become a little bit more cautious now,” said Mr Saurabh Mukherjea, Head of Indian Equity at Noble Group.
I-T dept finds Rs 1,200 cr in frozen demat accounts
Delhi : The I-T department has found over Rs 1,200 crore lying unaccounted in lakhs of frozen demat accounts across the country and has sought a detailed probe on the possibility of their use for illegal transaction and tax evasion.The department has now sent the reports of such accounts to the respective Chief Commissioners of Income Tax (CCITs) in various parts of the country to check the veracity of such accounts in their regions.More than 6.5 lakh frozen demat accounts were taken under scanner and investigated by the income tax department in December last year on the suspicion of huge evasion of taxes and ‘benami’ transactions.
Misc. - Indirect Tax
Cenvat rate taxes Ministry
Delhi : There is a difference of opinion in the Finance Ministry on the way the Cenvat rate (excise duty rate) should move in the coming days. Different groups are pulling in different directions. Some senior officials advocate that the median Cenvat rate should remain at 8 per cent, the level at which it was fixed after the interim Budget. But others in the Revenue Department think that the rate needs to be raised at the earliest to the pre-December 2008 level of 14 per cent.
Misc. Corporate Laws & Other Commercial Policies
Short of cash, govt plans to revive disinvestment ministry
Delhi : The government plans to resurrect the ministry of disinvestment in a bid to raise resources by selling its shareholding in public sector companies. Sources said Montek Singh Ahluwalia, former deputy chairman of the Planning Commission, was a front-runner among the names shortlisted to head the new ministry. The new disinvestment minister is likely to hold Cabinet rank.
Govt may relax FDI caps for insurance, defence production: Nath
Delhi : The new UPA Government may liberalise the entry of foreign direct investment in defence production and insurance, and reform the civil aviation policy, senior Cabinet Minister Kamal Nath has said. "I think there is some room ... we can liberalise the defence sector ... We need more capital in insurance. We should be looking at it. We will see how we frame it and structure it. We are all for getting in more capital in our insurance sector," Nath said in a panel discussion on a private TV channel.
Interest subsidy scheme for state utilities likely
Maharashtra : The Centre will soon decide on the establishment of a national electricity fund (NEF), with a corpus of Rs 1,00,000-1,50,000 crore, to finance the development of transmission and distribution (T&D) systems by state utilities, earlier proposed by the Planning Commission to reduce T&D losses.The Congress-led government, in its second term, plans to introduce an interest subsidy scheme instead of the NEF, with an annual budgetary allocation of Rs 10,000-25,000 crore.
Audit & Acc - Misc.
Banks advised to replace CAs with qualified auditors
Delhi : Accounting regulator, Institute of Chartered Accountants of India (ICAI) has asked the private and public-sector banks to hire the services of qualified auditors instead of chartered accountants who render ‘compilation engagement’ services.In a compilation engagement, a chartered accountant uses his accounting expertise as opposed to the auditing expertise to collect, classify and summarize financial information.
Finance & Money Markets
Banks increase margin to 25% on housing loans
Delhi : n what could reverse the effects of lower interest rates on home loans, some financial institutions have increased the margin requirement on housing loans to 25%. By doing so the financiers have made owning a home difficult, as people will have to contribute a higher sum from their own pockets.LIC Housing Finance and HDFC have increased the margin requirement to up to 25%, which means they would finance only up to 75% of the house cost.
Rupee may appreciate to 46 a dollar in 12 months: Goldman Sachs
Delhi : Rupee is likely to appreciate to 46 a dollar in the backdrop of a stable government at the centre and relatively resilient domesticrupee.jpg Where Re comes from & goes Forex Converter Remittances made easy demand, says a report by global financial servicesgiant Goldman Sachs."We expect the INR to appreciate further from current levels as the stable government and relatively resilient domestic demand become key catalysts for foreign inflows," the report said, adding that the Indian currency "may touch Rs 46 to a dollar within 12 months".Noting that there are significant pressures for rupee appreciation, the report said that the Indian currency gained about 5 per cent against dollar since the victory for the Congress-led UPA in the general elections.
Foreign investors can cut comex stake by Sept
Delhi : Deadline for foreign investors to bring down their holdings in commodity exchanges to below 5% has been extended by three months till September 30.Holding more than 5% of equity in these exchanges after the deadline by a foreign investor or entity, including persons acting in concert, will be considered as a violation of the Foreign Exchange Management Act (FEMA), a statement released by the department of industrial policy and promotion (DIPP) said.The move will give Goldman Sachs, Intercontinental Exchange (listed with the New York Stock Exchange) and Fidelity more time to comply with the new regulations. While Gold Sachs and Intercontinental hold 7% and 8% stakes, respectively, in National Commodity and Derivatives Exchange (NCDEX), Fidelity holds around 9% stake in Multi Commodities Exchange (MCX).
Overseas investors indulge in profit booking
Maharashtra : The FIIs who have been net buyers of equity for Rs 11,580 crore in May so far, have sold equities for a net amount of Rs 1,750 crore in the last three trading sessions of last week. (On Monday though, they were net buyers for Rs 428 crore.Market-men said that FIIs could be taking advantage of the market’s rally to dizzying heights after the election results were announced.The price-to-earnings ratio of shares has gone up from about seven or eight to around 15 now even when liquidity is hard to access and nothing has changed fundamentally. Such a rise is unwarranted for. “The FIIs have started to re-think on this exuberance and have become a little bit more cautious now,” said Mr Saurabh Mukherjea, Head of Indian Equity at Noble Group.
Tax holidays set to expire; IT biggies worried
With the tax holidays which India's $40 billion IT industry has been enjoying so far under the Software Technology Parks of India (STPI) scheme set to expire by March 2010, top Indian software exporters like Infosys and Wipro have cautioned investors about a potential impact on their profitability because of higher tax rates.
"Our net income would decrease if the government of India imposes additional taxes or withdraws or reduces tax benefits or other incentives," India's third biggest software company Wipro said in a recent regulatory filing with the U.S. Securities and Exchange Commission (SEC).During past few years, Indian exporters have made significant tax savings under the STPI scheme, which allows them to enjoy tax holiday for a duration of ten years. For instance, these tax incentives resulted in a decrease in Infosys' income tax expense to the extent of $325 million and $282 million for fiscal 2009 and fiscal 2008."Few of our STP units have already completed the tax holiday period and for the remaining STP units the tax holiday will expire by fiscal 2010," Infosys said in its regulatory filing with SEC."In the event that the Government of India or the government of another country changes its tax policies in a manner that is adverse to us, our tax expense may materially increase, reducing our profitability," Infosys added.According to experts such as Partha Iyengar, head of research at Gartner India, any ambiguity around extension of STPI scheme could impact India's attractiveness as an outsourcing destination. "STPI is an important and critical issue to be addressed; hopefully the new government will do it soon. They need to rationalise the SEZ scheme and provide more clarity on tax incentives. Many of our customers are not sure if they should move their captive operations to SEZs, etc., because of lack of clarity," Iyengar said.The special economic zone (SEZ) policy of the government provides five-year tax holiday for the IT units, followed by gradual taxation after the fifth year.In the case of Wipro this is the second warning they are sending out to their investors in a row. Previous day, the company had warned the investors that the disclosure in January by World Bank that Wipro is ineligible to work with the bank, would affect their business.
Source - siliconindia
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