Vedanta files claim notice against govt under UK-India BIT

Billionaire Anil Agarwal-led group said it will take "all necessary steps" to protect interest against the tax notice on Cairn India.

After Cairn Energy of UK, London- listed Vedanta Group has slapped a notice of claims against the Indian government challenging the Rs 20,497-crore tax imposed on its subsidiary using retrospective legislation.

Billionaire Anil Agarwal-led group said it will take "all necessary steps" to protect interest against the tax notice on Cairn India . The group filed the notice against I-T Department move to impose Rs 20,497 crore in taxes and penalties on Cairn India for allegedly failing to deduct tax on capital gains made by its former parent Cairn Energy while doing a business reorganisation seven years back.

Cairn Energy had in 2006-07 transfered its India assets including the giant Rajasthan oil fields to a new company, Cairn India and got it listed on stock exchanges. It sold major shareholding in Cairn India to Vedanta in 2011. "...

Vedanta's Board of Directors has instructed counsel to file a notice of claim against the GoI under the UK-India bilateral investment treaty (BIT) in order to protect its legal position and shareholder interests," Vedanta said in a filing to the London Stock Exchange.

"If enforced, such tax demand would have serious consequences for Cairn India and therefore Vedanta's investment in Cairn India," the metal, mining and oil major said. Indian government has also made a parallel tax demand on Cairn UK Holdings, for which the Edinburgh-based company has sought arbitration and is seeking compensation under the UK-India Investment Treaty.

Vedanta said the claim notice was the first step required prior to commencement of international arbitration pursuant to the BIT. The company has been advised by leading international counsel that the retrospective tax legislation passed is a violation of protections accorded to investors under the BIT and constitutes a serious impairment of the treaty rights of Vedanta, it said. "Vedanta and Cairn India will continue to take all necessary steps to protect their interest and the interest of their shareholders," it added.

Cairn Energy of the UK also recently sought compensation from the Government of India for the loss in value it suffered due to an "unfair and arbitrary" Rs 10,247 crore tax demand raised using a retrospective tax law. Cairn argued that the imposition of capital gains tax on transfer of its India assets to Cairn India was not only contrary to relevant legal standards but unjust because it was an internal transaction and no shares or assets were sold to any third party to make any capital gains.

Cairn India stock price

On March 27, 2015, Cairn India closed at Rs 215.55, down Rs 7.5, or 3.36 percent. The 52-week high of the share was Rs 385.00 and the 52-week low was Rs 214.60.

The company's trailing 12-month (TTM) EPS was at Rs 21.98 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 9.81. The latest book value of the company is Rs 206.66 per share. At current value, the price-to-book value of the company is 1.04.

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Posco seeks refund from Odisha rail line undertaking

South Korean steel giant Posco has sought refund from a rail line undertaking to be set up in partnership with Odhisa government citing change in company law but said it wasn't pulling out from the USD 12 billion steel project in the state.

"For railway (SPV we) cannot continue keeping deposit any further due to changed company law," Posco India Spokesperson IG Lee said.

Posco had joined hands with the state government along with SAIL, Rail Vikas Nigam and other players in 2006 to form a Rs 590 crore special purpose vehicle (SPV) for development of a 78-km long Paradip-Haridaspur rail line in Odhisa. 

Denying reports that the company is pulling out from the multi-billion project in the state, he said: "We are still on Odisha project. Money refund is not for the steel plant land. Rail Infra refund is as per the changed company law last year."

Lee also said six employees have "voluntarily" resigned and denied it was any sign of Posco pulling out from the project.

The steel maker's proposed USD 12 billion project at Jagatsinghpur district in Odisha for producing 12 million tonne per annum (MTPA) is viewed as the largest FDI in India.

It has, however, been stalled for about a decade on account of regulatory hurdles, including delays in land acquisition.

Posco had entered into a pact with Odisha government on June 22, 2005 for the plant, which included iron ore mine development.

However apart from the delays, in a fresh blow to the company, last month the Centre said the company would be required to participate in auction to get iron ore mines to feed its facility instead of direct allotment as assured earlier.

Steel Minister Narendra Singh Tomar had said that the company, which was assured Khandadhar iron-ore mine via dispensation route will have to participate in the auction process to get a mining lease.

Posco was previously promised the Khandadhar iron ore mine by the state for its mega steel plant, considered as the biggest FDI in India, but the actual allocation never happened due to delays in regulatory approvals.

Although the company has a memorandum of understanding with the Odisha government that assured allocation of mining leases, the passage of a Bill in Parliament that made allocation of all mines through auction route only, the agreement with the state will have no value.

In 2013, Posco had scrapped the 6 MT steel project in Karnataka over land and mineral hurdles. The Odisha project was also scaled down to initial 8 MT after it failed to acquire the desired quantity of land.

Last month POSCO had inaugurated a USD 709 million steel mill in Maharashtra to scale up its presence in the country.

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India is long-term story, island of growth in EMs: Reckitt

New launches are going to play a big role in Reckitt Benckiser's growth and the company is betting big on the government's Swachh Bharat programme.

India is the only island of growth amongst the emerging markets, that's how the CEO of Reckitt Benckiser, describes India and though he doesn't see the country growing in high double-digit over the next two years, Rakesh Kapoor is indeed very bullish on the country and says the global FMCG giant is in for the very long haul.

New launches are going to play a big role in the company's growth and it is betting big on the government's Swachh Bharat programme.

Kapoor said India's story is not about a quarter or even a year, it is a very long-term story and companies that have a very long view on India will make the right choices and make India a very important part of their business as indeed we want to make.

"Just a few years ago everyone was super excited about Brazil, Russia, India and China (BRIC). Everyone thought BRIC was the answer to economic challenges in the west but just a few years later Brazil is in a very tough place, Russia for both I would say political reasons but also economic reasons is not the same high profile economic growth that we have seen so in that context India becomes quite an island of growth for many companies. India remains very important not just for its own structural demographic and economic reasons but also in the context of global growth," he added. 

Kapoor further said that the Association of Southeast Asian Nations (ASEAN), which has headquarters in markets like Singapore, Indonesia will revert to Singapore through the ASEAN regional headquarters.

"In the past India was reporting into ASEAN which was reporting into our developing markets headquarters but now we have brought India straight line into reporting into developing markets headquarters so India actually has gone up, not gone down in the hierarchy if you want to measure it like that but India of course is, has been and will be a very important force of growth for RB," said Kapoor.

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Excise duty cut in Budget gives fillip to leather industry

The leather footwear industry in Chennai seems all set to take some big strides. With the Budget reducing excise duty on leather shoes, manufacturers who were catering primarily to export markets, are now gearing up to take advantage of the big local opportunity. Jude Sannith gets us this report from Tamil Nadu's leather hub, Ranipet.

The leather footwear industry in Chennai seems all set to take some big strides. With the Budget reducing excise duty on leather shoes, manufacturers who were catering primarily to export markets, are now gearing up to take advantage of the big local opportunity. Jude Sannith gets us this report from Tamil Nadu's leather hub, Ranipet.

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Yamaha launches Alpha,Ray and Ray Z

Japanese two-wheeler maker Yamaha on Wednesday launched an all new range of its three scooter models, Alpha, Ray and Ray Z priced between Rs 47,805 and Rs 49,939, (ex-showroom Delhi).

Japanese two-wheeler maker Yamaha on Wednesday launched an all new range of its three scooter models, Alpha, Ray and Ray Z priced between Rs 47,805 and Rs 49,939, (ex-showroom Delhi).

All three models would have 'Blue Core' engine concept, which are more fuel efficient and environment friendly as it increases combustion efficiency, Yamaha Motor India said in a statement. Commenting on the launch, Yamaha Motor India Vice President Roy Kurian said: "We are looking to place ourselves as a mass-market leader in India and scooters is certainly are main focus to be able to achieve this.

Yamaha sees scooters contributing over 50 percent of its sales in the future." Spelling out the company's targets, he said: "We are eyeing around 10 percent share in the fast growing scooter market in India this year riding on our three scooter offerings.

Currently, we have over 5 percent market share in the scooter segment, which is pegged at around 3 lakh units per month". The success of the new range is essential for Yamaha to catch the target, Kurian said.

The new range would also be available in new color schemes and graphics, the statement added. 

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Not interested in anybody else but IndiGo: Qatar Airways

The one area that the Qatar government is keen on entering is the Indian aviation space and Qatar Airways has been exploring joint ventures with Indian carriers. The airline is particularly keen on tying up with India's most profitable carrier IndiGo.

The Arabian Kingdom of Qatar is looking at scaling up its economic partnership with India. During the ongoing visit of Qatari Emir Sheikh Tamim Bin Hamad Al Thani to Delhi, both sides discussed how the Arabian Kingdom can use its sovereign wealth fund the Qatar Investment Authority to invest in railways, defence and infra sectors.

Both sides are learnt to have also talked about strategic issues, including the recent incidents in Yemen and the rising threat of ISIL in the Middle East.

The one area that the Qatar government is keen on entering is the Indian aviation space and Qatar Airways has been exploring joint ventures with Indian carriers. The airline is particularly keen on tying up with India's most profitable carrier IndiGo.

Meanwhile, according to sources,  SpiceJet has now reached out to Qatar airways to be an investor in the beleaguered airline. Speaking to CNBC-TV18, Qatar Airways CEO Akbar Al Baker said the company will like to invest in IndiGo. He said they are not interested in any other company but IndiGo.

Baker concluded saying that the India's foreign direct investment (FDI) policy suits them but the country's aviation policy doesn't. "They (India) are closing the door on very important economic tool of India and this is an airline. No leaders economic vision can be achieved without opened air services and regulated frequencies," he concluded.

SpiceJet stock price

On March 25, 2015, SpiceJet closed at Rs 21.55, up Rs 0.20, or 0.94 percent. The 52-week high of the share was Rs 25.70 and the 52-week low was Rs 11.10.

The latest book value of the company is Rs -16.49 per share. At current value, the price-to-book value of the company was -1.31.

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Audi enters North East India, eyes 200 units in first year

Audi India had sold 10,851 units in 2014 and remained the largest luxury carmaker for the second consecutive year.

The country's largest luxury carmaker Audi entered the North Eastern market by opening its first dealership in Guwahati, which is expected to sell 150-200 units in the first year.

"We enter a new place only when we see there is a market for us. We expect to sell a minimum of 150-200 units in the first year," Audi India Head Joe King told PTI.

The new dealership in the capital city of Assam will offer the entire range of Audi vehicles and has already registered sale of 50 units so far, he added.

"We are the first luxury carmaker to enter this market and we will definitely get the first mover's advantage," he said.

The company, in association with the dealer, may consider organising some rally or drive in North East like other parts of India to promote the brand in future, he added.

Talking about the Eastern region, King said the company is targeting to sell 2,500-3,000 units this year in West Bengal, Bihar, Jharkhand, Odhisa and North East.

Earlier this month, the company had stated that it was focusing on long-term sustainability of its business in India while maintaining the top slot.

"The important part is the foundation that we are building to ensure long-term leadership of Audi in India and not just rather looking at monthly volumes and competition, Member of the Board of Management of Audi AG Luca de Meo had said.

Audi India had sold 10,851 units in 2014 and remained the largest luxury carmaker for the second consecutive year. The maker of various popular brands like Q5 sports utility vehicle and A3 sedan also wants to maintain a bigger presence in the premium luxury segment. 

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Nokia may be allowed to sell Chennai mobile plant

Government may allow Finnish telecom firm Nokia to sell its Chennai plant with a condition that the money realised will be kept in escrow account till final verdict is out on its Rs 21,000 crore tax dispute.

"The Prime Minister (Narendra Modi) took initiative to resolve Nokia factory issue so that mobile manufacturing can be restarted in its Chennai plant," a source told PTI.

An inter-ministerial panel was formed in this regard and Central Board of Direct Taxes (CBDT) has agreed to the proposal of allowing sale of plant and deposit realised amount in escrow account, the source added.

On March 3 in Parliament, Modi has indicated that the Tamil Nadu-based Nokia plant, which shut down a few months ago, is likely to start functioning again.

The inter-ministerial panel set up in this regard included Department of Revenue, Department of Industrial and Policy Promotion (DIPP) and Department of Electronics and IT. CBDT was part of the discussions.

The assets of Nokia Chennai plant have been frozen by the Income Tax Department and the next hearing in the Nokia tax case is on April 6, when the resolution will be placed before the Supreme Court, the source said.

"There are three buyers who have shown interest in the plant but the deal can be finalised only after the court allows its sale," the source said.

The I-T Department says Nokia India and Nokia Corporation owe Rs 21,153 crore as total tax liability, including penalty, for the seven-year period from 2006 to 2013.

US software giant Microsoft acquired Nokia's mobile devices business for about USD 7.5 billion but kept the factory out of this deal due to tax dispute with Indian authorities.

The factory continued making handset under contract from Microsoft for a year after which the US firm terminated the manufacturing agreement following which Nokia suspended operation at the plant from November 1, 2014.

The mobile phone export from India crashed by 70 percent to Rs 2,450 crore in 2014, from Rs 11,850 crore in 2013 due to production getting affected at Nokia's Chennai plant as per a report of Indian Cellular Association. 

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Sun-Ranbaxy deal gets final CCI nod; Emcure to buy 7 brands

In an order issued on Monday, CCI also approved the deal with Emcure, which would purchase the 'divestment products' that were ordered to be sold in an earlier direction issued in December last by the Competition Commission of India (CCI).

Sun Pharma  and Ranbaxy  have got approval from the Competition Commission for sale of seven brands to Emcure Pharma to comply with the fair trade watchdog's conditional nod for their USD 4-billion merger.

In an order issued on Monday, CCI also approved the deal with Emcure, which would purchase the 'divestment products' that were ordered to be sold in an earlier direction issued in December last by the Competition Commission of India (CCI).

These seven brands were at the core of the CCI's contention that the merger between Sun Pharmaceutical Industries and Ranbaxy Laboratories was 'prima-facie' in violation of competition laws and therefore the regulator had ordered divestment of those products under its 'conditional' approval to the deal.

Despite sale of these products, the merger would create India's largest and the world's fifth largest drugmaker. The 'conditional' approval was given by CCI on December 5, 2014 after a public scrutiny of the deal. Consequently, the two companies were asked to identify a purchaser for the seven brands to be divested.

As per the CCI order, Sun and Ranbaxy last month proposed to CCI that Emcure Pharmaceuticals Limited would purchase all 7 divestment products, following which the companies were asked to provide some further details and clarifications. CCI had also appointed PwC as a monitoring agency for the divestment process.

"The Commission considered the reports submitted by the Monitoring Agency and the Proposal along with all information submitted by the parties and Emcure, in order to assess whether Emcure meets the requirements laid down in the order and whether the APA (Asset Purchase Agreement) and the SA (Supply Agreement) proposed to be entered into by the Parties and Emcure, are in accordance with the provisions of the Order," CCI said.

The regulator said that it has found Emcure to be "a company active in the sales and marketing of pharmaceutical products in the India and has the financial resources, proven expertise, manufacturing capability or ability to outsource manufacturing and incentive to maintain and develop the Divestment Products, as a viable and active competitor to the Parties in the relevant market".

Accordingly, CCI has approved "Emcure as the Approved Purchaser of the Divestment Products". In December, CCI had directed Sun Pharma to divest all products containing 'Tamsulosin + Tolterodine' which are marketed and supplied under the Tamlet brand name.

Similarly, Ranbaxy was directed to divest all products containing Leuprorelin which are marketed and supplied under the Eligard brand name. It also had to divest products such as Terlibax, Rosuvas EZ, Olanex F, Raciper L and Triolvance. In April, 2014, Sun Pharma had announced it would acquire troubled rival Ranbaxy in a USD 4-billion deal that includes USD 800 million debt.

Shasun Pharma stock price

On March 23, 2015, Shasun Pharmaceuticals closed at Rs 344.40, up Rs 1.40, or 0.41 percent. The 52-week high of the share was Rs 373.70 and the 52-week low was Rs 67.70.

The company's trailing 12-month (TTM) EPS was at Rs 7.57 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 45.5. The latest book value of the company is Rs 52.55 per share. At current value, the price-to-book value of the company is 6.55.

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AAI faces fresh labour troubles over airport privatisation

AAI Chairman RK Shrivastava said the authority is trying to fast track the request for proposals (RFPs) for this process but needs to address HR issues first.

The Airports Authority of India's (AAI) on-again-off-again plan to develop airports under the PPP model by inviting private parties has once again run into delays. This time, the AAI had proposed that four airports at Chennai, Kolkata, Jaipur and Ahmedabad be given to private developers. But vociferous protests, including a threat to strike work by employees, have led AAI to rethink the entire process.

AAI Chairman RK Shrivastava said the authority is trying to fast track the request for proposals (RFPs) for this process but needs to address HR issues first.

"There are many issues relating to the HR. A certain decision has to be taken. There are many issues which are linked with this privatization," he told CNBC-TV18.

AAI employees have questioned the very rationale for giving out airports on PPP model. They are also seeking status quo on their service conditions by asking for deployment under the new management on a deputation basis

"Employees don't want absorption, their concern is already there in the charter of demands and the government will address them," Shrivastava said.

The plan to develop AAI-owned airports by inviting private developers has been mired in delays right from the start. The AAI first wanted to develop 6 airports, then pruned the list and now even this process is delayed.

Earlier attempts by the authority to get private developers to run showcase airports have not been all successful as there were widespread criticism of Delhi and Mumbai airport privatisation leading to very high user tariffs.

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