Law
ministry does U-turn, agrees to conciliation in Vodafone tax case - See
more at:
http://www.indianexpress.com/news/law-ministry-does-uturn-agrees-to-conciliation-in-vodafone-tax-case/1115991/#sthash.XsaLOHML.dpuf
Law
ministry does U-turn, agrees to conciliation in Vodafone tax case - See
more at:
http://www.indianexpress.com/news/law-ministry-does-uturn-agrees-to-conciliation-in-vodafone-tax-case/1115991/#sthash.XsaLOHML.dpuf
Law ministry does U-turn, agrees to conciliation in Vodafone tax case
Law ministry does U-turn, agrees to conciliation in Vodafone tax case
In a
turnaround from its earlier position, the law ministry has given a
go-ahead to resolving the Rs 11,200 crore Vodafone tax dispute through
conciliation.
The ministry had rejected the conciliation proposal from the British telecom major to settle the long-pending dispute with Indian Income-Tax authorities.
"We have agreed to talk. We will see if there is any possibility of an agreement," new Law Minister Kapil Sibal told The Indian Express referring to the Vodafone issue.
Earlier, the ministry had rejected the proposal on the grounds that it is not permissible under the existing Income Tax Act, 1961, and executive decisions could not override the Act. In January, the finance ministry had sent a reminder notice to the telecom giant for payment of tax following which Vodafone proposed conciliation.
The ministry had then sought the Attorney General's view on the matter. The AG was of the opinion that the government will have to first amend the I-T Act, providing for such conciliation, only after which it would be able to go in for such an exercise.
However, since the finance ministry is already working on a new direct tax code, it put the ministry in a tough spot on whether to bring in substantial amendments in the existing act or wait for the new code to get implemented.
But with a new law minister in place, finance ministry officials met Sibal on Sunday following which he agreed to seek a fresh opinion of the AG on Monday. The file was cleared Monday evening and sent to the finance ministry, a ministry official said.
"In view of the clarifications received from the finance ministry earlier, the AG has opined that there is nothing to stop the finance ministry from opening a line of communication with the telecom company," the official added.
- See more at: http://www.indianexpress.com/news/law-ministry-does-uturn-agrees-to-conciliation-in-vodafone-tax-case/1115991/#sthash.XsaLOHML.dpuf
The ministry had rejected the conciliation proposal from the British telecom major to settle the long-pending dispute with Indian Income-Tax authorities.
"We have agreed to talk. We will see if there is any possibility of an agreement," new Law Minister Kapil Sibal told The Indian Express referring to the Vodafone issue.
Earlier, the ministry had rejected the proposal on the grounds that it is not permissible under the existing Income Tax Act, 1961, and executive decisions could not override the Act. In January, the finance ministry had sent a reminder notice to the telecom giant for payment of tax following which Vodafone proposed conciliation.
The ministry had then sought the Attorney General's view on the matter. The AG was of the opinion that the government will have to first amend the I-T Act, providing for such conciliation, only after which it would be able to go in for such an exercise.
However, since the finance ministry is already working on a new direct tax code, it put the ministry in a tough spot on whether to bring in substantial amendments in the existing act or wait for the new code to get implemented.
But with a new law minister in place, finance ministry officials met Sibal on Sunday following which he agreed to seek a fresh opinion of the AG on Monday. The file was cleared Monday evening and sent to the finance ministry, a ministry official said.
"In view of the clarifications received from the finance ministry earlier, the AG has opined that there is nothing to stop the finance ministry from opening a line of communication with the telecom company," the official added.
- See more at: http://www.indianexpress.com/news/law-ministry-does-uturn-agrees-to-conciliation-in-vodafone-tax-case/1115991/#sthash.XsaLOHML.dpuf
Merger between Sesa Goa and Sterlite
Industries
The
proposed merger between Sesa Goa and Sterlite Industries, aimed at creating a
mega natural resources firm from India, has moved a step closer towards
realisation with the nod from the Madras High Court today.
"The proposed Merger of Sterlite and Sesa Goa and Vedanta Group
Consolidation has received the approval of the High Court of Madras on July 25,
2013 and the approval of the High Court of Bombay at Goa on April 3,
2013," Sterlite said in a statement.
As per the merger scheme, Sterlite will be merged into Sesa Goa and a new
entity Sesa Sterlite will be created post merger. All other subsidiaries of
Vedanta, except Konkola Copper Mines, would be controlled by Sesa Sterlite
after completion of the process.
The merger would create seventh largest natural resources company of the world
(in terms of Earnings Before Interest, Taxes, Depreciation, and Amortisation)
and a cost saving of Rs 1,000 crore annually, Vedanta had said earlier.
The merger scheme has already been approved by most of the regulatory
authorities, including Goa bench of the Bombay High Court, the Competition
Commission of India, BSE and NSE. Shareholders of Sterlite and Sesa Goa have
already given their approval in June, 2012.
A glitch in realising the merger is a review petition filed by a shareholder of
Sesa Goa in the Bombay High Court, challenging the court order. However,
Sterlite said "hearing before the Division Bench (of Bombay High Court at
Goa) has been completed and the order of the Division Bench is awaited."
Post merger, Vedanta would hold 58.3 per cent stake in Sesa Sterlite. As per
the scheme of arrangements, Sterlite shareholders would get three shares of
Sesa Goa for every five shares held according to the swap ratio. This is second
restructuring exercise being attempted by Vedanta Resources as the first one in
2008 had failed due to objections raised by some minority shareholders over
valuation of a group firm, Konkola Copper Mines. Cairn India, Hindustan Zinc,
Balco, Vedanta Aluminium, Madras Aluminium, Talwandi Sabo Power and Australian
Copper Mines will become subsidiaries of Sesa Sterlite after the restructuring.
The restructuring would lead to Vedanta's debt burden on a standalone basis
falling to around USD 3.8 billion.
However, Sesa Sterlite, the new entity, would end up with a total debt of about
USD 14 billion. Shares of Sesa Goa fell by 2.24 per cent to close at 139.95
apiece on the BSE and the Sterlite scrip closed down 2.07 per cent at Rs 80.30.
Law ministry does
U-turn, agrees to conciliation in Vodafone tax case
In
a turnaround from its earlier position, the law ministry has given a go-ahead
to resolving the Rs 11,200 crore Vodafone tax dispute through conciliation.
The
ministry had rejected the conciliation proposal from the British telecom major
to settle the long-pending dispute with Indian Income-Tax authorities.
"We
have agreed to talk. We will see if there is any possibility of an
agreement," new Law Minister Kapil Sibal told The Indian Express referring
to the Vodafone issue.
Earlier,
the ministry had rejected the proposal on the grounds that it is not
permissible under the existing Income Tax Act, 1961, and executive decisions
could not override the Act. In January, the finance ministry had sent a
reminder notice to the telecom giant for payment of tax following which
Vodafone proposed conciliation.
The
ministry had then sought the Attorney General's view on the matter. The AG was
of the opinion that the government will have to first amend the I-T Act,
providing for such conciliation, only after which it would be able to go in for
such an exercise.
However,
since the finance ministry is already working on a new direct tax code, it put
the ministry in a tough spot on whether to bring in substantial amendments in the
existing act or wait for the new code to get implemented.
But
with a new law minister in place, finance ministry officials met Sibal on
Sunday following which he agreed to seek a fresh opinion of the AG on Monday.
The file was cleared Monday evening and sent to the finance ministry, a
ministry official said.
"In
view of the clarifications received from the finance ministry earlier, the AG
has opined that there is nothing to stop the finance ministry from opening a
line of communication with the telecom company," the official added.
Merger between Sesa Goa and Sterlite
Industries
The
proposed merger between Sesa Goa and Sterlite Industries, aimed at creating a
mega natural resources firm from India, has moved a step closer towards
realisation with the nod from the Madras High Court today.
"The proposed Merger of Sterlite and Sesa Goa and Vedanta Group Consolidation has received the approval of the High Court of Madras on July 25, 2013 and the approval of the High Court of Bombay at Goa on April 3, 2013," Sterlite said in a statement.
As per the merger scheme, Sterlite will be merged into Sesa Goa and a new entity Sesa Sterlite will be created post merger. All other subsidiaries of Vedanta, except Konkola Copper Mines, would be controlled by Sesa Sterlite after completion of the process.
The merger would create seventh largest natural resources company of the world (in terms of Earnings Before Interest, Taxes, Depreciation, and Amortisation) and a cost saving of Rs 1,000 crore annually, Vedanta had said earlier.
The merger scheme has already been approved by most of the regulatory authorities, including Goa bench of the Bombay High Court, the Competition Commission of India, BSE and NSE. Shareholders of Sterlite and Sesa Goa have already given their approval in June, 2012.
A glitch in realising the merger is a review petition filed by a shareholder of Sesa Goa in the Bombay High Court, challenging the court order. However, Sterlite said "hearing before the Division Bench (of Bombay High Court at Goa) has been completed and the order of the Division Bench is awaited."
Post merger, Vedanta would hold 58.3 per cent stake in Sesa Sterlite. As per the scheme of arrangements, Sterlite shareholders would get three shares of Sesa Goa for every five shares held according to the swap ratio. This is second restructuring exercise being attempted by Vedanta Resources as the first one in 2008 had failed due to objections raised by some minority shareholders over valuation of a group firm, Konkola Copper Mines. Cairn India, Hindustan Zinc, Balco, Vedanta Aluminium, Madras Aluminium, Talwandi Sabo Power and Australian Copper Mines will become subsidiaries of Sesa Sterlite after the restructuring. The restructuring would lead to Vedanta's debt burden on a standalone basis falling to around USD 3.8 billion.
However, Sesa Sterlite, the new entity, would end up with a total debt of about USD 14 billion. Shares of Sesa Goa fell by 2.24 per cent to close at 139.95 apiece on the BSE and the Sterlite scrip closed down 2.07 per cent at Rs 80.30.
January 23, 2013 News Updates
1. SEBI comes out with stringent norms for investment advisers:
Sebi has notified norms that make it mandatory for investment advisers to register with the capital market regulator and also require them to disclose all issues that could result in conflict of interests, among others
2. Bharti Airtel and Idea hike call tariffs by almost 100%:
In a blow to consumers, both Bharti Airtel and Idea Cellular have increased their call tariff rates by nearly 100 per cent. While Bharti Airtel has doubled the call rates from Re 1 per minute to Rs 2 per minute, Idea has also gone for a steep hike from 1.2 paise per second to 2 paise per second.
http://economictimes.indiatimes.com/news/news-by-industry/telecom/Bharti-Airtel-and-Idea-hike-call-tariffs-by-almost-100/articleshow/18144804.cms
In a blow to consumers, both Bharti Airtel and Idea Cellular have increased their call tariff rates by nearly 100 per cent. While Bharti Airtel has doubled the call rates from Re 1 per minute to Rs 2 per minute, Idea has also gone for a steep hike from 1.2 paise per second to 2 paise per second.
http://economictimes.indiatimes.com/news/news-by-industry/telecom/Bharti-Airtel-and-Idea-hike-call-tariffs-by-almost-100/articleshow/18144804.cms
January 22, 2013 News Updates
1. Government hikes import duty on gold, platinum to 6% from 4 %. This was done by the government
2. An over view of the top stories on the Union Budget 2013-14.
3. Is NPS said to be the best way to plan for your retirement.
Companies Bill was passed in Lok Sabha
The Companies Bill was passed in Lok
Sabha on Tuesday night. Dec 18, 2012.
The
highlight of the discussion is as follows:
In a marathon late-night sitting,
the Lok
Sabha on Tuesday passed a comprehensive law to amend the Companies Bill that will now require corporates to set aside
funds for social initiatives and strengthen the framework for independent
directors.
The Companies Bill, 2011 was passed by a voice vote in Lok Sabha that will strengthen the Serious Fraud Investigation Office (SFIO) to investigate wrongdoing of companies.
The Bill amends the Companies Act, 1956. Moving the bill for the consideration of the Lok Sabha, Corporate Affairs Minister Sachin Pilot, said private companies while maximising their growth, have responsibility towards society besides equitable and sustainable growth of the country.
The Bill proposes that profit-making companies that meet certain conditions will need to set aside 2% of their profits for corporate social responsibility (CSR). Companies that are unable to adequately spend as provided in the law they would have to disclose the reasons in their annual accounts. Pilot said that companies should voluntarily undertake CSR activities and not fear that the legislation amounts to return of "inspector raj".
The amended legislation says an auditor cannot auditor more than 20 companies and also clearly spells out the criminal liability of auditors. Auditors can be appointed for five years but the appointment has to be ratified every year.
The Bill introduces the concept of class action suits, strengthens the framework for independent directors that makes them more accountable but adequately shields them from management wrongdoings. Pilot said that under the new legislation, companies will be encouraged to create employees welfare fund. Disapproving of "vulgar display of wealth", Pilot said the law provides that remuneration of a director of a company should not be more than 5% of the net profit.
Under the new law, the CSR spending would be the responsibility of companies like their tax liabilities. The bill, with 470 clauses, seeks to make CSR spending compulsory for companies that meet certain criteria. Firms having Rs 5 crore or more profits in the last three years have to spend on CSR activities.
The Companies Bill, 2011 was passed by a voice vote in Lok Sabha that will strengthen the Serious Fraud Investigation Office (SFIO) to investigate wrongdoing of companies.
The Bill amends the Companies Act, 1956. Moving the bill for the consideration of the Lok Sabha, Corporate Affairs Minister Sachin Pilot, said private companies while maximising their growth, have responsibility towards society besides equitable and sustainable growth of the country.
The Bill proposes that profit-making companies that meet certain conditions will need to set aside 2% of their profits for corporate social responsibility (CSR). Companies that are unable to adequately spend as provided in the law they would have to disclose the reasons in their annual accounts. Pilot said that companies should voluntarily undertake CSR activities and not fear that the legislation amounts to return of "inspector raj".
The amended legislation says an auditor cannot auditor more than 20 companies and also clearly spells out the criminal liability of auditors. Auditors can be appointed for five years but the appointment has to be ratified every year.
The Bill introduces the concept of class action suits, strengthens the framework for independent directors that makes them more accountable but adequately shields them from management wrongdoings. Pilot said that under the new legislation, companies will be encouraged to create employees welfare fund. Disapproving of "vulgar display of wealth", Pilot said the law provides that remuneration of a director of a company should not be more than 5% of the net profit.
Under the new law, the CSR spending would be the responsibility of companies like their tax liabilities. The bill, with 470 clauses, seeks to make CSR spending compulsory for companies that meet certain criteria. Firms having Rs 5 crore or more profits in the last three years have to spend on CSR activities.
The link for the same is below for your reference.
June 28, 2012,
Felda Global Ventures, a palm oil company floats world's second-largest IPO in 2012
The world's second-largest initial public offering (IPO) this year, after Facebook, is from a palm oil company. Malaysia's Felda Global Ventures Holdings (FGVH), the world's third-largest palm oil company by acreage, plans to get listed today on Kuala Lumpur-based Bursa Malaysia Exchange with more than $3 billion of investor cash in its pocket.
FGVH was floated by the Malaysian government's Federal Land Development Authority
(Felda), which manages more than two million acres of plantation. That
puts Felda among the world's largest producers of the palm oil that is
used in everyday products from soap to cooking oil and has tripled in
price in the last decade.
Apart from Malaysia's largest oil palm plantations and its largest sugar mill, company has plantations in Indonesia and soyabean
and canola factories in US and Canada. It is looking for more
plantations in south-east Asia and Africa, and aims to become one of the
world's top five commodities giants by 2020. But for investors, FGVH's
real attraction lies not in what it owns, but in what it represents.
To begin with, the company spells security. As a state-controlled
company, FGVH benefits from strong political support. Malaysian Prime
Minster Najib Razak unveiled the listing plan himself.
The IPO
is set to deliver a windfall of over $500 million to its farmer
shareholders in what is likely to be an election year. Since the oil
palm industry is the fourth-largest contributor to the Malaysian
economy, no government can allow Felda to fail.
FGVH is a bet
on world food demand that is rising through a combination of growing
population and incomes. In 2005, palm oil surpassed soya oil to become
the most popular edible oil in the world with a current market share of
almost 30%.
While income growth, which affects the purchasing
power of consumers, is one of the most important factors contributing to
demand changes, urbanisation has been equally important in changing the food basket's composition.
It is a bet on the Asian growth story since palm oil is mainly consumed
in India, China, Indonesia and Pakistan that together contribute to
half the global demand. Asian palm oil demand survived the economic
crisis. China is the world's largest edible oil importer and consumer.
Clamouring for an RBI Cut,India Inc is now Cut Up
Industrialists cry foul as Guv Subbarao keeps focus on inflation;tumbling markets scare off panicky investors
The Reserve Bank of India kept interest rates unchanged on Monday,ignoring the widespread chest-beating over an economy at stall speed,and sending a clear signal that its focus is on fighting rising prices squeezing the lives of millions of Indians.Governor Duvvuri Subbarao,who appears to have made a habit of doing the unexpected and leaving the markets nonplussed,also did not cut the cash reserve ratio.The CRR stipulates the portion of deposits that banks must keep with the central bank.Stocks,bonds and currencies fell.Economists cheered the status quo,but industrialists,who blamed high interest rates for sluggish investments,were furious.The RBI said a cut in rates would fuel inflation instead of aiding economic activity since most investments are stalled due to several factors,a not-so-subtle reference to policy inertia at the government level.The persistence of overall inflation both at the wholesale and retail levels,in the face of significant growth slowdown,points to serious supply bottlenecks and sticky inflation expectations, the RBI statement said.The central bank also gave no indication about its next course of action,triggering speculation that the next cut may be as far away as October unless the global economy plunges into crisis,or the government moves swiftly to fix its finances.The CII and industry are disappointed by the monetary stance taken by the Reserve Bank of India, said Chandrajit Banerjee,director-general at the Confederation of Indian Industry (CII).
Why No Rate Cut
Prices are climbing
again since output is not matching demand.A rate cut would further drive up demand, and in turn inflation
RBI says its not
just high cost of funds,but several factors that are affecting investments,hinting at policy paralysis
A rate cut would
aggravate problems since it is a disincentive to savers.Lending rates adjusted for inflation are still low
Resolving the EU crisis
by printing more money could add to Indias price worries as commodity prices will rise
With deposit growth lagging loans,
banks would not be able to cut rates despite a repo rate cut
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Infy may Cut
Guidance Again on Forex Shock
Wild swings in currencies against $ weigh,Re cheers
Infosys Technologies may be forced to pare its already low growth guidance due to the wild swings of global currencies, including pound sterling, Australian dollar and euro, against the US dollar the currency in which Infosys forecasts growth. On the brighter side, however, the revenue reported in rupee will be boosted by a local currency fast depreciating against the greenback. At least three equity brokerages BNP Paribas, HSBC and Prabudhas Lilladher have flagged the possibility of cross-currency fluctuations forcing Infosys to lower its guidance. Based on current exchange rates, analysts estimate that Infosys sales growth forecast of 8-10 % may be impacted between 1% and 1.5%.However,this could change depending on these currencies exchange rate versus dollar during the course of the fiscal year. Among the top Indian software services companies, only Wipro provides growth guidance, but only for a quarter and not the full year, like Infosys. New Jersey-based Cognizant Technology Solutions gives full-year guidance, but gets over 75% of revenues from the US. To that extent, the company is less impacted by cross-currency fluctuations. At the current currency rates (GBP/USD,EUR/ USD,AUD/USD) the USD top line growth is likely to be impacted by near 1.5% for the full year, wrote Yogesh Aggarwal and Karthik Subramaniam of HSBC Securities in a client note last week. In that regard, fiscal year 2013 guidance may have to be adjusted downwards. Industry body Nasscom has guided for a 10-14 % growth for the sector while Cognizant recently revised its growth forecast down to 20%, from 23% earlier, in the year to December.
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RBI Hikes Rupee Export Credit
Refinance Limit
A cut above: As industry cries hoarse over RBIs policy,the central bank says hiking rupee export credit refinance limit to 50% of outstanding from 15% is equivalent to 50 bps CRR cut
Liquidity to get a boost;RBI says a higher refinance limit will result in.30k cr of additional liquidity
Reserve Bank of India has offered.30,000 crore of additional liquidity by way
of higher refinance against export credit but banks may not be too eager to
avail it.The banking regulator has raised the rupee export credit refinance
limit to 50% of outstanding,instead of 15% now,to release additional funds at
the prevailing repo rate of 8% a year.Banks will enjoy this enhanced limit from
June 30.RBI said the impact of a higher refinance limit will be equivalent to
about 50 basis points reduction in the cash reserve ratio even as it kept the
ratio unchanged at 4.75%.We may not use the enhanced limit immediately as we
are comfortable in terms of liquidity, Allahabad Bank chairman and managing
director JP Dua said.The move is going to help banks with tight liquidity
position. RBI said the move has the potential to release additional liquidity
of over.30,000 crore to banks and encourage banks to increase credit flow to
the countrys sagging export sector amid weak global demand.Raising the
refinance limit will ensure enhanced credit flow into the export sector thereby
boosting the export regime currently in place.This will help boost export sales
and,in turn,assist in bringing current account deficit down, said Deloittes
senior director in India Anis Chakravarty.He expects the liquidity situation to
ease in the near term with the latest move.The banking regulator money supply
(M3) growth has been slightly under the projected trajectory while credit
growth has moved above the projected rate.Open market operations,or OMOs,have
substantially eased liquidity conditions and RBI said it will continue to
conduct OMOs whenever required as the widening gap between deposit and credit
growth is intensifying liquidity pressures.
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Non-rupee Bond Sales Down to
4-yr Low
Cos deterred by sliding currency;decline nullifies RBI efforts to bring in dollars through overseas borrowing
The sale of non-rupee bonds has plunged to a four-year low as corporates whipsawed by a sliding rupee and increasing spread overseas preferred to borrow from local lenders.The decline in sale of bonds,denominated in currencies that are stronger than the rupee,nullifies the Reserve Bank of Indias efforts to bring in dollars through overseas borrowing to stabilise the Indian currency.The total amount raised by Indian companies through non-rupee denominated bonds,including the US dollar,Swiss franc and Chinese yuan,fell to $16 million in May from $3,146 million a year ago,according to data from Dealogic.This is an outcome of the decline in the Indian currency,which made repaying debt in stronger currencies more expensive for Indian firms that earn in rupees.Since February,the rupee has weakened by more than 14%,touching 56.40 per dollar in May.Apart from a very weak currency,the overall hedging cost would have been very high for any corporate to have borrowed in dollars or other stronger currencies, said Parthasarthy Mukherjee,president,treasury and international business,Axis Bank.In February,Rural Electrification Corporation and IDBI Bank issued Swiss franc bonds and IL&FS and ICICI Bank raised bonds denominated in Chinese yuan.Experts said companies borrowing in non-rupee currencies face the dual risk of interest rate fluctuation in the country they are borrowing from as well as exchange rate risk.Anybody who borrowed in currencies that have weakened lesser than the rupee against the dollar would have got a great offset,assuming they were un-hedged, said Harihar Krishnamoorthy,head,treasury,FirstRand Bank.Since January,the Swiss franc has weakened by 3.10% against the dollar,while the Chinese yuan has fallen by 1.27%.Companies also refrained from issuing non-rupee bonds due to the widening credit spreads amid increasing risk aversion among investors.State Bank of India Credit Default Swap (CDS) spread on five-year bonds,which acts as a proxy of Indian sovereign bonds among foreign investors,widened to 405 basis points on June 1 from 186 bps on April 7,2011,reflecting the increasing risk aversion among foreign investors.Everyone wants to reduce funding costs.Global markets are in turmoil.Secondary market spreads have shrunk, said Melwyn Rego,executive director,IDBI Bank.There is a slight lull in the market.But things change quite fast in these markets.Appetite will pick up by the end of this year. However,experts said given the expectation that the central bank may lower interest rates in the coming months to boost growth,issuers will increasingly look at domestic borrowing.Defying widespread expectations,the RBI on Monday kept policy rates steady saying a cut would aggravate the high inflation.However,going ahead,companies would prefer to borrow locally,since the cost of funding is likely to come down in near future,said Mukherjee.The non-dollar bond issuances have been cases in isolation,few and far between, he said.In the past year,interest rate arbitrage that issuers could make by borrowing overseas has been nullified,especially for corporates who have hedged their currency risks.For instance,a corporate borrowing from overseas,through a five-year loan,will pay nearly 11.75% (6-month Libor,over and above the 500 basis points spread the issuer would likely get,adding to that,MIFOR or Mumbai Interbank Forward Rate at 6%),which is at par or just marginally lower than what corporates will get from local lenders.
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