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RE: Indian Business-Banking News

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STEEP CUTS ANGER EMPLOYEES
Infy Staff get Variable Shock Post Pay Freeze

IT bellwether risks losing headcount as resumes pile up at employment portals

DEVINA SENGUPTA BANGALORE

Infosys will tell restive employees angry about a salary freeze that it will make steep cuts to their variable pay for the January-March quarter,risking an exodus of talent to greener pastures.Indias second-largest software exporter,which missed its revenue guidance for the final quarter,has decided that most of its employees will get only 70% of their variable pay,a senior company executive said.The blow will fall harder on the 300 top executives,the so-called title holders who will be asked to take a 70% cut in their variable salary.For the October-December 2011 quarter,the title holders had to forego 50% of their variable pay.Infosys,which employs nearly 1.5 lakh staff,has been facing pressure from investors and analysts who believe that the once-formidable company has been underperforming for more than a year.On Friday,when it announced its earnings,Infosys said there would be no wage increase for the time being as it tries to control costs.In 2008,the company said in April there would be no pay hikes but gave a mid-year raise of 10%.Salaries form bulk of the expenditure for software companies and variable pay accounts for about a quarter of total costs.By trimming variable pay,Infosys will be able to sustain its margins but the danger is that it could lead to disaffection among employees whose displeasure had been made known in blog posts and comments online.They are naturally upset today but will understand eventually, said the Infosys executive.Town halls where top executives explained the decision to staff were arranged on Thursday and Friday.Even so,employees may not be placated so easily.Job portals said there was a spurt in resumes from Infosys staff over the past few days.One of them said the increase was of the order of 10%.A former Infosys veteran said it was a wrong decision to freeze salaries of all employees.Instead,the pay of senior staff should have been brought down,he suggested.What happened in 2008 was an industry issue,but this is a company issue and employees will walk way, he said.CEO SD Shibulal told analysts last week that the salary reductions may well result in higher levels of attrition.But CFO V Balakrishnan has been of the view that Infosys is a better paymaster than rivals and,therefore,it is unlikely that employees will desert the company in large numbers.On Friday,Shibulal defended the decision to freeze salaries describing this year as an unusual one.

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Tribunal Cancels Green Nod to Jindals Chhattisgarh Project

OUR POLITICAL BUREAU NEW DELHI

The National Green Tribunal has cancelled the environmental clearance given to the Jindal Steel and Power Companys coal mining and washery project in Chhattisgarh.The clearance was set aside on the grounds that the public hearing conducted for the project was not proper.The environmental tribunal has come down heavily on the environment ministry for disregarding suggestions made by the expert appraisal committee while granting clearance.The expert committee had after considering complaints suggested a fresh public hearing for the project.Setting aside the environmental clearance granted in May 2009,the two-member bench comprising Professor DR Nagendran and Justice CV Ramulu said: This is a classic example of violation of the rules and the principles of natural justice to its brim.Therefore,we consider it appropriate to declare that the public hearing conducted in this case is nullity in the eye of law and therefore is invalid. The bench said that it was not a case where there are a few ignorable procedural lapses but instead it was a mockery of public hearing,which is one of the essential parts of the decision making process while granting an environmental clearance.Expressing shock at the way the public hearing was conducted,the bench said,after viewing the CD of the public hearing conducted on 5.1.2008,we are surprised to note to our dismay that the same was a farce All the norms required in conducting a smooth and fair procedure was given a go by.Coming down with a heavy hand on the ministry,the bench said,The ministry of environment and forest simply ignored the mandatory procedure under clause 8 of the EIA Notification 2006 and granted environmental clearance in favour of the project proponent. Clause 8 states that the regulatory body,in this case the ministry,normally accepts the recommendations of the expert appraisal committee.In case of a disagreement,the recommendations are sent back for the committees consideration.This process was not followed in this case.

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Govt mulls new norms,tax sops to revive SEZ boom

Sidhartha TNN

New Delhi: It could be a second innings for special economic zones,especially those held up for years,with the commerce department proposing fresh tax concessions and a cut in the minimum area requirement to a quarter of the present specifications.
The department has suggested that any zone that is not built around the identified 40 million-plus cities and state capitals would be eligible for duty benefits on capital investment for construction of hotels,hospitals,schools and colleges,residential and business complexes and training,leisure and entertainment facilities in what is billed as non-processing area (NPA) infrastructure.Sources said the zones would be eligible for tax concession if built 50-100 km from an urban conglomerate,with the facilities for exclusive use of SEZ employees.

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Export scheme benefits to be extended

In case of SEZs constructed in 123 backward districts,this infrastructure can also be used by those who are not part of the zone,a 48-page note said.At present,the rules specify that an NPA cant exceed half the area of an SEZ.
In addition,the department wants to extend the benefits of export schemes already available to entities outside the zones to SEZ units as well.This is aimed at making up for the levy of minimum alternate tax and withdrawal of other tax concessions by finance minister Pranab Mukherjee last year.
Further,nearly half the funding available under Aside,a scheme to build infrastructure for exports,may be allocated for building connectivity and infrastructure in SEZs.
Amid a flurry of SEZ development,which many had termed real estate activity,the government decided to withdraw tax concessions and phase out several of them.According to the commerce department,since February 2006,585 SEZs have been approved and 381 have been notified,with a majority of them related to information technology and IT-enabled services.
Exports from all SEZs put together amount to Rs 3 lakh crore over six years -- over 28% of shipments from the country.In all,over Rs 2 lakh crore has been invested in SEZs so far and over 7 lakh people are employed in development and running of the zones and companies located there.
The number could have been much more but several projects ran into land acquisition hurdles.

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US Grows,but not as Expected

Economy expands 2.2% in first quarter;drop in govt spending spoils the show

SHOBHANA CHANDRA WASHINGTON

The US economy expanded less than forecast in the first quarter as a smaller contribution from inventories overshadowed the biggest gain in consumer spending in more than a year.Gross domestic product,the value of all goods and services produced in the US,rose at a 2.2% annual rate,Commerce Department figures showed on Friday in Washington.That followed a 3% pace in the prior quarter and compared with the 2.5% median forecast of economists surveyed by Bloomberg News.Household purchases,which account for about 70% of the economy,increased 2.9%,exceeding projections.Job creation and income gains were enough to propel sales at car dealerships and retailers like Target,helping make the US more resilient to weakness in overseas markets.Federal Reserve officials this week said they expect growth to stay moderate, helping explain why they adhered to a goal of keeping borrowing costs low through 2014.This was a healthy quarter,with more growth coming from final demand, Christopher Low,chief economist at FTN Financial in New York,said before the report.Consumer spending picked up.Were moving in the direction of a sustainable expansion,but its too early to declare victory. Forecasts of the 85 economists in the Bloomberg survey ranged from gains of 1.2% to 3.6%.The GDP estimate is the first of three for the quarter,with the other releases scheduled for May and June when more information becomes available.In addition to the pickup in consumer purchases,the economy also benefited from the biggest gain in homebuilding in almost two years and a jump in auto production.GDP was restrained by a drop in government spending and slower growth in business investment in equipment and in inventories.The US is doing better than some of the other major economies.The UK economy slipped into its first double-dip recession since the 1970s,figures showed this week.In Japan and Germany,gross domestic product dropped in the final three months of 2011,while China,the worlds secondlargest economy,is also cooling.The US is where the strength is, Sandy Cutler,chairman and chief executive officer at Eaton,said on an April 23 conference call with analysts.The markets outside the US are not where the strength is this year. The Cleveland-based company predicted its US markets,including electrical,hydraulics,aerospace,truck and automotive,will rise 9% this year,up from an earlier estimate of 6%.For its markets abroad,Eaton reduced its growth forecast to 2% from 4%,Cutler said.Jobs and the economy are a central theme in political sparring between president Barack Obama and Republican challenger Mitt Romney.Obamas job approval rating reached 50% in a Gallup Daily tracking poll for April 21-23.The telephone survey of 1,534 adults has a margin of error of plus or minus 3 percentage points. Bloomberg

At a Snails Pace

Job creation and income gains were enough to propel sales at car dealerships and retailers like Target The US economy also benefited from the biggest gain in homebuilding in almost two years The US is doing better than some of the other major economies

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Officers Choice World's Largest Whisky Brand

Mumbai: Officers Choice Whisky,the flagship brand from Kishore Chhabria-led ADB,is now the No 1 whisky in the world by volume,with its sales crossing 16.4 million cases in January-December 2011.It pipped Bagpiper from Vijay Mallya-led United Spirits Ltd at the top position.Bagpipers sales are estimated at 15.8 million cases.The figures are from Impact International,a magazine which keeps track of developments in the global wine & spirits market.Officers Choice,which has shown rapid growth since Deepak Roy,a former UB hand,was named MD at ABD,moved up from a 4 million cases brand to the current position in just five years. M Padmakshan

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Adidas India hit by 1,350cr internal fraud

Samidha Sharma TNN

Mumbai: Adidas,the worlds second largest sports goods maker,may take a.1,350 crore hit after unearthing a massive commercial fraud in its Indian unit.The German giant has already booked a negative impact of 125 million and warned that it could suffer a further 70 million loss barely a month after replacing the local leadership team in India.
This makes it one of the worst financial irregularities to surface in the Indian arm of any MNC,and comes amid mounting concerns over corporate governance issues in the country.TOI had first reported on March 27 that managing director Subhinder Singh Prem and chief operating officer Vishnu Bhagat had exited the local unit of Adidas,which also owns Reebok,after it plunged into the red due to financial irregularities.

Telenor writes off $680m in India

N orwegian telecom major Telenor on Monday wrote off its remaining fixed and intangible assets in India worth over $680 million (.3,500 crore),saying the uncertainty has increased significantly after the SCs cancellation of Unitech Wirelesss 22 licences and recent Trai norms for re-auction of 2G licences and spectrum.

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Adidas mulls action against ex-bosses

Adidas Group then remained silent on specific queries by TOI whether the top-level changes were linked to financial mismanagement.
The $13 billion group had replaced the top management in India with Claus Heckerott taking charge as MD and Frederic Serrant assuming the role of sales director.We discovered commercial irregularities at our Reebok business in India.These irregularities will likely affect the prioryear consolidated financial statements of the Adidas group.In total,we are talking about a negative impact of up to a pre-tax amount of $125 million.Additional one-time charges in the remaining quarters of 2012 amounting to an estimated $70 million could also occur, said Herbert Hainer,CEO of the group,in the internal communication sent across to employees,and reviewed by this newspaper.He said the company may take legal action if necessary.
Allegations of financial discrepancies and losses swirled at the India unit after the merger of Reeboks operations.Adidas and Reebok merged in India only last year even though a $3.8 billion global buyout of the latter happened in 2005.Reebok India had a turnover of about Rs 600 crore,while Adidas clocked a revenue of Rs 480 crore in 2011.The company on a combined level had debts to the tune of Rs 600 crore and had registered a loss of Rs 90 crore with the Registrar of Companies.
The former MD Prem and COO Bhagat came into the Adidas fold through the Reebok merger.Prem who denied any wrongdoing while he was at the helm of the India operations had joined Reebok in 1995 when it entered the country and rose up the ranks to become the MD in 2003.TNN

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1 May 2012
Hindustan Times (Delhi)
HT Correspondent letters@hindustantimes.com

On Moody’s watch: LIC, 3 private banks

DOWNGRADE SYNDROME ICICI, HDFC, Axis review in three months

Credit rating agency Moody’s has placed on watch state-owned giant Life Insurance Corporation (LIC) and three of India’s biggest private sector banks — ICICI Bank, HDFC Bank and Axis Bank —for a possible downgrade, with the review for the three banks expected to be completed within three months.

Moody's action follows closely on the heels of another credit rating agency, Standard & Poor’s (S&P), downgrade on the outlook of 11 Indian financial institutions last week to negative from stable, following a similar outlook downgrade of India’s sovereign credit rating.

Experts believe that depositors and investors need not to worry much on the issue.

“Depositors money will not be impacted by Moody’s announcement as their financial health is in good shape,” said Dinesh Shukla, banking analyst at brokerage firm Sharekhan. “Latest quarterly results of these three banks show that they are in growth trajectory. We do not see any major downside for these banks in near future,” he said, adding that he has a buy call on ICICI Bank and Axis Bank and hold on HDFC Bank. All three banks under review by Moody’s were also in the list of 11 financial institutions whose credit ratings outlook was downgraded to negative by S&P last week.

The immediate trigger for placing LIC on the review list for a possible downgrade is the bailout act performed by the insurer in the sale of the government’s 5% stake in the oil company, ONGC.

“LIC has been increasing its exposure to public sector banks through equity investment, in addition to the purchase of shares in ONGC, which is 69.14% owned by the Indian government in March 2012,” Moody’s said.

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1 May 2012
Hindustan Times (Delhi)
HT Correspondent letters@hindustantimes.com

BAD LOANS MAY HAVE PEAKED IN BANKING SYSTEM: RBI

Bad loans in the banking system may have peaked and the situation relating to nonperforming assets (NPAS) is likely to improve from now on, according the Reserve Bank of India (RBI).

“Given the current situation... looks like there would not be undue alarm in the near future. So, assuming that things do not deteriorate in a very significant way, the NPAS might have peaked or the asset quality might have bottomed out,” said Anand Sinha, deputy governor, RBI in an event organised by industry chamber ASSOCHAM. “The expectation is that from here on the asset quality should improve,” said Sinha.

The central bank is planning to set up a working group committee to introduce more longterm fixed interest rate loan products by banks. He said the central bank is also planning to set up a committee to look into the issue of facilitating the development of fixed rate loan products in the banking system.

“A variety of fixed interest rate loan products are imperative considering that currently the banks offer fixed rates on deposits and mostly floating rates on home loans, which exposes borrowers to uncertain rate movements,” said Sinha.

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FIIs raise stake in 25 sensex firms

Riding On ECB Stimulus,Market Attracted 41,032Cr In March Quarter

Ishan Srivastava & Thyagaraju Adinarayan TNN

Chennai: Foreign institutional investment saw a sharp increase during the January-March 2012,with the markets net attracting Rs 41,032 crore compared with a net outflow of Rs 7,931 crore in the same period last year.This sudden spurt is attributed to European Central Banks aggressive intervention in the form of long-term refinancing option (LTRO) to douse the euro sovereign debt crisis.
A significant consequence of this inflow is that the FIIs have increased their stake in 25 out of the 30 companies on sensex,with HDFC,Cipla and Tata Motors topping the list.
Bharti Airtel,Coal India,DLF,Hero MotoCorp and GAIL are the sensex firms where foreign institutional investors (FIIs) pared their stake during the threemonth period.
ECB pumped in more than 1 trillion euros into banks at a rate of 1% over a period of three years.The intention was that banks would buyback sovereign debt and also increase lending to consumers and businesses, said Ajay Bodke,head of investment strategy and advisory at Prabhudas Lilladher,a brokerage firm.
The ECB stimulus was given in a period of two to three months,unlike the US Federal Reserve which also pumped in a similar amount,but over a period of two years.The unintended consequence of this was the increase in risk appetite of the recipients of this money.Part of this money was used to chase risky assets,especially in emerging economies like India, said Bodke.However,this aberration in FII inflow is fizzling out as market corrects and concerns over euro crisis rise again.April is the first month in 2012 when there has been a net outflow of FII funds.
If there are fiscal reforms by the government we could see the inflow continuing,but thats not very likely.Increase in January to March period was primarily due to ECB infusing money.But,with no more such infusion from Europe to be seen in the near future,it may be difficult to see an FII inflow, said Dipen Shah,head of private client group research of Kotak Securities.
The FII activity in April is a testimony to what Shah said as the month-ended on Monday showed a net outflow of Rs 1,657 crore.
This sudden increase in FII inflow was despite any meaningful reforms in the economy, said Bodke.The torrent has already become a trickle and I expect it be that way in coming months.

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Fund-strapped GIC Plans to Go Public

Move to also help govt meet its divestment target

SHILPY SINHA MUMBAI

General Insurance Corp of India,or GIC Re,the lone Indian reinsurer,is deliberating an initial public offering to raise funds amid strained resources and help the government meet its divestment target,the companys chairman said.Listing is one of the options we have in mind, said AK Roy,CMD of GIC Re.We are working closely with our owners.Timing is very important for such issues.We are in a dynamic world and every step has to be taken at an opportune time. State-run firms,including Hindustan Aeronautics Ltd,are among companies seeking to list their shares on stock exchanges that will provide them funds for expansion and at the same time help the government raise revenues.Although many IPOs such as NTPC and Power Finance Corp were successful,aggressive pricing has led to investors losing money in recent issues of state-run companies.Raising of funds has become critical for GIC after it incurred a loss of.733 crore for the nine months ended December 2011 due to claims arising from the Thailand floods and earthquake in Japan,and additional provisioning for motor pool.It made a profit of.1,056 crore in the same period last year.But the government is yet to decide on listing of the company as the department of disinvestment has not put this on its agenda.We have to see if listing is to capitalise good performance of the company or to raise money, said an official in the finance ministry.

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How Apple Sidesteps Billions in Taxes

Company has devised many strategies to take full advantage of loopholes in the US tax code

CHARLES DUHIGG & DAVID KOCIENIEWSKI NEVADA

Apple,the worlds most profitable technology company,doesnt design iPhones here.It doesnt run Apple-Care customer service from this city.And it doesnt manufacture MacBooks or iPads anywhere nearby.Yet,with a handful of employees in a small office here in Reno in a company subsidiary named Braeburn Capital,Apple has done something central to its corporate strategy: It has avoided millions of dollars in taxes in California and 20 other states.Apples headquarters are in Cupertino,California.By putting an office to collect and invest the companys profits out of Reno,just 200 miles away,Apple sidesteps state income taxes on some of those gains.Californias corporate tax rate is 8.84%.Nevadas Zero.Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year.As it has in Nevada,Apple has created subsidiaries in low-tax countries like Ireland,the Netherlands,Luxembourg and the British Virgin Islands some little more than a letterbox in Luxembourg or an anonymous office here that help cut the taxes it pays around the world.Almost every major corporation tries to minimise its taxes,of course.For Apple,the savings are especially alluring because the companys profits are so high.Wall Street analysts predict Apple could earn up to $45.6 billion in its current fiscal year which would be a record for any US business.Braeburn is a variety of apple that is simultaneously sweet and tart.When someone in the US buys an iPhone,iPad or other Apple product,a portion of the profits from that sale is often deposited into accounts controlled by Braeburn,and then invested in stocks,bonds or other financial instruments,say company executives.Some profits from those investments are shielded from California tax authorities by virtue of Braeburns Nevada address.Since founding Braeburn in 2006,Apple has earned more than $2.5 billion in interest and dividend income on its cash reserves and investments around the globe.Whats more,Braeburn allows Apple to lower its taxes in other states because many of those jurisdictions use formulas that reduce what is owed when a companys financial management occurs elsewhere.While Apples Reno office helps the company avoid state taxes,its international subsidiaries particularly the companys assignment of sales and patent royalties to other nations help reduce taxes owed to the US and other governments.The Luxembourg subsidiary,named iTunes S.ar.l., has just a few dozen employees,according to corporate documents filed in that nation and a current executive.But when customers across Europe,Africa or the Middle East and potentially elsewhere download a song,television show or app,the sale is recorded in this small country,according to current and former executives.The country has promised to tax the payments collected by Apple and numerous other tech corporations at low rates if they route transactions through Luxembourg.Taxes that would have otherwise gone to the governments of Britain,France,the US and dozens of other nations go to Luxembourg instead,at discounted rates.Without such tactics,Apples federal tax bill in the US most likely would have been $2.4 billion higher last year,according to a recent study by a former Treasury Department economist,Martin A.Sullivan.As it stands,the company paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year,a tax rate of 9.8%.(Apple does not disclose what portion of those payments were in the US,or what portion are assigned to previous or future years.) By comparison,Wal-Mart last year paid worldwide cash taxes of $5.9 billion on its booked profits of $24.4 billion,a tax rate of 24%,which is about average for non-tech companies.Apples domestic tax bill has piqued particular curiosity among corporate tax experts because though the company is based in the United States,its profits on paper,at least are largely foreign.While Apple contracts out much of the manufacturing and assembly of its products to other companies overseas,the majority of Apples executives,product designers,marketers,employees,research and development and retail stores are in the United States.Tax experts say it is,therefore,reasonable to expect that most of Apples profits would be American as well.The nations tax code is based on the concept that a company earns income where value is created,rather than where products are sold.However,Apples accountants have found legal ways to allocate about 70% of its profits overseas,where tax rates are often much lower,according to corporate filings.Neither the government nor corporations make tax returns public,and a companys taxable income often differs from the profits disclosed in annual reports.Companies report their cash outlays for income taxes in their annual Form 10-K,but it is impossible from those numbers to determine precisely how much,in total,corporations pay to governments.In Apples last annual disclosure,the company listed its worldwide taxes which includes cash taxes paid as well as deferred taxes and other charges at $8.3 billion,an effective tax rate of almost a quarter of profits.However,tax analysts and scholars said that figure most likely overstated how much the company would hand to governments because it included sums that might never be paid.The information on 10-Ks is fiction for most companies, said Kimberly Clausing,an economist at Reed College who specialises in multinational taxation.But for tech companies it goes from fiction to farcical. Apple,in a statement,said it has conducted all of its business with the highest of ethical standards,complying with applicable laws and accounting rules.We are incredibly proud of all of Apples contributions. The statement also said that Apple pays an enormous amount of taxes which help our local,state and federal governments.In the first half of fiscal year 2012,our US operations have generated almost $5 billion in federal and state income taxes,including income taxes withheld on employee stock gains,making us among the top payers of US income tax. The statement did not specify how it arrived at $5 billion,nor did it address the issue of deferred taxes,which the company may pay in future years or decide to defer indefinitely.But the $5-billion figure appears to include taxes ultimately owed by Apple employees.The sums paid by Apple and other tech corporations is a point of contention in the companys backyard.A mile and a half from Apples Cupertino headquarters is De Anza College,a community college that Steve Wozniak,one of Apples founders,attended from 1969 to 1974.Because of Californias state budget crisis,De Anza has cut more than a thousand courses and 8% of its faculty since 2008.Now,De Anza faces a budget gap so large that it is confronting a death spiral, the schools president,Brian Murphy,wrote to the faculty in January.Apple,of course,is not responsible for the states financial shortfall,which has numerous causes.But the companys tax policies are seen by officials like Murphy as symptomatic of why the crisis exists.I just dont understand it, he said in an interview.Ill bet every person at Apple has a connection to De Anza.Their kids swim in our pool.Their cousins take classes here.They drive past it every day,for Petes sake.But then they do everything they can to pay as few taxes as possible.
(NYT News Service)

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Agency employs goondas to seize property for bank,draws HC wrath

A Subramani TNN

Chennai: Graduating from the common practice of hiring rough collection agents to seize vehicles or recover loans from customers,a security agency engaged by a bank employed about 40 musclemen to physically take possession of an industrial unit,inviting the wrath of the Madras high court.
A division bench comprising Justice D Murugesan and Justice K K Sasidharan,disapproving of the forcible dispossession done,said: The petitioner very clearly explained the manner in which the securitization company (engaged by the bank) took possession of the property by employing musclemen.This is not the way in which possession should be taken over.We cannot approve such forcible dispossession.
Noting that the agency was making a false claim that the possession was taken over from a watchman peacefully,the bench said: The securitization company had taken the assistance of the secretary of the Poonamallee Criminal Court Bar Association for the reasons best known to them,and he has signed as a witness.The company appears to have no concern for the law of the land.Merely because it is a securitization company,it cannot be said it is above law.
The matter relates to a petition filed by Esteem Polimer Products,located at Kuthambakkam in Tiruvallur district.The company had taken a loan from Axis Bank by mortgaging aproperty.According to the petition,on April 7,about 40 to 50 persons led by a security agency owner and an advocate landed at the compound and evicted everyone from the premises and took possession of the stock and machineries by intimidation.The company wanted the court to restore possession of the premises to it.
The securitization company Asset Reconstruction Company Private Limited -- engaged by the bank,however,claimed that it had taken possession of the property peacefully and that there was only one watchman in the factory when the premises was taken over.
The judges,pointing out that there are materials to prove that the industrial unit in question was a tenant at the premises,said it could be evicted only as per the provisions of the Tamil Nadu Buildings (Lease and Rent) Control Act 1960.
As per the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 (SARFAESI Act),the securitization company can very well take possession of the asset in case there is no resistance (from the borrower),the judges said.But in case of resistance,it must approach the magistrate concerned and obtain an order under Section 14 of the SARFAESI Act,they said.The securitization company cannot be permitted to engage goondas to take possession of property, the judges said.
Stressing that recovery process has to be in accordance with law,they said: If any action is taken for recovery in violation of guidelines or principles as laid down by the Supreme Court,such an action cannot but be struck down.
Directing the securitization company to restore possession of the property,the bench appointed two advocate-commissioners to oversee the handing over of the property and machinery after verification.

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Bank 20120502a_010101005

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Bharti Q4 net down 28% on high 3G costs

Telco Posts Ninth Straight Quarterly Decline

TIMES NEWS NETWORK

New Delhi: Bharti Airtel Wednesday reported a 28% dip in fourth quarter net,its ninth straight quarterly drop in earnings,hit by higher amortisation and interest costs on its 3G network investments,as well currency fluctuations and higher tax provisions.
The company said profit in the quarter ended March 31,2012,stood at Rs 1,006 crore against Rs 1,401 crore in the same period of the previous fiscal.The companys revenues,however,moved up by 15% at Rs 18,729 crore against Rs 16,293 crore in the year-ago period.Revenue growth in the fourth quarter was fuelled by increased customer additions and strong minutes growth in India, the company said.The company reported a consolidated EBITDA margin of Rs 6,233 crore for the quarter,up 14% to 33%.
Akhil Gupta,deputy CEO and MD of Bharti Airtels parent Bharti Enterprises,said that it was a good quarter for the company.In India,we got the growth back... As far as Africa is concerned,the upward trajectory continues,both in terms of revenues,EBITDA and the overall operations.
Bhartis average revenue per user rose to Rs 189 rupees a month from Rs 187 in the previous quarter,the company said.For the fiscal 2011-12,Bharti's net profit fell 30% to Rs 4,259 crore,compared to Rs 6,047 crore in the previous year.It was down due to higher costs on account of 3G licence fee amortisation (Rs 593 crore),3G interest costs (Rs 421 crore),forex fluctuation losses (Rs 422 crore) and tax provisions (Rs 481 crore).
Revenue for the 2011-12 fiscal stood at Rs 71,451 crore,as against Rs 59,538 crore in 2010-11,up 20%,the company said.Shares of Bharti ended the day at Rs 318 on the BSE,up 2%,in a near-flat market.

In the last two quarters,we have been busy correcting some structural defects and rate increases and this has given us the headroom to re-inves this increase back into the market and consolidate our market position

SANJAY KAPOOR,CEO (INDIA & SOUTH ASIA)

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SENSEX 05_05_2012_012_049

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Airlines 04_05_2012_013_049

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sbi zero balance 20120505a_015101007

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No Indian on Maruti board in exec role

Trust Deficit Concerns Weigh As Indian Staff Fail To Get Leadership Positions

Pankaj Doval TNN

New Delhi: Is there a trust deficit brewing at Maruti Suzuki,the countrys top carmaker and subsidiary of Japans Suzuki Motor Corp The company,though one of the most-recognized brands in India,has the dubious distinction of not awarding a boardlevel executive position to any Indian since the departure of Jagdish Khattar in 2007,who was a government-inducted official at the company.
A fresh round of promotions at the company has seen Maruti controlled fully by Suzuki (with 54.2% stake) after the exit of the Indian government create yet another higher level of role for senior Indian staff,but still falling short of giving them the coveted board position.
Except for the independent directors on the board (who are Indians) and R C Bhargava,who is the non-executive chairman,no Indian has been given the leadership role on the companys board.The Indians at senior roles at the company include Mayank Pareek (sales & marketing),I V Rao (engineering),M M Singh (production),Sudam Maitra (supply chain) and S Y Siddiqui (administration).All of them had the position of managing executive officer (MEO) and have been promoted as senior MEOs (except for Pareek) in the fresh round of appraisal,when many expected a board position.And perhaps to compensate them for the elusive board position,Maruti has given them the title of chief operating officer for their respective departments.
Most Indian officials despite playing a key role in running their respective departments have a Japanese boss,who represents them at the board.Despite being denied board positions,they are all special invitees to the board meetings and answerable for the performance of their departments.
In Maitras case,a Japanese has superseded him.Kazuhiko Ayabe,who was junior to Maitra as an executive officer,has been elevated and given the board position for the supply chain department,effectively making him the boss.
So is there a bias at the company against Indians It is wrong to assume that there is a bias against Indian employees at Maruti.Perhaps,it has not come to such a stage where they (Japanese management) completely trust Indians to handle the company,which has now become very big, says chairman Bhargava.They must feel confident that if they withdraw,Indians can run the company.I am sure this will happen,but in due course of time.In the meanwhile,the Indians have to get a little more experienced.
Bhargava said despite not being there on the board,the senior Indian officials have the responsibility and status of a director.Salaries are near-same as that of a Japanese board member.
However,insiders say that some of the senior Indian staffers are not happy at the Suzuki-enforced arrangement.They feel that when they are playing the leadership role in the running of their departments,they should also be given a coveted position on the board.Why should a Japanese be given the honour when for all practical purposes,it is the Indians who are running various departments at the operational level and are answerable for the operations, one of them said.
Bhargava said the Japanese officials who are present on the board play a key role.Communication with Japan (Suzuki headquarter) has to be in Japanese.We have a lot of communication to be done.

Admin · Guru

Excise on gold jewellery,TDS on realty rolled back

TIMES NEWS NETWORK

New Delhi: Finance minister Pranab Mukherjee buckled under pressure from two powerful trade lobbies jewellers and realtors while dropping proposals put forward by him,ostensibly to check circulation of black money in the economy.
Apart from black money,he has also decided to hold back the shift towards a goods and service tax regime and announced a withdrawal of 1% excise duty on all precious metal jewellery,branded or unbranded,after nation-wide strike from industry bodies.
Following the changes announced on Monday,you will no longer be required to deduct 1% of the transaction value at the time of purchase of property.Similarly,for cash purchase of jewellery,the minister has increased the threshold for tax collection at source from Rs 2 lakh proposed by him on March 16 to Rs 5 lakh now.The TCS threshold for cash purchase of bullion,excluding coin or any item weighing 10 grams or less,has,however,been retained at Rs 2 lakh.
The announcements received unanimous acceptance from jewellery makers,who had been opposing the move since it was proposed in the Budget.This is a great announcement.The implementation of the excise duty,especially,would have been practically impossible to manage as it is impossible for jewellers to track where a piece of jewellery has been manufactured, said Mehul Choksi,CMD Gitanjali.
Retailers were especially worried over the extensive book keeping that imposing the excise duty would entail.I think it is a very positive move.Excise compliance norms are very tedious.The proposal had created a lot of pressure on the supply side, said Vijay Jain,CEO,Orra.
The move follows a 21-day strike by jewellers across the country in March this year,after the FM had proposed a 1% excise duty on unbranded jewellery and a 1% tax on all purchases exceeding Rs 2 lakh in the Budget.
According to the government,the move was intended to streamline excise duty that had already been levied on branded jewellery in March 2011.Post the strike,the finance minister had met jewellery associations in early April giving them an assurance that the excise duty would be rolled back.

BULLION REGAINS ITS SHINE

Admin · Guru

Draconian clause in customs law scrapped

TIMES NEWS NETWORK

New Delhi: The finance minister on Monday scrapped a proposed tough amendment in the customs and central excise law that would have made granting of bail only after hearing the public prosecutor,bringing much needed relief to the business community,exporters and importers.
Lawmakers had slammed the proposed changes in the Finance Bill and had termed the provisions as draconian.Leader of Opposition in Rajya Sabha Arun Jaitley had also severely criticized the move.
The proposed amendment in the law had said that notwithstanding anything contained in the Code of Criminal Procedure,1973,no person accused of an offence punishable for a term of imprisonment of three years or more under Section 135 shall be released on bail or on his own bond unless the public prosecutor has been given an opportunity to oppose the application for such release.
Finance minister Pranab Mukherjee,while initiating the discussion on the Finance Bill in Lok Sabha,said he had taken note of the concerns expressed by members.The House will recall that certain amendments were proposed in the customs and central excise law in respect of the classification of offences as cognizable and non-bailable.In response to concerns expressed by members that the proposal regarding grant of bail only after hearing the public prosecutor is too harsh,I propose to omit this provision entirely, Mukherjee said.
He said only serious offences under the customs law involving prohibited goods or duty evasion exceeding Rs 50 lakh shall be cognizable.However,all these offences shall be bailable, Mukherjee said.
Experts welcomed the move saying it removed uncertainty and fear.It is a positive move.The key contention was that the courts right to grant bail should not be limited by the appearance of the public prosecutor, said Himanshu Tiwari,partner (indirect tax practice) at consultancy firm BMR Advisors.

Admin · Guru

Govt readies 13k cr notice for Voda

Retro Tax Stays

Govt Gives In To Demands Of Jewellers,Realtors,Oppn

Surojit Gupta & Sidhartha TNN

New Delhi: The income tax department is readying a Rs 13,000-crore demand on Vodafone after finance minister Pranab Mukherjee decided against dropping the controversial proposal to retrospectively amend the law to levy capital gains tax on merger and acquisitions involving foreign companies with assets or shares in the country.
Sources indicated that the notice is ready and will be served soon after the Budget gets presidential assent.The notice will include interest on the Rs 7,900 crore that the tax department says is due from the transaction that involved Vodafone acquiring Hutchisons 67% interest in the Indian telecom venture.They said it was never the governments intent to levy penalty but merely recover tax that was due.
While the move will come as a setback not just for Vodafone but nearly a dozen other companies,it may trigger a fresh round of litigation with the telecom giant threatening to invoke the provisions of the India-Netherlands investment treaty.
Vodafone,which had even got the British chancellor of exchequer to lobby on its behalf,has said that the tax was not due on the transaction,which was routed through Cayman Islands.In addition,it has said that Hutchison Whampoa should be asked to pay taxes.But the tax department has countered it,arguing that Vodafone should have deducted tax before making the payment to Hutch.
On Monday,Vodafone did not comment on the government move.The Lok Sabha is due to vote on the Finance Bill before it is sent to Rajya Sabha for approval.Tax experts said they would prefer to wait for some clarity on the issue.While deciding against dropping the controversial clause in the Finance Bill,Mukherjee,however,clarified that the government will ensure that double tax avoidance agreements are respected.The statement was meant to comfort FIIs,who were wary of the government taxing transactions routed via Mauritius or Singapore.However,he said low or no tax jurisdictions with which India doesnt have DTAAs,and that includes Cayman Islands,will not be spared.

Admin · Guru

Cognizant lowers 12 sales guidance by 3%

To Zip Past Infosys As No.2 IT Co Next Qtr

Ishan Srivastava TNN

Chennai: Circa 2006,Infosys revenue for the March quarter was double over that of Cognizant at $593.4 million.Six years later,Cognizant is all set to go past Infosys to become the second largest offshore IT services provider,going by the revenue guidance announced by both companies.While Infosys has guided to revenues of $1.77 billion at the lower end,Cognizant has guided to at least $1.79 billion,a gap of $19 million.
Infosys has forecast a 0-1 % growth for the next quarter,while Cognizant has forecast a 4.6% growth in revenues during the June quarter.In June last year,Cognizant overtook Wipro as the third largest software exporter in India.
However,Cognizant lowered its revenue outlook for the full year by three percentage points to 20%.This is the first time in nearly four years that the company has cut its outlook.
Due to a slower than anticipated acceleration in demand as we entered the second quarter,we are adopting a more conservative stance for the remainder of the year and revising our guidance to at least 20% revenue growth for 2012, said CEO Francisco DSouza.The lowering of guidance sent Cognizant shares tumbling at NASDAQ where it was trading 17% lower in early trades.
Though a climb down,it is much higher than the 8-10 % guidance given by Infosys and 11-14 % guidance given by industry association Nasscom.
Cognizants revenue for the quarter grew 24.8% to $1.71 billion.Net profit grew 17% to $243.60 million.
In terms of both revenue and profit,Cognizant has performed better than its peers in this quarter.Cognizants revenue in the March quarter grew by 24.8% year-on-year (YoY) while TCS grew 18% and Infosys,10.5%.Cognizants March quarter profit grew 16.9%,while TCS profit grew 11% and Infosys,15.2%.
Cognizant has been posting better growth than Infosys for quite some time and this (overtaking of Infosys) is expected, said Ankita Somani,IT analyst at Angel Broking.While many Indian IT firms have found this year difficult,it has been a normal year for TCS and Cognizant.
Many analysts said firms like Cognizant and TCS are eating into shares of other Indian companies like Infosys.But Malcolm Frank,executive VP of strategy and marketing at Cognizant refuted this line.We are very far away from zerosum game.All the major Indian IT firms and us would account for something like 5% of the overall software services market.There is tremendous headroom,both geographically and segment-wise,for Indian firms.BPO and IT infrastructure are just two examples of such verticals, said Frank.
Net headcount addition at Cognizant for the quarter was approximately 2,800 with total employee strength rising to around 1,40,500 as of March 31,2012.The attrition stood at 10.5%.The company said that for offshore,wage hike would be approximately 8% (excluding promotions) and for onsite it will be in low single digit.
We expected difficulty in Europe but it turned out to be difficult in the US too.The acceleration in growth was not up to the pace we expected.And there are underlying macroeconomic uncertainties in both US and Europe.We are seeing strong growth in insurance while banking is a concern, said Frank.There are also significant issues,including regulatory,within the pharmaceutical in healthcare vertical.
Cognizant is heavily dependent on the two verticals healthcare and financial services which make up around 68% of its revenues.Healthcare was the fastest growing vertical with around 33% growth yearon-year.We want the share to become lower but we have to achieve the fine balance between rounded growth and concentrating on segments which are fast growing, said Frank,commenting on diversification within verticals.

Admin · Guru

Pranab shifts onus of proof to I-T dept

The GAAR provisions will now apply to income of financial year 2013-14 and subsequent years, he told lawmakers while initiating discussion on the Finance Bill in Lok Sabha.
Mukherjee also proposed some amendments to GAAR provisions by removing the onus of proof entirely from the taxpayer to the revenue department before any action can be initiated under GAAR.An independent member would be appointed in the GAAR approving panel to ensure objectivity and transparency and another member of the panel would be an officer of the level of joint secretary or above from the law ministry.
Experts welcomed the measures on GAAR and said they will help assure foreign investors.
The announcement and the safeguards give the requisite comfort.More importantly it ties in with the argument that GAAR provisions should be implemented with the Direct Tax Code, said Mukesh Butani,chairman BMR Advisors,a consultancy firm.TNN

Admin · Guru

PROPOSALS OF 4 DRUGMAKERS HANG FIRE
Unclear Rules Stop FDI in Pharma Cos

KHOMBA SINGH & CHAITALI CHAKRAVARTY NEW DELHI

The government has recently stopped giving permission to foreign companies and overseas investors to buy into Indian drugmakers till clear guidelines regarding foreign direct investment (FDI) in the sector are finalised.The Foreign Investment Promotion Board (FIPB),the nodal agency that approves investments in India,deferred four proposals at its March 30 meeting on the grounds that specific conditions for considering cases of brownfield foreign investment in the pharma sector were under formulation.There have been no restrictions on foreign investments in pharma for the past decade,but a series of highprofile acquisitions in the sector has prompted the government to tinker with the approval process,resulting in delays.Foreign direct investment (FDI) of 100% through the automatic route in the pharma sector was opened just a decade backand there was no tangible reason to revisit it so soon.It is unfortunate that recent policy changes,primarily based on unfounded apprehensions,are causing avoidable delays in FDI approvals, said Tapan Ray,director-general of industry body Organisation of Pharmaceutical Producers of India.The new foreign investment norms being considered include asking the buyer to give a commitment to continue manufacturing the drugs that were produced by the local company prior to the takeover.The buyer will also have to take approval before discontinuing production of any drug included in the national list of essential medicines.

Slew of Takeovers Trigger Fear

The authority to approve acquisitions of Indian companies by MNCs will shift to the competition watchdog,Competition Commission of India (CCI),from the FIPB.But industry experts said it will be several months before necessary amendments are made to empower the CCI to approve buyouts.In the past 3-4 years,there has been a series of takeovers of Indian companies by foreign drug makers,including Daiichi Sankyos acquisition of Indias largest drug company Ranbaxy Laboratories,Sanofi Aventis buyout of Shanta Biotech and Abbott Laboratories purchase of Piramal Healthcares domestic formulations business.These developments had triggered fears among health groups and Indian drugmakers that MNCs were poised to dominate the local industry and they would substantially increase the cost of medicines in the country.Some Indian drug companies demanded that the foreign investment cap in the sector be pared to 49% from 100%.While the health ministry and Department of Industrial Policy & Promotion backed local drugmakers,it was opposed by the Planning Commission and finance ministry.Following a directive from the prime minister in October 2011,a middle path was worked out.An inter-ministerial group decided that while 100% foreign direct investment in the sector would stay,acquisitions of Indian firms by overseas drug companies would be vetted by the Competition Commission of India with riders to ensure that medicines remain available in India at affordable prices.In the same meeting,the inter-ministerial group had asked the FIPB to clear mergers and acquisition proposals of foreign drug companies and investors for six months till necessary amendments were made to empower the Competition Commission of India to approve such deals.Indian Drug Manufacturers Association Secretary-General Daara Patel said the FIPB does not want to take any decisions in the interim period.The Competition Commission of India is going to approve all future cases.Why would they want to take a chance At the March 30 meeting,the FIPB deferred Mauritius-based Ambrose Pvt Ltds proposal to buy 40% stake in Sutures India for Rs 199 crore.Similarly,Spains Chemo Groups plans to buy a 100% stake in Ordain Healthcare Global for Rs 58 crore,Ankur Drugs plans to raise about Rs 40 crore from NRIs and Plethico Pharmas plans to raise Rs 490 crore by diluting 22% stake via FCCBs also did not get the go-ahead.

Admin · Guru

Jindal Steels Bolivian Ore Project on Shaky Ground

Bolivian govt encashes another bank guarantee from co for not meeting contractual terms

MEERA MOHANTY NEW DELHI

Naveen Jindal-controlled Jindal Steel & Powers ambitious Bolivian project to mine 20 billion tonnes of iron ore is at risk,after the Bolivian government encashed yet another $18-million bank guarantee from the Indian firm for not meeting contractual terms.Jindal Steel Bolivia (JSB) was billed to become the largest foreign direct investment in the Latin American nation under president Evo Morales reign.The South American nation had,in 2010,encashed a similar amount blaming the company for not meeting its commitments.JSB had sought the intervention of the International Court of Arbitration.According to sources close to the development,it could well be the end of the road for the Indian steel manufacturer in Bolivia.The writing is on the wall.It is hard to see how we can make this relationship work from here, said the person,who did not want to be identified.The Indian company has been struggling to hang on to its half of the El Mutun deposit,touted to be among the largest iron ore deposits in the world,that was to be developed into a 10-milliontonne per annum mine.Since the mine was located close to the inner border of the landlocked country,it required an expensive network of road,rail,river and port infrastructure.Despite dire statements made by senior ministers in Bolivia,including Morales who threatened to take over the mines,negotiations for subsidised gas for the pellet,steel and power plants had continued till recently.Reports quoting company officials of JSB say work has been suspended since March when it informed the government it could not go ahead with plans without a commitment of gas supply.The state-owned gas firm Yacimientos Petrolferos Fiscales Bolivianos offered 2.5 million metric cubic metres of gas per day against JSBs requirement of 4.5 mmcd required by October 2014.Last month,senior officials from the Indian steel manufacturer had told The Economic Times,that the two sides were discussing the possibility of scaling down plans to adjust to the reduced gas supply.But developments over the last few days have taken a nasty turn,with yet another annual bank guarantee being executed,and both sides issuing ultimatums.Jindal Steel had won 40-year rights to the iron ore deposit in 2007.As per its contract with Bolivia,JSB was to invest $600 million by 2012.Increased resource nationalism may not have a big impact on India,say industry experts.With the exception of Jindals buy,whose terms are not really in the public domain,Indian companies have stayed away.The cost of developing infrastructure is very high.And the distance from India,makes it difficult to raise finances for a pure market play (without captive purpose) investment.But the primary reason is the opportunities opening up nearer home in the east board of Africa and Australia,where many junior explorers have come to the fore and states such as Queensland and Victoria are also offering new opportunities.