Vodafone representative meets FinMin officials

Vodafone India non-executive Chairman Analjit Singh, on Monday, met Revenue Secretary Sumit Bose in an attempt to resolve the Rs11,200-crore tax liability issue related to the British firm's acquisition of Indian telecom assets of Hutchison Whampoa.

"We met the Revenue Secretary today," Singh told reporters but did not provide any detail when asked if a resolution was in sight.

"...that is difficult to say. But we are willing and positive and that is why we are here," Singh said.

Vodafone has been slapped with an income tax demand notice of Rs 11,200 crore on its 2007 acquisition of Hong Kong-based Hutchison Whampoa's stake in its Indian telecom business.

The government is likely to announce some steps to deal with the issue in the Budget for 2013-14, which will be unveiled in the Lok Sabha on February 28.

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SABIC Research-GE India Tech deal gets CCI green signal

Fair trade watchdog CCI has approved the proposed acquisition of GE India Technology Centre's certain assets and equipment by SABIC Research, saying that the deal won't adversely impact competition.

The deal will help SABIC Research and Technology in R&D activities to support its group business.

In its order dated January 30, Competition Commission of India (CCI) said that "the proposed combination is not likely to have an appreciable adverse effect on competition in India".

CCI noted that both SABIC Research and GE India Technology are the service providers to their respective group entities.

"...the assets, which are being acquired by SABIC Research and Technology pursuant to the proposed combination, are used by GE India Technology Centre for rendering R&D services to other GE Group companies and as stated in the notice, SABIC Research also intends to use the assets for rendering R&D services only to the SABIC Group companies," CCI said.

According to the regulator, SABIC Research is a company incorporated in India and is engaged in R&D activities in chemicals and polymers supporting the business units of the SABIC Group -- a producer of commodity-grade plastics as well as high-grade engineering thermoplastic products.

Saudi Basic Industries Corporation (SABIC), based in Saudi Arabia, indirectly holds 100 percent shares in the entity.

Meanwhile, GE India Technology part of US conglomerate GE and provides IT enabled services and R&D activities among others to the group's entities.

Following the execution of an "Asset Transfer Agreement" between GE India Technology and SABIC Research on December 17, 2012, a notice for approval of the deal was filed with the regulator on January 11.

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Vodafone seeks allotment of spectrum won in Nov

Alleging delay in allocation of airwaves, Vodafone India has asked government to "immediately allot spectrum" for 14 circles secured in the November 2012 auction for which it has already made required payments. The company has also sought clarification if the 20-year licence period will commence from date of actual allotment of the said spectrum, pending allocation of airwaves.

In a letter to Telecom Secretary R Chandrashekhar, the company said, "We call upon DoT to immediately allot us the spectrum acquired by us through auctions, for which payments have already been made and LoIs (Letters of Intent) were issued." "The reason for the delay in the allotment of spectrum is on account of the fact that it is still being used by operators whose licences were cancelled vide the Supreme Court judgement dated February 2, 2012," Vodafone said.

Operators like Idea, Videocon, Uninor are "on the same frequency band" in circles like Assam, Haryana, J&K and Odisha which was "awarded to Vodafone" in the auctions held in November 2012, it added. Vodafone has won spectrum in 14 circles in the November auction for Rs 1,127.94 crore. "As per the existing guidelines, Vodafone India has made a payment of Rs 372.22 crore under the deferred payment option route on November, 22, 2012," the letter said.

Stating that as the spectrum is yet to be assigned to it, Vodafone has sought clarification on commencement of the 20-year licence period. As per the notice inviting application (NIA), the issue of LoI shall be taken as the effective date for reckoning of the licence period.

"In context of, the pending allocation of spectrum and continued use of spectrum by other license operators, DoT may immediately clarify and confirm that the period of 20 years for which the right to use the spectrum has been acquired by the licensee through this auction will be reckoned from the date of actual allotment of the said spectrum," the letter said.

Also Read: Vodafone seeks withdrawal of auction guidelines

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Assocham asks govt to fast-track Jet-Etihad deal clearance

Industry body Assocham asked the government to expedite mandatory clearances to give effect to the proposed Jet-Etihad deal and launch fresh efforts to revive the grounded Kingfisher Airlines . The government should "ensure that all the mandatory clearances from the Foreign Investment Promotion Board and even from RBI should be given expeditiously so that a refurbished entity takes off with a renewed vigour," it said.

Assocham said: "After the Etihad-Jet deal, fresh efforts should also be made to revive the grounded Kingfisher Airlines." "After all, public money worth several thousands of crores of rupees is locked and the stakeholders - be it banks, employees and promoters - all are the losers," it said. Observing that Indian aviation industry was witnessing early signs of revival, Assocham said the proposed deal for Etihad Airways to pick up stake in Jet Airways would "infuse new lease of life" in the troubled Indian aviation sector.

The industry has been navigating headwinds from the economic slowdown that led to slump in passenger traffic and spike in operational costs, it added. "Induction of capital by Etihad, one of the most efficient airlines of the world will not only improve the financial position of Jet Airways, but would also bring several operational benefits as well as give an extended reach to the Indian carrier," Assocham said.

The two airlines are expected to clinch the deal soon and apply for approval of the stake sale deal to the Foreign Investment Promotion Board (FIPB) of the Finance Ministry. Assocham said the proposed deal would also send positive signals among global investors who want to invest in different sectors of the economy.

It said Etihad has in the last two years picked up strategic stakes in several global carriers like Virgin Australia, Air Seychelles and Aer Lingus. "In a way, Jet would become part of the big Etihad reach all around the world," Assocham said. However, the chamber said, a lot more needs to be done both from the industry and from the policy perspectives.

More News From Aviation Space: Small investors, HNIs hike KFA stake;FIIs bring it down

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All decisions on 2G spectrum auction finalised: Kapil Sibal

The Empowered Group of Ministers met today to discuss the 2G auction. Speaking after the meeting, telecom minister, Kapil Sibal said all decisions regarding the auction have been finalised. He also added that there will be no cap on the maximum number of blocks any company can bid for.

Also read: SC defers 2G scam hearing; cancelled licenses extended

Kapil Sibal, telecom minister, said, "The EGoM met today to approve the notice for the invitation of the auction and the whole agenda has been approved. We are now going ahead with the auction as proposed. Whatever are the other procedural decisions that had to be taken, have been taken. You can find out all the details from us."

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HP to close site in Germany, cutting 850 jobs

Computer maker Hewlett-Packard Co said on Friday it is planning to close a site in Germany by the end of October as part of its multi-year restructuring plan.

HP said it was closing its site in Ruesselsheim, Germany, southwest of Frankfurt, and that around 850 jobs would be cut. The remaining 250 employees may be able to transfer to HP partners or clients.

The restructuring of its enterprise services business will not affect HP's other major sites in Germany, the company said, adding that it would continue to employ about 10,000 people in Europe's largest economy.

HP said last year that it was planning to lay off 29,000 employees over two years as it tries to return to growth.

The company, which employs more than 300,000 people globally, began a multi-year restructuring last year aimed at focusing the sprawling company on services targeted at corporations.

HP shares were up 16 cents at USD 16.67 in morning trading.

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All decisions on 2G spectrum auction finalised: Kapil Sibal

The Empowered Group of Ministers met today to discuss the 2G auction. Speaking after the meeting, telecom minister, Kapil Sibal said all decisions regarding the auction have been finalised. He also added that there will be no cap on the maximum number of blocks any company can bid for.

Also read: SC defers 2G scam hearing; cancelled licenses extended

Kapil Sibal, telecom minister, said, "The EGoM met today to approve the notice for the invitation of the auction and the whole agenda has been approved. We are now going ahead with the auction as proposed. Whatever are the other procedural decisions that had to be taken, have been taken. You can find out all the details from us."

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HP to close site in Germany, cutting 850 jobs

Computer maker Hewlett-Packard Co said on Friday it is planning to close a site in Germany by the end of October as part of its multi-year restructuring plan.

HP said it was closing its site in Ruesselsheim, Germany, southwest of Frankfurt, and that around 850 jobs would be cut. The remaining 250 employees may be able to transfer to HP partners or clients.

The restructuring of its enterprise services business will not affect HP's other major sites in Germany, the company said, adding that it would continue to employ about 10,000 people in Europe's largest economy.

HP said last year that it was planning to lay off 29,000 employees over two years as it tries to return to growth.

The company, which employs more than 300,000 people globally, began a multi-year restructuring last year aimed at focusing the sprawling company on services targeted at corporations.

HP shares were up 16 cents at USD 16.67 in morning trading.

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KTM buys Husqvarna; Huskys may roll out of Chakan

Bajaj Auto 's Austrian partner firm KTM Auto announced that it would acquire 100% of BMW's off-road niche motorcycle brand Husqvarna. The acquisition would be made by KTM Auto's parent firm Pierer Industrie AG. The development would come as a big boost to the country's second largest two-wheeler manufacturer Bajaj Auto.

Rajiv Bajaj, MD, Bajaj Auto, says that our increase in the equity position at KTM is a reflection of our belief that we are a motorcycle specialist. We see ourselves as a power house of motorcycles. We like to be present in every meaningful segment of the motorcycle market across the world.

Today if Bajaj is poised to develop, produce and distribute KTM motorcycles ranging from 125cc to 400cc out of India I don't see any reason why in principle we are not best suited to do the same when it comes to a brand like Husqvarna as well.

Below is the edited transcript of his interview to CNBC-TV18.

Q: Six years after you first bought a stake in KTM, the company has gone onto acquire BMW's Husqvarna. What does it mean for Bajaj Auto?

A: Our increase in the equity position at KTM is a reflection of our belief that we are a motorcycle specialist. We see ourselves as a power house of motorcycles. We like to be present in every meaningful segment of the motorcycle market across the world. To be present in very premium space, we knew that it is almost impossible to create a new brand which can successfully compete in the premium space.

So, we thought that the inorganic route would be a better way, the more successful way to do that. So in 2007 we purchased 14.5 percent stake in KTM. Over the years that has grown to about 47-48 percent now. Everything that strengthens brand KTM, product portfolio, distribution, technology, economies of scale KTM, everything that strengthens KTM along all these parameters is good for Bajaj.

Q: Take us through the brand strategy because in the case of Bajaj and KTM there is a clear brand differentiation but in the case of KTM and Husqvarna they are not only both off-road motorcycle bikes brands but also compete in exactly the same segment?

A: Let me give you two analogies. Let us say, Mercedes and BMW. They may both be in the same segment and they may both essentially be luxury cars but they are very different kind of luxury cars. Second example is, Volkswagen and Audi. They are not in the same space, Audi is one step above Volkswagen.

While they are quite different at the front end they do share the platform and therefore they do share a lot at the backend right from product development to supply chain to manufacturing. With these two analogies we can venture to say that what can happen in the case of KTM and Husqvarna is one at the front end and this is my personal opinion, KTM and Husqvarna should retain their individual brand identities because even today both brands have place in the marketplace.

Last year KTM sold 100,000 motorcycles and Husqvarna sold about 10000, a little less than their peak volume of 15000. So, this figure implies that there exists a position for Husqvarna. So, I would expect that in the future every attempt will be made only to strengthen the two individual positions, otherwise what is the reason to have two brands. However, at the backend, both essentially are off-road motorcycles one can expect or anticipate that there can be very useful synergies in terms of product development and manufacturing.

Q: We saw lot of joint development work between Bajaj and KTM over the last few years. What kind of synergies do you expect between Bajaj and Husqvarna if any at all? Can we also see Husqvarna bikes being co-developed or co-manufactured at Chakan for instance as is the arrangement currently with KTM?

A: I can't comment. But today if Bajaj is poised to develop, produce and distribute KTM motorcycles ranging from 125cc to 400cc out of India I don't see any reason why in principle we are not best suited to do the same when it comes to a brand like Husqvarna as well. With KTM, we are already manufacturing the 125cc and 200cc. It will be a matter of months before the 390cc is introduced, that is no secret. So, we are a proven partner for this purpose. If it makes sense from the point of view of manufacturing synergy then that this would be a consideration that in the near future we would see a few Huskys roll of the line in Chakan.

 

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RBI issues draft guidelines on restructuring loans

Moneycontrol Bureau

The Reserve Bank of India (RBI) on Thursday proposed to allow lenders to retain the standard asset status of their loan accounts even after restructuring. However, this norm is subject to some conditions and will be applicable till April 1, 2015. Till that time, banks are required to raise their provisions on such assets to 5% in a staggered manner; the central bank said in its draft guidelines on restructuring assets released late evening on Thursday.

"RBI has decided to accept the above recommendation and give effect to this with effect from April 1, 2015. Accordingly, the extant asset classification benefits available on restructuring on fulfilling certain conditions will be withdrawn from that date," said the draft guidelines.

Earlier in July, 2012, a working group headed by B Mahapatra had reviewed the existing prudential guidelines on restructuring of loans by banks and it was put up for comments from external parties.

A loan accounts is considered for restructuring when the business faces any stress in repaying its debt. After restructuring, if it loses its standard (performing asset status), it slips into sub-standard category, the first level of non-performing assets that require higher provisions. The measure is a kind of temporary relief for banks till the stipulated time.

The panel later recommended some modifications after getting feedback from various quarters. Based on those, RBI issued the draft guidelines inviting further comments to be submitted on and before February 28, 2013.

Banks can avail this asset classification benefits if there is any change of date of commencement of commercial operations for infrastructure projects. Restructuring is the process when banks relaxes the original terms and conditions of loan repayments.

According to the draft guidelines, till the time of April 1, 2015; banks need to up its provisions from the existing 2.75% to 3.75% spread over four quarters in 2013-14 and then to 5% in the same manner by March 31, 2015.

Upgradation on principal and interest payments both

As per Mahapatra committee, loan accounts which already lost their standard status due to restructuring would be eligible upgrade to their earlier status only after observation of "satisfactory performance" during the "specified period".

"It has been decided that the specified period should be redefined as a period of one year from the commencement of the first payment of interest or principal, whichever is later, on the credit facility with longest period of moratorium under the terms of restructuring package," said the RBI draft guidelines adding that in many cases, accounts are upgraded on the basis of interest repayment only.

Only viable restructuring...

Banks just cannot take any feeble business unit for restructuring. Viability of restructuring has to be established based on certain proposed parameters by RBI. Those include return on capital employed, debt service coverage ratio, gap between the internal rate of return (IRR) and cost of funds and the amount of provision required in lieu of the decrease in the fair value of the restructured loans.

"In line with the (panel) recommendation, it has been decided that in order to qualify for the special asset classification benefit banks should ensure that the unit taken up for restructuring achieves viability in eight years (instead of 10 earlier), if it is engaged in infrastructure activities, and in five years (seven earlier) in other cases," RBI added further.

Promoter's funding...

In any restructuring scheme, as per the exiting norms, promoter(s) should pump in a minimum of 15% of banks' sacrifice due to the recast. Under such regulation, banks can only claim retention of standard category after restructuring.

"Promoters' sacrifice and additional funds brought by them should be a minimum of 15% of banks' sacrifice or 2% of the restructured debt, whichever is higher. This stipulation is the minimum and banks may decide on a higher sacrifice by promoters depending on the riskiness of the project and promoters' ability to bring in higher sacrifice amount," RBI said referring to the panel proposals.

The draft guidelines also advocated for promoters' personal guarantee in all cases of restructuring. Banks need to have it mandatorily to avail asset  classification benefits.

In 2012, Indian banks restructured Rs 2.12 lakh crore loans under the corporate debt restructuring (CDR), a mutual platform to recast debt. Higher provisions against bad loans are eroding banks' profit margins. 

saikat.das@network18online.com
 

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