Bajaj Fin may rejig mgmt to abide by RBI’s banking norms

Nov 29, 2013, 09.42 PM IST

In an exclusive interview with CNBC-TV18, Rajiv Bajaj, director, Bajaj Auto said its finance arm - Bajaj Finance- may undertake an organisational restructuring to ensure that there is no 'conflict of interest'.

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Bajaj Fin may rejig mgmt to abide by RBI's banking norms

In an exclusive interview with CNBC-TV18, Rajiv Bajaj, director, Bajaj Auto said its finance arm - Bajaj Finance- may undertake an organisational restructuring to ensure that there is no 'conflict of interest'.

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Bajaj Fin may rejig mgmt to abide by RBI's banking norms

In an exclusive interview with CNBC-TV18, Rajiv Bajaj, director, Bajaj Auto said its finance arm - Bajaj Finance- may undertake an organisational restructuring to ensure that there is no 'conflict of interest'.

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Just a day after the Tatas opted out of the race for a banking licence, its Pune-based rival business family Bajaj reiterated its commitment and intent on converting from a non-banking financial company into a full-fledged bank.

Also read: Birlas bullish on banking foray; look for minority partners

In an exclusive interview with CNBC-TV18, Rajiv Bajaj, director, Bajaj Auto said its finance arm - Bajaj Finance - may undertake an organisational restructuring to ensure that there is no 'conflict of interest'.
 
Bajaj said that the firm was in a dilemma since currently the auto division of the finance company finances 30 percent of Bajaj Auto's total domestic sales. This could get impacted if the NBFC becomes a full-fledged bank raising questions of a possible 'conflict of interest' .

 The MD of Bajaj Auto said that it is engaging experts to ensure that while the new bank complies with the requirements at the same time lending to Bajaj Auto is not impacted.
 
"Auto Finance division of Bajaj Auto is managed by me through my colleague who too is a Bajaj Auto employee. If Bajaj Finance becomes a bank then to avoid any 'conflict of interest' we may have to relinquish our roles in managing the auto division," Bajaj told CNBC-TV18.

He also voiced concerns at a time when Bajaj's competitors are becoming aggressive in auto lending the company could ill-afford to hamper two-wheeler and three-wheeler lending for Bajaj Auto.
 
"Shareholders of Bajaj Auto could be concerned as financing is critical to combat competion and the slowing economy and is the lifeblood of sales. We are seeing our competitiors strengthen their financing arms. We need to find out the optimum middle ground," he added.

A senior executive in the banking industry told CNBC-TV18 that auto companies wanting to convert into full-fledged banks could face this dilemma.
 
Currently Bajaj Group is the only NBFC that has shown interest in converting into a bank, which has a sizeable auto business. In fact Bajaj Auto is the 'golden goose' for the entire Bajaj Group.

Other groups with auto businesses like the Tatas and Mahindras have already opted out of the race for winning a banking license. Maruti Suzuki and Hero MotoCorp have already said they have no ambition to becoming banks.
 
Tatas and Mahindras have cited the stringent condition of meeting CRR and SLR requirement from the first day of becoming a bank. "After prolonged deliberations and detailed analysis, Tata Sons has therefore decided to withdraw its application dated July 1, 2013, from the current round of licensing," Tata Sons had said in a statement on Thursday.

Bajaj Auto stock price

On November 29, 2013, Bajaj Auto closed at Rs 1974.75, up Rs 23.75, or 1.22 percent. The 52-week high of the share was Rs 2228.95 and the 52-week low was Rs 1657.50.

The company's trailing 12-month (TTM) EPS was at Rs 109.18 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 18.09. The latest book value of the company is Rs 273.08 per share. At current value, the price-to-book value of the company is 7.23.

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Birlas bullish on banking foray; look for minority partners

While the Tata Group may have backed out of the race for a banking licence , CNBC-TV18 has learnt from sources that the Aditya Birla Group is not only bullish about its banking foray but also believes that the foray will help it consolidate its portfolio offerings.

Sources say that the group is looking at investing upto Rs 700-800 crore for its banking arm and is firming up details including professionals to be hired.

"The group is confident about its plans and is hiring senior professionals from the industry to be able to draft out a firm plan for the banking foray. There are no hurdles with respect to regulatory concerns etc," says a source familiar with the development.

Sources say the group is also open to bringing in a partner for a majority stake but only if the fit is right.

"What the group wants is a partner that can bring in the domain expertise and technology framework. In terms of capital though, the Birla Group is very strong and doesn't need help in terms of capital investment. If the group doesn't find a suitable partner, it may not go ahead with the partner route," said the source.

When contacted the spokesperson for Aditya Birla Group said they cannot comment on market speculation as per policy.

Aditya Birla stock price

On November 29, 2013, Aditya Birla Money closed at Rs 13.25, down Rs 0.3, or 2.21 percent. The 52-week high of the share was Rs 23.95 and the 52-week low was Rs 10.60.

The latest book value of the company is Rs 4.97 per share. At current value, the price-to-book value of the company was 2.67.

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No equity dilution; hope to sell PPP assets: Ramky Grp

Infrastructure industries has been bogged down by various issues like lack of equity, rising cost of debt and availability of receivables getting stretched said Goutham Reddy, Managing Director, Ramky Group.

The company would not look at equity dilution to fund new projects but in fact is looking at selling PPP assets worth Rs 1700 crore from the road sector.

While fundamentally, operating margins are intact liquidity concerns are impacting the topline which in turn is resulting in negative bottomline, he said.

The current order book for the company stands at Rs 10,500 crore of which Rs 8,500 is effectively executable and the rest is caught up in client related issues, land acquisitions etc.

Also read: RBI widens infra sector lending sub-category

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

Q: The last few quarters have been tough. Last quarter your revenues decline 33 percent, you all had an operating loss, what is your sense for the full year, what is the revenue going to look like and are we likely to see a loss at the operating level?

A: Fundamentally as you are seeing in the sector, there are three major issues that the sector is going through. The equity that assumes to be available as stocks being available, cost of debt has substantially gone up and availability of receivables have also started to get stretched. All these are concerns facing the industry.

The liquidity concern is leading through a reduction in the revenue. While fundamentally operating margins are intact but because of the liquidity crisis, there is certainly an impact on the topline resulting in a bottomline being negative.

Yes, the Q3 also looks very similar and hopefully we should get a better Q4 if cash flows improves, which are likely to happen in the current month.

Q: I wanted to ask you with regard to your working capital, it has been elevated around 160 days odd mark, take us through that, what is the recent update?

A: I think it is a simple function of equity not being available as I was just explaining to you that there are five things that are continuing to happen. One is that the debt is going down because some of the term loans are getting repaid and no fresh loans are being issued. Mobilisation advance is going down because there is serious mobilisation advance collected being recovered against the revenue, order inflow is not happening, retention money is continuing to go up, fixed assets are still getting added because of the commitments made and so are the investments which are getting added. As a result of this, working capital cycle is certainly enhanced.

Q: Is it going to get worse on the working capital in the coming two quarters?

A: I guess we have got saturated on this because I don't see any further possibility of enhancing the cycle. So I don't think it is going to get worse from here. It is going to be around this range.

Q: With regard to your order book. Could you take us through what is it currently standing at and could you break it up for us segment wise?

A: We have got about Rs 10,500 crore of order book, of which about Rs 1,500-2,000 crore is not very effectively executable in the current environment because of the client related issues, land acquisition related issues etc out of the balance Rs 8,500 crore which is effectively executable, we are seeing about Rs 3,000 crore is in the road sector, Rs 1,800 crore in the water sector, about Rs 1,800 crore in the building sector and the balance is spread between industrial construction, irrigation projects, transmission and distribution of power.

Q: Your debtor provisioning is also very high in the previous quarter. It was about Rs 38 crore just in the last quarter, could you tell us the outlook on the debtor provision, have you all managed to recover some money or has the situation gotten worse than even next quarter, we are going to see such a high provisioning figure?

A: In fact the debtor position has improved over the last couple of quarters. While it is still high, if you look at the overall net current assets; the current assets are coming down because with depleted working capital and depleted liquidity, you are forced to recover some of your current assets at a faster pace or even on a conservative assessment, we are able to pullback some cash from the system.

So debtors position and the current asset position is improving. But the solution to this whole infrastructure problem has to come from the government and unless that starts, we do not create a starting point for a change.

Q: Are there any chances of equity dilution if in case you require additional capital and if in case you will win some more public-private partnership (PPP) projects?

A: We are certainly not looking at equity dilution but we are looking at sell of some PPP assets but as you are able to see there are too many assets in the market. So how quickly this will happen will depend on environmental change.

Q: What is the size of the PPP projects that you are looking to sell?

A: We are looking at Rs 1,700 crore project in road sector.

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I-T dept will have to change approach towards Vodafone: ELP

Hailing the Bombay High Court's reprimand towards the I-T Department in the Vodafone tax issue, Rohan Shah, managing partner, ELP, says the revenue department will now have to rectify its harassing approach towards the telecom major.

Speaking to CNBC-TV18, Shah says the HC's move to remand the case back to the assessing officer lays bare the fact that even the court believes the tax department was not taking the appropriate approach in the tax tussle.

British telecom major Vodafone had acquired Honk Kong-based Hutchison Whampoa's stake in Indian telecom major, Hutchison Essar (famously known as Hutch) in 2007. The Rs 11,200 crore tax liability issue is based on this acquisition.

While the Supreme Court (SC) had ruled in Vodafone's favour in 2012, the government later changed its views on the same, thereby attracting the retrospective tax claims on deals that were already done with.

There have been numerous conciliatory talks between the government and Vodafone, but no amicable understanding has been reached yet.

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

Q: The Bombay High Court seems to have remanded the case back to the assessing officer and accompanied that decision with some very stern comments for the Revenue Department that it is natural for Vodafone to feel harassed, that no government should visit this kind of misery on an assessee. What do you make of this decision?

A: I think this is a very positive decision after the Supreme Court judgement in Vodafone. Comments in terms of what the attitude of the Tax Department should be qua the assesses and in a way, an affirmation once again that the approach being taken by the Tax Department was not the appropriate one. So, even in terms of the remand the remand in that manner is not going to be completely open-ended, because the approach that had been taken till today is certainly not the approach they can readopt.

Q: But it does mean that they can continue to agitate that share premium must be taxed in the manner that they have done, so both with the demand on Vodafone as well as the demand of Shell or do you think that this kind of commentary from the Bombay High Court kills the Tax Department's effort to tax share premium?

A: The text of the judgement is not yet available, but the controversy was could you tax it, the argument being that it is capital receipt and you could not tax it. To the extent that they have said that the approach was not correct and that in fact amounted to harassment, even though there is a remand, I do no think the Tax Department will be able to adopt the same arguments or the same approach that they had before.

Q: Would this case have gone more strongly in favour of Vodafone had the Bombay High Court just knocked down this effort to tax share premium? So do you think that in some sense remanding it back to the assessing officer continues to be a slight negative or uncertainty issue for Vodafone and equally for Shell?

A: We have to see this in the background that the Supreme Court has consistently said that entertaining a writ petition at a point in time where there are alternate remedies is something that should be discouraged. I would not have expected them to come to an absolute finding on the tax position.

Q: I have some more comments coming in from the Bombay High Court. The Bombay High Court said, 'we are not going into the merits. This appears to be a fit case to direct the Dispute Resolution Panel (DRP) to decide on chargeability on shortfall of premium' That seems to be partially negative then?

A: Not negative. It is left open. There are the comments in terms of their not standing by the approach taken by the Tax Department. My sense here is it was only fair to expect them to remand. They could not have come to a final finding.

Given the nature of their observations I think the department will certainly be on their guard. You are not going to see something completely fancy and at the same point in time, I do not think they will pursue the line that they had before the matter is open for decision and therefore both the Tax Department and the assessee will obviously have an opportunity to put forth whatever arguments they have to sustain their own case.

Q: This does look like a bit of a negative. Couldn't the Bombay High Court just have said this is a ludicrous effort to try and tax what is the capital receipt and hence it should not proceed at all?

A: Not having the full judgement is a little jeopardous. What we are all reading is the summation of observation and the operative order in terms of the remand. We need to see what the rationale is. It has sent it back for a remand which is only logical and we need to see the tax as to whether even on the approach and the technicalities they have come down against the department. That we do not have right now.

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SEBI relaxes rules for infra debt funds

The Securities and Exchange Board of India (SEBI) relaxed fundraising rules on Friday for infrastructure debt mutual funds in its continued bid to channel long-term capital to finance the country's highways, toll roads and bridges.

The SEBI said on Friday it would allow foreign feeder funds that get at least 20 percent of their managed assets from long-term investors such as sovereign wealth funds and pension funds to qualify as "strategic investors".

That distinction is important given SEBI requires these infrastructure debt funds (IDFs), which operate as mutual funds, to get a minimum commitment of 250 million rupees from strategic investors before launching.

IDFs were first announced in 2011 by the then finance minister Pranab Mukherjee to channel long-term capital to fund India's infrastructure needs, but such funds have seen little traction in the last two years.

India allows two types of IDFs, ones that operate as mutual funds and are supervised by SEBI and others that operate as non-banking financial companies and are regulated by the central bank.

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Videocon to seek shareholder nod to raise up to $800 mn

Nov 30, 2013, 03.45 PM IST

The funds could be raised through various means, such as the issue of shares or foreign currency convertible bonds, the company told the stock exchange in a statement.

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Videocon to seek shareholder nod to raise up to $800 mn

The funds could be raised through various means, such as the issue of shares or foreign currency convertible bonds, the company told the stock exchange in a statement.

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Videocon to seek shareholder nod to raise up to $800 mn

The funds could be raised through various means, such as the issue of shares or foreign currency convertible bonds, the company told the stock exchange in a statement.

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Videocon Industries proposes to seek shareholder approval to raise up to Rs 5000 crore, the company said on Saturday.

The funds could be raised through various means, such as the issue of shares or foreign currency convertible bonds, the company told the stock exchange in a statement.

Videocon Ind stock price

On November 29, 2013, Videocon Industries closed at Rs 170.30, up Rs 0.35, or 0.21 percent. The 52-week high of the share was Rs 246.25 and the 52-week low was Rs 163.75.

The latest book value of the company is Rs 309.51 per share. At current value, the price-to-book value of the company was 0.55.

Action in Videocon Industries

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I-T dept will have to change approach towards Vodafone: ELP

Hailing the Bombay High Court's reprimand towards the I-T Department in the Vodafone tax issue, Rohan Shah, managing partner, ELP, says the revenue department will now have to rectify its harassing approach towards the telecom major.

Speaking to CNBC-TV18, Shah says the HC's move to remand the case back to the assessing officer lays bare the fact that even the court believes the tax department was not taking the appropriate approach in the tax tussle.

British telecom major Vodafone had acquired Honk Kong-based Hutchison Whampoa's stake in Indian telecom major, Hutchison Essar (famously known as Hutch) in 2007. The Rs 11,200 crore tax liability issue is based on this acquisition.

While the Supreme Court (SC) had ruled in Vodafone's favour in 2012, the government later changed its views on the same, thereby attracting the retrospective tax claims on deals that were already done with.

There have been numerous conciliatory talks between the government and Vodafone, but no amicable understanding has been reached yet.

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

Q: The Bombay High Court seems to have remanded the case back to the assessing officer and accompanied that decision with some very stern comments for the Revenue Department that it is natural for Vodafone to feel harassed, that no government should visit this kind of misery on an assessee. What do you make of this decision?

A: I think this is a very positive decision after the Supreme Court judgement in Vodafone. Comments in terms of what the attitude of the Tax Department should be qua the assesses and in a way, an affirmation once again that the approach being taken by the Tax Department was not the appropriate one. So, even in terms of the remand the remand in that manner is not going to be completely open-ended, because the approach that had been taken till today is certainly not the approach they can readopt.

Q: But it does mean that they can continue to agitate that share premium must be taxed in the manner that they have done, so both with the demand on Vodafone as well as the demand of Shell or do you think that this kind of commentary from the Bombay High Court kills the Tax Department's effort to tax share premium?

A: The text of the judgement is not yet available, but the controversy was could you tax it, the argument being that it is capital receipt and you could not tax it. To the extent that they have said that the approach was not correct and that in fact amounted to harassment, even though there is a remand, I do no think the Tax Department will be able to adopt the same arguments or the same approach that they had before.

Q: Would this case have gone more strongly in favour of Vodafone had the Bombay High Court just knocked down this effort to tax share premium? So do you think that in some sense remanding it back to the assessing officer continues to be a slight negative or uncertainty issue for Vodafone and equally for Shell?

A: We have to see this in the background that the Supreme Court has consistently said that entertaining a writ petition at a point in time where there are alternate remedies is something that should be discouraged. I would not have expected them to come to an absolute finding on the tax position.

Q: I have some more comments coming in from the Bombay High Court. The Bombay High Court said, 'we are not going into the merits. This appears to be a fit case to direct the Dispute Resolution Panel (DRP) to decide on chargeability on shortfall of premium' That seems to be partially negative then?

A: Not negative. It is left open. There are the comments in terms of their not standing by the approach taken by the Tax Department. My sense here is it was only fair to expect them to remand. They could not have come to a final finding.

Given the nature of their observations I think the department will certainly be on their guard. You are not going to see something completely fancy and at the same point in time, I do not think they will pursue the line that they had before the matter is open for decision and therefore both the Tax Department and the assessee will obviously have an opportunity to put forth whatever arguments they have to sustain their own case.

Q: This does look like a bit of a negative. Couldn't the Bombay High Court just have said this is a ludicrous effort to try and tax what is the capital receipt and hence it should not proceed at all?

A: Not having the full judgement is a little jeopardous. What we are all reading is the summation of observation and the operative order in terms of the remand. We need to see what the rationale is. It has sent it back for a remand which is only logical and we need to see the tax as to whether even on the approach and the technicalities they have come down against the department. That we do not have right now.

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Anil Agarwal regrets investing in aluminium proj in Odisha

With raw material issues casting a shadow on his Rs 50,000-crore aluminium project in Odisha, metal czar Anil Agarwal said he regretted choosing India over an acquisition in the US for the investment.

"You know, how my mind was working at that time. I was buying Asarco, it was ready-made company, (requiring) a couple of billion dollars. Either, I could do Asarco or I could do Vedanta Aluminium.

"I said, look, I am going to work for my country. I said I want to create this 4,000 MW power plant, I am going to create 3 million tonne (MT) aluminium capacity. We have bauxite, we have human resource, let's do it here.

Also read: Odisha allows Vedanta to source bauxite from L&T mines

"I think, at the end of the day, if you ask me, I regret. I could have done better if I would have bought Asarco. This would have been a feather on my cap. I don't know why it is coming, but it is coming from my heart," Vedanta Resources Chairman Agarwal said in an interview to a news channel.

His comments come in the backdrop of Vedanta's alumina refinery project at Lanjigarh in Odisha staring  at an uncertain future due to lack of assured supply of input. The refinery and its proposed long-term bauxite source --mines in Niyamgiri hills -- have been in the midst of controversies even since the beginning as the local tribals opposed the projects.

Finally, during July-August this year, 12 gram sabhas, selected by Odisha government for a referendum on mining in Niyamgiri hills, had rejected the mining proposal altogether, dashing Vedanta's hopes for getting the raw material.

It is currently operating at about 50-60 per cent of the installed capacity. The unit needs three million tonnes of bauxite to run at full capacity.

Agarwal said it was his "biggest passion" to build a new aluminium project in the country following a thought that "the only thing that I can do for India is to create this capacity of aluminium."

The company has invested Rs 50,000 crore in the refinery alongwith an aluminium smelter of 1.5 MTPA at Jharsuguda and a captive power plant in the state. It created at least half a million jobs, Agarwal said."Tremendous work we have done," he added.

Vedanta had bid for US-based miner Asarco, but backed out later. It had to pay USD 132.75 million as damage to Asarco for its unsuccessful takeover bid in 2009. Meanwhile, earlier this week, Odisha had allowed Vedanta to source bauxite from mines owned by Larsen and Toubro for the refinery project.

Larsen and Toubro has two bauxite reserves at Sijimali and Kutrumali mines in south Odisha's Rayagada and Kalahandi districts respectively. Both the mines have an estimated bauxite deposit of about 300 million tonnes.

Larsen stock price

On November 29, 2013, Larsen and Toubro closed at Rs 1043.35, up Rs 19.95, or 1.95 percent. The 52-week high of the share was Rs 1138.33 and the 52-week low was Rs 678.10.

The company's trailing 12-month (TTM) EPS was at Rs 50.16 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 20.8. The latest book value of the company is Rs 272.92 per share. At current value, the price-to-book value of the company is 3.82.

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No equity dilution; hope to sell PPP assets: Ramky Grp

Infrastructure industries has been bogged down by various issues like lack of equity, rising cost of debt and availability of receivables getting stretched said Goutham Reddy, Managing Director, Ramky Group.

The company would not look at equity dilution to fund new projects but in fact is looking at selling PPP assets worth Rs 1700 crore from the road sector.

While fundamentally, operating margins are intact liquidity concerns are impacting the topline which in turn is resulting in negative bottomline, he said.

The current order book for the company stands at Rs 10,500 crore of which Rs 8,500 is effectively executable and the rest is caught up in client related issues, land acquisitions etc.

Also read: RBI widens infra sector lending sub-category

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

Q: The last few quarters have been tough. Last quarter your revenues decline 33 percent, you all had an operating loss, what is your sense for the full year, what is the revenue going to look like and are we likely to see a loss at the operating level?

A: Fundamentally as you are seeing in the sector, there are three major issues that the sector is going through. The equity that assumes to be available as stocks being available, cost of debt has substantially gone up and availability of receivables have also started to get stretched. All these are concerns facing the industry.

The liquidity concern is leading through a reduction in the revenue. While fundamentally operating margins are intact but because of the liquidity crisis, there is certainly an impact on the topline resulting in a bottomline being negative.

Yes, the Q3 also looks very similar and hopefully we should get a better Q4 if cash flows improves, which are likely to happen in the current month.

Q: I wanted to ask you with regard to your working capital, it has been elevated around 160 days odd mark, take us through that, what is the recent update?

A: I think it is a simple function of equity not being available as I was just explaining to you that there are five things that are continuing to happen. One is that the debt is going down because some of the term loans are getting repaid and no fresh loans are being issued. Mobilisation advance is going down because there is serious mobilisation advance collected being recovered against the revenue, order inflow is not happening, retention money is continuing to go up, fixed assets are still getting added because of the commitments made and so are the investments which are getting added. As a result of this, working capital cycle is certainly enhanced.

Q: Is it going to get worse on the working capital in the coming two quarters?

A: I guess we have got saturated on this because I don't see any further possibility of enhancing the cycle. So I don't think it is going to get worse from here. It is going to be around this range.

Q: With regard to your order book. Could you take us through what is it currently standing at and could you break it up for us segment wise?

A: We have got about Rs 10,500 crore of order book, of which about Rs 1,500-2,000 crore is not very effectively executable in the current environment because of the client related issues, land acquisition related issues etc out of the balance Rs 8,500 crore which is effectively executable, we are seeing about Rs 3,000 crore is in the road sector, Rs 1,800 crore in the water sector, about Rs 1,800 crore in the building sector and the balance is spread between industrial construction, irrigation projects, transmission and distribution of power.

Q: Your debtor provisioning is also very high in the previous quarter. It was about Rs 38 crore just in the last quarter, could you tell us the outlook on the debtor provision, have you all managed to recover some money or has the situation gotten worse than even next quarter, we are going to see such a high provisioning figure?

A: In fact the debtor position has improved over the last couple of quarters. While it is still high, if you look at the overall net current assets; the current assets are coming down because with depleted working capital and depleted liquidity, you are forced to recover some of your current assets at a faster pace or even on a conservative assessment, we are able to pullback some cash from the system.

So debtors position and the current asset position is improving. But the solution to this whole infrastructure problem has to come from the government and unless that starts, we do not create a starting point for a change.

Q: Are there any chances of equity dilution if in case you require additional capital and if in case you will win some more public-private partnership (PPP) projects?

A: We are certainly not looking at equity dilution but we are looking at sell of some PPP assets but as you are able to see there are too many assets in the market. So how quickly this will happen will depend on environmental change.

Q: What is the size of the PPP projects that you are looking to sell?

A: We are looking at Rs 1,700 crore project in road sector.

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SEBI relaxes rules for infra debt funds

The Securities and Exchange Board of India (SEBI) relaxed fundraising rules on Friday for infrastructure debt mutual funds in its continued bid to channel long-term capital to finance the country's highways, toll roads and bridges.

The SEBI said on Friday it would allow foreign feeder funds that get at least 20 percent of their managed assets from long-term investors such as sovereign wealth funds and pension funds to qualify as "strategic investors".

That distinction is important given SEBI requires these infrastructure debt funds (IDFs), which operate as mutual funds, to get a minimum commitment of 250 million rupees from strategic investors before launching.

IDFs were first announced in 2011 by the then finance minister Pranab Mukherjee to channel long-term capital to fund India's infrastructure needs, but such funds have seen little traction in the last two years.

India allows two types of IDFs, ones that operate as mutual funds and are supervised by SEBI and others that operate as non-banking financial companies and are regulated by the central bank.

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Birlas bullish on banking foray; look for minority partners

While the Tata Group may have backed out of the race for a banking licence , CNBC-TV18 has learnt from sources that the Aditya Birla Group is not only bullish about its banking foray but also believes that the foray will help it consolidate its portfolio offerings.

Sources say that the group is looking at investing upto Rs 700-800 crore for its banking arm and is firming up details including professionals to be hired.

"The group is confident about its plans and is hiring senior professionals from the industry to be able to draft out a firm plan for the banking foray. There are no hurdles with respect to regulatory concerns etc," says a source familiar with the development.

Sources say the group is also open to bringing in a partner for a majority stake but only if the fit is right.

"What the group wants is a partner that can bring in the domain expertise and technology framework. In terms of capital though, the Birla Group is very strong and doesn't need help in terms of capital investment. If the group doesn't find a suitable partner, it may not go ahead with the partner route," said the source.

When contacted the spokesperson for Aditya Birla Group said they cannot comment on market speculation as per policy.

Aditya Birla stock price

On November 29, 2013, Aditya Birla Money closed at Rs 13.25, down Rs 0.3, or 2.21 percent. The 52-week high of the share was Rs 23.95 and the 52-week low was Rs 10.60.

The latest book value of the company is Rs 4.97 per share. At current value, the price-to-book value of the company was 2.67.

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Bajaj Fin may rejig mgmt to abide by RBI’s banking norms

Nov 29, 2013, 09.42 PM IST

In an exclusive interview with CNBC-TV18, Rajiv Bajaj, director, Bajaj Auto said its finance arm - Bajaj Finance- may undertake an organisational restructuring to ensure that there is no 'conflict of interest'.

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Bajaj Fin may rejig mgmt to abide by RBI's banking norms

In an exclusive interview with CNBC-TV18, Rajiv Bajaj, director, Bajaj Auto said its finance arm - Bajaj Finance- may undertake an organisational restructuring to ensure that there is no 'conflict of interest'.

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Bajaj Fin may rejig mgmt to abide by RBI's banking norms

In an exclusive interview with CNBC-TV18, Rajiv Bajaj, director, Bajaj Auto said its finance arm - Bajaj Finance- may undertake an organisational restructuring to ensure that there is no 'conflict of interest'.

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Just a day after the Tatas opted out of the race for a banking licence, its Pune-based rival business family Bajaj reiterated its commitment and intent on converting from a non-banking financial company into a full-fledged bank.

Also read: Birlas bullish on banking foray; look for minority partners

In an exclusive interview with CNBC-TV18, Rajiv Bajaj, director, Bajaj Auto said its finance arm - Bajaj Finance - may undertake an organisational restructuring to ensure that there is no 'conflict of interest'.
 
Bajaj said that the firm was in a dilemma since currently the auto division of the finance company finances 30 percent of Bajaj Auto's total domestic sales. This could get impacted if the NBFC becomes a full-fledged bank raising questions of a possible 'conflict of interest' .

 The MD of Bajaj Auto said that it is engaging experts to ensure that while the new bank complies with the requirements at the same time lending to Bajaj Auto is not impacted.
 
"Auto Finance division of Bajaj Auto is managed by me through my colleague who too is a Bajaj Auto employee. If Bajaj Finance becomes a bank then to avoid any 'conflict of interest' we may have to relinquish our roles in managing the auto division," Bajaj told CNBC-TV18.

He also voiced concerns at a time when Bajaj's competitors are becoming aggressive in auto lending the company could ill-afford to hamper two-wheeler and three-wheeler lending for Bajaj Auto.
 
"Shareholders of Bajaj Auto could be concerned as financing is critical to combat competion and the slowing economy and is the lifeblood of sales. We are seeing our competitiors strengthen their financing arms. We need to find out the optimum middle ground," he added.

A senior executive in the banking industry told CNBC-TV18 that auto companies wanting to convert into full-fledged banks could face this dilemma.
 
Currently Bajaj Group is the only NBFC that has shown interest in converting into a bank, which has a sizeable auto business. In fact Bajaj Auto is the 'golden goose' for the entire Bajaj Group.

Other groups with auto businesses like the Tatas and Mahindras have already opted out of the race for winning a banking license. Maruti Suzuki and Hero MotoCorp have already said they have no ambition to becoming banks.
 
Tatas and Mahindras have cited the stringent condition of meeting CRR and SLR requirement from the first day of becoming a bank. "After prolonged deliberations and detailed analysis, Tata Sons has therefore decided to withdraw its application dated July 1, 2013, from the current round of licensing," Tata Sons had said in a statement on Thursday.

Bajaj Auto stock price

On November 29, 2013, Bajaj Auto closed at Rs 1974.75, up Rs 23.75, or 1.22 percent. The 52-week high of the share was Rs 2228.95 and the 52-week low was Rs 1657.50.

The company's trailing 12-month (TTM) EPS was at Rs 109.18 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 18.09. The latest book value of the company is Rs 273.08 per share. At current value, the price-to-book value of the company is 7.23.

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'Jignesh Shah will not be able to come back to MCX-SX'

It is India's youngest stock exchange and was a platform that Jignesh Shah, the engineer turned entrepreneur, fought long and hard to establish. It took time and he battled like a man possessed to the point when the company was finally notified as a "recognized stock exchange" under Section 2(39) of the Companies Act on December 21, 2012.

Also read: MCX-SX now controlled by FIs, not Financial Tech: GK Pillai

Less than a year later, Shah has lost control over the exchange and will never be able to make it back.

To add to his woes, the new Board of MCX-SX will soon review the close ties that exist between the parent firm Financial Technologies (India) Ltd ( FTIL ) and the exchange.

Shah had to step down as the chairman and that place was taken former Home secretary Gopal K Pillai, a vastly experienced administrator with long stints in crucial government departments including that of Commerce.

Pillai, along with other public interest directors appointed by the Securities and Exchange Board of India (SEBI) are now steering the loss making exchange. A new chief executive officer has been selected and his announcement awaits clearance from the stock market regulator.

Pillai told CNBC TV18 that Shah will never be able to come back to the stock exchange. "The former promoters are now out of MCX-SX. Shah is a minority shareholder and the stock exchange is now looking at being arms length from Shah", he said.

MCX-SX suffered a major loss of investor consequence due to the scandal at NSEL. With nearly two dozen investors including banks and financial institutions, it is clear that the stakeholders will seek a greater say. Pillai says the institutions will get a place on the Board as shareholder directors. There is also the possibility of inducting a strategic investor in the future.

So, while he has lost his place at the stock exchange, Shah will have to contend with several other consequences of the exchange slipping out his grasp. The key among these is the review of the business relationship that exists between FTIL and the stock exchange. Pillai said the Board is looking at the business pacts in great detail and would review them at its next meeting sometime mid-December.

"Certain provisions in the contracts favour FTIL. For instance, the cancellation clauses one-sided", he said, adding that he was sure that FTIL would be willing renegotiate the clauses. This process is likely to be initiated in the new year and be over by March 2014.

Financial Tech stock price

On November 28, 2013, Financial Technologies closed at Rs 168.45, up Rs 1.05, or 0.63 percent. The 52-week high of the share was Rs 1197.90 and the 52-week low was Rs 102.05.

The company's trailing 12-month (TTM) EPS was at Rs 71.19 per share as per the quarter ended June 2013. The stock's price-to-earnings (P/E) ratio was 2.37. The latest book value of the company is Rs 580.93 per share. At current value, the price-to-book value of the company is 0.29.

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Cadila Pharma inks pact with UK based Helperby Therapeutics

Nov 28, 2013, 06.58 PM IST

As per the licensing agreement, Helperby will take the compound through further clinical trials, approvals and into commercialisation, it added.

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Cadila Pharma inks pact with UK based Helperby Therapeutics

As per the licensing agreement, Helperby will take the compound through further clinical trials, approvals and into commercialisation, it added.

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Cadila Pharma inks pact with UK based Helperby Therapeutics

As per the licensing agreement, Helperby will take the compound through further clinical trials, approvals and into commercialisation, it added.

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Cadila Pharmaceuticals Ltd today said it has signed an agreement with UK-based antibiotics discovery firm Helperby Therapeutics for antibiotic drug resistance research & development.

Also read: Will Wockhardt's loss be Dr Reddy's gain? Analysts think so

"Global market size of antibiotics is estimated to be around USD 69 billion," Cadila Pharmaceuticals said in a statement.

As per the licensing agreement, Helperby will take the compound through further clinical trials, approvals and into commercialisation, it added.

Helperby will supply Cadila Pharmaceuticals with antibiotic resistance breakers whilst Cadila Pharmaceuticals will develop the combinations with old antibiotics, the company said.

The company's however did not give any details about the financials.

Commenting on the development, Cadila Pharmaceuticals Chairman and Managing Director Rajiv I Modi said: "Cadila Pharmaceuticals' collaboration with Helperby can help the mankind win the battle against the microbes and hopefully save millions of lives in coming years."

When an antibiotic resistance breaker is combined with an old obsolete antibiotic, it can rejuvenate it and make it active against highly resistant bacteria, the company said.

Cadila Health stock price

On November 28, 2013, Cadila Healthcare closed at Rs 734.25, down Rs 0.8, or 0.11 percent. The 52-week high of the share was Rs 924.60 and the 52-week low was Rs 631.00.

The company's trailing 12-month (TTM) EPS was at Rs 34.58 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 21.23. The latest book value of the company is Rs 142.20 per share. At current value, the price-to-book value of the company is 5.16.

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Centre asks states to soon break impasse on sugar issue

With the logjam in Uttar Pradesh over higher sugarcane price continuing, the Centre today asked the state government to settle the issues with sugar industry at the earliest so that mills start crushing operations in the current season that started from October.

Also read: UP rejects sugar mills' SAP demand, waives off entry tax

Assuring Centre's full assistance in solving the UP sugar crisis, Union Food Minister K V Thomas asked sugar mills and farmers not to "precipitate" the crisis.

He said domestic supply is comfortable on the back of huge opening stocks of nearly 9 million tonnes. Cash-starved UP private millers have decided not to start operation in 2013-14 marketing year (October-September) saying they cannot pay more than Rs 225 per quintal to farmers as against the state advised price (SAP) of Rs 280 a quintal announced by the state government.

"Our request is the state government should take initiative so that crushing starts. Farmers and millers' issues should be settled. All problems should be discussed and settled. Whatever assistance is needed from the government of India, we will do it within our norms," Thomas told reporters.

"We request farmers and millers make things smooth. The state government should take initiative to settle the issue earliest. We appeal to farmers and mills not to precipitate the issue," he added.

The Minister informed that 101 out of 170 mills have started functioning in Maharashtra. "Out of 122 mills in UP, 50 mills have started. More mills will start operations". However, it may be noted that most of the private sugar mills have shut crushing operations.

Yesterday, crucial talks between UP government and mill owners to break the logjam over cane crushing operations failed, with millers refusing to run their plants at current high cane price.

Asked about the Centre's plan to give financial package to sugar industry, Thomas said: "Today, we had discussion with the Finance Minister. We also had discussion with C Rangarajan on the sugar issue. An informal group of ministers will look into the financial package. Whatever possible within our norms, we will definitely support".

The informal group of ministers, headed by Agriculture Minister Sharad Pawar, would take a decision on all sugar related issues including financial package. "As soon as the Agriculture Minister comes, a meeting will be held to decide on the issue," he added.

Thomas said the Rangarajan panel had made eight suggestions to decontrol the sugar sector. The Centre has implemented three of them and the rest needs to be done by the state governments.

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ISMA rejects UP govt offer of panel on cane price

The deadlock between the Uttar Pradesh government and sugar mills over cane prices continues with the Indian Sugar Manufacturers Association (ISMA) rejecting the government's offer to set up a panel to look into linking cane and sugar prices.

Also read: What Rangarajan Committee on sugar price decontrol recommended

Abinash Verma, managing director, Indian Sugar Mills Association, said there was no need for the panel, or even a state-advised price for cane if the Rangarajan Committee recommendations were accepted.

ISMA has reiterated its stand that sugar mills were not in a position to  pay more than Rs 225 per quintal, Rs 55 less than the state-advised price of Rs 280.

The UP government too is adamant that it cannot accept the cane price proposed by sugar mills.

Verma said sugar mills already owe Rs 2000 crore in arrears to sugar cane farmers, and this could increase to Rs 15,000 crore by March.

He said banks were refusing loans because of the mills' weak financial position.

Earlier in the day, the UP government offered also to waive entry tax which would help sugar mills save around Rs 220 crore. The government also offered a subsidised interest scheme which would help sugar mills save Rs 190 crore.

The government feels these measures are good enough for sugar mills to avoid losses, and that there are no further room for negotiations.

 It has warned of penalties for sugar mills which would not start crushing operations by December 4.

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

Q: I knew that you would be disappointed with the relief measures announced by the UP government, but what now? The UP government has very categorically stated that it is in no mood to negotiate any further. They have ruled out possibility of any talks. Do you believe it is the end of road as far as the negotiations are concerned?

A: I do not think that it can be the end of the road because it involves about 4 to 5 billion farmers of Uttar Pradesh who have grown almost about 80 million tonnes of sugarcane to be offered to the sugar industry. The gur manufacturers are buying it at about two-third the price that we are offering. We are offering a price of Rs 225, the gur manufacturers are taking at about Rs 150, so I do not think the state government can afford such a situation. They need to find a solution. We need to sit down with them and find a solution.

Q: What could that possible solution be? The state government is saying this is the best we can do. You are saying Rs 225/quintal is the best we can do. The Centre has so far not announced what it can perhaps do to intervene, at best maybe interest subvention through the Sugar Development Fund (SDF), but what is the solution then because nobody is willing to blink?

A: We have been requesting the state government that our paying capacity at the current sugar price is about Rs 225, but they have gone ahead and fixed an SAP of Rs 280. So what we have been requesting is for them to bridge the gap once. At least once in a  lifetime they can bridge this gap through a subsidy directly to the farmers.

Q: On the issue of subsidy the state government has come out and said, no we cannot bridge the gap of Rs 55. Has there been any further negotiation on whether or not they can do anything less than Rs 55 if you are willing to go up to Rs 240 for instance?

A: No, today we are not able to go up to Rs 240, because at the current sugar prices we cannot afford to pay more than Rs 225. If we pay anything more than Rs 225 the cane price arrears of the farmers will start building up from day one and we are certainly going to lose money and the banks are not going to give us loans at all. So, it is not a possibility for us to start the mills at Rs 280 at all. The state government has to come out with some kind of a formula to bridge the gap of Rs 55.

Q: So far your demands of the state government intervening by way of a direct subsidy to farmers to the tune of Rs 55 which is the difference between Rs 235 and Rs 280, they have rejected that demand. They have said that that is no way possible for us, so where does this really leaves things? What can then be the solution if we are stuck at that very same point?

A: It remains stuck there. About 76 of 99 private sugar mills have already given suspension notices to the state government. So, it remains at that. There is no movement forward by either side.

Q: Are you now exploring legal recourse? The UP government has also very categorically today stated that they are in no mood to listen to your arguments anymore. They have given you a time till December 4 to restart operations. Are you now looking at legal recourse?

A: Legal recourse for what? They have already filed FIRs against several sugar companies, against some promoters. They sent police to some promoters' house also which is very unfortunate. So, they have started these strong-arm tactics already. I do not know what legal recourse.

Q: On December 4 if you do not play ball and do not restart operations what happens? Do you believe the government will actually come over and restart the mills on your behalf?

A: We have already told them to do so. We have told the state government that we can run our sugar factories in 2013-14 at no loss, no profit.

Q: Is that a realistic option?

A: If you are talking about realistic option, the most realistic option is to bridge the gap by giving Rs 55 of subsidy. Other than that, I do not think there is any realistic option at all for the state government or for the sugar industry in Uttar Pradesh.

Q: Are you taking any heart from the fact that the Allahabad High Court, when it was listening to a petition filed by Farmers' Association has asked the UP government to come out with a just and equitable solution? It has also warned the UP government of social consequences if it does not arrive at a solution as far as the sugar prices is concerned. I understand the next hearing is on the 3rd of December. Do you feel confident that perhaps there could be some judicial intervention that may broke peace?

A: I cannot make predictions what the judiciary is going to say tomorrow and how the state government is going to react. We only know our position. We can only submit our position and our position is we cannot survive if we anything more than Rs 225 at today's prices.

Q: We have been speaking with the Food Minister KV Thomas today. He was saying that the cabinet will finally take a call on whether an interest subvention can be provided. It takes me back to the package that was rolled out in 2006-07. That plus the measures that have been announced today, will that enable you to restart operations?

A: It all depends what is the package. If one looks at the interest subvention given in 06-07 and 07-08, a total of Rs 3,800 crore was given across the country of which about 30 percent production comes out from Uttar Pradesh which works out to about Rs 1,200 crore which may come to Uttar Pradesh. Rs 1,200 crore is half of the cane price arrears that we have carried from the last year. So it does not solve the problem at all. That is not the solution. The problem is bigger than that.

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Jubilant receives FDA approval for antipsychotic drug

Jubilant Life Sciences Ltd today said it has received approval from the US health regulator to market generic version AstraZeneca's Seroquel used for the treatment of schizophrenia and acute manic episodes associated with bipolar disorder.

The abbreviated new drug applications (ANDAs) approval from the US Food and Drug Administration is for Quetiapine Fumarate tablet, generic version AstraZeneca's Seroquel is in strength of 25 mg (base).

"We expect to launch this product in Q4 FY14," the company said in a statement.

Quoting IMS data, the company said the current total market size for this product USD 59 million per annum. As on September 30, 2013, Jubilant Life Sciences had a total of 676 filings for formulations of which 218 have been approved in various regions of the world. This includes 58 ANDAs filed in the US and 48 Dossier filings in Europe.

Shares of Jubilant Life Sciences closed at Rs 126.75 apiece, down 0.63 per cent from their previous close on the BSE.

Jubilant Life stock price

On November 28, 2013, Jubilant Life Sciences closed at Rs 126.75, down Rs 0.8, or 0.63 percent. The 52-week high of the share was Rs 248.25 and the 52-week low was Rs 65.10.

The latest book value of the company is Rs 116.89 per share. At current value, the price-to-book value of the company was 1.08.

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Triumph enters India, launches 10 models in Rs 20 lk range

After a delay of nearly two years, British motorcycle brand Triumph today entered the Indian market with ten models, priced between Rs 5.7 lakh and Rs 20 lakh (ex-showroom Delhi).

Also read: Mahindra seeks subsidy to promote electric cars

The company, which has set up a wholly-owned subsidiary in the country, will start delivering its bikes from January next year and aims to sell around 500 units in the first six months of the launch in the country.

"We are aiming to sell around 400-500 motorcycles in the first six months of the launch. In the next one year, we are targeting to sell around 1,000 units in the Indian market," Triumph Motorcycles Director - Sales and Marketing (Global) - Paul Stroud told reporters here.

When asked about the reason for the two year delay in entering the Indian market, Stroud said the company took time to formulate product strategy for the Indian market.

"We wanted to make sure that we entered the market with right models and right partners. So it took us time to look into these issues. We were also looking at developing back-end support, as well as invested on the plant during the period," he added.

Stroud, however, did not share either the investments made at the plant or its annual production capacity.

During the 2012 edition of the Auto Expo, the company had announced its entry into the Indian market with seven models. However, the company did not go ahead with its launch plans.

The company will assemble four models in its newly established plant in Manesar, while the rest would be come as completely-built units from its plants in the UK and Thailand.    

It would assemble the Bonneville T100, Daytona 675R, Street Triple, Speed Triple and Thruxton in Manesar. The rest -- Rocket III Roadster, Tiger Explorer, Tiger 800 XC and Thunderbird Storm will be imported into the country as completely built units (CBUs), it added.

While the Bonneville is the lowest priced at Rs 5.7 lakh, the costliest bike from the Triumph stable in India will be the Rocket III Roadster tagged at Rs 20 lakh. The company said it will open four dealerships shortly in Delhi, Mumbai, Bangalore and Hyderabad.

"We plan to open two dealerships at Bangalore and Hyderabad by the end of December. Dealerships in Mumbai and Delhi will follow after that. We plan to have nine dealerships across the country by March-end," Triumph Motorcycles India Manging Director Vimal Sumbly said.

He added that the company will start taking bookings of bikes during the second week of December and deliveries would begin from the first week of January.

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Cadbury signs MoU with AP govt for chocolate facility

Cadbury India today signed a memorandum of understanding with the Andhra Pradesh government for setting up its chocolate manufacturing facility at Sri City Special Economic Zone in Chittoor district.

Said to be the company's largest manufacturing facility in Asia-Pacific region, the first phase of the project will become functional by 2015 with an investment of Rs 1,000 crore and produce about one lakh tonnes of the famous Cadbury chocolates, according to the company's Managing Director Manu Anand.

The MoU was signed by Anand and state Industries Principal Secretary K Pradeep Chandra in the presence of Chief Minister N Kiran Kumar Reddy, Major Industries Minister J Geeta Reddy and others.

Also read: Diamond trader Dilip Lakhi buys Cadbury House for Rs 350cr

The Chief Minister also laid the foundation-stone for the manufacturing facility on the occasion. "The manufacturing facility will come up on 134 acres of land in Sri City SEZ in four phases and will have an overall production capacity of 2.5 lakh tonnes by 2020. In the first phase we will produce chocolates and other products in the subsequent phases. All these products will be for domestic consumption only but a small portion could also be exported,"Anand told reporters on the occasion.

At the function, Chief Minister Kiran Reddy said the Cadbury facility would not only provide direct employment to 1,600 persons but would also help over 4.5 lakh dairy farmers in Chittoor district. "Cadbury requires about five lakh litres of milk and 100 tonnes of sugar per day for its first phase operations. This will give a big boost to the local farmers and help dairying in the district besides helping the sugar industry grow," he said.

Reddy said Andhra Pradesh has emerged as the best investment destination for industries as the investors saw good prospects. "They don't come here for charity. They set up shop only after studying the industry and investment conditions in all parts of the state. We don't require Harvard or any others to certify us as an investment destination. The companies themselves are certifying us," the Chief Minister remarked.

The Major Industries Minister said the state government planned to develop a women-oriented industrial estate in each district headquarters to encourage women entrepreneurs.

"In the last three years, AP received investment proposals to the tune of Rs 1.35 lakh crore. Of the 115 MoUs we signed with various companies, most have completed their projects while some are rogressing. Only a few have dropped out for various reasons," she said.

"Regardless of the atmosphere around, major companies are coming into the state to open their units," the Minister said, referring to the ongoing crisis over the state bifurcation.

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Jet-Etihad: CII rejects plea to remove ‘joint-control’ view

Nov 27, 2013, 09.09 PM IST

The rectification was sought on the portion talking about Etihad's right to nominate certain board members being "significant", as also on the observation that Etihad was getting a "joint control" in running Jet Airways.

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Jet-Etihad: CII rejects plea to remove 'joint-control' view

The rectification was sought on the portion talking about Etihad's right to nominate certain board members being "significant", as also on the observation that Etihad was getting a "joint control" in running Jet Airways.

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Jet-Etihad: CII rejects plea to remove 'joint-control' view

The rectification was sought on the portion talking about Etihad's right to nominate certain board members being "significant", as also on the observation that Etihad was getting a "joint control" in running Jet Airways.

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Competition Commission has held on to its observation about Etihad gaining joint control in Jet Airways and "significant" rights to appoint directors with a 24 percent stake purchase, while rejecting a plea to "rectify" its order that approved the deal earlier this month.

Also read: CCI's stance on Jet-Etihad deal unlikely to change

The two parties -- Abu Dhabi-based Etihad and Naresh Goyal-led Jet Airways -- had sought "rectification" to two parts of the order passed by the Competition Commission of India (CCI) on November 12 while clearing the deal.

The rectification was sought on the portion talking about Etihad's right to nominate certain board members being "significant", as also on the observation that Etihad was getting a "joint control" in running Jet Airways.

Both pleas were rejected by CCI, the fair trade regulator, in a fresh order dated November 26 and published today. This would not have any impact on the earlier CCI order passed on November 12 which said the Jet-Etihad deal did not pose any threat to competition. However, CCI's observations about Etihad gaining joint control and "significant" rights to appoint directors on Jet's board differ from the companies' assertion and submissions before other regulators and agencies in this regard.

Passing the order, CCI said that the views/observations of the Commission regarding Etihad's joint control over Jet which are based on certain facts discussed in the November 12 order.

"While mistakes apparent on the record could be rectified ..., observation(s)/decision(s) of the Commission cannot be a subject matter of rectification," CCI said.

The deal was announced earlier this year and its closure was announced by the two companies last week. Etihad is acquiring 24 per cent stake for about Rs 2,060 crore. Besides CCI, Sebi, FIPB and other agencies have also cleared the deal but it has been taken to the Supreme Court by Subramanian Swamy.

Jet Airways stock price

On November 27, 2013, Jet Airways closed at Rs 293.80, down Rs 12.6, or 4.11 percent. The 52-week high of the share was Rs 688.60 and the 52-week low was Rs 280.00.

The latest book value of the company is Rs -27.75 per share. At current value, the price-to-book value of the company was -10.59.

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Tough to change RBI's banking licenses norms now: EY

Ashvin Parekh, EY thinks it may be difficult for the non-banking finance companies (NBFCs) to meet the Reseve Bank of India (RBI) guidelines for converting to banks and that could have been the reason for Tata Sons to withdraw its application for banking license.

According to a release by Reserve Bank of India, Tata Sons has withdrawn its application for a banking license and central bank has accepted Tata's request .

Parekh says it is unlikely that rules or guidelines will be changed because that would be a very lengthy process but does seem to think that RBI has missed out something somewhere.

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

Q: Have they withdrawn because it is very unremunerative for big groups? We saw that Mahindra's also had not applied. Do you think there will be more such causalities?

A: I would not know why Tata Sons have decided to withdraw but by and large you did get a sense when the clarifications were rendered to the guidelines. The guidelines, and then the clarification suggested that conversion of non-banking financial companies (NBFC), particularly large-sized NBFCs would be very difficult to meet with within the guidelines which were offered in June 2013.

In keeping with that you are getting a sense that perhaps some of the NBFCs may have failed, they are better off continuing as NBFCs rather than converting as a bank, so that could be one reason.

Second of course is that there is going to be a larger oversight from the RBI in case of large particular groups who will apply for the banking license and form the non-operating finance holding companies.

Q: Do you think that therefore there could be more such casualties? Would the Birla Group also want to withdraw? What about companies like Shriram Transport - there also the conversion would mean serious restructuring and perhaps loss of business, perhaps earning the ire of investors. So, do you see more casualties from these two spaces - the big conglomerates and these very well functioning NBFCs?

A: Initially we thought that this reform was to help corporates, and capital coming in from large corporates, with very large reputation and with good presence in the Indian economy. Now with the withdrawal of two prominent corporates this reform seems to be taking a different shape altogether.

Q: Is there any chance that rules itself will be tweaked? Or that the committee under Dr Jalan will not want to open a Pandora's box of litigation, so changes in rules are unlikely at this juncture?

A: Changing of the rules has become very difficult because the whole process will have to be re-entered etc which becomes too lengthy a process.

Q: Are there chances that others in the list may follow the Tata example?

A: The fact does remain that the core object with which the entire reform was being carried out and then a lot of deliberations happened and finally the guidelines - now the applications, and the withdrawal of the large corporates does suggest that they seemed to have missed out something somewhere.

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Cash-for-loan scam: Takru says SBI MDs report by weekend

Nov 27, 2013, 07.30 PM IST

Takru, who is on the board of the bank as government nominee, also said it is wrong to blame the high bad assets in state-run banks to corrupt and lax practices in the loan appraisal process and ruled out changing the existing laws and procedures of working of banks.

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Cash-for-loan scam: Takru says SBI MDs report by weekend

Takru, who is on the board of the bank as government nominee, also said it is wrong to blame the high bad assets in state-run banks to corrupt and lax practices in the loan appraisal process and ruled out changing the existing laws and procedures of working of banks.

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Cash-for-loan scam: Takru says SBI MDs report by weekend

Takru, who is on the board of the bank as government nominee, also said it is wrong to blame the high bad assets in state-run banks to corrupt and lax practices in the loan appraisal process and ruled out changing the existing laws and procedures of working of banks.

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Financial Services Secretary Rajiv Takru today said the in-house panel constituted by the State Bank of India to probe corruption charges against one of its senior most Deputy Managing Directors Shyamal Acharya, who was sent out on forceful leave since then, will submit its report by weekend.

Also read: CBI continues SBI probe, finds 4kg gold in Dy MD's lockers

Takru, who is on the board of the bank as government nominee, also said it is wrong to blame the high bad assets in state-run banks to corrupt and lax practices in the loan appraisal process and ruled out changing the existing laws and procedures of working of banks.

"What has happened is most unfortunate. SBI has come out with their own internal committee and we expect the report of the committee by weekend," he told reporters after a meetingat the Reserve Bank.

On asked about the prevalence of high NPAs--some state-run banks have reported gross NPAs at over 7 per cent while in SBI, it is over 5 per cent---and if it can be attributed to corrupt practices in loan sanctioning process, Takru said that would be "speculative".

"NPAs are rising for a variety of reasons which you know," he added.

He said these allegations do not merit changing any of the laws and procedures of working of state-run banks and added that "we should wait for the law to take its own course.

"If anybody is guilty, surely you don't expect the government to say nothing should be done. If he is guilty, certainly, the law will take its course. But I think its a bit premature, we should not speculate on this," Takru said.

"I don't think there is anything here which requires a change in law or in procedures," he added.

Last Sunday, the Economic Offences wing of the CBI had registered a case against Acharya, who was heading the mid-corporate group at SBI, after raiding his house in the city.

Cases were registered against him along with an ex-SBI official KK Kumarah and Chairman of a Delhi-based firm Worlds Window, Piyoosh Goyal, for alleged graft in disburals of Rs 400 crore loan.

Following this, SBI on Monday set up a two-member internal panel, comprising two MDs - Hemant Contractor and A Krishna Kumar - to probe the issue.

SBI stock price

On November 27, 2013, State Bank of India closed at Rs 1763.90, down Rs 21.95, or 1.23 percent. The 52-week high of the share was Rs 2550.00 and the 52-week low was Rs 1452.90.

The company's trailing 12-month (TTM) EPS was at Rs 179.98 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 9.8. The latest book value of the company is Rs 1445.60 per share. At current value, the price-to-book value of the company is 1.22.

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TRAI prescribes tariff for USSD-based mobile banking svcs

Aiming to promote use of mobile banking services across India, telecom regulator TRAI has come out with guidelines and tariff on unstructured supplementary  service data (USSD)-based mobile banking services.

USSD technology is used by telecom operators to send alerts to their users. It can be used for pre-paid call-back service, location-based content services and menu-based information services.

"We have come out with a framework to help bank agents to interface with service providers for the use of SMS, USSD and IVR channels to provide mobile banking services. The authority wants to utilise the benefits of mobile banking for financial  inclusion," TRAI Chairman Rahul Khullar told reporters here.

Also read: Will new spectrum sale lead to fresh legal battles?

A large section of the population, especially in rural areas do not have an easy access to banks and this facility will help to tide over that shortcoming, he added. The Mobile Banking (Quality of Service) (Amendment)

Regulations, 2013 have come into immediate effect and the Telecommunication Tariff (56th Amendment) Order, 2013 shall come into force on January 1, 2014, Telecom regulatory Authority of India (TRAI) said in a note yesterday.

TRAI has prescribed that ceiling tariff for an outgoing USSD-based mobile banking service shall be Rs 1.50 per USSD session.

"Telecom service providers should collect charges from their subscribers for providing the USSD to deliver mobile banking services," the sectoral regulator added.

All service providers should facilitate not only the banks, but also the unauthorised agents of banks to use SMS, USSD and IVR (Interactive Voice Response) to provide banking services to bank customers, it said.

"On September 30, 2013, there were about 87 crore mobile subscribers in the country of which about 35 crore were in the rural areas. The fact that large number of mobile subscribers in rural areas do not have access to banking facilities presents an opportunity for leveraging the mobile telephone to achieve the goal of financial inclusion," TRAI said.

The authority said unlike SMSs, USSD messages create a real-time connection during a USSD session. The connection remains open, allowing a two-way exchange of a sequence of data making USSD more responsive than services that use SMS.

Some banks in the country, such as State Bank of India (SBI) and ICICI Bank, have already launched USSD-based mobile banking services. However, the authority says the use of USSD-based mobile
banking by these banks is at present limited to the provision of value-added banking services to their existing customers.

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SBI's Acharya-led corporate group's decisions under scanner

Nov 27, 2013, 09.31 PM IST

Sources have said that the bank could see tough times going ahead. This means the decisions taken by the mid corporate group headed by Shyamal Acharya could come under widespread regulatory scrutiny.

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SBI's Acharya-led corporate group's decisions under scanner

Sources have said that the bank could see tough times going ahead. This means the decisions taken by the mid corporate group headed by Shyamal Acharya could come under widespread regulatory scrutiny.

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

SBI's Acharya-led corporate group's decisions under scanner

Sources have said that the bank could see tough times going ahead. This means the decisions taken by the mid corporate group headed by Shyamal Acharya could come under widespread regulatory scrutiny.

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The country's largest bank State Bank of India (SBI) is in a state of shock after the Central Bureau of Investigation (CBI) filed a case of alleged bribery against its deputy managing director Shyamal Acharya. 

Also read: Cash-for-loan scam: Takru says SBI MDs report by weekend

Sources have said that the bank could see tough times going ahead. This means the decisions taken by the mid corporate group headed by Shyamal Acharya could come under widespread regulatory scrutiny.

Acharya was in charge of  Rs 2 lakh crore loan portfolio in the bank's mid corporate group. The group deals with lending to corporate customers with an annual turnover of upto Rs 500 crore and credit limit of above Rs 50 crore.

Also read: CBI continues SBI probe, finds 4kg gold in Dy MD's lockers

As on Sept 2013, the mid corporate group accounted for nearly 20 percent of SBI's total loan book.  The portfolio also saw gross NPAs worth Rs 23,467 crore as on September-end.

Bankers fear that Shyamal Acharya's involvement in the bribery case could impact the speed of SBI's lending decision. But sources say that more clarity will be available once SBI completes its internal investigation by early next week.

SBI stock price

On November 27, 2013, State Bank of India closed at Rs 1763.90, down Rs 21.95, or 1.23 percent. The 52-week high of the share was Rs 2550.00 and the 52-week low was Rs 1452.90.

The company's trailing 12-month (TTM) EPS was at Rs 179.98 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 9.8. The latest book value of the company is Rs 1445.60 per share. At current value, the price-to-book value of the company is 1.22.

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EGoM on Telecom may meet next week to discuss MA rules

The Empowered Group of Ministers on telecom, headed by Finance Minister P Chidambaram, is likely to meet next week and discuss the long-awaited mergers and acquisitions (M&A) rules.

"The Department of Telecom is co-ordinating for a date in the first week of December. Final date has to be decided by the EGoM," a government official told PTI. The EGoM last met on November 22 when it was to take call on M&A guidelines that is expected to pave way for consolidation of mobile phone companies in the sector.

Also read: Stay in oil & gas, telecom for strong returns: Franklin

The ministers had decided on spectrum base price and other details for the third round of auction at the meeting. Inter-ministerial panel Telecom Commission has given its nod to allow telecom companies to merge in a manner that their market share does not exceed 50 percent in terms of subscriber base.

The Cabinet has already announced broad guidelines with respect to M&A Policy. The EGoM has to take call on pricing and fees related to mergers and acquisition rules. These include spectrum charges that an entity formed after merger would have to pay on its total holding, lock-in period of the merged entity and a transfer fee on spectrum allocated to a company and gets moved to another entity within period of three years as result of M&A.

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BMW to hike prices from January by up to 10%

German luxury car maker BMW today said it will increase prices of its vehicles in India by up to 10 percent from January 2014 as part of its sustainable and profitable growth strategy.

Also read: BMW i3: A 5-door electric hatchback

The price increase from 7 to 10 percent will be across the BMW and MINI product range effective January 1, 2014, the company said in a statement.

"At BMW Group, we believe that both profitability and growth are essential for a win-win situation at the end. We are making price decisions with all due care and consideration ensuring that they pay off in the long run," BMW Group India President Philipp von Sahr said.

In August this year, the company had increased the prices of its vehicles by up to 5 per cent citing higher import costs due to declining rupee.

At present, BMW sells a range of vehicles in India, including compact luxury car 1 series, sedans 3, 5, 6 and 7 Series, along with SUVs X1, X3, X5 and sports car M Series, which are priced between Rs 20.9 lakh and Rs 1.78 crore.

BMW Group's luxury compact car, the Mini series is currently available between Rs 23.7 lakh and Rs 33.2 lakh (ex-showroom).

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Cairn India unveils Rs 5,725 crore share buy-back programme

Cairn India today said it will spend up to Rs 5,725 crore to buy back shares, a move which would help promoter Anil Agarwal-led Vedanta Group gain greater control over oil producer without putting any money.

Cairn, which is sitting on a cash pile of about USD 3 billion, in a statement said its board has approved buying 17.09 crore shares or 8.9 percent of the total shareholding, from open market at no more than Rs 335 apiece.

"The maximum Buyback price represents over 4 percent premium compared to the average of the weekly high and low of the closing share price of the company during the last two weeks," it said.

The buyback will start in January after shareholders nod and other sanctions and approvals are in place.

Cairn, the largest private oil producer in the country, will offer to buy back shares, including 10.27 percent held by its former promoter Cairn Energy Plc of UK, and extinguish them.

After completion, Vedanta Group ownership in Cairn India will rise to 64.53 percent from current 58.76 percent.

Share buy back is the process where a company repurchases outstanding shares in order to reduce the number of shares on the market.

Companies, as a rule, buy back shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may be looking for a controlling stake.

UK's Cairn Energy plc, which had sold majority stake in Cairn India to Vedanta Group, still holds 10.27 percent shares and may look at the share buy back programme to exit.

Vedanta Group had bought stake in Cairn India at Rs 355 per share, a price the company stock has not touched in last one year.

"Cairn Energy is a known seller for long time and the share buy back may present it with an opportunity to exit from Cairn India," an analyst said.

While share buy back is considered an efficient means of returning capital to shareholders, it also indicates that the company is not looking at doing major acquisitions or has significant capex plans that may need its current cash pile.

"The Board of Directors of the company in its meeting held on November 26, 2013 has approved a proposal for the buyback of equity shares of the company from its existing shareholders, other than the company's promoters, promoter
group, persons in control and persons acting in concert," the statement said.

The Buyback would be done from the open market through the Stock Exchanges, at a price not exceeding Rs 335 per share, up to an aggregate amount not exceeding Rs 5,725 crore.

Cairn India shares today closed at Rs 324 apiece, down 2.09 percent on the BSE.

Cairn India stock price

On November 26, 2013, Cairn India closed at Rs 324.00, down Rs 6.9, or 2.09 percent. The 52-week high of the share was Rs 349.90 and the 52-week low was Rs 267.90.

The company's trailing 12-month (TTM) EPS was at Rs 99.60 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 3.25. The latest book value of the company is Rs 178.04 per share. At current value, the price-to-book value of the company is 1.82.

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Adopt Aadhaar authentication for card-based payments: RBI

In order to ensure security in card-based payment transactions taking place at point of sale (POS) terminals or at ATMs, the Reserve Bank today advised banks that they may adopt Aadhaar as additional authentication or move to EMV chip and pin technology.

"In respect of cards, not specifically mandated by the RBI to adopt EMV norms, banks may take a decision whether they should adopt Aadhaar as additional factor of authentication or move to EMV chip and Pin technology for securing the card present payment infrastructure," RBI said in a notification.

Also read: Foreign banks' WoS to be exempt from capital gains tax: RBI

However, it said all new card present infrastructure has to be enabled with both EMV (Euro pay MasterCard Visa) chip and Pin technology and Aadhaar acceptance.

Biometric (finger print/retina scan) captured by UIDAI can be used as authentication to protect against both domestic counterfeit and lost & stolen card fraud as the cardholder has to be physically present at the POS terminal/ATM toklauthenticate the transaction.

Even if the card is counterfeited, the fraudster will not be able to use the card as biometric of the customer would berequired.

For securing card and electronic payment transactions, RBI had set up a working group that had recommended evaluation of UIDAI's Aadhaar as an effective alternative for additional factor of authentication for domestic transactions.

RBI said the recommendations of the Working Group have been examined and these have been advised after taking into consideration the developments that have taken place in the card payment ecosystem as well as the scalability and

effectiveness of Aadhaar over a period of time. Card present transactions at POS or at ATMs constitute the major proportion of card based transactions in the country.

Currently, transactions using cards at POS do not require additional authentication in majority of the cards. However, data stored in magnetic stripe is vulnerable to skimming. Increasing confidence of the customer for using POS channel would require securing of these transactions through implementation of authentication in the short run and prevent counterfeiting of cards by migrating to chip and PIN in the long run.

EMV chip card protects against counterfeit (skimming) card fraud. EMV chip card and PIN protects against both counterfeit (skimming) and lost & stolen card fraud.

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Commerce Min seeks 49% FII, FDI cap in existing drug cos

The Ministry of Commerce and Industry has proposed tighter overseas investment norms in existing drug companies by limiting all forms of foreign participation in them, including FII and FDI, at 49 percent.

Sources said the proposal is aimed at clarifying the level of overseas investment in the sensitive sector. It was earlier felt that foreign institutional investment (FII) could be over and above the FDI limit of 49 percent.

"The proposal now says that the cap would be 49 percent (FDI + FII) in existing firms. The cabinet yesterday postponed the matter. It is expected to take it up soon," they added.

Currently, India permits 100 percent foreign direct investment (FDI) in new pharma companies through the automatic approval route. The same level is allowed for overseas investment in existing pharmaceutical companies, with approval from the Foreign Investment Promotion Board (FIPB).

Also read: No going back on gas price hikes; notification soon: Moily

The Department of Industrial Policy and Promotion (DIPP), a wing of the commerce ministry, had proposed reducing the FDI cap in "rare or critical pharma verticals" to 49 percent from 100 percent.

Unabated takeovers of Indian pharma companies and facilities by multi-national corporations between 2006 and 2011 necessitated a review of the FDI policy in the brownfield pharma sector. From November 2011 to July 2013, as many as 74 pharma sector proposals were approved by the FIPB.

"The takeovers have severely affected the entire sector, including manufacturing, marketing of oral formulations, injectables, specialised oncology verticals, vaccines, consumables and devices," another source said.

Over 95 percent of FDI in the pharma sector between April 2012 and June 2013 was in brownfield or existing projects. India received USD 2 billion of FDI in the sector during this period.

Sections of the government such as the DIPP and the Ministry of Health and Family Welfare have raised concerns about the merger and acquisition of Indian pharma firms, saying it may affect availability of affordable generic drugs.

A health ministry proposal to cap FDI at 26 percent was turned down by the DIPP. With Indian firms being acquired at high valuation, the threat of changing the mix from generics to branded generics or patented medicines cannot be ignored, they said, adding, "Over 8 million people across the globe that receive anti-retrovirals from generic companies rely on Indian manufacturers."

Takeovers would impair the ability of Indian companies to take advantage of drugs going off patent through 2015. "Amendment in the current FDI policy will strengthen the domestic firms and secure accessibility and affordability of medicines in the country as well other nations dependent on India," sources said.

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