Network18 profitably divests Yellow Pages and AskMe biz

The Network18 Group announced that it has entered into an agreement to profitably divest its premier local search businesses - Infomedia Yellow Pages and AskMe. This is in line with its stated objective of divesting stakes in non-core assets to create value for the shareholders of Network18 Media & Investments Limited (Network18) and allow infusion of growth capital in these assets to propel them to the next stage.

Network18 is divesting the business to GETIT Infoservices Private Limited (GETIT) - India's leading digital marketing company offering a platform for Local Search, Classifieds, Micro Communities, Deals, etc. The combined operations of GETIT will be referred to as "Getit Infomedia" and will be wholly owned by shareholders of Getit.

Announcing the transaction, Raghav Bahl, Managing Director, Network18 said that, "The divestiture of Infomedia Yellow Pages and Askme, India's leading local search businesses is a reflection of our commitment to profitably monetize non-core assets for the benefit of our shareholders and to also facilitate the growth of these businesses to the next level. We would like to convey our best wishes to the team as they embark on the next phase of their journey."

Commenting on the deal, B Sai Kumar, Group CEO, said, "We take pride and pleasure in having been a part of the Infomedia Yellow Pages and Askme businesses. We are delighted with this development and believe that the new operations will be a powerful solution provider for the SME space in India. We would like to wish the team the very best as they continue to excel in their endeavours."

The divestment of Yellow Pages and AskMe Businesses forms a part of a series of asset monetization transactions by Network18. The divestment is subject to shareholders' approval. Earlier during the current financial year, Network18 had partially diluted its stake in India's premier Digital Commerce asset Bookmyshow.com.  It had also recently divested its entire stake in Newsire18.

(Note: Web18, which owns Moneycontrol.com and Indiaearnings.com, belongs to the Network 18 Group)

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Budget 2013-14: Does not make sense to levy estate duty, says KPMG

Wed, Feb 27, 2013 at 23:37

With the Union Budget just a couple of hours away, expectations are running sky high from what finance minister P Chidambaram might announce to boost the sagging economy.

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Budget 2013-14: Does not make sense to levy estate duty, says KPMG

With the Union Budget just a couple of hours away, expectations are running sky high from what finance minister P Chidambaram might announce to boost the sagging economy.

Like this story, share it with millions of investors on M3

Budget 2013-14: Does not make sense to levy estate duty, says KPMG

With the Union Budget just a couple of hours away, expectations are running sky high from what finance minister P Chidambaram might announce to boost the sagging economy.

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To download current article in Word format, click here.

With the Union Budget just a couple of hours away, expectations are running sky high from what finance minister P Chidambaram might announce to boost the sagging economy.

 

In an interview to moneycontol.com, Hiten Kotak, co head, tax, KPMG India spoke about his expectations from the document.

 

Watch video for more details

 

 

To download current article in Word format, click here.

highlights

• Economic slowdown a wake-up call for stepping up reforms
• Future shift in RBI policy stance would be desirable.
• Tight RBI policy led to sharper-than-expected slowdown
• April-December data shows 5.3% fiscal gap aim 'achievable'.

more »

flashes

• Economic Survey in favour of widening tax base and prioritising expenditure
• WPI inflation may decline to 6.2-6.6% in March
• Indian economy likely to grow at 6.1-6.7% in FY14
• FY13 GDP growth seen at 5%

more »

InterpretationS

• Railway minister has done a commendable job in meeting competing demands of improving services and controlling expenditure: PM
• It is a reformist and forward- looking Budget: PM
• If you look at the overall Budget, it was relatively muted and there was nothing exciting and no steps were taken, which would make the market happy: ICICI Direct
• There is no major capex from the civil construction on the freight corridor, though some investments are coming on the metro side: KEC International

more »

SECTOR IMPACT

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• Cement - Major
• Infrastructure - General
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• Power - Generation/Distribution

EXPECTATIONS

expectation on: Markets

Anup Bagchi

MD & CEO | ICICI Securities

expectation on: Markets

Arindam Ghosh

MD & CEO | Blackridge Capital

expectation on: People

Saurabh Mukherjea

Head of Equities | Ambit Capital

expectation on: Markets

Ridham Desai

MD and Head Of India Research | Morgan Stanley

expectation on: Markets

Ashok Wadhwa

Group CEO | Ambit Holdings

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Won't have direct impact of rail freight hike: Coal India

After the Railway Minister PK Bansal hiked rail freight fares in the Railway Budget 2013-14 today, S Narsing Rao, chairman and managing director, Coal India doesn't see the hike having any direct impact on the company. Rao says it is the power generating stations that would be affected considering they depend on railways as a source of transportation.

On the Railway Budget announced today, Rao is doubtful if anything the Railway Minister announced today will help the company at all.

Below is the edited transcript of Rao's interview to CNBC-TV18.

Q: What impact will the freight rate announcement in Budget today have on Coal India?

A: It would not have direct impact on Coal India because the rail freight is entirely passed through to the consumer. So, basically power generating stations who are depending on the rail as a source of transportation would be affected.

Q: Will you miss your production target for this year due to the lack of railway connectivity? Is that going to be a huge issue?

A: No. However, once the Mand-Raigarh rail links are done, then there will certainly be improvement, but that is one of those three railway lines what the minister has announced today.

Q: Are you satisfied with the Railway Budget that was announced today? And will Coal India be on track for coal production for the 12th plan target is concerned?

A: I wonder if this particular project and whatever the minister has announced would come to our rescue in the 12th plan at all. I have serious doubts about that because it is a line and it takes time.

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SBI may issue loan recall notice to Kingfisher soon

State Bank of India ( SBI ), the largest lender to Kingfisher 's said that a loan recall notice is likely to be issued to Kingfisher Airlines in a month time. SBI, the country's largest bank, has so far extended credit to the tune of Rs 1,700 crore to the ailing airlines.

Speaking on the sideline, Krishna Kumar, MD, SBI said to CNBC-TV18, exclusively that lenders to Kingfisher have formed a sub-committee and are seeking legal opinion over recalling loans. Once recall notices are sent action will be taken on assets pledged.

 

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Auction needs relook, reserve price too high: Harish Salve

The government's 2G auction plans got a blow as there are no takers for the 900 megahertz GSM spectrum in the upcoming auctions in March. Vodafone, Bharti Airtel and Idea Cellular have decided not to participate.

This comes after the Delhi High Court earlier in the day refused to grant a stay on the 900 mhz auctions based on the pleas of Vodafone and Bharti Airtel. 

Harish Salve, senior advocate, Supreme Court said he is not surprised by the companies deciding not to bid in the GSM auction. He believes the whole auction process needs a relook.

In an interview to CNBC-TV18 he said, the government needs to debate the auction issue in the parliament.

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

Q:  We saw a doomed auction from the start that is the previous one. We saw the telecom Empowered Group of Ministers (EGoM) go back to the drawing board, revise the price downwards. Then announce a roadmap for future auctions. We have seen this matter being taken to court and back and now you are at a situation once again with the GSM operators say the price is too high, we are not going to participate in the next round of auctions, what do you make of this?

A: I am hardly surprised that this has happened because this is an accident which has been waiting to happen. It is complete lack of clarity in way in which the government has functioned. It is the overall feeling of gloom, I don't know where the whole telecom sector is going, and nobody knows where the Indian economy is going. With 4G at everybody's heels nobody knows what the business model is going to be.

At a time like this the government should be courageous enough to come and tell the court that this whole telecom business needs a relook and auctioning it, is just not going to make sense.

Q: In the current atmosphere, do you think the court is going to buy the governments argument?

A: If they come out with the whole truth, if they candidly admit that firstly, they have given free spectrum to a lot of companies, they have given tons of spectrum without charging. They brought in the new ones, they did not want to touch the established players and then they did not defend their case.
The new set of licenses are not even defended by the government. They argued for 30 minutes.

I told them make a law and put the whole thing in perspective. The court said the cabinet's mandate was to auction. However, higher than the cabinet's mandate is parliament's mandate. So it should be taken to the parliament, debated and a law made. That is what they have to do and not this way by saying we are going to the court. The court is now increasingly getting a feeling that somebody is just trying to pip the court.

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2G: Witness identifies Anil's sign on docs linked to AAA

In the latest development in connection with the 2G spectrum allocation case, a Central Bureau of Investigation (CBI) witness has identified the signature of Reliance ADAG chairman Anil Ambani on some documents.

The CBI witness identified the signature of Anil Ambani on documents attached to the account opening form of AAA consultancy firm, which is said to be a front company for Reliance ADAG.

The investigating agency, in its chargesheet, had alleged that AAA Consultancy Services Company used Swan Telecom as a front company to get illegal licences.

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Need larger banks, consolidation greater need: Parekh

Welcoming RBI's guidelines for grant of new bank licences, eminent banker Deepak Parekh has said consolidation is a greater need for the Indian banking space to create some large banks of global size and scale.

"I think that the RBI (Reserve Bank of India) guidelines for grant of new licences are well thought-through and it seems that a lot of thinking has gone into it," Parekh told PTI.

However, a greater need of the hour in the Indian banking space is banks of large size and scale to match their international peers and consolidate their positions on the global league tables, Parekh said in a telephonic interview.

A veteran banker and well-respected industry leader, Parekh is Chairman of financial services giant HDFC Ltd whose group companies include leading private sector lender HDFC Bank.

When asked whether he feels that Indian banking sector needs more players, Parekh, however, said a greater need of the hour is banks with much larger size and scale.

"I have always said that we need consolidation, rather than more players in the Indian banking sector. "The need today is for more consolidation than the new banks, because what we require is large-scale banks," he said.

Asked if Indian banks need to match the size and scale of their international peers and consolidate their positions on global league tables, Parekh replied in affirmative and said: "We need scale for that and we would need consolidation to get the scale."

Parekh also said the Indian banking sector needs to address the issue of huge unbanked population in rural areas. "We need to have much more rural branches today, although it will be very difficult for new banks to have 25 per cent] rural branches. It is a very tough call.

"Still the guidelines are very well thought-through for a comprehensive, pretty fair and transparent process to grant new licenses," he said.

Parekh further said RBI in its final guidelines for new banking licences has taken care of all critical issues such as capital adequacy, foreign holding and rural branches.

"They have not excluded anyone outrightly and now it is their (RBI's) prerogative that how many licences they want to give," Parekh said.

Earlier, there were apprehensions that RBI might not allow companies with exposure to certain high-risk sectors like brokerage and real estate to seek banking licenses, while there were also voices of opposition against large business] houses being allowed to set up banks.

However, the final guideline does not exclude any aspirants on the basis of their business interests and rather focusses on 'fit and proper' criteria for grant of licences.

RBI has said the applicants should have a past record of sound credentials, integrity and financial strength with a successful track record of 10 years. RBI has fixed a minimum equity capital level of Rs 500 crore for the banking license aspirants, while capping the foreign holding in the first five years to 49 per cent and mandating 25 per cent of branches in rural area.

The RBI's decision to open up the sector for new players has been widely welcomed by the aspirants as well as independent experts and industry leaders.

"The new RBI Guidelines on the banking licenses have opened the doors to next-generation banks. The move not to bar any sector and tough Group exposure norms are steps in the right direction," said S Ravi, an eminent chartered accountant and independent director on various public companies.

"This will envisage the existing banks towards better performance which augurs well for the customers. RBI's emphasis on the track record of the promoters will go a long

way in establishing a stable and safe banking companies," he said.

At the end of last fiscal, India had a total of 173 commercial banks, which included 169 scheduled commercial banks and four non-scheduled commercial banks. Excluding the regional rural banks, there were 87 scheduled commercial banks in the country as on March 31, 2012. This included including about 27 from the public sector and 20 the domestic private sector banks.

As on March 31, 2012, a total of 41 foreign banks operating in India, while another 46 overseas banks had their respective representative offices in the country. In comparison, on lay 23 Indian banks had any overseas presence at the end of last fiscal.

Also, none of the Indian banks figure among even the top-50 banks globally in terms of either valuation or size, measured by equity and reserves.

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MFIs may challenge HC ruling; see 40% growth in FY'13

The Microfinance Institutions Network (MFIN) has hinted at challenging the recent Andhra High Court order upholding the legality of the Andhra MFI Act in the Supreme Court, a top official of the umbrella body that has over 40 microlenders as members, has said.

The MFIN is also expecting the industry to log in a healthy 40 percent growth this fiscal, after the last year's drought when the industry de-grew by a whopping 24-25 per cent.

"Challenging the Andhra Pradesh High Court order which upheld the constitutional validity of the Andhra MFI Act, at the Supreme Court is under our active consideration," MFIN chief executive Alok Prasad told PTI over the weekend.

He added that nothing, however, has been finalised in this regard in view of the belief that the Budget session will pass the Microfinance Bill and the same will come into force by the middle of the next fiscal.

The Microfinance Institutions (Development and Regulation) Bill, which is with the Parliamentary standing panel, is expected to cover all MFIs, including the smaller ones.

The Central Bill also proposes to take MFIs outside the purview of state-level legislation such as the Andhra law, and treats MFIs as an extended arm of banks, besides according regulatory powers over them to the RBI.

The Bill also seeks to allow MFIs to collect small amounts of deposits.

On February 11, a division bench of Andhra Pradesh High Court disposed of a petition that sought to declare the Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Act 2010 as illegal and unconstitutional.

However, the Court suggested that the AP government review its Act as a new Bill related to Microfinance sector is currently pending in Parliament.

The microlenders challenged two years ago the AP law that had barred them from lending to a borrower second time without prior approval from government.

On the court verdict, Prasad further said, "despite the fact that the court did not agree with our view, it has clearly recognised the Reserve Bank as the sole regulator of the sector, which is a very good development."

He also hoped that following this verdict, the AP administration, which has been alleged to have framed the law to protect its own business interests as it is also running a microfinance business through the women's self-help groups across the state, takes a constructive view towards the industry.

On the growth front, Prasad, said he "expects the industry to post a healthy 40 per cent growth this fiscal as bank funding has returned to the sector, after degrowing around 25 per cent last fiscal." .

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ZipDial connects clients with customers through missed call

Marketers are in the business of wooing customer loyalty, but very often what may seem like a winning marketing idea fails, because of the sheer complexity of the reward loyalty program.

Set up in 2010, ZipDial essentially addresses this problem. ZipDial was started by three graduates from Indian Institutes of Management (IIM), Indian Institutes of Technology (IIT) and Stanford University in 2010 Valerie Wagoner, Sanjay Swamy and Amiya Pathak. They have developed a powerful and innovative suite of marketing solutions based on the simplicity of dialling a toll free number.

ZipDial helps brands connect with customers through a missed call. The client has given a toll free number that consumers can dial into, but instead of having to wait endlessly to connect with a call center executive or punching multiple options the call rings once and disconnects and then the consumer receives an SMS with more information on the marketing campaign.

ZipDial's clients leverage these number for sending promotional messages or information. Services include mobile number verification for e-commerce ventures, mobile banking polls and customer feedback surveys.

"We came up with the idea for ZipDial in a late night brainstorm as entrepreneurs do. By the time we came up with about 300 different applications we said, okay, now it is time to put a business around this.At the time I contacted a couple of smaller businesses who I thought might be interested in using such a service and literally in the first conversation they were trying to hand me cash over the table for their first month subscription because they were so excited about the service," says Valerie Wagoner.

Between 2010 and now ZipDial has been steadily adding clients. Today its mobile engagement and analytics platforms is used by companies like Procter & Gamble (P&G), Hindustan Unilever (HUL), Cadbury, Disney, MakeMyTrip, Ola Cabs, Snapdeal, Puma, Amnesty International and a lot more. Businesses pay annual or biannual subscription plus usage fee based on success. Valarie claims that compared to Facebook, ZipDial drives between 2-5 times more engagements across all customers and in a time period that is at least twice as fast.

"Cafe Coffee Day is an example of a retail customer that we work with. They have done campaigns where they are promoting a coupon opportunity and users ZipDial to earn coupons and those are then redeemed when the person walks into the Cafe Coffee Day outlet. We have also looped in a feedback survey where consumers can rate their experience at Cafe Coffee Day by Zip Dialling for happy or unhappy," Wagoner says.

In April 2011 the venture raised Rs 3.6 crore in funding laid by Mumbai Angels. This maiden brand also saw participation from Blume Ventures and the partners at AngelPrime. In December 2012 Silicon Valley based incubator cum seed fund 500 startups invested another Rs 2.5 crore. The funds were used to scale up and get the wheels turning on international expansion plan. Times Internet is the latest investor in the venture.

"The ZipDial has created engagement for 100 percent of consumers. So compared to something like QR codes which is limited to smart phone users or even SMS which fewer than half of Indian mobile phone owners like to send or know how to send. Zip Dialling is a 100 percent accessible interaction. So we see fantastic results like makemytrip.com increasing their feedback responses from less than 0.5 percent to more than 10 percent," Wagoner says

With revenues of Rs 5.5 crore in just first year of operations Wagoner and team at ZipDial seemed to be dancing all the way to the bank. Wagoner is now looking to leverage ZipDial's relationship with its global brands to expand across countries in Asia and Africa. Not only is ZipDial creating value for large brands but it is also helping Small and Medium Enterprises (SME) use mobile engagement and analytics for a starting package of Rs 1,000 a month. Wagoner claims this important segment will continue to scale up in India.

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SAIL to invest Rs 72,000 crore: CS Verma

State-run steel maker SAIL would invest Rs 72,000 crore to increase its overall capacity from 13.82 million tonnes to 23.46 million tonnes and enhance its iron ore production, company Chairman C S Verma said here today.

"A sum of Rs 72,000 crore is being invested to increase the overall capacity from 13.82 million tonnes to 23.46 million tonnes and we have already placed orders worth Rs 58,000 crore till January last," he said.

Out of Rs 72,000 crore, Rs 10,284 crore would be used for development of SAIL mines under Raw Material Division (RMD) to increase the production of iron ore. The RMD, which runs seven captive iron-more mines at Kiriburu, Meghahatuburu, Gua and Chiria in Jharkhand, and Bolani, Barsua and Kalta in Odisha, is working on the modernisation and capacity expansion of mines in the Eastern part of the country, Verma said. SAIL will invest Rs 10,284 crore for development of mines under RMD as well as Bhillai to cater to its increased iron-ore requirements, he said.

Of the total investment, he said, SAIL will pump in Rs 940 crore to increase the capacity of Kiriburu mines from 4.25 million tonnes per annum to 5.50 million tonnes per annum. Another Rs 900 crore will be invested on adjoining Meghahatuburu mines in West Singhbhum district of Jharkhand to increase capacity from 3 million tonnes per annum (MTPA) to 6.50 million tonnes per annum. Rs 1091 crore will be invested for enhancing the capacity of the Bolani Mines from 4 MTPA to 10 MTPA.

He said jobs for most of the packages of these projects have already been awarded and are likely to be completed by 2013-14. Besides, the mining in Gua Mines in West Singhbhum district, which remained closed since 2011, is likely to resume soon, Verma said. Gua Mine will be developed up to 10 MTPA capacity along with installation of beneficiation and pelletisation facilities with an investment of Rs 3,000 crore, Verma said after visiting Kiriburu and Meghahatuburu mine for the first time.

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Licence norms transparent about what RBI wants: AB Grp

Ajay Srinivasan, CEO, Financial Services, Aditya Birla Group feels that Reserve Bank of India is very transparent in terms of what their expectation were. It was after the RBI, issued the final guidelines for licensing of new private sector banks.

He supported RBI and said that from the beginning made it thsi clear that it was around financial inclusion .

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

Q: On the plain reading of the guidelines put out by the Reserve Bank, are you in the race or out?

A: I think the guideline is actually a broad range of people to apply. It is not applying too many filters at the initial stage other than some broad criteria. So yes, at this point in time it looks like someone like us would be eligible to apply.

Q: In terms of the eligibility criteria and the obligations that the Reserve Bank will impose if you were to get a bank license do you believe that the obligations are too many or are they fair and it gives you a level playing field?

A: I think that's the way the guidelines are. They are very transparent in terms of what their expectations are. They have said from the beginning that this is really around financial inclusion.

I think, like it was mentioned just now, the RBI does believe that one wants widely held banks. They believe depositor interest is more important than just the shareholder interest. So, it is consistent with their thinking. It is consistent with what they have been talking about in the guidelines. If one wants to apply, the n they have to apply under those conditions.

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Arch rivals Infosys, TCS to work together on govt contract

It's the clash of the titans. Last year, India's top two IT companies , TCS and Infosys came face to face for a government IT contract. MCA 21, which was finally bagged by Infosys, but in a dramatic turn of events this year, all's not well with the project. It is prompting Infosys to go on the defensive side, reports CNBC-TV18's Kritika Saxena.

Undercurrents of rivalry between Infosys and TCS have never been a big secret, but the face-off has now reached another level. It was a sixand a half year IT contract to develop and maintain MCA 21. A portal launched by the ministry of corporate affairs in 2006, which is the main platform for cos to submit documents and filings to the Registrar of Companies.

TCS was handling this contract since 2006, but the contract was given to Infosys after TCS's contract expired in December 2012. Around January, TCS completed the official handover to Infosys, but the site ran into severe technical glitches post the handover. This created a panic situation at MCA prompting the ministry to bring in TCS as an external consultant for the contract. This essentially means that TCS will have to work with Infosys in sorting out the issue.

The ministry has jumped in to ensure corporate using the portal face minimum inconvenience. Sachin Pilot, Corporate Affairs Minister said, "Issues were caused due to transition. The website is now almost back to normal. If cos loses time, no extra money will be charged."

However, Infosys has been quick to retort with a statement, rubbishing allegations of negligence at its end.

Till date Infosys has made no significant changes to the system, which continues to run in the old environment. That is managed by the incumbent vendor, Tata Communications. Infosys gave a statement that any reports that imply that the instability in the MCA 21 applications is on account of their negligence are misguided.

V Balakrishan, Head, Infosys BPO, Bangalore said,  "This is a complex project, whenever there is a transition happens one will see some challenges. I think it's a great project and we are working with the ministry closely to address all the challenges".

Even though Infosys's statement has raised eye brows, TCS however remains tight lipped. As per policy, it did not officially comment on the contract.

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Healthcare biz to spend Rs 5,700 cr on IT in 2013: Gartner

Healthcare services providers in India are expected to spend Rs 5,700 crore on IT products and services in 2013, recording a growth of 7 percent over 2012, research firm Gartner said on Thursday.

Healthcare services providers, such as hospitals, hospital systems, ambulatory service and physicians' practices, had spent Rs 5,300 crore on internal IT, hardware, software, external IT services and telecommunications in 2012, Gartner said in a statement.

Telecommunications, which includes telecommunications and networking equipment and services, is expected to remain the largest overall spending category. It is expected to grow 3.9 percent in 2013 to reach Rs 1,720 crore in 2013, up from Rs 1,660 crore in 2012. Internal services, which refer to salaries and benefits paid to the information services staff of an organisation, is expected to grow 18 percent in 2013.

IT services are forecast to grow 9.7 per cent to reach Rs 1,450 crore in 2013, up from Rs 1,320 crore in 2012, led by growth in process management and consulting.

"Rising demand from the growing middle class in India's large cities is fueling growth in private sector healthcare. Large national and state government programs will spur growth along the primary (and secondary) care sector and public health domain," Gartner research director Anurag Gupta said.

Hospital information systems, picture archiving and communications systems, electronic health records and mobile technologies will be high on the agenda, he added. Health insurance growth will also catalyse technology adoption in healthcare provider segments, Gartner said.

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National Australian Bank opens shop to tap India trade boom

Australian banks are flocking to set up shop in India. The latest is the National Australian Bank which opened its branch in the country to capitalise on the rising trade flows between both countries.

"The two-way flow of trade in goods and services between India and Australia in 2005-06 was roughly or slightly more than USD 10 billion. In 2010-2011, it doubled or more than doubled to USD 21 billion. At senior levels of both governments, there is a very strong desire to double the trade in two years," Spiro Pappas, CEO - Asia, National Australia Bank told CNBC-TV18.

"In particular, our focus is on sectors that are strategically important for India and more broadly, Asia. These include sectors focused on food, energy and resources security."

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Betting on partners, expertise govt support: Air Asia

AirAsia, CEO, Tony Fernandes explains to CNBC-TV18 that the he plans to start operations with 3-4 planes and will scale up as per market needs. "We have plenty of aircraft deployed in the market and not deterred by Indian regulatory climate, the high ATF rates and airport charges in India. A progressive government keen on a growing economy is key and we will operate differently from other airlines in India."

Also Read: AirAsia's India foray good news; see more competition: KPMG

Fernandes hopes to get all clearances and is confident the government will move as quickly as it can while refraining to comment on the timeline for clearances.

"We have got two illustrious partners and it too early to say what role Ratan Tata will play in the joint venture. I have a lot to learn from Ratan Tata and would love him to play whatever role he can in the JV."

Indian parties will play major role in running the airline and board representation will be proportional to investment. "We hope to start operations with USD 30-50 million and the big opportunity for us would be to devise a cost structure that will stimulate market.We are here to create a new market and address new routes."

Though the airport charges in some airports were very high, Fernandes asserts that the Indian aviation market is not all gloom and doom.

Below is the edited transcript of the interview on CNBC-TV18

Q: Why did you decide to go the start-up route? There are low-cost carriers in India like SpiceJet who are waiting for foreign carriers to invest in them.

A: Our philosophy has always been to build organically, create a culture organically and most importantly, establishing a unique cost structure. Right now I don't think any Indian airline has the right cost structure to really create the right fares to stimulate the market. That's why we took this route.

Q: And why the decision to tie-up with the Tatas and Arun Bhatia? When Ratan Tata stepped down he said that the Tatas have no plans for the aviation business as he felt it this destroyer of wealth and capital. How did you manage to convince the Tatas to get on board in a foray into aviation business?

A: Firstly, our effort in getting two Rolls Royce partners is a fantastic start for the joint venture. How did I persuade the Tatas? I think we won them over with our model which explained our plan try and create new demand in India and build new routes. The fact that we have been successfully doing it for 11 years in other parts of Asia, also helped I think.

Q: What is Ratan Tata's role in this joint venture? The Tatas announced that they will be  minority investors and will not be involved with operations or running of the airline in anyway and will only have two nominees on the board.
 
A: These are early days and the JV hasn't really formed at all. We would love to have him play whatever role he would like as he has got a tremendous experience. Add to this that he is a pilot and knows the aviation industry very well. So there is much I can learn from him. But it is early days to exactly say what role he will play.

Q: The JV will be three-way partnership between you, Arun Bhatia and the Tatas. You have also applied to the FIPB for clearance with the aviation minister having welcomed your decision. But have you held any discussions with regulators and government officials regarding the clearance?

A: We didn't march in blindly. Only after holding discussions and examining if the environment was suitable for us did we decide to enter the Indian market. But we will have to wait for necessary approvals from the government regulators.

Q: In terms of ownership, this will be a venture that will be majority-owned by Indians but if AirAsia is going to manage the operations, the question of foreign control is going to be looked at very closely by Indian regulators. How do you intend to convince the authorities concerned that control will rest with the Indian board or ownership?

A: We have two very successful families and companies in the Indian corporate scene who are very proactive. From an operational point of view, in the Tatas' joint venture with Starbucks, it makes a lot of sense for Starbucks to run some of the operational bits. But in terms of finance control and all the key board decisions, the Tatas' will play a major role. That is how we conduct  all our joint ventures.

Q: Can you give us details about the representation and constitution of the board? The Tatas are to have two members on the board but how many members will the Bhatia family and AirAsia have on the board?

A: I don't know. It will be in order of the shareholding of the investment being putting together.

Q: So what kind of investments are we talking about initially? How quickly do you believe you will be able to get started as and when you do get the requisite approvals from the government?

A: We will be able to start fairly quickly as soon as we get approvals. The required capital to generally start an airline with will be USD 30-50 million and in India it would be no different.

Q: I understand that your hub will be at Chennai. Will the airline run on a low-cost model and mirror what Air Asia's global model? How you intend to structure operations, what are the routes you are looking at and what is your big opportunity in India?

A: The big opportunity is the population of 1 billion people, the routes that have been hitherto ignored, and devising a cost structure to stimulate the market. Why Chennai? Because that's the region where we fly regularly and we know the South Indian market well because we have operating there for a number of years.

Q: What will be the size of the fleet?

A: It is early days at the moment. We will generally start with three or four planes and scale up depending on how successful we become and the manner in which the market takes to us. We have 300 aircraft on order so we have plenty of aircraft to deploy into the market. But we will take it step-by-step.

Q: What is going to be the strategy in terms of the routes that you intend to focus?

A: I am not going to declare that so soon. Let's give it a bit of time. We are here to create a new market. We see tremendous opportunity and lots of routes that have never been flown before which is AirAsia's mainstay. If you look at our network right now, 50 percent of the routes that we fly are new routes.

Q: Are you not perturbed by the Indian regulatory climate, extremely high prices of aviation turbine fuel (ATF) and exorbitant airport charges?

A: No. We have been in the aviation business for 11 years. People laughed when we started in Malaysia and said that it will be very hard to make money. The key to India is its population of a billion people and a progressive government looking at ways to stimulate the economy. Impediments like high ATF prices have been placed on the table and will be discussed.

Regarding airport charges, I would agree that the charges at some airports are high. But I think that even private airport operators are looking for partners and low-cost terminals. There are also plenty of secondary airports in India that are under-utilised and plenty of old airports that may be available in years to come. So, I am not so worried.

Certainly, we will not be able to fly to some airports because I don't think it makes sense in the same way we would never fly to some very expensive airports in Asia as well. So, there is plenty of scope. We are going to do it very differently from many of the other airlines that have operated in India. And that is where we see the sweet spot.

There is a market in India- it is not all doom and gloom. There are a million people using the train every day. I was told that it takes some 40 hours to go from New Delhi to Chennai and was shocked to hear the airfare that people are ready to pay on the New Delhi-Chennai route. And I think that was right in middle of the sweet spot we are looking at. We are trying to create a market and create new people to fly.

Q: The aviation minister said he hoped to expedite clearances, but what's your own sense of how quickly you will perhaps be able to get past the regulatory approvals that you require?

A: Really, that's not something I can comment on. But I have to say as I mentioned earlier, I found the Indian government very supportive, very proactive in trying to get business done. So, I am sure that they will move it as quick as they can and we are ready as soon as they give the necessary approvals.

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Indian employees to see 10% salary hike in 2013: Aon Hewitt

Indian employees are likely to fetch an average salary hike of just 10.3 percent this year, as industries have been impacted by the country's poor economic scenario, says HR consultancy firm Aon Hewitt. This will be the lowest in a decade barring the sub-prime crisis year of 2008.

Sandeep Chaudhury, practice leader, Aon Hewitt told CNBC-TV18 that if one looks at the real performance of corporate India over the last 12 months, even 10.3 percent salary hike is an optimistic estimation.

Below is the verbatim transcript of Sandeep Chaudhury's interview on CNBC-TV18.

Q: According to you the average salary hike for 2013 will be 10.3 percent and growth is likely to come in for the economy and for the gross domestic product (GDP) at about 5 percent, isn't 10.3 percent then a tad optimistic?

A: Yes absolutely. If you just look at the real performance that the corporate India has been able to generate over the last 12 months, even 10.3 percent could be a liberal way to look at salaries for 2013. I think organisations are taking a bit of a long-term view of how they want to invest in talent. We have seen a bit of a discerning point of view even when the wage distribution is coming very high, when it comes down to how different sectors are looking at it.

Also Read: EU seeks deal on fixed-salary cap for bankers' bonuses

Q: Speaking of sectoral performance like auto where the performance this year has been particularly bad across the board for both passenger cars as well as the two wheeler business and the commercial vehicle (CV) business, the salary hike is above the average at 11. 2 percent. Haven't we seen a fair amount of volatility in the numbers even as far as banking and financial services are concerned, technology is concerned?

A: If we just look at the auto industry, salary increase is currently sitting at a projection of 11 percent for the year 2013. It is down by 2 percent from the data that we collected in the middle of 2012. They have essentially revised looking at a bit of a weak indication in terms of how the units per sales would improve in the year 2013. For the manufacturing and the industrial sector salary is still not a very high pressure point because they sit at a single percent as a percent of the overall revenues in the operating expenses.

If you look at the same logic played out with banking and financial services, that section in particular and it is just a too wide a sector. Insurance looks at their salary increases a little better than the larger part of the investment banking and the asset management community and the retail and the corporate just doing marginally better than that. So, even 8 percent of financial services could look at a variance anywhere between 3 to and 8 depending on which sector or financial services we are looking at.

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Don't take coercive action against Bharti cos: TDSAT to DoT

TDSAT has directed the government not to take any coercive action against two Bharti group firms, Bharti Airtel and Bharti Hexacom, in a dispute over licence fees pending further hearing in the matter.

The Department of Telecommunications (DoT) had raised demands in November last year pertaining to special audit for the financial year 2006-2007 and 2007-2008.

It also raised demands after licence fee assessment for 2006-2007 and revised licence fee assessment for 2006-2007 and 2007-2008.

This was challenged by the Bharti group firms before TDSAT requesting to set aside the demands and also to restrain the DoT from taking any coercive action against them till the final disposal of this petition.

The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) had observed that Bharti Airtel already challenged the same in the Kerala High Court on the question of validity of terms and conditions of the licence agreement.

Moreover, Bharti Hexacom has also got a stay from Guwahati High Court on the issue of the demand raised. The tribunal said: "It is seen that the demands raised by the Respondent (DoT) have been covered by the said interim orders issued by the High Court. Therefore, I am of the opinion that there is no need to issue any order by this
Tribunal".

"Regarding the demand of licence fee assessment for the year 2006-2007 raised on January 30, 2013, it is on similar grounds as in other demands. It is noticed that large number of petitions have been filed in this Tribunal which are on the Board for final hearing, wherein the similar demands have been raised and the final finding is to be given by this Tribunal.

The demands raised by the DoT in all these petitions have been stayed by this Tribunal.
"Therefore, keeping in view the order of Guwahati High Court and this Tribunal in various other petitions, it is directed that pending hearing in these petitions the Respondent (DoT) will not take any coercive action against the Petitioner (Airtel and Hexacom)," said TDSAT in its order passed on February 18, 2013.

The tribunal has asked government to file its reply within four weeks. It also gave two weeks time to the Bharti group firms to file their rejoinders and directed that the
matter be listed on March 18 for further directions.

Meanwhile, TDSAT, which has been headless for sometime, yesterday became even member-less as the lone serving member P K Rastogi has retired, a development that makes the tribunal unable to preside matters filed by telecom and broadcasting firms for now.

TDSAT had already been functioning without a head since November, 2012 after its Chairman Justice S B Sinha retired.

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UK's Balfour Beatty keen on developing business in India

UK-based leading infrastructure Group Balfour Beatty today said it is keen on developing its business in India and is looking at participating in the feasibility study of the proposed Mumbai-Bangalore industrial corridor.

"We are keen to develop our business in India and sort of things we do in infrastructure. We will certainly give some inputs into the feasibility study of the proposed Mumbai- Bangalore industrial corridor," Balfour Beatty Chief Executive Ian P Tyler told PTI here.

Prime Minister Manmohan Singh, while addressing a joint press conference with his British counterpart David Cameron, today said officials have been asked to explore UK's participation in a possible industrial corridor in the Mumbai-Bangalore sector. Cameron is heading a biggest-ever business delegation to India.

"The UK and India are keen to support that initiative. So, the UK industry can apply directly in terms of how we can assist in building infrastructure development," Tyler said. Tyler also said the company is developing its business in India and is "looking to play a more significant role with Tata projects to start looking at areas we might operate." On its proposed investments in projects here, he said, "We will invest what we need to invest to see business develops right."

He added that the Indian market is huge and there are lot opportunities. The Group's subsidiary Balfour Beatty India has already inked a pact with Tata Group's infrastructure arm Tata Projects (TPL) to collaborate on emerging opportunities in India and sub-Saharan Africa with initial focus on power generation, transmission, railways, mining, and water and waste water segments.

TPL is one of the reputed construction firms and is executing engineering, procurement and construction of some of the largest coal-based power plants, blast furnaces, among others, in the country.

Balfour Beatty, a world-class infrastructure group with capabilities in professional services, construction services, works in the UK, continental Europe, the US, South-East Asia, Australia and the Middle East.

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FinMin to appoint 9 new CMDs for PSU banks, 10 shortlisted

Saikat Das
moneycontrol.com

The ministry of finance is set to fill up vacancies for the top job of nine individual state-owned lenders in 2013-14. It interviewed 18 executive directors of different banks on February 11. A batch of around 10 bankers has been shortlisted, sources in the banking industry told moneycontrol.com.

"Currently, the shortlist is put up to the Reserve Bank of India. The regulator will go through the past records of those bankers and would put its seal. Thereafter, it the ministry will finalise it in due processes," a source with the direct knowledge of the development said.

Those shortlisted executive directors (EDs) included Rajeev Rishi - Indian Bank , C V Rajendran - Bank of Maharashtra , Rakesh Sethi - Punjab National Bank , Amar Lal Daultani - Corporation Bank , M S Raghavan - Bank of India , V Kannan - Oriental Bank of Commerce , Arun Tiwari - Allahabad Bank , S K Jain - Bank of Baroda , B K Batra (deputy managing director) - IDBI Bank and N K Maini (DMD) - SIDBI. All of them had resumed their banking services in between 1976-1979.

In the recent time, public sector banks are grappling with the staff shortage be it at the management level or at the branch level. According to media a report, PSU banks are planning to hire around 56,500 people in next six months across junior to middle management levels.

In 2013-14, the existing CMDs (Chairman cum Managing Directors) from nine banks are going to retire. They are Ajai Kumar - Corporation Bank, Shubhalakshmi Panse - Allahabad Bank , D. Sarkar - Union Bank of India , M V Tanksale - Central Bank of India , MG Sanghvi - Syndicate Bank , R M Malla - IDBI Bank, Narendra Singh - Bank of Maharashtra, Devinder Pal Singh - Punjab & Sindh Bank and B A Prabhakar - Andhra Bank .

A senior official who is dealing with those appointments at the ministry of finance (banking operations) could not be reached for his comments on this. However, another official briefly said, "it is not yet finalized but the process is very much on. The ministry is considering some select group of bankers."

There was a six-member interview board, which took interviews for CMDs' posts. They were Rajiv Takru, secretary - department of financial services; Anand Sinha, deputy governor - RBI, Jagdish Capoor, former deputy governor - RBI (1997-2001) and a few other experts including two directors from Indian Institute of Management - Calcutta and IIM- Kozhikode. To step into CMD's shoes, an executive director has to have minimum of two years of service life.

At the same time, 35 general managers from different banks appeared for interviews held on February 12 -13. As many as 16-17 executive directors will be selected from that group.

saikat.das@network18online.com

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Will formulate transparent penalty system soon: CCI

Cracking the whip on DLF and the BCCI, probing cartelisation among oil marketing companies and clearing high-profile M&A deals - the past few months have been eventful at the Competition Commission Of India (CCI). CCI chairman Ashok Chawla discusses, on CNBC-TV18, some of the key decisions taken by the watchdog and adds that the commission has decided to establish a system to ensure a transparent set of guidelines and penalties.

Below is the edited transcript of the interview on CNBC-TV18

Q: The United Spirits Limited (USL)-Diageo deal, which has received the final observation from the Securities and Exchange Board of India (SEBI) awaits the nod from the Competition Commission of India (CCI). Can you give an update on the status of the USL-Diageo deal?

A: Today was the last date for the receipt of replies from USL and Diageo to queries raised by the CCI. I don't think after that it should take us very long to arrive at a decision.

Q: Where do you stand on the issue of cartelisation as far as oil marketing companies are concerned? The sector continues to be regulated by the government which has allowed a degree of freedom in pricing. But where really does the question of caretlisation arise if the OMCs don't even have the freedom to price?

A: We asked this question to the government sometime ago. The ministry of petroleum replied that it has no role to play regarding the pricing of petrol and it is decided by the oil companies. So, we are to issue an order calling for a probe to investigate if oil companies are forming a cartel to maintain similar prices for similar amounts of petrol.

Regarding diesel, the government has admitted that it has not fully deregulated the pricing. And this requires decision at the levels of the government and our advocacy efforts are on. However, the policy is not fully open and transparent.

Q: When will you issue that order?

A: The commission has already decided and is in the process of finalising an order which should be issued in a few days.

Q: The CCI has established the abuse of position and grave conflict of interest at the Board Of Control For Cricket In India (BCCI). Why did the CCI impose a penalty of only 6 percent and not the permissible limit of 10 percent?

A: I think the order and penalty of 6 percent indicates the significance of BCCI's contribution towards the development of cricket.

Q: There have been allegations that there was a lack of transparency in the process of how the BCCI's penalty was arrived at. What is your opinion?

A: We have taken a conscious decision to build on some more cases before establishing an architecture that will ensure transparency in the broad principles or guidelines for imposition of penalty.

Q: In response to the buyer guidelines issued after the DLF order, the DLF buyers-association has filed yet another complaint with the CCI which you have declined to address. What do these guidelines really mean and do they amount to anything at all?

A: Technically and legally, that was in relation to a specific case of DLF found to be abusing its dominance and the penalty was imposed accordingly. Later the agreement was modified and a separate order was issued in January.

Now that order is under litigation. I have mentioned separately and in the public domain, that while this is an agreement which will have to go through the process of judicial appraisal and final approval, it is fair and balanced and an agreement which builders, developers and consumers would do well to follow.

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KFA crisis: Is there a need to tighten rescheduling norms?

The final call on Kingfisher Airlines would be an important development for the economy and the banking sector. Banks have an exposure of Rs 7,800 crore to KFA. From the bankers' perspective, with an exposure of Rs 6000 crore in as early as 2010, which subsequently jumped to Rs 7800 crore, it was not an easy call to make as an account of this magnitude would be classified as non-performing assets (NPAs).

In an interview to CNBC-TV18 two banking stalwarts, AK Purwar, former chairman of State Bank of India (SBI) and RK Bakshi, retired executive director, Bank of Baroda share their view on the steps taken by banks and the Indian banking norms.

Below is the verbatim transcript of the discussion on CNBC-TV18

Q: Should bankers have taken this decision in 2010? Is it necessary that bankers should be more strict when a rescheduling is given because it does look like even the Reserve Bank of India (RBI) thinks that banks are happy rescheduling it?

Purwar: What was the total exposure of the banking system on Kingfisher? It was Rs 6000 crore plus. If one account of this magnitude goes into non-performing assets (NPAs) and going down the drain, banking system would take all possible steps to see to that this account gets restructured and may be revived. Unless they see that there is no chance of its revival, they would continue to feed it, continue to give oxygen to it, continue to see it revive.

Q: Can bankers, and that too 17 banks take an exposure of Rs 6000 crore and not go deeply into an industry which has not performed very well globally? Many bankers have told me that the group itself had some problems of repayment or some problems regarding the way it managed its finances, are Indian bankers less diligent?

Purwar: I would be the last person to agree to this statement. I believe that Indian bankers including public sector and private sector banks are as diligent as any other world class banks could be. We are very strict on diligence side.

Also Read: Uday Kotak: Growth vs inflation; we have to risk one

Q: Most foreigners who look at this case tell me that in any other country he would have died long ago. Is this true?

Purwar: I have worked abroad. I have seen what has happened throughout the world. In many countries such big exposes are not allowed to languish. Kingfisher is the third big airline of the country, after going out in the market and the impact it had on the customers, consumers is different and therefore every economy, every society, every country and those bankers who have told you, they have told you wrong. Every country tries to make sure that such companies survive unless they find there is just no way they can survive.

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Etihad needs to revise Jet Airways deal - chairman

Etihad Airways needs to revise its deal to buy a stake in India's Jet Airways and it is too soon to say when a final agreement will be struck, the Abu Dhabi airline's chairman told Reuters on Sunday.
Sheikh Hamed bin Zayed al-Nahayan, speaking on the sidelines of a defence exhibition in the UAE capital, said officials would meet with Indian Trade Minister Anand Sharma to discuss the matter.

When asked if a Jet deal would be signed by March or April, Sheikh Hamed said: "I don't know....we need to revise it."

The terms of the possible deal have not been disclosed, but a government source said earlier this month Etihad was in talks to pick up a 24-percent stake in Jet for up to USD 330 million.

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Sistema Shyam says SC order will not impact its operations

Sistema Shyam Teleservices (SSTL), which operates under the brand name MTS, today said the Supreme Court order for telecom firms which were unsuccessful and did not participate in the 2G spectrum auction process to cease operations, does not impact it.

The apex court yesterday said the "entire" licenses quashed by it for 2G spectrum be auctioned without "further delay" and those telecom companies which were unsuccessful and did not participate in the auction process held in November 2012 will cease to operate "forthwith".

In a statement, an SSTL spokesperson said: "The Honourable Supreme Court's order on February 15, 2013 does not impact the company and any of its operations as it relates to telecom operators who had not participated in the spectrum auctions on November 12 and 14, 2012. The auctions done on the said dates was for the GSM spectrum (1800 Mhz)."

It added that "SSTL on the other hand being a pure play CDMA operator provides its telecom services using the 800 Mhz spectrum".

The CDMA spectrum auction was not conducted in November, 2012 as there were no bidders for it citing huge base price fixed for it.

SSTL did not participate in the auction as the company was awaiting decision of the apex court on its curative petition, which was pending for hearing at the time of auction. In the curative petition filed in May last year, the company had sought exemption from SC judgement of February 2, 2012 but it was rejected by the court on February 14, 2013.

The company has shown interest in participating in the spectrum auction scheduled for March. SSTL spokesperson said: "It may also be noted that the company had filed an application dated January 10, 2013 in the Supreme Court, saying that the company wants to continue its operations and intends to participate in upcoming auctions in March 2013. The Honourable Supreme Court is going to give a separate order on the same. The said order is awaited."

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KFA crisis: Is there a need to tighten rescheduling norms?

The final call on Kingfisher Airlines would be an important development for the economy and the banking sector. Banks have an exposure of Rs 7,800 crore to KFA. From the bankers' perspective, with an exposure of Rs 6000 crore in as early as 2010, which subsequently jumped to Rs 7800 crore, it was not an easy call to make as an account of this magnitude would be classified as non-performing assets (NPAs).

In an interview to CNBC-TV18 two banking stalwarts, AK Purwar, former chairman of State Bank of India (SBI) and RK Bakshi, retired executive director, Bank of Baroda share their view on the steps taken by banks and the Indian banking norms.

Below is the verbatim transcript of the discussion on CNBC-TV18

Q: Should bankers have taken this decision in 2010? Is it necessary that bankers should be more strict when a rescheduling is given because it does look like even the Reserve Bank of India (RBI) thinks that banks are happy rescheduling it?

Purwar: What was the total exposure of the banking system on Kingfisher? It was Rs 6000 crore plus. If one account of this magnitude goes into non-performing assets (NPAs) and going down the drain, banking system would take all possible steps to see to that this account gets restructured and may be revived. Unless they see that there is no chance of its revival, they would continue to feed it, continue to give oxygen to it, continue to see it revive.

Q: Can bankers, and that too 17 banks take an exposure of Rs 6000 crore and not go deeply into an industry which has not performed very well globally? Many bankers have told me that the group itself had some problems of repayment or some problems regarding the way it managed its finances, are Indian bankers less diligent?

Purwar: I would be the last person to agree to this statement. I believe that Indian bankers including public sector and private sector banks are as diligent as any other world class banks could be. We are very strict on diligence side.

Also Read: Uday Kotak: Growth vs inflation; we have to risk one

Q: Most foreigners who look at this case tell me that in any other country he would have died long ago. Is this true?

Purwar: I have worked abroad. I have seen what has happened throughout the world. In many countries such big exposes are not allowed to languish. Kingfisher is the third big airline of the country, after going out in the market and the impact it had on the customers, consumers is different and therefore every economy, every society, every country and those bankers who have told you, they have told you wrong. Every country tries to make sure that such companies survive unless they find there is just no way they can survive.

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'Vodafone-govt need to agree on terms, adopt give take'

Dutt Menon Dunmorrsett, partner at Anuradha Dutt and Vodafone counsel says that conciliation is formal manner of resolving issues and is not adversarial.

Anuradha Dutt adds that Vodafone has not started to think of the end-result and that it is too premature to discuss the steps that Vodafone will take

A resolution will involve some give-and-take, and both the parties have to agree to terms, Dutt told CNBC-TV18.

Below is the edited transcript of the interview on CNBC-TV18

Q: Vodafone sent a letter of conciliation to the finance ministry. Has the informal process of negotiation that you were involved in failed? What does the conciliatory process mean?

A: Nothing has failed. It was similar to the discussion between two people to arrive at an amicable resolution. Therefore conciliation is a method and is not an adversarial proceeding. In fact it is an informal manner of amicable resolution. So, Vodafone decided to try conciliation to arrive at an amicable resolution.

Q: Is the waiver of interest and penalty an acceptable solution for Vodafone? What is Vodafone's expectation from the conciliatory process?

A: I don't think Vodafone has really started to think about what would be the end-result of this amicable resolution. It is initiating the process on the premise of willing to consider a resolution and if the government agrees to this, there will be some give-and-take which is legally permissible. Whatever solution is arrived at Vodafone must find it legally enforceable. It is a little premature to discuss what Vodafone is willing to accept and what the government is willing to do at this moment.

Q: Can interest and penalty waiver, if that is part of the settlement, be effected via a circular or is an amendment in the IT Act necessary?

A: To my mind, a circular can be brought to offer relief to a situation which the Shome Committee has termed hard and unfair. What I have gathered in my interaction is that the tax office probably thinks that an amendment is necessary and a circular may not be the best procedure.

Q: Is May the earliest that an amendment is likely to be moved?

A: It needs to be seen if both parties agree to the terms and conditions. If it is not possible to reach an agreement, then the government will do what it as and Vodafone will do what it has to. If the government decides on prospective amendment or waiving the interest penalty, it will have to wait till May with the Budget around the corner. So, it may be in May.

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See no issues with diesel price hikes every month: BPCL

After Indian Oil Corp (IOC), the country's largest fuel retailer by sales hikes petrol price by Rs 1.50 paisa per litre and diesel prices by 45 paise per litre. Other oil companies are likely to announce another round of diesel price hike in a day or two. Speaking to CNBC-TV18 about the fuel hike, RK Singh, chairman and MD of Bharat Petroleum Corporation ( BPCL ) says "Clear decision from government to hike diesel on monthly basis, do not see difficulty in minor diesel hikes every month," adds Singh.

Also Read: IOC raises petrol price by Rs 1.50/l, diesel by 45 paise/l

Further, Singh mentions that there is very definite and clear decision about the periodicity of the hike as also the quantum of hike. This was not the case with petrol. Government has indicated that oil companies can raise the price between 40-50 paise per month. "I do not see ambiguity or need for any consultation but being a government company, informing the ministry becomes necessary. So, I don't rule that out but do not find any difficulty in implementing the hike in a day or two," Singh adds.

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Tough new norms to avoid misuse of pvt placement soon: Govt

Market regulator SEBI came down hard on the Sahara group on Wednesday. In the wake of high-profile investor refund case involving over Rs 24,000 crore, Sebi froze their bank accounts and issued orders for attaching properties of two group firms and promoter-directors.

Corporate Affairs Minister Sachin Pilot told CNBC TV18 that tough new norms to avoid misuse of private placement norms are in the offing. Pilot added that the government was aware that this route had been misused by companies.

Below is the edited transcript of Sachin Pilot's interview with CNBC-TV18

Q: What is your take on Sebi order?

A: First of all, we at no point want to curtail the environment in which individuals and companies want to raise capital. For the economy and businesses to grow, they have to raise money from banks, private entities and all companies are free to do so.

However, while they do that anyone trying to raise money fraudulently or by misleading investors - some cases have come to notice where these placements have been done with some shroud of secrecy and non-compliance.

Q: Am I given to understand then that you are looking into cases where companies have misused this route to raise funds?

A: Most certainly. If there is any company or companies that have been non-compliant to the rules, have tried to misuse the clauses that have existence today in the companies law, we will take strict action.

There can be a small investor putting Rs 10,000-20,000 in a company with some fraudulent advertising or misleading information or some forged documents.

In a small town or small city those people have lack of information and very limited resources to contest and claim their money back. It is these small investors that we as government must making a priority to protect their interests.

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Budget 2013-14: Recapitalisation of banks must be ensured

By Dr Brinda Jagirdar,

Economist, State Bank of India (SBI)

The Budget 2013-14 is framed against the backdrop weak industrial growth, sticky inflation, concerns on fiscal deficit and widening current account deficit.  Since industry has grown only by 0.7 percent during FY13 so far (April-December), it will be quite a challenge to even touch the 2 percent growth projected by Central Statistical Office (CSO) for the financial year.

The slowdown in overall GDP growth is also impacting the business growth and asset quality of banks. So in my view, the first issue the Budget must address is reviving investment in the economy on a sustained basis. In particular, to enable the economy to achieve 8-10% GDP growth, the recent decline in domestic savings rate, especially in financial assets, needs to be reversed.

At a time when interest rates in the economy are softening, it will be a challenge to mobilise financial savings. The current trend of lukewarm growth in bank deposits is a matter of concern more so because bank deposits are getting pushed out and funds are flowing into the shadow banking system of Liquid Mutual Funds, Tax Free bonds by PSUs and so on. 

Perhaps, companies offering tax-free bonds should not be allowed to unfairly crowd out the retail market and there is no necessity of giving tax advantage to these large infrastructure companies as these entities have the financial strength and standing to raise funds directly from the market.

Instead, banks, provident funds and pension funds could be allowed this benefit of garnering tax free long term funds for investing in infrastructure, which would help promote a vibrant corporate debt market and incentivise infrastructure development. Therefore, the tax advantages flowing to non-banks, which affect deposit mobilisation by banks, may be re-examined in the present context.  

As we have to leverage our demographic dividend urgently, the Budget must focus education and incentivising capacity creation in this sector. Skill development must go hand in hand with education and manufacturing and all this must be done with a sense of purpose and urgency. 

Banks are already extending education loans and to improve recovery and further incentivise them, the UID may be made mandatory for borrowers availing education loan. Further, presently deduction under Section 80-C for payment of tuition fees up to Rs 1 lakh is allowed.

This may be raised by another Rs 1 lakh to cover repayment of principal amount, where the benefit has not already been taken under section 80C as tuition fee.

The third area I will emphasise is agriculture. Government is already providing interest subvention for crop loans, but this interest subvention may be extended to all term loans in agriculture.

Term loans help to add overall investment and therefore interest subvention will give a fillip to capital formation in the economy. India's banking sector has remained resilient in the face of the global economic crisis and has received praise from abroad as it has managed to weather the economic and financial storms raging globally.

A sound regulatory framework as well as strong systems and processes in banks have helped India's banks. Going forward, the Budget must ensure that adequate provision is made for recapitalisation of banks so that they are able to support India's growth in the years to come.

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Nifty exclusion linked to demerger process: Wipro

Moneycontrol Bureau

Software major Wipro says its demerger process has led to its exclusion from the NSE 50-share benchmark Nifty. 

"A corporate action like our demerger of a listed company would generally result in a short term withdrawal of the scrip from the index as it has been happening in the past where such corporate action had been initiated. We expect restoration of the same on completion of the corporate action, which we expect to conclude in the next few months," the company said in a press statement.

On November 1 2012, the Wipro board approved the demerger of the non-IT businesses into a separate company to be named Wipro Enterprise (WEL).

Wipro and diversified group Siemens will be dropped from the (National Stock Exchange) NSE's benchmark index Nifty from April 1 .(More details) In their place, private-sector lender IndusInd Bank and state-run NMDC would be included in the Nifty index, the statement said.

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Total liability not likely to exceed Rs 5,120cr: Sahara

Moneycontrol Bureau

In a press statement, Sahara claimed that its total liability was not likely to exceed Rs 5,120 crore. The Securities and Exchange Board of India (SEBI) on Wednesday cracked down on Sahara group, freezing more than 100 bank accounts of two of its companies. Sources said that the immovable assets of the two companies were also frozen.

The SEBI also attached the assets and properties of Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC).

Here is Sahara's statment:

"According to Sahara, the total liability is not likely to exceed Rs 5,120 crore, which amount has already been deposited with SEBI. As regards the instalments to be deposited with SEBI, as per the order of the Supreme Court, Sahara has filed interim application before the Supreme Court inter alia praying that Sahara be permitted to furnish security through a  credible financial institution instead and in place of the payment of the  balance instalments, since Sahara has already redeemed a significant number of OFCD holders and any further payments to SEBI would amount to double payment. The said interim application is pending and is likely to come up for hearing next week.

Further, SEBI's order on Wednesday for attachment of the assets is based on facts and details of assets as of January 2012.  Since then, the facts have changed in view of redemptions made by Sahara from time to time. This fact of redemption was known to SEBI. Hence, Wednesday's order does not take into account the changed facts and circumstances.

As per the order of the Supreme Court, the liability to refund the monies is of SIRECL and SHICL. Hence, attachment of assets of individuals by SEBI is incorrect. The company has not only paid SEBI an amount much higher than outstanding liabilities of two companies and the fact also remains that during the whole affair, Sahara ia genuinely concerned for investors.

There are number of companies in India including the Golden Forest Company where after the Supreme Court's order to repay and a committee was appointed (whose chairman was a retired Chief justice of Delhi High Court) and the order was followed."

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ICAI, RBI to discuss accounting standards for banking cos

Accounting regulator ICAI will soon hold discussions with the Reserve Bank of India on implementation of IFRS standards by banking companies. The Institute of Chartered Accountants of India (ICAI) has also submitted a tentative roadmap for IFRS implementation to the Corporate Affairs Ministry.

Going forward, Indian accounting standard would be converged with the International Financial Reporting Standards (IFRS). ICAI President Subodh Kumar Agrawal today said there would likely be a meeting with RBI next week to discuss IFRS implementation for banking entities.
    
The central bank has sought a meeting to deliberate on the issue, he added. Agrawal, who was elected as ICAI President today, said the institute has given a tentative roadmap for implementation of IFRS standards to the Corporate Affairs Ministry. "The Institute has said that all companies having networth of over Rs 1,000 crore should implement IFRS from April 1, 2015," he said.

Those having networth of over Rs 500 crore and up to Rs 1,000 crore, IFRS has to be implemented from April 1, 2016 and for companies, having networth of below Rs 500 crore but listed, the timeframe would be April 1, 2017. However, the roadmap is not applicable for banking, insurance and NBFC companies, Agrawal said.

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Hero pulls out of Indian Premier League sponsorship

Hero Moto Corp has pulled out of Indian Premier League sponsorship, according to CNN-IBN sources on Tuesday.

Hero Moto Corp was a team sponsor for Delhi Daredevils for the first three seasons and then of Mumbai Indians for seasons four and five. The group has also sponsored the World Cup and Champions Trophy in the past.

"We have strategically decided to move out of cricket and therefore pulling out from Mumbai Indians is natural," a spokesperson from the group said.

According to sources, the group, however, will continue its association with hockey and golf with the Hockey India League - that culminated on last Sunday - getting a big response from fans.

Also, it has signed a four-year deal with the international governing body for hockey, the FIH, and will be sponsoring all the tournaments under the auspices of the FIH.

Hero, for several years, has also been the patron of Indian golf and is the title sponsor for the Indian Open, one of the biggest Asian Tour tournaments.

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RIL plans CDU maintenance turnaround at Jamnagar refinery

Reliance Industries Limited (RIL) has planned `maintenance turnaround' of a crude distillation unit (CDU) at its Jamnagar refinery complex for four weeks starting February 18.

This period would also be used to carry out necessary modifications to improve the reliability and performance of the unit, a company statement said. The balance three crude distillation units and all the secondary processing units are expected to sustain normal operations, the statement said. RIL is India's largest private sector company with a turnover of Rs 339,792 crore(USD 66.8 billion).

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High fiscal deficit will trim welfare spending: Ramesh

Union rural development minister Jairam Ramesh on Monday said there may not be a major increase in the allocation for social sector in the forthcoming Budget due to the grim fiscal situation.

"It is going to be very tough maintaining high levels of increases (in budget allocations) given the fiscal situation. It is a tough situation to be in," Ramesh told reporters on the sidelines of a convocation at Reserve Bank of India-promoted IGIDR.

"It is going to be tough," he repeated, when asked how the Budget will shape up for the social sector.In the face of rating downgrade threats, finance minister P Chidambram had in October 2012 set a fiscal deficit target of 4.8 percent for next fiscal.

Chidambram had also said he would rein in fiscal deficit at 5.3 percent this fiscal. Ramesh also said the government's flagship rural employment guarantee programme MGNREGA, run by his own ministry, needs to be more "flexible" to regional sensitivities, especially in the central India, where the Maoist insurgents are capitalising on the discontent spread by lack of development.

"If there is one group of areas which requires a completely different approach, it is the tribal areas which are characterised by very poor human development indicators. And it is not a coincidence that many of these areas are Maoist-affected," he said. "These are all areas of tribal deprivation, these are all areas of tribal discontent which have been used by Maoists."

This is the second time Ramesh has found flaws with MGNREGA in the last two months. Earlier, he had termed the programme as "paying wages for unproductive work" which creates no real assets. Ramesh also called for urgent attention to the sanitation and hygiene issues, saying that they have a direct bearing on malnutrition, and blamed economists and and Plan panel for being oblivious to it.

"There is adequate medical evidence to suggest that one of the causes for persistent high levels of malnutrition in the country is poor sanitation and hygiene. This has not yet percolated among economists who write on human development or even the planning commission...," he said.

Barring education, the country's performance on the other human development indicators like health has not been good, even though the economic growth has been strong, he said. He also pointed out a slew of paradoxes like the human development index continuing to be poor in spite of high per capita incomes in states like Gujarat, Punjab and Haryana.

Similarly, richest states like Maharashtra, Andhra and Karnataka have districts or pockets having the worst human development indicators, the minister said.

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OilMin nod for drilling in exploration area

The Petroleum Ministry has issued formal orders allowing companies like Reliance Industries and Cairn India to explore oil and gas within the producing fields subject to certain conditions.

The Ministry, which had been sitting on the proposal for over a year, issued formal orders a few days ago permiting exploration in already producing oil and gas fields to help companies augment existing production.

"Government of India has decided that exploration will be allowed in mining lease area with cost recovery on establishment of commerciality," the order said.

All approved exploration costs will be allowed for cost recovery on such declaration of commerciality, it said.

"The contractor will also be permitted to develop and monetise the existing discoveries, if any, in the Mining Lease area (or oil and gas producing region) which could not be developed or monetised earlier because some of the activities may have been in deviation from Production Sharing Contract (PSC) provisions," it said.

After this, companies can drill exploration wells within an oil and gas field, but with the condition that cost recovery of such wells would be allowed only in case there is a commercially exploitable discovery.

This essentially means that cost of drilling any well that does not lead to a discovery, or a small find that could not be independently produced, will not be allowed.

Currently, when a company finds oil or gas in an area, the discovery area is ring-fenced and a mining lease is granted for production of hydrocarbons. Operators get to recover all their cost -- whether successful or failed wells, from the oil and gas produced and sold from that particular block.

The order said past exploration cost in a development area will not be allowed to recover.

It said "any future costs for appraisal, development and production of all such existing discoveries under the new ring-fencing arrangements" will be allowed to be recovered.

The Directorate General of Hydrocarbons (DGH) had previously taken a view that further exploration within this ring-fenced mining lease area is not permitted.

It felt the government's profit share, which is triggered when an explorer recovers all his cost, would be adversely impacted if new costs are added.

RIL and Cairn have maintained that exploration being a continuous process is allowed in the mining lease under which they currently produce gas from eastern offshore and Rajasthan blocks, respectively.

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Solar power to be focus of shift in energy needs: Ambani

Reliance Industries ' Chairman Mukesh Ambani, owner of world's largest oil refinery, today said solar power will be at the core of the shift in future source of energy needs - from hydrocarbon to renewable.

"We will transit form hydrocarbon presence which is coal, oil and natural gas over the next many decades into a fully renewable, sustainable future and the solar really will be at the heart of it," Ambani said in an interview with CNN International.

Reliance has a solar division that was established to bring solar energy systems and solutions primarily to remote and rural areas.

Asked about the probable impact on the oil prices in the event of a military strike on Iran, he said, "Today there is enough spare capacity in the system to take care of eventualities."

But, at the same time, he was full praise for the US for moving towards self-reliance on energy with a "fundamental transformation" that has taken place in the country.

"There has been a fundamental transformation in the energy scene in the US. For many decades, we have heard that the US will be independent of foreign imports of energy.

Realistically, I can now tell you that this is my judgement that this will happen in the next 5 or 7 years," he said.

"The US has truly found non-conventional energy in shale oil and gas which is really bringing benefit not only to the population in the US, but to across the world," he added.

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Mahindra to acquire BAE Systems' 26% stake in defence JV

Moneycontrol Bureau

Mahindra & Mahindra on Saturday said it's unit Mahindra Defence Systems will acquire BAE Systems' 26 percent stake in their joint venture company Defence Land Systems India, citing changes in the business environment and customer procurement frameworks among other reasons.

"Since the establishment in 2009 of the M&M (74 percent) and BAE Systems (26 percent) joint venture, DLSI, there has been significant evolution in the Indian Land Systems market. Developments in both the industry environment and in customer procurement frameworks and acquisition strategies have led the shareholders to conduct a strategic review of the DLSI business," the automobile to technology major said.

At the time of signing the JV agreement, the two companies had said that the parent companies would initially invest USD 21.25 million over a period of three years.

The decision to end the venture will enable both the companies to consider each opportunity on a case by case basis, including continuing to explore opportunities for co-operating on specific defence projects, it added.

"This is a strategic decision and will enable both the companies to approach opportunities individually and to offer customised solutions to meet the needs of the Indian defence land systems domain. We have had a fruitful association with BAE Systems and look forward to working with them in the future on a case by case basis," said Brigadier (Retd.) Khutub Hai, CMD, Mahindra Defence Systems.

M&M had also planned another defence JV with Israel's Rafael, which was rejected by the government in December.

This is not the first time the Mahindra Group has formed joint ventures and then ended up buying the partner's stake for various reasons.

In December 2012, M&M and its US partner Navistar had decided to part ways in their commercial vehicle and engines joint ventures, amid sluggish growth in the Indian medium and heavy truck industry.

M&M had said it would acquire Navistar International Corp's 49 percent stake in Mahindra Navistar Automotives and Mahindra Navistar Engines for about Rs 175 crore.

The two companies had entered into a truck and bus manufacturing JV in 2005, while the engines JV was formed in 2007. Navistar had said that that given its 2013 priorities, the capital and focus needed to be allocated to other business opportunities in the near term.

Earlier, M&M had ended a joint venture with French car maker Renault in 2010. That JV had been formed to launch the entry-level sedan Logan in India, but dwindling sales after initial success and difference over the future of the JV led to the two parting ways.

While Renault has since set up its own Indian arm and sells various models like the Duster SUV and Scala sedan, M&M has rebadged the Logan and now sells it as Mahindra Verito.

M&M shares closed down 1.3 percent at Rs 884.60 on NSE on Friday. 

Also Read: Strong UV sales drive M&M Q3 net profit up 26% at Rs 836cr

Nachiket Kelkar
nachiket.kelkar@network18online.com

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Strong in India first; govt aid key to green car: Nissan

Welcome to this week's edition of The Forbes India Show. CNBC-TV18's Senthil Chengalvarayan and Forbes India editor-in-chief Indrajit Gupta interview Toshiyuki Shiga, COO, Nissan Motor in Chennai not far the Renault-Nissan joint venture factory which rolls out about 4,00,000 cars a year.

Below is the edited transcript of the show on CNBC-TV18

Chengalvarayan: Tell us how 2013 looks for the Japanese auto industry? Is Europe picking up? How negative has the effect of the dispute between China and Japan been apart from the 41-percent in sales in October? Has the situation begun to improve for Nissar in China?

A: Yes. Nissan's global sales in the calendar year of 2012 was 4.94 million, posting a 5.8- percent increase against the previous year. Despite the spat between Japan and China, the international sanctions on Iran and the crisis in Europe, Nissan is growing. We are expect further growth in 2013.

Chengalvarayan: Do you expect growth for Nissan alone or for the entire industry as a whole?

A: Both. The automotive industry in 2012 was around 79.4 million, increasing by around 6 percent and the industry is still growing.

Chengalvarayan: Will 2013 be better than 2012?

A: Globally, yes. There were a few difficulties before the Japan and China spat and the sanctions on Iran. However, the Chinese market still is growing at 5-7 percent. So, further growth may be expected in industry.

Gupta: Do you have an alternate plan in case Japan's relations with China worsen? And God forbid if it does, what are the options for Nissan?

A: I can't comment on the current situation but after the sanctions on Iran in mid-September 2012 we were significantly affected, but the situation is gradually improving. In December 2012 and at the start of January 2013, the number of the customers visiting our showroom has returned to normal levels

So, the customer traffic is improving. Effective orders from customers are slowly returning to 80 percent of last year's levels. The trend in sales is also showing improvement. I expecting the governments of Japan and China to amicably settle the dispute to enable customers to get rid of any hesitation in buying Japanese cars.

Chengalvarayan: Are you happy with your progress in India?

A: I am satisfied with our progress in India. We have set some key objectives to be achieved in India. We have achieved the primary objective of entering the Indian market. We entered the Indian market in 2010 and commenced the sales of the Micra which touched around 30,000 units. In 2012, we sold 33,000 units. We aim to sell around 50,000 units this year. So, I think our growth in domestic sales is good. I have high expectations as our team in India is doing a good job.

Our Indian business has begun to export products worldwide especially to Europe, the Middle-East and Africa. Our manufacturing the team is also doing a very good job to enable exports by operating production according to schedule which also contributes to our business.

We have also set up facilities to tap India's strength in engineering research and development. Our R&D facility employs around 2,000 people who are developing a very strategic car model- the Datsun- which will be introduced next year in the Indian market.

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Insurance cos to up equity exposure: Max Life cheers up

Insurance companies will be allowed to increase their exposure in equities from 10 percent to a higher level of 12 percent and 15 percent. Rajesh Sud, MD & CEO of Max Life Insurance told CNBC-TV18 that it is good to have some headroom to play with and markets are looking up a bit.

Further Sud feels that flexibility is always good and level playing field would certainly be an important issue.

Below is an edited transcript of Rajesh Sud's interview on CNBC-TV18

Q: A hike in your equity exposure to about 15 percent is good news for most insurance companies because Life Insurance Corporation (LIC) has been allowed to hike to 30 percent. Is it a level playing field?

A: You could look at it from that side and say it is better. People in private sector would say, we still have significant headroom on the 10 percent benchmark in a company as well because products demand that we diversify investments across multiple companies and to that extent internal investment guidelines for most companies would have kept a tighter number than 10 percent also. However, it is good to have some headroom to play with and markets are looking up a little bit. It is always good to have some flexibility and certainly level playing field would be an important issue.

Also Read: Mkt gearing for 2014 polls, Budget may not worry: Experts

Q: Will it make difference to private insurance because you are anyway not allowed to go beyond 10 percent in most cases?

A: Allowed or not is a different issue. You would just take a view from an investment management perspective and good principles and demand that there is a certain limit of exposure to sectors and to companies that most companies would operate with as internal guidelines. To that extent, 10 percent is a pretty big number to have exposed yourself onto and we are talking of large funds that we manage, our assets in the management for our company are Rs 20000 crore.

Q: Do you believe that the Insurance Regulatory and Development Agency (IRDA) has been browbeaten by the government to go in for this hike because the IRDA was not in favor of LICs exposure being hiked to 30 percent and this is a decision that they are now going back to, they had brought down the equity exposure four years ago and they are having to do a u-turn?

A: With this regulator getting browbeaten into anything is like a far fetched idea now.

Q: Anything important on the agenda that you would have liked to hear but hasn't come through?

A: Two or three other big items that are hugely anticipated, there is reference to them in the headline news that has come from the IRDA in the press release and that talks about a certain product guideline being finalised and issued soon. This is being discussed between the industry and the regulator now for almost a year and has ramifications for almost all forms of products that industry currently sells. So, that would be by anticipated both in terms of what they have proposed as guidelines as well as what is the timeline around implementation.

In 2010, when there was a very short timeline given to the industry to adapt with the new unit linked insurance plan (ULIP) guidelines, that created a bit of a dislocation for all of us. So, we are just hopeful that this time there will be more time given for the industry to adapt. Other than that, there is stuff on health insurance, again one doesn't have details about it but there is a mention of that. There is also talk about a standardised proposal form which is a welcome move, we will take that on.

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