Fundamentals strong; growth to improve in second half: PM

Asserting that the fundamentals of the Indian economy are strong, Prime Minister Manmohan Singh has said GDP will improve in the second half of fiscal 2013-14 and that the government is commitment to get back to a sustainable growth rate of 8-9 percent.

Addressing investors here, Singh said the government will contain the fiscal deficit at 4.8 percent of GDP and work towards achieving the medium-term objective of reducing the current account deficit (CAD) to 2.5 percent of GDP.

"The results of our efforts will be visible in the second half of the year. We expect stronger growth in 2013-14 than in 2012-13. The second half of the year should see a distinct turnaround, partly because of the good monsoon and partly because of the steps we have taken," he said.

The Indian economy grew at a four-year low of 4.4 percent in the April-June quarter. In 2012-13, it clocked a decade low level of growth at 5 percent.

"It is a fact that our growth rate has slowed down. We grew at an average of about 8 percent for a decade. Last year, our growth rate dipped to 5 percent. To some extent, this reflects the slowdown in the global economy and in all emerging markets," Singh said.

The government, he said, is committed to getting India back to a sustainable growth path of 8-9 percent.

"The fundamentals of the Indian economy remain strong...Our forex reserves stand at over USD 270 billion and are more than sufficient to meet India's external financing requirements," Singh said.

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Retro tax significant disincentive to do biz: Damodaran

Investors have been raising concerns about how it is difficult to do business in India. The government seems to have acted finely. A committee headed by M Damodaran, former chairman of the Securities and Exchange Board of India (SEBI), has recommended steps to improve upon the investment climate of the country.

CNBC-TV18's Shereen Bhan caught up Damodaran to know more about the recommendations.

Below is an edited transcript of the exclusive chat on CNBC-TV18

Q: You submitted—some would say practical and comprehensive—suggestions on what could be done by the government to improve the investment climate to make it easier for businesses to conduct transactions in India. Let me start by talking to you about specific recommendations you have made. You are not the first one to recommend doing away with the retrospective tax amendment. You follow what Parthasarathi Shome has also said. But are you hopeful that we are likely to see changes because our obsession with retrospective legislation doesn't seem to end? The recent Land Bill is a case in point where again retrospectivity has been worked into the legislation.

A: I hope we will live to see the day when this becomes a very rare event in our lives. Government—and we have noted this in the report—has the power to tax retrospectively. But because the power exists should you do it and unsettle what has been in settled position earlier?

That is a question you need to address. Yes, I am aware that many people have said the same thing before, especially in the context of one particular tax matter. There is no harm in more people reinforcing that premise.

Q: We do move away from retrospective legislation but you have also recommended a specific time limit for projects but you haven't specified what that limit ought to be. Did you not suggest the limit because that may not necessarily be the most practical thing to do for a committee and in your assessment what could that timeline be? We now have the Competition Commission of India (CCI) in operation to try and get over these issues regarding environmental clearances etc which delay projects but what to your mind would a suitable timeline be or time limit be?

A: We have made a recommendation that can be word to words. I am not saying that tomorrow morning somebody will lay down time limits but in matters where individual interests are involved like a building clearance or something, we want authorities to move away for something like sequential query -- who raise one question every three months then the person comes back with that response and then you raise another question. We want that to be a thing of the past and if somebody cannot within a reasonably long timeframe say yes or no then we believe that there must be a dimed permission.

Q: Let me go away from your report. As the former SEBI chief, I want to ask you for your view on the National Spot Exchange Ltd (NSEL) imbroglio; there are more shocking revelations everyday. How do you see the current mess and what is your prognosis on why and how this has happened?

A: I know nothing more than what is in the public domain through the newspapers. Clearly, something has gone wrong and I would reserve my opinion till I get to know what exactly has gone wrong, at what point of time and who is responsible to what extent.

Q: But doesn't it worry you that the very body that is looking at regulating commodity exchanges wasn't even empowered enough and we are now debating who should have had jurisdiction?

A: It is easy to rush to judgment but let us wait till everything is before us and then let the appropriate authorities arrive at the appropriate conclusions.

Q: Since the NSEL issue has raised questions on regulatory over lapse again, what do you believe the solution is? Is the Financial Development and Stability Council (FSDC) the answer to addressing the issue of regulatory over lapse because that is what the government seems to believe?

A: I have gone public and said no. When you are creative regulatory organizations and empowering them, the answer is coordination, informed coordination where all people understand what the issue is and together find solutions. Brining a super body again essentially comprising the same paper but headed by the ministry is undermining the entire basis of autonomous regulatory organizations then they become attached to subordinate offices of the ministries and that is a solution worse than the problem.

Q: I want to talk to you about your take on the market and the dependence on what the Fed may or may not do, when and how much it will taper. This seems to be what is driving our markets up or down. Your thoughts on that.

A: The way I look at it is that the Fed should— and I think that is what they should do—look at what suits the US best. It is true that markets world over do tend to get affected because of the actions on the Fed, the statements of the Fed and all of that but these are not the things that should occupy our minds as much as they do at this point of time.

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Rahul Gandhi's 3-minute speech stuns India's ruling party

India's governing Congress party was thrown into confusion on Friday when Rahul Gandhi, who controls it with his mother Sonia, described the party's official policy of tolerance towards criminal members of parliament as "nonsense" and "wrong".

Mr Gandhi - great-grandson of Jawaharlal Nehru, the man who led India to independence in 1947 - has long been dismissed as a lightweight politician and is struggling to carve an image of himself as a figure of moral authority ahead of next year's general election in the world's largest democracy.

His unexpected three-minute statement at a press club in New Delhi was a deliberate snub to senior ministers. In the face of public mockery, but with the tacit support of other parties, Congress leaders had prepared a legal ordinance to bypass a Supreme Court ruling against criminal MPs.

"My opinion of the ordinance is that it's complete nonsense and that it should be torn up and thrown out," Mr Gandhi said after hijacking a news conference by a nonplussed Ajay Maken, an MP who had moments earlier been defending the government's plans.

"If we want to fight corruption in this country, whether it's us - the Congress party, or the BJP [the opposition Bharatiya Janata party], we cannot continue making these small compromises, because when we make these small compromises we compromise everything," said the 43-year-old Mr Gandhi. "I personally feel that what our government has done as far as this ordinance is concerned is wrong."

The BJP, whose prime ministerial candidate Narendra Modi is scheduled to hold a rally in Delhi on Sunday, was driven on to the back foot by Mr Gandhi's outburst. "Is this the Congress party or some Nautanki [folk theatre] company?" asked Mukhtar Abbas Naqvi, a BJP spokesman. "The Congress party cannot gloss over its government's failures by resorting to such gimmicks."

In July, the Supreme Court decided to clean up the parliament, ruling that sitting MPs would henceforth be disqualified immediately if convicted in a serious criminal case. The government's proposed ordinance would allow them to remain if the conviction were stayed because of an appeal, a process that can take years in India's convoluted legal system.

Numerous criminals are involved in national and state politics in India. After the last general election, 162 of the 543 members of the Lok Sabha, the lower house, had criminal cases against them, including charges of rape, murder and kidnapping, according to civil rights watchdogs.

Some politicians complain that they may be embroiled in frivolous or malicious cases filed by their rivals and designed to keep them out of parliament, but Supreme Court judges have not recently been swayed by such arguments.

Also on Friday, the Supreme Court ruled that voters should from now on be given the right to cast a vote for "none of the above" at the polling booth, and directed the Election Commission to ensure that the choice was added to ballot papers and electronic voting machines.

A large number of such "negative" votes would inevitably embarrass any politician who won a constituency with only a few positive votes in his favour. Sanjay Parikh, counsel for the People's Union for Civil Liberties, which requested the ruling in the public interest, said the "right to reject" would deter parties from fielding "tainted candidates".

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Nalco to pay Rs 322.15 crore as dividend to government

Aluminium giant Nalco has announced a total dividend payout of 25 percent, amounting to Rs 322.15 crore for 2012-13, as against 20 percent paid in the previous year.

Also read: Nalco rejects Vedanta's request for alumina

Announcing this after the Annual General Meeting of the company here, Nalco CMD Ansuman Das said the shareholders of the Navaratna PSU approved a total dividend payout of 25 percent which works out to Rs 1.25 per share.

With this, the total payout would be Rs 322.15 crore for 2012-13, he said, adding, since inception Nalco had paid a total of Rs 4519.17 crore as dividend, including Rs 3920.73 crore as share of the central government.

The upward revision was approved following a recommendation for payment of a final dividend at Rs 0.50 per share (10 percent) in addition to the interim dividend of Rs 0.75 per share (15 percent) paid on March 30, 2013.

The total dividend pay-out for 2012-13 would work out to be at Rs 1.25 per share (25 percent) as against Rs 1.00 per share (20 percent) paid for 2011-12.

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Gold maintains buoyancy on rising demand, silver surges

Gold today extended rally at the domestic bullion market on the back of heavy buying from stockists and retail customers amid robust investment offtake. Silver also surged owing to sustained speculative demand as well as industrial support.

Standard gold of 99.5 percent purity climbed by Rs 200 to finish at Rs 30,465 per 10 gm from Friday's closing level of Rs 30,265.

Pure gold of 99.9 percent purity rose by Rs 195 to close at Rs 30,610 per 10 gm from Rs 30,415.

Silver ready (.999 fineness) jumped Rs 430 to conclude at Rs 50,730 per kg as compared to Rs 50,300 previously. Globally, the yellow metal rebounded sharply on safe haven demand as US budget concerns amid ongoing uncertainty over Fed tapering its stimulus measures weighed heavily on investor sentiment.

December gold shot up USD 15.10 to settle at USD 1,339.20 an ounce at the Comex division of the NYMEX late yesterday and silver December contract gained by USD 21.83 an ounce.

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Nationwide ban on earth mining for bricks and roads: NGT

In a blow to brick-kiln industry and road contractors, the National Green Tribunal has banned digging of earth across the country for making bricks and roads without prior environment clearance (EC).

A bench headed by Justice P Jyothimani has directed the Chief Secretaries of all the states and union territories to ensure that its interim order is adhered to.

"We restrain any person, company and authority to carry out any such digging activities of brick earth or ordinary earth against the directives issued by the Ministry of Environment and Forests (MoEF) of June 24, 2013 in any part of the country without obtaining EC from the competent authority.

"The Chief Secretaries of all states/Union Territories (UTS) are to ensure strict adherence to this order," it said.

The tribunal issued notices to Uttar Pradesh seeking its response on the plea for directions to the state government to stop extraction of earth for making bricks and roads, which is allegedly going on in violation of a Supreme Court decision as well as directions of the MoEF to all the states.

"Considering the seriousness of the issue", the bench restrained the UP government from permitting such digging until further orders of the tribunal.

The NGT made the order applicable to all the states saying "as the judgement of the apex court as well as the directives issued by MoEF has got the effect and applicability throughout the territory of India,... what is applicable to respondents (UP government) by our interim order is applicable to all the other states and UTs also".

The ban on brick earth mining comes one-and-a-half months after the NGT banned sand mining from river beds, without environment clearance, across the country.

As per the petition, MoEF in its office memorandum to the states has directed that digging of earth for making bricks and roads requires EC from the competent authority.

The petition has alleged that in spite of the decision of the apex court and the directives of the MoEF, the Uttar Pradesh government has not framed rules/guidelines for the purpose of obtaining EC and are allowing indiscriminate digging of earth.

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Heineken sewn up in Chinese trademark tangle

China became the world's copycatting centre by faking everything from Louis Vuitton bags and PhD diplomas to Apple stores. Now Heineken has become the latest multinational to face an intellectual property challenge - from a tiny Chinese sewing machine company.

The global brewer has accused Wujiang Xili Machinery Factory, a company from Jiangsu province with fewer than 50 employees, of pirating its name and logo, and using them at a Shanghai trade show this week.

The case comes as China comes under continuing pressure from the US, Europe and Japan to improve its intellectual property record.

Apple last year agreed to pay USD 60 million to Proview Technology (Shenzhen) to end a long-running iPad trademark dispute as it was preparing to unveil the third generation of its tablet in China. Michael Jordan, the retired US basketball star, is also embroiled in a case with Qiaodan, a sportswear company with thousands of stores in China, in which he says the company illegally used his Chinese name on their garments.

China this month amended its trademark law in ways that lawyers say will make it easier for foreign companies to protect their trademarks. The new law, which takes effect in May, will raise the penalty for trademark infringement and increase the burden on a defendant to prove that an application was made in good faith.

Geoffrey Lin, a lawyer at Ropes & Gray, said China has become "more consistent" in the application of its intellectual property laws. But he said foreign companies still face a lot of "hijacking" where local companies register trademarks that resemble those of a multinational before the foreign firm can do so - in a process akin to people buying internet domains that use the names of big companies.

Earlier this year, China's State Administration for Industry and Commerce ruled that Wujiang Xili acted in "bad faith" in applying to register two Heineken names. But the company registered a third version, which the brewer has petitioned to have cancelled.

Joe Simone, a partner at SIPS, a Hong Kong intellectual property firm that is acting on behalf of Heineken, said piracy had serious ramifications for foreign companies.

"A pirate that steals your trademark can effectively stop you from entering the PRC [People's Republic of China] market and using Chinese factories to produce goods for global distribution," said Mr Simone.

Cai Fufeng, Wujiang Xili's legal officer, said the Jiangsu company had not acted in "bad faith". He said the logo was designed by an outside party, and that the trademark registration had not breached Chinese law.

Asked if the logos were alike, he said: "Heineken didn't show me their trademark, so I don't know whether ours looks similar."

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Rahul Gandhi meets industrialists

Congress Vice President Rahul Gandhi today met a small group of industrialists including RP-Sanjeev Goenka Group chairman Sanjiv Goenka and banker Shikha Sharma.

Others who were part of the meeting include Bengal Ambuja Housing Development Ltd MD Harshavardhan Neotia and former Hindustan Unilever CEO Nitin Paranjpe. Sharma is CEO of Axis Bank. While none of the participants were available for comments, sources privy to the meeting said Gandhi met this small group at his residence this morning and perhaps was his first interaction with industrialists and businessmen.

Also Read: Why blame Rahul when MMS has chosen to play doormat?

Besides the current state of economy, Gandhi may have discussed FDI in retail with the participants, most of whom are or were connected with retailing at one point or the other.

RP-Sanjeev Goenka Group owns the Spencer's Retail chain which is a multi-format retailer present across the country, selling electronics, home and office essentials, garments and fashion accessories, toys, and personal care items. The company is planning to open about 80 large format stores by 2017.

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Accenture expects revenue of $7-7.3 bn in Sept-Nov quarter

Global technology services and consulting company Accenture expects revenue in the September-November quarter to be in range of USD 7-7.3 billion. For fiscal September-August 2014, the firm has forecast revenue growth of 2-6 percent.

The firm reported a 4 percent increase in revenue to USD 7.1 billion for the fourth quarter of fiscal 2013 from a year earlier, while revenue for the entire fiscal climbed 3 percent to USD 28.6 billion.

"Accenture expects net revenues for the first quarter of fiscal 2014 to be in the range of USD 7-7.3 billion," it said in a release. "For fiscal 2014, the company expects net revenue growth to be in the range of 2-6 percent in local currency."

The company estimates operating cash flow in fiscal 2014 to be in the range of USD 3.6 billion-3.9 billion, property and equipment additions to be USD 400 million and free cash flow at USD 3.2 billion-3.5 billion.

Operating cash flow was USD 3.3 billion and free cash flow was USD 2.9 billion in fiscal 2013.

"We remain focused on investing to further differentiate our industry, technology and business process capabilities, particularly in digital marketing, mobility, analytics and cloud," Accenture Chairman and CEO Pierre Nanterme said.

Accenture is targeting new bookings for fiscal 2014 in the range of USD 32-35 billion against new bookings for fiscal 2013 of USD 33.3 billion.

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Heavy rainfall expected in north Gujarat, south Rajasthan

The withdrawal line of southwest monsoon continues to pass through Kalpa, Hissar, Jodhpur and Nalia. Isolated rain and thundershowers are expected to bring down temperatures in Jammu & Kashmir, Himachal Pradesh, Uttarakhand and Haryana. South and east Rajasthan is likely to receive light to moderate rain at few places, keeping the mercury near normal. A predominantly cloudy sky with chances of light rain will not allow the maximum temperature in the national capital to rise above 33 degrees.

The upper air cyclonic circulation  over  north Bay of Bengal and  neighbourhood  extending up to mid tropospheric levels still persists.  Under its influence, a low pressure area will develop over Bay of Bengal leading to thundershowers in West Bengal and Orrisa. Jharkhand and north eastern states may receive light to moderate rain. Temperatures are expected to drop by a couple of notches after 48 hours in the north eastern states.

An upper air cyclonic circulation still lies over north Gujarat and adjoining south Rajasthan, and is expected to bring heavy rainfall in this region. Day temperatures of Gujarat will rise significantly as rainfall succumbs. Chhattisgarh will also receive moderate rainfall in the next 24 hours.

The southern peninsula will remain mainly dry due to the absence of any significant low pressure system. Nevertheless, isolated light rain is a possibility in coastal Andhra Pradesh. Temperature will rise by a couple of degrees in coastal Andhra Pradesh. While, it will remain near normal in interior Karnataka and Tamil Nadu. Bangalore, as always will remain comfortable with maximum and minimum temperatures at 29 and 20 degrees respectively.

By: Skymetweather.com

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Banco Products reappoints directors, auditor

Sep 21, 2013, 07.02 PM IST

Banco Products (India), in its annual general meeting on September 21, approved re-appointment of Atul G Shroff and Manubhai G Patel as directors; Shah & Co, chartered accountants as auditor of the company; re-appointment of Kiran Kumar Shetty as executive director.

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Banco Products reappoints directors, auditor

Banco Products (India), in its annual general meeting on September 21, approved re-appointment of Atul G Shroff and Manubhai G Patel as directors; Shah & Co, chartered accountants as auditor of the company; re-appointment of Kiran Kumar Shetty as executive director.

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Banco Products reappoints directors, auditor

Banco Products (India), in its annual general meeting on September 21, approved re-appointment of Atul G Shroff and Manubhai G Patel as directors; Shah & Co, chartered accountants as auditor of the company; re-appointment of Kiran Kumar Shetty as executive director.

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SRS Holdings India merged with BTL Investments: SRS Real Infra

Sep 21, 2013, 07.02 PM IST

SRS Real Infrastructure says that SRS Holdings India Limited, a promoter & Holding Company has been merged with one of the promoter group company namely, BTL Investments & Securities Limited.

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SRS Holdings India merged with BTL Investments: SRS Real Infra

SRS Real Infrastructure says that SRS Holdings India Limited, a promoter & Holding Company has been merged with one of the promoter group company namely, BTL Investments & Securities Limited.

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SRS Holdings India merged with BTL Investments: SRS Real Infra

SRS Real Infrastructure says that SRS Holdings India Limited, a promoter & Holding Company has been merged with one of the promoter group company namely, BTL Investments & Securities Limited.

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Santaram Spinners reappoints Fenil R Shah as director

Sep 21, 2013, 07.02 PM IST

Santaram Spinners, in its annual general meeting on September 21, approved reappointment of Fenil R Shah as director; and RR Shah & Associates, chartered accountants as auditor of the company

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Santaram Spinners reappoints Fenil R Shah as director

Santaram Spinners, in its annual general meeting on September 21, approved reappointment of Fenil R Shah as director; and RR Shah & Associates, chartered accountants as auditor of the company

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Santaram Spinners reappoints Fenil R Shah as director

Santaram Spinners, in its annual general meeting on September 21, approved reappointment of Fenil R Shah as director; and RR Shah & Associates, chartered accountants as auditor of the company

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Madhusudan Industries reappoints directors, auditor

Madhusudan Industries reappoints directors, auditor

Madhusudan Industries, in its annual general meeting on September 21, approved reappointment of Rajesh B Shah and Sanwar Mal Agarwal as directors; appointment of P K Shashidharan and Prem Chand Surana as directors; and H V Vasa & Co, chartered accountants as auditor of the company

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SRS Holdings India merged with BTL Investments: SRS

Sep 21, 2013, 07.02 PM IST

SRS Limited says that SRS Holdings India Limited, a promoter & Holding Company has been merged with one of the promoter group company namely, BTL Investments & Securities Limited.

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SRS Holdings India merged with BTL Investments: SRS

SRS Limited says that SRS Holdings India Limited, a promoter & Holding Company has been merged with one of the promoter group company namely, BTL Investments & Securities Limited.

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SRS Holdings India merged with BTL Investments: SRS

SRS Limited says that SRS Holdings India Limited, a promoter & Holding Company has been merged with one of the promoter group company namely, BTL Investments & Securities Limited.

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BNR Udyog reappoints director, auditor

Sep 21, 2013, 07.02 PM IST

BNR Udyog, in its annual general meeting on September 21, approved reappointment of T Bhardwaj as director; and Laxminiwas & Jain, chartered accountants as auditor of the company

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BNR Udyog reappoints director, auditor

BNR Udyog, in its annual general meeting on September 21, approved reappointment of T Bhardwaj as director; and Laxminiwas & Jain, chartered accountants as auditor of the company

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BNR Udyog reappoints director, auditor

BNR Udyog, in its annual general meeting on September 21, approved reappointment of T Bhardwaj as director; and Laxminiwas & Jain, chartered accountants as auditor of the company

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Richa Industries changes registered office

Sep 21, 2013, 07.02 PM IST

Richa Industries has informed BSE that the Company has change its Registered office from V.P.O Kawnara, Old faridabad to Kheri-Jasana Road, Near Lingayas University Faridabad-121101 to Plot No-29, DLF Industrial Area, Phase-Il, Faridabad- 121003 w.e.f. September 13, 2013.

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Richa Industries changes registered office

Richa Industries has informed BSE that the Company has change its Registered office from V.P.O Kawnara, Old faridabad to Kheri-Jasana Road, Near Lingayas University Faridabad-121101 to Plot No-29, DLF Industrial Area, Phase-Il, Faridabad- 121003 w.e.f. September 13, 2013.

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Richa Industries changes registered office

Richa Industries has informed BSE that the Company has change its Registered office from V.P.O Kawnara, Old faridabad to Kheri-Jasana Road, Near Lingayas University Faridabad-121101 to Plot No-29, DLF Industrial Area, Phase-Il, Faridabad- 121003 w.e.f. September 13, 2013.

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Richa Industries Ltd has informed BSE that the Company has change its Registered office from V.P.O Kawnara, Old faridabad to Kheri-Jasana Road, Near Lingayas University Faridabad-121101 to Plot No-29, DLF Industrial Area, Phase-Il, Faridabad- 121003 w.e.f. September 13, 2013.Source : BSE

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Nilachal Refractories reappoints directors, auditor

Nilachal Refractories reappoints directors, auditor

Nilachal Refractories, in its annual general meeting on September 20, approved reappointment of Bhagwati Prasad Jalan, Vijay Kumar Agarwal and Niraj Jalan as directors; and P Mukhopadhyay & Co as statutory auditor of the company

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Western India Shipyard reappoints directors, auditor

Sep 21, 2013, 07.02 PM IST

Western India Shipyard, in its annual general meeting on September 21, approved reappointment of Ashwani Kumar, appointment of Ashok Kumar Agarwal as director; reappointment of S K Mutreja as whole time director & CEO for three years; and V V Kale & Co, as statutory auditor of the company

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Western India Shipyard reappoints directors, auditor

Western India Shipyard, in its annual general meeting on September 21, approved reappointment of Ashwani Kumar, appointment of Ashok Kumar Agarwal as director; reappointment of S K Mutreja as whole time director & CEO for three years; and V V Kale & Co, as statutory auditor of the company

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Western India Shipyard reappoints directors, auditor

Western India Shipyard, in its annual general meeting on September 21, approved reappointment of Ashwani Kumar, appointment of Ashok Kumar Agarwal as director; reappointment of S K Mutreja as whole time director & CEO for three years; and V V Kale & Co, as statutory auditor of the company

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Supreme Tex Mart appoints S K Verma and Associates as cost auditor

Sep 21, 2013, 07.03 PM IST

Supreme Tex Mart approved appointment of S K Verma and Associates as cost auditors of the company to conduct the cost audit for the financial year ending March 31, 2013.

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Supreme Tex Mart appoints S K Verma and Associates as cost auditor

Supreme Tex Mart approved appointment of S K Verma and Associates as cost auditors of the company to conduct the cost audit for the financial year ending March 31, 2013.

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Supreme Tex Mart appoints S K Verma and Associates as cost auditor

Supreme Tex Mart approved appointment of S K Verma and Associates as cost auditors of the company to conduct the cost audit for the financial year ending March 31, 2013.

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Supreme Tex Mart Ltd has informed BSE that the Board of Directors of the Company at its meeting held on September 20, 2013, inter alia, has approved the following:1. Appointment of M/s. S K Verma and Associates as Cost Auditors of the Company to conduct the Cost Audit for the Financial Year ending March 31, 2013.2. Due to some clerical mistake the intimation regarding allotment made to Sunnyland Group Ltd on September 10, 2013 was inadvertently given incorrect to the Stock Exchanges as the actual allotment was made of 1466940 No of Shares instead of 1257188 Shares. Board advised to give the correct figure to the Stock Exchanges.Source : BSE

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Companies Act, 2013 - Rules 2

Published on Sat, Sep 14,2013 | 18:38, Updated at Sat, Sep 14 at 18:38Source : Moneycontrol.com 

Companies Act, 2013 - Rules 2

The rules do not prescribe a class of companies that will have to rotate their auditors. Thank you @meinkampf13 for reminding me that this is missing. A class of companies has to be specified, auditor rotation is unlikely to be applicable to all companies, small and big, private and public. I suppose that will come later. SURPRISE!

And as well known audit partner Dolphy Dsouza pointed out a difficult to meet  eligibility requirement for auditors – 'a relative of an auditor may hold securities of face value or interest in the company not exceeding rupees one lakh.' Though given that relative has been defined to mean immediate family – I don't see this posing a big problem.

And now on to Installment 2 of rules analysis - as in the first one…my comments in bold italics followed by the relevant rule…

CHAPTER 11:  APPOINTMENT AND QUALIFICATIONS OF DIRECTORS

Business opportunity for Independent Directors Yellow Pages!

11.4 (1)…anybody, institute or association which has been authorized in this behalf by the Central Government shall create and maintain a data bank of persons willing and eligible to be appointed as independent director and such data bank shall be placed on the website of the Ministry of Corporate Affairs or on any other website as may be approved or notified by the Central Government.

Disclaimer: Independent Directors are subject to character risk and there is no assurance or guarantee that the objectives of Independence will be achieved!

(3) A disclaimer shall conspicuously be displayed on the website along with the databank that a company must carry out its own due diligence before appointment of any person as an independent director and the body, institute or association as notified by the Central Government for creating and maintaining the databank or the Central Government shall not be responsible for the person chosen for appointment on its board as independent director out of such databank. Further, the Central Government or such body, institute or association shall neither be responsible for any contravention of any law committed by any company or its directors by the reason of the fact that the person appointed by the company as an independent director, was selected from the databank nor it will be a defence in any court of law.

1 cup search + 250 grams printer icon = Databank!
Someone has lots of free time in the MCA…this databank issue has been given serious TLC!

(7) Such databank posted on the website shall:

(a) be publicly accessible at the specified website;
(b) be substantially identical to the physical version of the panel or data bank;
(c) be searchable on the parameters specified in rule 11.4(2);
(d) be presented in a format or formats convenient for both printing and viewing online; and
(e) contain a link to obtain the software required to view / print the particulars free of charge.

A shareholder can be picked to be a small shareholders' director and will be considered an Independent Director if he meets the definition of Independent including '(e) who, neither himself nor any of his relatives(iii) holds together with his relatives two per cent. or more of the total voting power of the company; This rule implies that the 'Independent' tag is an add-on.

11.5
(4) Such director shall be considered as an independent director subject to his giving a declaration of his independence in accordance with sub-section (7) of section 149 of the Act.

(5) The appointment of small shareholders' director shall be subject to the provisions of section 152 except that-

(a) The director shall not be liable to retire by rotation;
(b) The director's tenure as small shareholders' director shall not exceed a period of three consecutive years; and
(c) on the expiry of the tenure, the director shall not be eligible for re-appointment.

But oddly, the next Rule indicates that 'Independence' is a necessary requirement.

(7) A person appointed as small shareholders' director shall vacate the office if -

(a) the director ceases to be a small shareholder, on and from the date of cessation;
(b) the director incurs any of the disqualifications specified in section 164;
(c) the office of the director becomes vacant in pursuance of section 167;
(d) the director ceases to meet the criteria of independence as provided in sub-section (6) of section 149.

CHAPTER 12: MEETINGS OF BOARD AND ITS POWERS

Venue means  place. No kidding!

Meetings of Board through video conferencing or other audio visual means
(6) With respect to every meeting conducted through video conferencing or other audio visual means authorised under these rules, the scheduled venue of the meeting as set forth in the notice convening the meeting shall be deemed to be the place of the said meeting and all recordings of the proceedings at the meeting shall be deemed to be made at such place. The statutory registers which are required to be placed in the Board meeting as per the provisions of the Act shall be placed at the scheduled venue of the meeting. Where such registers are required to be signed by the directors, the same shall be deemed to have been signed by the directors participating through electronic mode if they have given their consent to this effect and it is so recorded in the minutes of the meeting.

Hurrah! Company law finally has a whistleblower protection mechanism…or something like that!

Establishment of vigil mechanism
12.5. (1) For the purposes of sub-section (9) of section 177, every listed company and the companies belonging to the following class or classes shall establish a vigil mechanism for their directors and employees to report genuine concerns:-

(1) Companies which accept deposits from the public; and
(2) Companies which have borrowed money from banks and public financial institutions in excess of fifty crore rupees;

(2) Companies which are required to constitute an audit committee shall operate the vigil mechanism through the audit committee. If any of the members of the audit committee are conflicted in a given case, they should recluse themselves and the others on the committee would deal with the matter on hand. In case of other companies, the Board of directors shall nominate a director to play the role of audit committee for the purpose of vigil mechanism to whom other directors and employees may report their concerns.

(3) This mechanism shall provide for adequate safeguards against victimization of employees and directors who avail of the mechanism and also provide for direct access to the chairperson of the Audit committee or the director nominated to play the role of audit committee, as the case may be, in exceptional cases. Once established, the existence of the mechanism may be appropriately communicated within the organization.

(4) In case of repeated frivolous complaints being filed by a director or an employee, the audit committee or the director nominated to play the role of audit committee may take suitable action against the concerned director or employee including reprimand.

In which the Rules have Rules to follow? This seems to mean that 'stock broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary' cannot avail of inter-corporate loans or deposits beyond a limit…yet to be prescribed!

Loan and investment by a company
12.8. For the purposes of sub-section (6) of section 186, no company registered under section 12 of the Securities and Exchange Board of India Act, 1992 and also covered under such class or classes of companies which may be notified by the Central Government in consultation with the Securities and Exchange Board, shall take any inter-corporate loan or deposits, in excess of the limits prescribed under the regulations applicable to such company, pursuant to which it has obtained certificate of registration from the Securities and Exchange Board of India.

Okay some serious stuff coming up on RPTs. Does this narrow or expand the scope of permitted RPTs?  I say it narrows the scope of RPTs… ie: ALL COMPANIES WITH A PAID-UP SHARE CAPITAL OF RS 1 CR OR MORE will need approval via special resolution before entering a contract/arrangement with RPT. And that ANY AND ALL COMPANIES will need approval via special resolution to  enter contracts/arrangements of the size and type mentioned below  (a,b,c). For ease of understanding I am first copying the relevant section (188) of the Companies Act and there the concerned rule (12.14).

Act: 188. (1) Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to—

(a) sale, purchase or supply of any goods or materials;

(b) selling or otherwise disposing of, or buying, property of any kind;

(c) leasing of property of any kind;

(d) availing or rendering of any services;

(e) appointment of any agent for purchase or sale of goods, materials, services or property;

(f) such related party's appointment to any office or place of profit in the company, its subsidiary company or associate company; and

(g) underwriting the subscription of any securities or derivatives thereof, of the company:

Provided that no contract or arrangement, in the case of a company having a paid-up share capital of not less than such amount, or transactions not exceeding such sums, as may be prescribed, shall be entered into except with the prior approval of the company by a special resolution:

Provided further that no member of the company shall vote on such special resolution, to approve any contract or arrangement which may be entered into by the company, if such member is a related party:

Provided also that nothing in this sub-section shall apply to any transactions entered into by the company in its ordinary course of business other than transactions which are not on an arm's length basis.

Rules: 12.14 (1) For the purposes of first proviso to sub-section (1) of section 188,

(i) a company having a paid-up share capital of rupees one crore or more shall not enter into a contract or arrangement with any related party; or

(ii) a company shall not enter into a transaction or transactions, where the transaction or transactions to be entered into

(a) individually or taken together with previous transactions during a financial year, exceeds five percent of the annual turnover or twenty percent of the net worth of the company as per the last audited financial statements of the company, whichever is higher, for contracts or arrangements as mentioned in clauses (a) to (e) of sub-section (1) of section 188; or

(b) relates to appointment to any office or place of profit in the company, its subsidiary company or associate company at a monthly remuneration exceeding one lakh rupees as mentioned in clause (f) of sub-section (1) of section 188; or

(c) is for a remuneration for underwriting the subscription of any securities or derivatives thereof of the company exceeding ten lakh rupees as mentioned in clause (g) of sub-section (1) of section 188;

except with the prior approval of the company by a special resolution.

CHAPTER 16:  PREVENTION OF OPPRESSION AND MISMANAGEMENT

The minimum size of class in a 'class action' is exactly the same strength of members/depositors that could move Sec 397/398 in the Companies Act, 1956. Just saying…

16.1 (a)…the number of members that may file an application for class action as provided in sub-section (1) shall be, in the case of a company having share capital, not less than one hundred members of the company or not less than ten per cent. of the total number of its members, whichever is less, or any member or members singly or jointly holding not less than ten percent of the issued share capital of the company, subject to the condition that the applicant or applicants have paid all calls and other sums due on his or their shares.

(b) For the purposes of sub-clause (ii) of sub-section (3) of section 245, the number of depositors that may file an application for class action as provided in sub-section(1) shall be not less than one hundred depositors or not less than ten per cent. of the total number of depositors, whichever is less or any depositor or depositors singly or jointly holding not less than ten percent of the total value of outstanding deposits of the company.

Coming Up - Installment 3: Chapters 18, 19, 22…

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5-6% GDP may be new normal for India: Amansa Capital

Akash Prakash of Amansa Capital is of the opinion that there is a growing minority that believes 5-6 percent gross domestic product (GDP) is the new normal for India. So, unless there are significant reforms in terms of judicial reforms and the way bureaucracy functions, we may not get back to 7-8 percent growth. However, he does not believe that India's long-term story is permanently vitiated.

The finance minister will have to deliver 4.8 percent fiscal deficit number because otherwise there is a greater risk of a ratings downgrade. For that the FM will have to savagely cut planned expenditure and if he does so then there will be no catalyst for growth.

Also read: Rupee still undervalued; see Rajan as inflation hawk, says KV Kamath

If there is a broad based redemptions happening across emerging markets (EMs) then foreign institutional investors (FIIs) in India don't have a choice because they cannot sell everything else and not sell India. So, the  broad-based long-only fund selling is driven by EM redemptions and not driven by them deciding to underweight India or cut India, adds Prakash.

Below is the verbatim transcript of his interview on CNBC-TV18

Q: How is it looking? Just the darkest hour or do you think it could get even darker the way the news flow has been these last few weeks?

A: Hopefully we are somewhere near the darkest hour in the sense that it is difficult to conceive anything else further getting worse from here. In the sense that the rupee move has already happened, gross domestic product (GDP) growth already has been cut by most people, who estimate the GDP growth for the coming year around 4-4.5 percent.

The only thing I would say is that the markets have held up reasonably well. The large cap liquid stocks have actually performed okay despite all the headwinds. Midcap index is pretty much beaten down and probably is as bad as it gets, but for the large cap index you could argue that there is still downside.

Q: That downside might play out if global funds begin to sell. They have sold a bit but not lots. In your interaction with people do you sense that their patience might be wearing thin now?

A: The final capitulation if it were to come would be these large long-term, long-only money holders in India were to finally sell-out either because of redemptions or for other reasons, that shoe hasn't dropped yet. More than the fund managers themselves I think the issue is people behind the funds the investors or the limited partners, what is their level of patience and willingness to stick it out in India and there there is a clear sense of fatigue setting in that people are just tired. The last five years most investors in India have not made anything in dollars. There is a constant question being asked that if you have made nothing in the last five years in a time when liquidity was very strong and flows into emerging markets (EMs) were very strong etc, how much longer are we expected to wait to make returns here. So, I think there is fatigue setting in. Combine that with the general sense of disillusion with emerging markets as an asset class more broadly. So, there is a possibility that some people just throw in the towel and say let me move my money back into the United States (US) or wherever that risk does exists.

Q: Has the basic confidence in the long term story also been dented because people have taken knocks in India in the past, they have gone through up's and down's but this time when we speak to people they seem to be almost suggesting that something is going wrong with the long term scrip out here which is not just a tactical correction of 20-30 percent in the market which happens quite routinely?

A: You hit the nail on the head. If there is the capitulation of the long term investors getting out it is exactly that saying that I can no longer underwrite India growing at 7-8 percent for the next 5-10 years. Till very recently there was still a sense that this is a short term problem, its high oil prices or inflation or lack of reforms etc. I think there are people now who are more broadly questioning what you are saying, saying that may be this 7-8 percent growth for five years between 2003 and 2008 was actually the flash in the pan and that we don't have a governance structure or infrastructure in place to grow at that level.

The very strong liquidity flows in that period of 2003 to 2008 disguised or papered over lot of our structural weaknesses. So, the jury is still out. I am not sure that it is right to be so bearish to say that the long term view on India itself is gone; I think that is still too strong a statement. I am not as bearish to say that the long term story is permanently vitiated.

However, there is growing number of people in the US who are taking the view that the new normal for India so to speak is 5-6 percent GDP. Unless there is very significant reform or a more grass root level type of reform in terms of police reform, judicial reform, the way the bureaucracy functions very basic stuff, unless that type of basic blocking and tackling is done you are not going to get back to 7-8 percent growth and are going to be stuck at 5-6 percent. It is still a minority who thinks that but it is growing the minority is growing.

The longer we keep cutting earnings and GDP estimates, the minority will keep growing who believe that this is a permanent or a structural problem not a cyclical problem.

Q: That is one part of the scary script - the growth problems that you spoke about. Tied to that is the basic structural balance of the economy which is the way the deficit is moving, the way commodity prices are beginning to creep up again and the fact that the fear of that downgrade which we sort of swept under the carpet for a few months is beginning to come back. Do you think on that side too, investors are right in being a bit more worried now?

A: Firstly, the rupee weakness -the 15-18 percent move has serious fiscal consequences in terms of the subsidy bill, oil and fertilizer specifically. Secondly, the government was building in near 6-6.5 percent GDP growth this year when they made their Budget arithmetic back in February. Obviously that is not going to happen. So, there is going to be significant consequences in terms of negative consequences on tax revenue and you are not going to get the 18-19 percent tax revenue or whatever number they budgeted in the Budget.

There is serious expense overshoot on the subsidy side and looks like a significant revenue undershoot on tax as well as they are not going to get the money they budgeted for the spectrum and the disinvestment.

Having said that, the finance minister is very clear that the 4.8 percent fiscal deficit is a line in the sand and he will have to deliver that because you run much greater risk of a ratings downgrade if he cannot deliver the 4.8 percent on the fiscal deficit. So, he will be deliver 4.8 percent which means he will have to savagely cut planned expenditure again, which is what he did last year to make the budget arithmetic work.

If you savagely cut planned expenditure, I don't see where you will get the catalyst for growth because one of the assumptions people were making was the government would come in, the public sector companies would make serious investments in kick starting the capital spending cycle. The government will spend money, that doesn't look like it is going to happen. I think you are stuck with the current constructive of growth, which is reasonable consumption growth which is still slowing but still reasonably okay and almost non-existent fixed capital spending in investment because the private sector doesn't have the capital or the confidence to make investments and the public sector or the government won't have the money if they need to cut the fiscal deficit back to 4.8 percent in the construct we have just talked about.

So, the imbalanced growth or the skewness of growth in India is entirely consumption driven and very little on the investment side. Unfortunately, I don't see that changing for some time. You need to get that to change if you want to get a significant recovery in the economy. I don't see where that thing will come from in the short term because the private sector doesn't have the confidence or the balance sheet to make the investments required.

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Rajan's policy will not have false optimism or pessimism

Hitendra Dave
HSBC

I think Raghuram Rajan had alluded to the impending September 20 monetary policy meet. The RBI's number one priority could be to just dispel some of the excessive doom and gloom which prevail. He mentioned it, the Finance Minister also mentioned it in Parliament. Very clearly, the financial markets have got to the man on the street, the business man, the consumer, the investor, the saver and everywhere.

So, what we might get at the policy date is a communication of the Indian economy going through a difficult time and there can't be any false optimism. However, we certainly should not have false pessimism either. That will be the overall construct in which the policy will be made.

In terms of specific measures we all know that the main event coming up between now and our own policy is the FOMC where we will get the much needed clarity now on details of the tapering whatever they be.

The main determinant of the policy direction in terms of any change would be how the forex market is behaving between now and then, how the Fed lays out its plan.

However, while he has obviously emphasised the priority of inflation over other objectives of the central bank, in the press conference as well as in earlier statements, one can clearly make out that there is a belief that if one does the right things to reinvigorate growth and investment activity, a lot of other things just fall into place thereafter as far as the financial market stability is concerned.

I think one has to step back a little bit. There was a recent 150 years or some commemoration ceremony in Delhi where even the Prime Minister had referred to the fact that when he took over as a governor, he had set up a committee and asked Dr Chakraborty to look at the framework of the monetary policy and this is a continuum thereof and the words used there were maybe in a globalised economy maybe the conventional monetary policy tools and instruments and outcomes expected perhaps need to be reviewed and reassessed. I think this is in that context and perhaps the context that in the immediate environment is there has been a fair amount of talk and criticism that the steps adopted by Reserve Bank of India (RBI) in a globalised world which we are operating now to stem some of the currency weakness have possibly not had the intended effect on the currency side but have clearly caused damage possibly growth prospects and other financial markets. So I think it is in that context that this committee has been set up, I don't think it has got a next three-six months, this will lay the frame of a possibly policy making for the next many coming years. Whether they move to a committee or they still continue with the current system, everybody recommends but the final decision is only of one-man which is the governor's. I don't think it is very easy for everyone to make a comment because ultimately it is for the governor to decide whether he is comfortable with that situation or not. I am not even sure, how the act or the RBI act provides for these things. As far as the general desirability of moving to a committee system you would think that yes, most of the central banks around the world increasingly are moving to that situation where possibly the governor's vote is the first amongst equal kind of a situation but from the statement that we read, I would not jump to a conclusion either way. 

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Growth won't improve significantly: Martin Sorrell

Sir Martin Sorrell, chief executive officer, WPP talks about the growth prospects in world economies.

Also read: 5-6% GDP may be new normal for India: Amansa Capital

Below is the edited excerpt:

Q: Could you give us an overview of what is happening in the world moneywise, economy wise.

A: If I compare this to lets say a year ago, I feel little bit more confident. May be that is misplaced confidence. If you think about the grey swans as opposed to black swans which you don't know, they are unknown unknowns, these are the known unknowns.

If you think about eurozone, probably little bit better Greek surplus people feel, may be they have pushed it out of their minds but I think we feel little bit better about the state of western Europe certainly the UK is better. We have done very well in the UK that may be more about us than it is about the UK. However I think George Osborne is being vindicated, the Prime Minister David Cameroon has been vindicated and I think labour is in probably a little bit more of a state of disarray than it was 12 months ago. We are still worried about France, France probably has further to fall. Italy is rudderless from a political point of view. Spain there are signs of bottoming out, terribly high unemployment which is socially unacceptable particularly amongst the youth 50 percent unemployment, 25 percent general unemployment and you saw the Catalan's yesterday talking about Scottish independence. So, there are still big problems but we are starting to see some signs of recovery and certainly some investment by US institutions in European stocks. You see Carlos Slim active in KPM, you see Carlos Ghosn hiring in Spain. You see Telefonica doing seeing significant restructuring. So, better signals. 

Growth will not be significant even in an Indian context or Russian or Brazilian or Chinese context but it will be better than it was may be say 1-2.5 percent or something like that in due course.

US certainly better the sequester has held the US back but fears about the deficit, fears about USD 16 trillion dollars of debt have receded. I was talking to one of the private equity people just recently and he said underlying economy is probably growing at 2.5-3 percent which ain't bad, it is not BRICS standards but ain't bad.

In terms of other grey swans the Middle East is the biggest problem. It is not just Syria, it is Egypt. I think that is the serious concern. Fears about Syrian attack by the US have probably receded a bit hopefully but generally people are still very concerned about the Middle East. 

So, when you put it all together the US deficit concerns have receded, the eurozone has receded, the BRICS hard/soft landing on BRICS Brazil is not a good situation. It is not as good as it was but we are still growing very rapidly there.

Russia I am very bullish about as long as oil p[rice stays roughly where it is may be USD 100, USD 90 may be even little bit less than that. Ofcouse you have got the world cup coming up there, you got the Sochi Winter Olympics, there may be some other big events there and Russia is starting to play an important role politically whether you agree with it or not.

In China it is a soft landing, great confidence in the new leadership there. 

Now coming closer to home, people are worried about India. There is a lack of confidence in India at the moment. Certainly the oligarch's that I speak to are very concerned.

The interesting thing to my mind is and I am very bullish about India and remain so, my bullishness is undimmed but there is concern in the short term. Not just pre the election but post the election. Whatever the result is people feel it will be the same stasis may continue after the election. The lack of leadership or lack of strong leadership will debilitate the Indian economy. So, it is a great concern.

Of the BRICS if I was to rank them I would say India is in the weakest position at the moment which is sad because it was certainly a roaring tiger. It is not roaring quite so loudly at the moment. However it doesn't dim my faith. We have a very good business here. Our people are outstanding.

One thing I did notice, I haven't gone into it in detail, younger people here are probably less optimistic. They have lived through an era of strong growth since the 90s. Rupee has been strong, the economy has been strong and people have to be realistic. Things don't go up in a secular line forever, there have to be cyclical oscillations around that secular growth. India is going through a weaker rupee which has advantages in some ways. Inflation is an issue here but generally people are feeling less optimistic and that has an impact on youth and certainly we are seeing Indian's looking at opportunities beyond India which is something that government and business has to worry about.          

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UTI uniquely positioned; get chance to strengthen co: Puri

Despite being mired in controversy, UTI MF is very uniquely positioned, says managing director Leo Puri. The country still needs an institution that is independent, is able to mobilize capital and deploy it productively, he says. He says this provides him with an opportunity to work towards strengthening an institution that has such a strong sense of purpose around it, he adds.

Also Read: Early polls plus reforms to aid mkt; shun PSBs, realty: UTI

Without exaggerating UTIs importance, Puri sees it as part of his role to bring back the faith and confidence that UTI MF is the best intermediary through which households across India can channel its savings into debt and equity products.

Below is the verbatim transcript of Leo Puri's interview on CNBC-TV18

Q: Let me start by asking you about what compelled you to want to even get into this business of trying to come in and run UTI. It has been an organization that was mired in controversy; it has been headless for over two years now. Your appointment itself and the selection process from the time that you first got a call to your appointment was an 18 month long process. For a man who spent his entire career in the private sector why would you do this to yourself?

A: This is still an institution which represents the best of the Indian financial system. It did get into trouble some of it self inflicted during the course of its history, but the country still needs an institution that is independent, is able to mobilize capital and deploy it productively. UTI is uniquely positioned in my view to play that role.

As a professional at my stage in my early 50s now there are few opportunities I could think of frankly which would allow me to feel I was able to contribute in a sense to strengthening an institution that has such a strong sense of purpose around it. It is for that reason that I felt this was the institution I would want to serve and help restore to its natural role in the system.

Q: As we look at the future and as we look at FY14 what do you intend doing to stir things up if I could use that word for UTI because both in terms of assets under management or profitability on all of those parameters we have actually seen you fall in the pecking order. So, what can we really expect as far as UTI's future is concerned?

A: At a fundamental level this industry does need to mature. Some of the challenges that the industry has faced have been self inflicted. Products have not been perhaps as well positioned to all segments as they could have been. Drawn the ire of regulators through what is allegedly mis-selling. We have had issues around perhaps commitments that were made and not kept and so on. So, we have to take and acknowledge all of that as you look forward.

However it is also true that in every mature financial system the role of an asset manager or mutual fund is to bring capital into the markets in order to actually fund the growth of industry and if that job is not done well we actually have a systemic problem. Without perhaps exaggerating UTIs importance I certainly see it as part of our role to bring back the faith and confidence that we are the best intermediary through which households across India can channel their savings into debt and equity products.

Q: Your job gets even tougher in the current environment which is uncertain, where you don't know whether you are going to be talking about 4000 or you are going to be talking about 6000 as far as the Nifty is concerned or 20000 on the Sensex. So, one day you are being written off and the next day you are back with a 700 point rally?

A: This environment probably proves more than anything other the importance of the mutual fund industry and the importance of professional asset management advice as the long term solution to how households actually allocate their savings. It is our role now to stand by our investors, help them think through asset allocation decisions and help educate our intermediaries to do the same who are also very important to our business.

We can do that partly through investor education, we can do that partly through intermediary education and ofcourse we have to directly ensure that we communicate this message to investors. But this is a very good time for us to come out and step forward and underline that message that the role that we play is to fundamentally provide a long term stable professional home which is secure and hopefully will help to protect and grow their assets.

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IBM with Jaiprakash Associates to set electronic chip units

Two electronic chip manufacturing units, which entail a combined investment of Rs 51,550 crore and would enjoy government subsidy, are likely to be operational in the country in the next two years.

Two consortia-- one led by Jaiprakash Associates in association with IBM and the other led Hindustan Semiconductor-- have proposed setting up these plants. Communications and IT Minister Kapil Sibal said setting up of electronic chip facilities will also be of nation's strategic purpose as chips have security implications.

Also read: TRAI to take up TV channels pricing issue

"There are strategic sectors like atomic energy sector, space, defence and power. In all of these you need chips. There are security considerations. It will serve our strategic purpose. There are security consideration. The fabs should be operational in about two years from now," Sibal said here.

At present there is no electronic chip manufacturing or semiconductor wafer fabrication plant in India. Over 90 per cent of the domestic electronic requirement is met through imports. Government will also hold 11 per cent stake in each project, while technology providers are required to hold 10 per cent stake holding.

Department of Electronics and Information Technology Secretary J Satyanarayana said: "One plant is proposed by a consortium led by Jaiprakash Associates, along with IBM Microelectronics and the system integrator is Tower Jazz. The outlay of the proposed fab is about Rs 26,300 crore."

This unit is likely to come up in Greater Noida in UP. "The other plant is from Hindustan Semiconductor Manufacturing Corporation (HSMC) along with France-based ST Microelectronics  and Silterra (Malaysia). The outlay of this proposed fab is about Rs 25,250 crore," Satyanarayana said.

The proposed location of this plant is in Gujarat.  Government is yet to work out the details of subsidy the proposed projects will enjoy. Subsidy will depend on detailed project report to be submitted by the two consortia.

Sibal said that the about 60 per cent of incentives approved by Cabinet are already covered under existing policies. In addition to this, the Finance Ministry has agreed to give them status under section 35 AD of I-T Act which means capital investment amount will be set off against profit.

"They will be given interest free loan. This along with recognition under 35 AD will constitute balance 40 per cent of incentives to be provided to them," Sibal said. Also, the loan amount given to the companies will be converted into 11 per cent equity in these projects, Satyanarayana said.

 Sibal said that electronic chip manufacturing is highly capital intensive business and long gestation period. "No body was interested in setting up wafer fab here unless you give them large concessions. It is zero duty in any country. We had to attract investors," he said.

Out of total 16 interest received by government, only the two consortium showed seriousness, the minister said.

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Companies Act: 98 Sections Notified; Lawyers Worried!

Published on Sat, Sep 14,2013 | 18:39, Updated at Sat, Sep 14 at 19:13Source : Moneycontrol.com 

The Ministry of Corporate Affairs notified 98 Sections of the Companies Act, 2013 on 12th September. These provisions of the Act do not require notification of Rules.

Payaswini Upadhyay got leading General Counsels and Corporate Lawyers to give their first reactions.

Bharat Vasani, Group General Counsel, Tata Group
"I must confess that I was surprised to see this notification. It is not very clear to me as to why MCA was in such a tearing hurry to notify those 98 sections when only a part of the draft rules were released for public comments just  a few days ago. In my view, it would have been advisable to notify those sections once the Rules were finalised and the Corporate Sector had digested the new law.

Section 465 of the Act which deals with repeal and saving has not been notified. As a result, the entire 1956 Act will continue to remain in full force and effect. Hence the notification of a few sections has created confusion which could have been avoided. Given that the Companies Act is a basic charter for the corporate sector like the Constitution of India, it is always advisable to give adequate time to create a proper infrastructure for implementation before the new law is notified."

Shardul Shroff, Managing Partner, Amarchand Mangaldas
"Although notification of 98 sections of the Companies Act, 2013 ("New Act") is welcome and this means that the MCA is serious about implementing this new law as soon as possible, until the remaining sections are notified, one will need to read two sets of companies acts for structuring of transactions and day to day compliance purposes. In some cases, only certain parts of chapters and for that matter, parts of sections have been notified. The notified portions will need to be analyzed very closely to understand their exact implication. However, going by the nature of provisions notified, this is bound to evoke mixed reactions from various stakeholders.

Some of the key issues are follows:
1. The new definition of 'subsidiary' factors the component of preference share capital, resulting in creation of several unintended subsidiaries overnight, necessitating various compliances like consolidation of financial statements, etc. by the new 'holding companies'. This aspect will be very significant particularly for PE investors whose preferred mode of investment is preference share capital.

2. In view of the express prohibition under Section 185 of the New Act, loans/guarantees, etc., cannot be provided by a company to its directors (including directors of holding company) or entities in which such directors are interested, which was allowed under the existing Companies Act, 1956, with the prior approval of the Central Government. This may hinder companies' structuring plans to fund their projects/business requirements.

3. Private arrangements/contracts containing restrictive transfer conditions (like put option, call options etc.) have now been made enforceable pursuant to Section 58 of the New Act, putting an end to the existing ambiguity surrounding enforceability of the same.

4. Significantly, Section 470 of the New Act empowering the Central Government to remove difficulties in giving effect to the provisions of this New Act has also been notified. Whilst this will enable the Government to resolve unintended ambiguities surrounding the new law, caution will need to be taken to obviate taking positions which are inconsistent with the provisions of the New Act.

Sridhar Gorthi, Partner, Trilegal
"While in some ways it was only a matter of time, the sudden notification of 98 sections of the Companies Act, 2013 with immediate effect has taken many by surprise.

The first element of confusion is caused by the absence of any provision repealing corresponding provisions of the Companies Act, 1956. It is hoped that the Government will rectify this soon – some clarity on 'grandfathering' would also be welcome.

Take for example the fact that, overnight, holding subsidiary relationships have come into existence between various companies, since now even preference capital will be counted to determine this relationship. These companies would have to start complying with various provisions that were not inapplicable to them so far. Clearly, some more thought should have gone into the manner in which the new Act will be notified and implemented.  Since many rules vital for the implementation of the key sections of the new Act were not yet drafted, it was clear that the new Act would be brought into effect in stages.  However, a precise timetable for such phased implementation should have been announced so that companies could have planned accordingly.  Also, in this interim phase, where parts of the new Act that have come into force, and the rest of the Companies Act, 1956 also continues to apply, there is a definite need for clarity to resolve inconsistencies that are bound to arise.

It would be ideal if the government could quickly conclude and finalize the remaining provisions (and relevant rules) such that the entire new law takes effect at the soonest, making life easier for all."

Rajeev Uberoi, Group General Counsel & Group Head - Legal & Compliance, IDFC
"The Ministry of Corporate Affairs showing its aggressiveness towards the implementation of the Companies Act 2013 has today notified 98 sections of the Companies Act 2013 by way of notification dated 12th September 2013 and the rest of the Sections would be enforced in phases. The manner in which sections have been notified by the Ministry is also very interesting since in some notified section, certain sub-sections have not been notified now and that section is brought into force with exception for the un-notified sub-section. The sections pertaining to Public Offer and the process for the same has been notified whereas one pertaining to Private Placement has been kept on hold.

The major changes which are brought by the Companies Act are removal of the privileges which Private Companies enjoyed under the 1956 Act. Practically Private Companies are brought on par with Public Companies and almost all exemptions given under the 1956 Act have been removed.  For example, Section 180 of the Companies Act 2013 (restriction on the Powers of the Board) is applicable to every company, whereas the corresponding Section 293 of the Companies Act 1956 was not applicable to the Private Companies.

The other sections that have come into force with effect are mostly procedure in nature and include those related to difference between public offer and private placement, powers of SEBI to regulate issue and transfer of securities, mandatory public offer of securities in demat form, as also civil and criminal liability for mis-statements in prospectus.

The norms detailing punishment for fraudulently inducing persons to invest money, the calling of extraordinary general meeting of shareholders, shareholder voting, ordinary and special resolutions and punishment for failure to distribute dividend have also been notified.

Besides, new definitions of CEO, CFO, company, company secretary, control, cost accountant, debentures, derivatives, director, dividend, ESOPs, experts, financial statements, financial institutions, global depository receipts, government company and holding company, have also been notified.

The Companies Act, 2013 comes as a welcome change for investors and other stakeholders as it promises to bring reforms in enforcement measures and mandates increased transparency and accountability. It mainly focuses on the social welfare and protection of the investors. It also endeavours to strengthen corporate governance and provides for provisions to ensure ethical and vigilant activities of directors and other professionals in the company. The Act promises to provide updated Company Law provisions with explicit concept of Global Practices. This exhibits a sheer commitment of the MCA towards introducing the fast track reforms across."

Ajay Vaidya, Chief Legal & Compliance Officer, Kotak Mahindra
"Repealing existing provisions in the 1956 Act for substituted provisions in the 2013 act will remove uncertainty in compliances" 

Ravi Kulkarni, Senior Partner, Khaitan & Co.
"Section 3 of the new Act allows the Central Government to notify different dates."
 
"Having quickly gone through the provisions which have been notified, I find that these are provisions which are either procedural in nature or in which there is no change between the 1956 Act and the 2013 Act. Hence, I believe that the problem of overlap and inconsistency should not occur."
 
"Therefore, for such of the provisions, which have been notified, we are not required to fall back on the 1956 Act. For other sections, the 1956 Act would apply. They will not repeal the 1956 Act till all sections are implemented and the related rules after comments are in place. In other words, both Acts are applicable, albeit for different provisions."
 
"The provisions relating to the NCLT and the Appellate Tribunal which have been brought into force normally sections 407 to 414 seem to have obviously been brought into force to empower the Government to recruit the President/Members of these bodies so that these bodies can be made functional quickly."

Rajiv Luthra, Managing Partner, Luthra & Luthra
"Most of the 98 sections including the definitions that have been notified yesterday are either simple and straight forward provisions or are similar to their counterparts in Companies Act, 1956, barring certain important definitions such as 'private company', 'public company', 'interested director' and provisions relating to shareholder meetings, foreign companies and National Company Law Tribunal. However, we are keen and looking forward for commenting on the draft rules which once finalized, will result in the notification of key provisions of the new Act."

Ashok Gupta, Group General Counsel, Aditya Birla Group
"Under the Act, the government has the power to notify to sections in a phased manner like may other acts e.g. Competition law in the recent past. All the sections which are notified are the ones where no rules are required for their implementation.  Other sections for which rules are required to be place will be notified only after rules are made final.  It seems the Govt. is keen to implement the new Companies Act  as the earliest being contemporary being focusing on governance, transparency,  and accountability."

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The Curious Case Of Fresenius Kabi: Strikes Again!

Published on Sat, Sep 14,2013 | 18:51, Updated at Sat, Sep 14 at 18:51Source : Moneycontrol.com |   Watch Video :

In October 2012, the foreign parent of Fresenius Kabi, an Indian oncology drugs company, sold 9% of its stake via an OFS to a handful of foreign institutional investors. This in an effort to eventually meet the 25% minimum public shareholding norm.  But 6 months later, Fresenius Kabi's promoter changed its mind and decided to delist the company. The foreign parent set a floor price of Rs 130 for the outstanding 19% of public shareholding. In May this year, Fresenius Kabi informed the Exchanges that it had received requisite shareholder approval for the delisting. But 10 days later that delisting plan was stymied. On June 4th, SEBI, in an interim order, imposed sanctions on over a hundred listed companies that had not complied with the 25% minimum public shareholding norm. Fresenius Kabi was on that list – and as a consequence its promoters were barred from buying or selling any shares – stalling the delisting process.

Fresenius Kabi approached SAT, the Tribunal sent them back to SEBI and SEBI in its final order allowed the delisting to proceed  but imposed an additional condition – that Fresenius Kabi delist on the basis of its pre-OFS shareholding. The regulator cited investor complaints alleging that 'the entities who had purchased shares in the aforesaid OFS might have participated in the OFS with an intent to subsequently tender their shares at an artificial price in the bids for the delisting offer.' Governance advisory firm SES had raised a similar concern – that delisting would be easier after the OFS as the bulk of the shares to be acquired were held by institutional shareholders. Aggrieved by this additional condition Fresenius Kabi returned to SAT and won.

The Tribunal order says 'If delisting is in the ordinary course of business, then there is no reason for imposing conditions. It appears that impugned direction has been issued on the basis of certain complaints which are yet to be investigated.'

Did SEBI jump the gun or did it lose a winning case? I have with me two former SEBI Directors to answer that question – Sandeep Parekh and JN Gupta

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Unsecured Secure?

Published on Sat, Sep 14,2013 | 18:51, Updated at Sat, Sep 14 at 18:51Source : Moneycontrol.com |   Watch Video :

This month, The Firm deviated from law to talk about the consequences of a depreciating rupee and a deteriorating economy. With over 200 billion dollars in foreign borrowings, many Indian companies could face a serious risk of default. Fortunately 2013 is not a big year for FCCB redemptions. Because if it were, defaulting companies could face a losing battle in court. I say this because after the 2011 victory against Wockhardt, foreign bondholders have been on a winning spree. Zenith, KSL, Shiv Vani, Moser Baer- all these companies have been successfully litigated against by their bondholders. And there are more in the pipeline! Payaswini Upadhyay finds out what this new credit hierarchy means for companies, their secured and unsecured lenders.

In 2011, the Wockhardt case marked nothing less than a revolution for the Indian financial world, as unsecured creditors successfully asserted their rights for the first time. The financially beleaguered pharmaceutical company was in the throes of a corporate debt restructuring process initiated by its secured lenders. Excluded from the CDR, a few unsecured FCCB holders filed a winding- up petition against Wockhardt in the Bombay High Court. Their intent was to block the sale of Wockhardt's nutrition business to Danone, until their dues were recovered. The court agreed – forcing Wockhardt to repay bondholders or face liquidation proceedings. For the first time unsecured creditors jumped the queue.

Sitesh Mukherjee
Partner, Trilegal
"Before the Wockhardt judgment was pronounced by the Bombay High Court, these bondholders were not being entertained in the CDR process and they were not happy with the way CDR process was going on and they basically felt that the CDR process would only extend the rights of the existing secured lenders and leave them further behind in the queue in case the company became insolvent."

H Jayesh
Founder Partner, Juris Corp
"What is the right we are talking about? It was not right of recovery. It's a right that if the company claims it is unable to pay me as a creditor, why should the company be allowed to survive. That is the right we are talking about and that's what Wockhardt is really about. People see Wockhardt as Oh, the unsecured creditors got paid out. That's not the point. Point is if a promoter or some of the creditors claim that it's ok not to pay the unsecured creditors but pay us and continue to exist, that is where Wockhardt comes up."

The corporate debt restructuring process is an informal process devised by the RBI and run mostly by Indian bank lenders. It often envisages the sale of a company's assets in order to repay secured creditors. The CDR format does not include unsecured creditors. Which is why unsecured creditors such as bondholders have often gone to court to file a winding up petition against the company and thereby block a CDR unless their demands are also met. It's worked in Wockhardt and it's worked in the case of Shiv-Vani and Moser Baer as well.

Oil and gas company Shiv-vani defaulted on its FCCB obligation - prompting the bond trustee Citicorp to file a winding up petition in the Delhi High Court. Last week, the court restrained Shi-vani from implementing any Corporate Debt Restructuring or CDR scheme. 4 days later, the court relaxed its order to allow Shiv-vani to undergo CDR but on the condition that any fresh rights created in the company's assets will need court permission.

A similar battle played out between Moser Baer and its bond trustee Citibank. With unpaid dues of Rs 688 crores, Citibank, filed a winding up petition against Moser Baer in the Delhi High Court last year. In December, the court restrained the company from alienating any of its assets. But the company's secured lenders argued against a winding up and in favor of a CDR and committed to a debt haircut. The court subsequently allowed Moser Baer to continue with the CDR process but on the condition that any sale of assets will require court approval.

Sitesh Mukherjee
Partner, Trilegal
"We have to understand that the purpose of the unsecured creditors or bondholders is not to prevent the CDR process - that's not what they want. The courts are also not looking to stop the CDR process. What they would however like is that if there is a CDR process and the secured creditors want to confine it to themselves and not look after the interests of the unsecured creditors, then the unsecured creditors have certain remedies in law."

Shishir Mehta
Partner, Khaitan & Co.
"It ultimately depends upon the negotiation power of the unsecured creditors and there have been instances where the borrower has managed to come to some sort of a deal with the unsecured creditors - one was in the matter of GTL infra - 35% of the debt was compulsory converted. And for the remaining 65%, a different pricing was agreed to. So it could be that if the unsecured creditors are aggressive and which is what the strategy has been in the last couple of years and which is working because they are well within their rights to enforce a winding up."

The spate of bondholder victories has forced some companies to deploy new tactics. Last year, after Zenith Infotech failed to make a Rs 586 cr FCCB redemption, its bond trustees filed a winding up petition in the Bombay High Court. After several months of twists and turns, while the matter was pending decision, Zenith filed a reference with the Board For Industrial and Financial Reconstruction or BIFR asking to be declared a sick company. Bombay High Court's Judge Kathwala frowned on the tactic saying- 'the principal object of the SICA is to rehabilitate genuinely sick companies where due to factors beyond their control, the companies have become sick, and that the Act is really not mean to help those companies where the company has become sick due to dishonesty, siphoning off funds and misappropriation of funds by its promoters and management.'

H Jayesh
Founder Partner, Juris Corp
"In the past what has upset the courts that adjournments are taken on various basis. And in the meantime a reference is filed and admitted. Some of the High Courts in the country have become sensitive to this and are more conscious when they are granting adjournments - at times they just ensure that an overall undertaking is given that this doesn't mean you will go and make a reference to SICA and defeat the whole purpose. Or at times, they are expediting the hearing when they realize that the process of the court is being abused to make a reference to SICA and to defeat the whole process."

Justice Kathawala ultimately decided not to interfere with the BIFR process but not without saying – I am also conscious of the fact that such dishonest promoters of the company take advantage of a beneficent legislation like SICA 

A more recent member of the club of successful unsecured creditors is Bank Of New York Mellon - a trustee for KLG Systel's bondholders. After failing to recover dues worth 130 cr rupees, the American bank filed a winding up petition against KLG Systel in the Punjab and Haryana High Court. In May this year it emerged victorious.

Shishir Mehta
Partner, Khaitan & Co.
 "Courts would use winding up as a matter of last resort. Having said that if the company is delinquent in its finances, the unsecured creditors frankly have no option but to pursue a winding up of the company primarily as a pressure tactic. For secured creditors- it doesn't make any sense to co-operate with the unsecured creditors - their interests are completely different. To that extent, there won't be any synergy between those two groups. But the courts will be increasingly more and more forceful on the borrower to address the issues of debt on both the secured as well as the unsecured side."
 
Wockhardt, Zenith, KLG Systel, Moser Baer and Shiv-Vani- these are the cases that have reached some fruition in favor of unsecured creditors. The pipeline looks equally robust in terms of numbers. Tulip Telecom is facing winding up proceedings in the Delhi HC filed by Axis Trustee Services that holds 84 crores worth Non-Convertibles debentures on behalf of the bondholders. Winding up proceedings against Sterling Biotech are ongoing in the Bombay High Court after it failed to pay its bondholders last year. Bondholders are fighting a similar battle against ICSA in the Hyderabad High Court. Geodesic has defaulted on dues of $113 million and currently has winding up petitions filed against it by Standard Chartered, Citibank London Branch, Barclays and HDFC. Suzlon, Sakthi Sugars and S Kumar have been served legal notices by their respective bondholders asking them to pay up or face winding up proceedings.

H Jayesh
Founder Partner, Juris Corp
"Why is it that the CDR doesn't deal with the promoters; why is it that CDR doesn't make promoters do meaningful sacrifices including write down of shareholding or change of management. And that has been the biggest objection of unsecured creditors, especially bondholders, has been that you are asking us to take a huge haircut and wait for 10 years before we get paid and you are allowing the very people who have created the problem - see its one thing to say economic conditions are such world over- but some of the instances that have happened in the last few years will show clearly, its the promoters who have siphoned off funds, who have been reckless in the way they managed the company etc. But the secured creditors keep giving them a further chance at the cost of the unsecured creditors. I think that will change. At least some of the secured creditors we have been talking to are conscious of this fact that the days of taking the unsecured creditors for granted, the days of giving promoters priority over unsecured creditors are coming to an end."

Add to that the promise made by the Companies Act 2013 that envisages the formation of the National Company Law Tribunal or NCLT. Once set up, the NCLT will exercise the powers of BIFR under SICA and the winding up power of High Courts. Since all the proceedings of a defaulting company will take place under NCLT's roof, the hope is it will reduce the abuse of court process that Jayesh spoke off. But since that will happen in due course, for now, the unsecured creditors are asserting their rights like never before.

In Mumbai, Payaswini Upadhyay

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