The Citibank employee who perpetrated the Rs 400-crore fraud not only duped a string of wealthy individuals, but also took one of India’s biggest business groups for a ride.
A few firms belonging to Munjal-controlled Hero group are learnt to have invested close to Rs 200 crore in the sham investment scheme that promised a high rate of return.
A senior Hero group official used his discretion to invest the money in what initially appeared to be a normal treasury operation done to deploy surplus cash. The money collected from the Hero group entities and others was used to buy stocks by routing funds through multiple bank accounts and several trading and demat accounts with three brokerages.
There is no evidence at this stage to suggest the Hero group official was acting in connivance with Shivaraj Puri, the disgraced Citibanker who devised the fraudulent scheme.
“Citibank officials are in touch with Hero group. They are discussing the matter ever since the bank sensed the fraud,” said a person familiar with the ongoing investigation. The investment, according to the person, was not by the flagship Hero Honda , but by entities that were holding investible surplus belonging to group promoters.
Hero group officials were not available for comment while an email to Sunil Kant Munjal, promoter-director of India’s largest two-wheeler maker, Hero Honda, went unanswered. A Citibank spokesperson also declined comment.
The police has issued a ‘lookout’ notice alerting airports to track Puri, who is currently absconding, and other suspects involved in the fraud. However, according to sources, Puri will present himself before tha court on Friday.
What has come as a surprise to banking circles is the blatant nature of the fraud that began with Puri forging a Sebi document that named a Citibank account as the custodian account for a scheme that indicated lucrative returns. An account was opened in the name of one Premnath, who was later found to be a relative of Puri who worked as a relationship manager with the Gurgaon branch.
In the first leg of the transaction, investors put money in the scheme favouring the custodian account. In the second leg, the money moved to accounts of friends and relatives, including those of one Sheila Premnath and Shivaraj’s mother Diksha.
“One such account also belonged to Shivaraj... It’s rather foolish for a fraudster to do this,” said a local private bank official. Subsequently, the money trail leads to brokerages like Religare, Bonanza and IIFL that executed stock trades and ran the demat accounts.
According to market circles, Shivaraj had three demat accounts with Bonanza’s Parliament Street Branch. These individual accounts were in the names of Diksha Puri, Raghu Raj Puri and his own. These accounts were treated as high net-worth accounts due to their trading patterns.
These accounts have been frozen by the brokerage, and each of them has a balance of less than Rs 1 crore. “We are in touch with regulatory authorities,” said a Bonanza official.
With Religare, Puri ran two demat accounts—one in his own name and the other was a joint account with his mother. The account was operational since June 2009 and shares worth Rs 60-70 crore were traded in these accounts. Religare has full KYC disclosure on these two accounts and had alerted the Fraud Intelligence Unit once the transactions exceeded Rs 10 crore.
In IIFL, the Puri ran two demat accounts, of which one was a joint account and the other a standalone account in his mother’s name. Very little trading activity has been reported in his mother’s account against which there is a cash balance of just Rs 5,000.
“Investors, particularly corporates, will pressurise Citibank to pay back. The investigation will have to focus on ways to salvage the money and trace whether money made from share transactions have been routed to other accounts using other banks,” said a regulatory source.
Gurgaon Police Commissioner SS Deswal on Wednesday told news agencies that “a first information report under sections of cheating and forgery against a bank employee and three others was lodged and 18 accounts having close to Rs 4 crore frozen”. In a statement issued on Tuesday, Citibank said the “issue does not impact other accounts, transactions or customers of the Bank”.
Regulatory authorities are not yet attaching too much importance to the fraud, which they feel has no systemic impact. “Sebi has so far only confirmed to the police that the regulator has not issued any letter relating to the scheme that was mentioned by the accused. This was done as the police was not registering an FIR otherwise. Sebi is not probing anything at the moment until more facts emerge,” said a Sebi official. “We are looking at the report. It appears to be a local fraud by an employee,” said an RBI official
Source : ET
Wednesday, December 29, 2010
Tuesday, December 28, 2010
Mutual funds see exodusof top talent
Deserting their Investors: Madhusudan Kela, Ved Prakash Chaturvedi & Nilesh Shah all three have left the Mutual Fund Industry
Two weeks ago, Nilesh Shah, deputy managing director and chief investment officer (CIO) of India’s third largest fund house ICICI Prudential Asset Management Co. Ltd, resigned to seek “other opportunities”. Shah, 42, is one of the three leaders the Rs.7 trillion mutual fund (MF) industry has lost in recent months.
In September, Ved Prakash Chaturvedi, 50, a 20-year industry veteran, stepped down as chief executive officer (CEO) of Tata Asset Management Ltd. A month earlier, Madhusudan Kela, head of equities at Reliance Capital Asset Management Ltd, the country’s largest fund house, moved out of the firm.
Kela, 41, continues to be with Reliance-Anil Dhirubhai Ambani Group, but is no longer involved in the MF business. Chaturvedi is planning his own venture while Shah will decide on his future career path after taking a short break.
For the best part of the last decade, Chaturvedi, Shah and Kela have been among the faces of Indian MF industry. Between them, they were overseeing nearly one-third of the industry’s assets under management.
The number of experienced fund managers leaving the asset management industry has been on the rise. In the past two years, at least 65 fund managers, including CIOs and CEOs, have ventured out of the industry into other financial services, according to MF tracker valueresearchonline.com.
In 2010, at least 35 fund managers left the industry where tighter regulations have increased the pressure on the fund managers and shrinking margins have reduced rewards.
“The dream job of a high-flying fund manager is not the same any more,” said one senior fund manager who recently left the industry and didn’t want to be identified.
Unlike privately managed funds, MFs are governed by elaborate regulations and disclosure requirements, including declaration of a daily net asset value (NAV). This makes a fund manager’s work open for scrutiny by not only superiors, but also by peers, regulators, media and common investors.
“The pressure on fund managers is tremendous. Teams are small and responsibilities are wide. Managing public money keeping in mind day-to-day NAVs is not easy,” said an official from a large private sector fund house, who also spoke on condition of anonymity.
Despite five new fund houses—Pramerica Asset Management Pvt. Ltd, Motilal Oswal Asset Management Co. Ltd, Peerless Funds Management Co. Ltd, IDBI Asset Management Co. Ltd and L&T Finance Investment Management Ltd—commencing business this year, the overall number of fund managers and CIOs remained stagnant at around 260-270.
Arjun Parthasarathy of IDFC Asset Management, Ashish Nigam of Religare Asset Management Co. Ltd and K. Ramkumar of Sundaram Asset Management Co. Ltd are some of the senior fixed-income managers who left the industry that has seen many regulatory changes since August 2009.
The Securities and Exchange Board of India (Sebi) has introduced changes in MF regulations, including the abolition of entry loads (the commissions that an investor has to pay while purchasing MF units), marking debt instruments to their market value and tightening rules for approval and launch of new fund offers.
Many asset management firms are facing falling profits and some of them even ran into losses in the quarter ended September.
“Industry is still seeing negative inflows at the net level. Forget the variable (compensation), even increments (in pay) are unlikely to happen,” an official from a large private sector fund said on condition of anonymity.
Attrition not only hurts the firms but also investor interest. Top fund managers in developed markets such as Bill Miller of Legg Mason Capital Management Value Trust and Anthony Bolton of Fidelity International have spent nearly their entire career managing a single fund with a single fund house. Miller’s fund beat the market for 15 consecutive years beginning 1991. Bolton managed Fidelity Special Situations Fund for 28 years between 1979 and 2007.
While the pressure is rising, the rewards are shrinking, forcing managers to look for greener pastures, say head hunters.
“Fund managers are looking for opportunities elsewhere as the MF industry has been affected by numerous regulatory changes. As the fee income for the fund houses comes down, their margins are squeezed. While smaller funds are most affected, even the larger fund houses are facing trouble,” said Kris Laxmikanth, CEO, Head Hunters India Pvt. Ltd.
This directly affects the pay cheque of fund managers, Laxmikanth said.
MFs are not making meaningful money any more and fund managers are high-cost resources. Typically, a fund manager’s variable pay, linked to the performance of the fund, is thrice the amount of the fixed pay.
“A senior fund manager typically earns around Rs.40 lakh in fixed pay and Rs.1.2 crore in variable. So, in a good year, the pay could be Rs.1.6 crore. But these salaries have vanished as the industry itself has not done well,” Laxmikanth said.
“Regulatory tightening has certainly made these people a little pessimistic about the growth of the business,” said Dhirendra Kumar, CEO, Value Research, a Delhi-based MF tracker. “But cost may not be a major issue behind this attrition.”
The sheer amount of opportunities and growth prospects that other financial services offer are increasingly becoming too good to resist for fund managers.
For instance, investment banks are always on the lookout for talented executives and fund managers with expertise in analysing companies and valuing them are often easy targets. Ramkumar of Sundaram AMC is one of the fund managers who has become an investment banker.
Other opportunities for MF managers include family offices that manage the investments of wealthy families and hedge funds where regulatory obligations are minimal and financial rewards are lucrative.
Chaturvedi said his decision to leave Tata Asset Management was a personal decision and did not have anything to do with the status of the industry. “It happens to a lot of people after serving in an industry for 15-20 years and there are various compulsions ".
“The rules have changed and people who were very relevant to the industry earlier may not be as relevant for growth in today’s environment. So, while some people are moving out on their own, some must have been pushed out.”
Source : Live Mint
Two weeks ago, Nilesh Shah, deputy managing director and chief investment officer (CIO) of India’s third largest fund house ICICI Prudential Asset Management Co. Ltd, resigned to seek “other opportunities”. Shah, 42, is one of the three leaders the Rs.7 trillion mutual fund (MF) industry has lost in recent months.
In September, Ved Prakash Chaturvedi, 50, a 20-year industry veteran, stepped down as chief executive officer (CEO) of Tata Asset Management Ltd. A month earlier, Madhusudan Kela, head of equities at Reliance Capital Asset Management Ltd, the country’s largest fund house, moved out of the firm.
Kela, 41, continues to be with Reliance-Anil Dhirubhai Ambani Group, but is no longer involved in the MF business. Chaturvedi is planning his own venture while Shah will decide on his future career path after taking a short break.
For the best part of the last decade, Chaturvedi, Shah and Kela have been among the faces of Indian MF industry. Between them, they were overseeing nearly one-third of the industry’s assets under management.
The number of experienced fund managers leaving the asset management industry has been on the rise. In the past two years, at least 65 fund managers, including CIOs and CEOs, have ventured out of the industry into other financial services, according to MF tracker valueresearchonline.com.
In 2010, at least 35 fund managers left the industry where tighter regulations have increased the pressure on the fund managers and shrinking margins have reduced rewards.
“The dream job of a high-flying fund manager is not the same any more,” said one senior fund manager who recently left the industry and didn’t want to be identified.
Unlike privately managed funds, MFs are governed by elaborate regulations and disclosure requirements, including declaration of a daily net asset value (NAV). This makes a fund manager’s work open for scrutiny by not only superiors, but also by peers, regulators, media and common investors.
“The pressure on fund managers is tremendous. Teams are small and responsibilities are wide. Managing public money keeping in mind day-to-day NAVs is not easy,” said an official from a large private sector fund house, who also spoke on condition of anonymity.
Despite five new fund houses—Pramerica Asset Management Pvt. Ltd, Motilal Oswal Asset Management Co. Ltd, Peerless Funds Management Co. Ltd, IDBI Asset Management Co. Ltd and L&T Finance Investment Management Ltd—commencing business this year, the overall number of fund managers and CIOs remained stagnant at around 260-270.
Arjun Parthasarathy of IDFC Asset Management, Ashish Nigam of Religare Asset Management Co. Ltd and K. Ramkumar of Sundaram Asset Management Co. Ltd are some of the senior fixed-income managers who left the industry that has seen many regulatory changes since August 2009.
The Securities and Exchange Board of India (Sebi) has introduced changes in MF regulations, including the abolition of entry loads (the commissions that an investor has to pay while purchasing MF units), marking debt instruments to their market value and tightening rules for approval and launch of new fund offers.
Many asset management firms are facing falling profits and some of them even ran into losses in the quarter ended September.
“Industry is still seeing negative inflows at the net level. Forget the variable (compensation), even increments (in pay) are unlikely to happen,” an official from a large private sector fund said on condition of anonymity.
Attrition not only hurts the firms but also investor interest. Top fund managers in developed markets such as Bill Miller of Legg Mason Capital Management Value Trust and Anthony Bolton of Fidelity International have spent nearly their entire career managing a single fund with a single fund house. Miller’s fund beat the market for 15 consecutive years beginning 1991. Bolton managed Fidelity Special Situations Fund for 28 years between 1979 and 2007.
While the pressure is rising, the rewards are shrinking, forcing managers to look for greener pastures, say head hunters.
“Fund managers are looking for opportunities elsewhere as the MF industry has been affected by numerous regulatory changes. As the fee income for the fund houses comes down, their margins are squeezed. While smaller funds are most affected, even the larger fund houses are facing trouble,” said Kris Laxmikanth, CEO, Head Hunters India Pvt. Ltd.
This directly affects the pay cheque of fund managers, Laxmikanth said.
MFs are not making meaningful money any more and fund managers are high-cost resources. Typically, a fund manager’s variable pay, linked to the performance of the fund, is thrice the amount of the fixed pay.
“A senior fund manager typically earns around Rs.40 lakh in fixed pay and Rs.1.2 crore in variable. So, in a good year, the pay could be Rs.1.6 crore. But these salaries have vanished as the industry itself has not done well,” Laxmikanth said.
“Regulatory tightening has certainly made these people a little pessimistic about the growth of the business,” said Dhirendra Kumar, CEO, Value Research, a Delhi-based MF tracker. “But cost may not be a major issue behind this attrition.”
The sheer amount of opportunities and growth prospects that other financial services offer are increasingly becoming too good to resist for fund managers.
For instance, investment banks are always on the lookout for talented executives and fund managers with expertise in analysing companies and valuing them are often easy targets. Ramkumar of Sundaram AMC is one of the fund managers who has become an investment banker.
Other opportunities for MF managers include family offices that manage the investments of wealthy families and hedge funds where regulatory obligations are minimal and financial rewards are lucrative.
Chaturvedi said his decision to leave Tata Asset Management was a personal decision and did not have anything to do with the status of the industry. “It happens to a lot of people after serving in an industry for 15-20 years and there are various compulsions ".
“The rules have changed and people who were very relevant to the industry earlier may not be as relevant for growth in today’s environment. So, while some people are moving out on their own, some must have been pushed out.”
Source : Live Mint
Early PF Withdrawing may become a thing of past
Withdrawing the provident fund balance each time you switch jobs could soon become a thing of the past if the country’s apex retirement fund has its way.
The Employees’ Provident Fund Organisation (EPFO) has urged the government to bar workers from pulling out their PF balances on changing jobs.
“Every six months to a year you change your job and withdraw your PF. That makes us more like a bank,” said Central PF Commissioner Samirendra Chatterjee.
“The PF account should serve its purpose of social security — having a . 15,000 balance at retirement is ridiculous,” Chatterjee said. “It’s in the larger interest of workers to bar withdrawals,” he said.
EPFO going for a change :
EPFO’s call for change has been spurred by an alarming internal study of this year’s PF settlements at PF office in Karnal, Haryana . As many as 89% of the cases settled at the office, which covers a blend of old and new economy industries, were those of workers withdrawing PF balance after resigning from a job. Just 0.8% workers opted to transfer their PF account to their new job.
The settlement amount for 82% of the workers pulling out their PF was less than . 30,000. Nearly 65% workers withdraw their retirement savings before the age of 35. Just 3% EPF members had continuous service of 10 years – a prerequisite to be eligible for pension benefits from EPFO
More employees withdraw their PF early :
The study inferred that 50% of claims are from people withdrawing their PF at the age of 31.33, after working for 2.7 years. They typically take home . 10,000, it said. “Sure, people need money, but they shouldn’t consume all their savings at every opportunity,” said Chatterjee.
Existing PF rules specify that an employee can withdraw his/her entire EPF contributions two months after leaving a job. However, there is a condition that the employee shouldn’t start working elsewhere in that period. If another job is taken up within two months, the EPF balance must be transferred to the worker’s new PF account at his/her new workplace.
There is a need for change
But these rules are impossible to implement as EPFO has no systems in place to prevent workers from getting new PF accounts with every job switch. Its accounting systems are archaic and operations are still being computerised incrementally.
The PF commissioner has asked all field offices to do an analysis of their settlements over the past year, so that the government can be convinced about the need for change. Other provident funds like the Coal Miners’ Provident Fund and the Seamens’ Provident Fund restrict withdrawals to special circumstances, while the New Pension Scheme doesn’t allow any withdrawals before the age of 58.
Quick withdrawals also hurt EPFO’s investment earnings :
The EPFO was set up in 1952 to ensure that India’s workforce is assured of some income security in old age. The rising claims from young workers is detracting focus from more crucial regulatory functions of the EPFO like monitoring defaults from employers, conducting audits and scrutinizing returns. Quick withdrawals also hurt EPFO’s investment earnings as 70% of PF contributions are withdrawn within 3 years.
For over a decade, the department has tried unsuccessfully to assign a unique account number for individuals to retain through their working lives. In the absence of such a system, even if one changes jobs within a single PF office’s jurisdiction, the department can’t block withdrawal claims on account of resignation
Streamlining transfer of PF balances: A priority
A few employees do opt for transfers so that their retirement savings accumulate instead of being frittered away. But the transfer process is too tedious, requiring one to co-ordinate between two employers and two PF offices. The result- most workers withdraw such piecemeal retirement savings each time they join a new firm.
“Transfers used to take long as they are additional work and low-priority even for the employers. You have already left them so they have no interest in forwarding applications to us,” Chatterjee said.
An attempt is being made to streamline transfer of PF balances from past jobs into workers’ current accounts. Last week, testing began in Delhi and Karnal offices on new software that would transfer PF balances electronically, within a month. If this goes smoothly, it would be replicated across the country from the first week of January.
The Employees’ Provident Fund Organisation (EPFO) has urged the government to bar workers from pulling out their PF balances on changing jobs.
“Every six months to a year you change your job and withdraw your PF. That makes us more like a bank,” said Central PF Commissioner Samirendra Chatterjee.
“The PF account should serve its purpose of social security — having a . 15,000 balance at retirement is ridiculous,” Chatterjee said. “It’s in the larger interest of workers to bar withdrawals,” he said.
EPFO going for a change :
EPFO’s call for change has been spurred by an alarming internal study of this year’s PF settlements at PF office in Karnal, Haryana . As many as 89% of the cases settled at the office, which covers a blend of old and new economy industries, were those of workers withdrawing PF balance after resigning from a job. Just 0.8% workers opted to transfer their PF account to their new job.
The settlement amount for 82% of the workers pulling out their PF was less than . 30,000. Nearly 65% workers withdraw their retirement savings before the age of 35. Just 3% EPF members had continuous service of 10 years – a prerequisite to be eligible for pension benefits from EPFO
More employees withdraw their PF early :
The study inferred that 50% of claims are from people withdrawing their PF at the age of 31.33, after working for 2.7 years. They typically take home . 10,000, it said. “Sure, people need money, but they shouldn’t consume all their savings at every opportunity,” said Chatterjee.
Existing PF rules specify that an employee can withdraw his/her entire EPF contributions two months after leaving a job. However, there is a condition that the employee shouldn’t start working elsewhere in that period. If another job is taken up within two months, the EPF balance must be transferred to the worker’s new PF account at his/her new workplace.
There is a need for change
But these rules are impossible to implement as EPFO has no systems in place to prevent workers from getting new PF accounts with every job switch. Its accounting systems are archaic and operations are still being computerised incrementally.
The PF commissioner has asked all field offices to do an analysis of their settlements over the past year, so that the government can be convinced about the need for change. Other provident funds like the Coal Miners’ Provident Fund and the Seamens’ Provident Fund restrict withdrawals to special circumstances, while the New Pension Scheme doesn’t allow any withdrawals before the age of 58.
Quick withdrawals also hurt EPFO’s investment earnings :
The EPFO was set up in 1952 to ensure that India’s workforce is assured of some income security in old age. The rising claims from young workers is detracting focus from more crucial regulatory functions of the EPFO like monitoring defaults from employers, conducting audits and scrutinizing returns. Quick withdrawals also hurt EPFO’s investment earnings as 70% of PF contributions are withdrawn within 3 years.
For over a decade, the department has tried unsuccessfully to assign a unique account number for individuals to retain through their working lives. In the absence of such a system, even if one changes jobs within a single PF office’s jurisdiction, the department can’t block withdrawal claims on account of resignation
Streamlining transfer of PF balances: A priority
A few employees do opt for transfers so that their retirement savings accumulate instead of being frittered away. But the transfer process is too tedious, requiring one to co-ordinate between two employers and two PF offices. The result- most workers withdraw such piecemeal retirement savings each time they join a new firm.
“Transfers used to take long as they are additional work and low-priority even for the employers. You have already left them so they have no interest in forwarding applications to us,” Chatterjee said.
An attempt is being made to streamline transfer of PF balances from past jobs into workers’ current accounts. Last week, testing began in Delhi and Karnal offices on new software that would transfer PF balances electronically, within a month. If this goes smoothly, it would be replicated across the country from the first week of January.
Citibank probing Rs 400 cr fraud in consumer banking division
Citi Caught Sleeping
Citibank is probing a Rs 400 crore fraud perpetrated by certain employees of the bank at its Gurgaon branch in India, atleast three people told ET Now on condition of anonymity. It is learnt that the fraud was discovered by accident and that the banks Asia Pacific fraud risk management team has been camping in India for the past two weeks conducting detailed investigations and questioning several employees who maybe suspected of being involved in prosecuting the fraud.
People familiar with the development told ET Now that the employees involved have been suspected of selling investment products to clients claiming that these would generate unusually high returns. The employees claimed that the products were authorized by the banks investment product committee and used forged bank documents and letterheads to prove the same.
The suspected employees then siphoned off the funds raised from the sale of these products into their personal bank accounts and defrauded clients to the tune of Rs. 400 crore.
The suspected employees had access to High Net Worth Individual (HNI) clients of the bank and were in roles which involved servicing their requirements for investment products, according to a bank employee who spoke on condition of anonymity.
It is leant that close to 40 clients have been impacted by the fraud though the number could be much higher as investigations are still underway.
A citibank spokesperson issued the following statement in response to queries from ET NOW. "We recently initiated an investigation into a certain set of suspicious transactions based on documents forged by an employee involving a few accounts in our Gurgaon branch. We immediately reported the matter to all the relevant regulatory and law enforcement authorities. Identified suspicious transactions have been isolated and we are providing full assistance to the authorities in their investigations. This issue does not impact other accounts, transactions or customers of the Bank. Subsequent to our complaint naming the involved employee and other external individuals who appear to be perpetrators in these suspicious transactions,the Gurgaon Police has registered an FIR.”
The fraud may have been discovered by accident according to some of the people quoted above. According to one of the sources, a senior official in the consumer banking division was talking to a client who mentioned that he had recently purchased a product from the bank that could generate unusually high returns in a short span of time. It was brought to the clients notice that the bank was not distributing any such product which is when an investigation into the matter was initiated.
The investigation may have triggered audits across several branches of Citibank in India according to another bank official.
ET Now first reported the story at 3 PM IST today.
It is learnt that the employee who has been reported to the law enforcement authorities has been attending office at the Gurgaon branch accompanied by his lawyer everyday and is threatening the bank with dire consequences if action is taken against him.ET NOW first reported the story at 3 PM IST today.
It is learnt that the employee who has been reported to the law enforcement authorities has been attending office at the Gurgaon branch accompanied by his lawyer everyday and is threatening the bank with dire consequences if action is taken against him.
HIGH-NETWORTH FRAUD
HOW FRAUD WAS COMMITTED?
Citibank’s relationship managers are said to have committed the fraud with the help of an external party, most likely a brokerage house that distributes investment products Funds generated by selling the product to some investment companies and individuals were transferred to accounts of some brokers, who utilised the money for their transactions
The employees claimed the products were authorised by Citibank’s investment product committee and used forged bank documents and letterheads to prove the same
WHO ARE INVOLVED?
Employee named in FIR learnt to be working as a senior relationship manager in Citibank’s Gurgaon branch. The staffer may have been supported by other relationship managers responsible for sales of investment products to high net worth clients of the bank
WHO ARE AFFECTED?
Close to 40 clients, including some corporate treasuries, could be affected because of the fraud. It is unclear whether Citibank will compensate its clients for the losses.
Source : ET
Sunday, December 26, 2010
Infra, social sector tobe key 12thPlan areas
The Planning Commission has zeroed in on 12 critical areas around which the 12th Plan (2012-2017) will revolve, the social sector and infrastructure being key priorities. The apex planning body will now seek public comments on the areas it has chosen to emphasize.
The commission had identified 134 areas when it began work on the 12th Plan earlier this year for which an approach paper is being prepared.
“Enhancing skills and employment generation, transport infrastructure, climate change, inclusiveness, energy security, rural transformation and agriculture growth, better education and preventive healthcare are some vital areas around which the approach paper will be made,” said Pronab Sen, principal adviser to the panel.
“No doubt social sector will be given prime importance in the 12th Plan.”
He added that higher investments in infrastructure by the government and through public-private partnerships will help boost economic growth, pegged at 8% in each year of the 12th Plan.
This will carry forward the “inclusive growth” targets set in the 11th Plan, which had envisaged spending over three-fourths the projected Rs.14.21 trillion in the draft plan on the priority sector. In the 10th Plan, it was 55%, while total spending was Rs.8.1 trillion. The projections for the 12th Plan are yet to be announced.
Sen also said the interactive website for the 12th Plan, which is currently under security audit, will be up sometime this week. The website will seek public views on the 12 key issues both in the form of objective statements and opinion poll. These will go into the making of the approach paper, which should be ready by March-end, according to Sen.
An approach paper carries general guidelines on which the plan is based. Once readied and made public, the details of plan programmes and sector-specific strategies are worked out.
Sen said a wide consultative approach was followed in arriving at the 12 areas. This included consulting non-governmental organizations (NGOs) and experts in the field of development.
“The Planning Commission involved NGOs such as Centre for Budget and Governance Accountability, Social Watch, Wada Na Todo Abhiyan and Oxfam India to get the view of civil society on the challenges and needs of development planning,” said Sen.
Wada Na Todo Abhiyan, the name of which in Hindi translates as “Don’t-break-your-promise campaign”, is an organization working for holding the government accountable to its promises.
The approach paper is traditionally written by the perspective planning division of the plan panel. A team of senior officials makes projections for economic growth and its sector-wise distribution, poverty ratios, fiscal balance and estimation of external sector balance. This is the first time that civil society organizations have been so deeply involved in the exercise.
Some NGOs gathered feedback from other NGOs and people working in the respective areas at grassroots levels. These, Sen said, included NGOs working with demographic groups such as adolescents, the physically handicapped, women, destitutes and Left-wing extremists.
Planning Commission members and officials such as Mihir Shah, Arun Maira and Sen himself attended several meetings held with the NGOs.
S.L. Rao, former director general of the National Council of Applied Economic Research, says while spelling out key areas and involving civil society groups are positive steps, the focus should be on larger areas of concern.
“Ecology and environment, development of tribal areas, proper use of reforestation funds which are currently lying unused and a clear demarcation of go and no-go areas as propagated by environment minister Jairam Ramesh etc., will remain critical issues throughout the 12th Plan and therefore should be addressed with utmost care,” Rao said.
No-go areas are those where mining activities and industrial projects are prohibited because of environmental concerns. The environment ministry and the Planning Commission recently had different opinions on the concept
Source : Mint
The commission had identified 134 areas when it began work on the 12th Plan earlier this year for which an approach paper is being prepared.
“Enhancing skills and employment generation, transport infrastructure, climate change, inclusiveness, energy security, rural transformation and agriculture growth, better education and preventive healthcare are some vital areas around which the approach paper will be made,” said Pronab Sen, principal adviser to the panel.
“No doubt social sector will be given prime importance in the 12th Plan.”
He added that higher investments in infrastructure by the government and through public-private partnerships will help boost economic growth, pegged at 8% in each year of the 12th Plan.
This will carry forward the “inclusive growth” targets set in the 11th Plan, which had envisaged spending over three-fourths the projected Rs.14.21 trillion in the draft plan on the priority sector. In the 10th Plan, it was 55%, while total spending was Rs.8.1 trillion. The projections for the 12th Plan are yet to be announced.
Sen also said the interactive website for the 12th Plan, which is currently under security audit, will be up sometime this week. The website will seek public views on the 12 key issues both in the form of objective statements and opinion poll. These will go into the making of the approach paper, which should be ready by March-end, according to Sen.
An approach paper carries general guidelines on which the plan is based. Once readied and made public, the details of plan programmes and sector-specific strategies are worked out.
Sen said a wide consultative approach was followed in arriving at the 12 areas. This included consulting non-governmental organizations (NGOs) and experts in the field of development.
“The Planning Commission involved NGOs such as Centre for Budget and Governance Accountability, Social Watch, Wada Na Todo Abhiyan and Oxfam India to get the view of civil society on the challenges and needs of development planning,” said Sen.
Wada Na Todo Abhiyan, the name of which in Hindi translates as “Don’t-break-your-promise campaign”, is an organization working for holding the government accountable to its promises.
The approach paper is traditionally written by the perspective planning division of the plan panel. A team of senior officials makes projections for economic growth and its sector-wise distribution, poverty ratios, fiscal balance and estimation of external sector balance. This is the first time that civil society organizations have been so deeply involved in the exercise.
Some NGOs gathered feedback from other NGOs and people working in the respective areas at grassroots levels. These, Sen said, included NGOs working with demographic groups such as adolescents, the physically handicapped, women, destitutes and Left-wing extremists.
Planning Commission members and officials such as Mihir Shah, Arun Maira and Sen himself attended several meetings held with the NGOs.
S.L. Rao, former director general of the National Council of Applied Economic Research, says while spelling out key areas and involving civil society groups are positive steps, the focus should be on larger areas of concern.
“Ecology and environment, development of tribal areas, proper use of reforestation funds which are currently lying unused and a clear demarcation of go and no-go areas as propagated by environment minister Jairam Ramesh etc., will remain critical issues throughout the 12th Plan and therefore should be addressed with utmost care,” Rao said.
No-go areas are those where mining activities and industrial projects are prohibited because of environmental concerns. The environment ministry and the Planning Commission recently had different opinions on the concept
Source : Mint
Lessons from 2010 for equity investors
When you look back at the equity market's performance in December 2010, you are bound to smile at the performance of your portfolio. The average returns of most equity funds have been in the range of 20-30 per cent, with some clocking even a return of 40 per cent.
In the case of individual stocks, the performance has been staggering with many stocks clocking over 50 per cent returns. Many from the technology space have been impressive and despite the recent correction, a number of mid-cap stocks have turned multi-baggers.
While every year in recent times has been dominated by foreign institutional investor (FII) flows, the year 2010 truly belonged to this aggressive bunch who took the inflows into a different level in the months of September and October. For the first time in many years, the domestic stock market was on the radars of a number of global funds and the noise in support of allocation for domestic stocks got louder during the year.
Easier to spend time in market than timing it
Even as sceptics are crying hoarse that this money supply could end soon in the light of pricing, the time seems to have come for the world to have a bigger pie of India. This in itself should be comforting for the domestic investor but you need to get the timing right.
A popular joke about investing in equity is that it is easier to spend time in the market than timing it. The repeated bounce-backs witnessed in the markets after sharp corrections have only reiterated this well-known principle. However, the performances of a number of sectors did not hold water in 2010 as many didn't show signs of bounce-back even after sharp cuts.
The classic examples were real estate and construction stocks that came under severe pressure due to negative news flow. The pain was more in the case of many small and mid-sized companies which shed as much as 30-40 per cent in a matter of a few trading sessions.
Stock that sheds liberally need not be good
As a result, a number of investors are bound to feel left-out of the year's rally despite the market in general adding close to 35-50 per cent to its previous level. The best way to tackle the issue is to put the past behind and take the right step forward. The task would be a lot easier if one makes it a point to learn some lesions from previous experience.
Why not list out the takeaways from the year gone by and avoid committing those errors in the New Year? Here are some takeaways from 2010:
A stock that sheds liberally need not be good to invest in
Often, an investor rushes to buy a stock which is on a downward trend, but one needs to know the reason behind the falling spree. As the recent scams have exposed, stocks which rose on manipulation and on poor fundamentals can never regain their past glory as their prices were never fair.
Past performance is no cushion for future show
It probably holds good for sectors which hog the limelight at regular intervals. Ironically, every year has thrown up new winners at regular intervals and investors always seem to catch on at the wrong time.
If it was auto in 2008-09, it was real estate in 2010 as both sectors came up with stellar performances prior to their poor shows.
While betting on a sector, one needs to analyse the macro environment and price points first. If auto was an underperformer in 2009 it was because of the interest environment and so was the case with property in 2010.
Hence, rather than using the contrarian approach, an investor would be better-placed if he picks stocks which are not challenged by the macro environment.
Buying it right and getting out smart
Equity markets in general can be better performers when compared with other assets. They can churn out winners when an investor gets his timing right both with buys and sells. In a volatile market, both need to be managed well as they ensure optimisation of returns.
Article by Srikala Bhashyam
In the case of individual stocks, the performance has been staggering with many stocks clocking over 50 per cent returns. Many from the technology space have been impressive and despite the recent correction, a number of mid-cap stocks have turned multi-baggers.
While every year in recent times has been dominated by foreign institutional investor (FII) flows, the year 2010 truly belonged to this aggressive bunch who took the inflows into a different level in the months of September and October. For the first time in many years, the domestic stock market was on the radars of a number of global funds and the noise in support of allocation for domestic stocks got louder during the year.
Easier to spend time in market than timing it
Even as sceptics are crying hoarse that this money supply could end soon in the light of pricing, the time seems to have come for the world to have a bigger pie of India. This in itself should be comforting for the domestic investor but you need to get the timing right.
A popular joke about investing in equity is that it is easier to spend time in the market than timing it. The repeated bounce-backs witnessed in the markets after sharp corrections have only reiterated this well-known principle. However, the performances of a number of sectors did not hold water in 2010 as many didn't show signs of bounce-back even after sharp cuts.
The classic examples were real estate and construction stocks that came under severe pressure due to negative news flow. The pain was more in the case of many small and mid-sized companies which shed as much as 30-40 per cent in a matter of a few trading sessions.
Stock that sheds liberally need not be good
As a result, a number of investors are bound to feel left-out of the year's rally despite the market in general adding close to 35-50 per cent to its previous level. The best way to tackle the issue is to put the past behind and take the right step forward. The task would be a lot easier if one makes it a point to learn some lesions from previous experience.
Why not list out the takeaways from the year gone by and avoid committing those errors in the New Year? Here are some takeaways from 2010:
A stock that sheds liberally need not be good to invest in
Often, an investor rushes to buy a stock which is on a downward trend, but one needs to know the reason behind the falling spree. As the recent scams have exposed, stocks which rose on manipulation and on poor fundamentals can never regain their past glory as their prices were never fair.
Past performance is no cushion for future show
It probably holds good for sectors which hog the limelight at regular intervals. Ironically, every year has thrown up new winners at regular intervals and investors always seem to catch on at the wrong time.
If it was auto in 2008-09, it was real estate in 2010 as both sectors came up with stellar performances prior to their poor shows.
While betting on a sector, one needs to analyse the macro environment and price points first. If auto was an underperformer in 2009 it was because of the interest environment and so was the case with property in 2010.
Hence, rather than using the contrarian approach, an investor would be better-placed if he picks stocks which are not challenged by the macro environment.
Buying it right and getting out smart
Equity markets in general can be better performers when compared with other assets. They can churn out winners when an investor gets his timing right both with buys and sells. In a volatile market, both need to be managed well as they ensure optimisation of returns.
Article by Srikala Bhashyam
Thursday, December 23, 2010
Government IPOs yield higher returns than private company issues
State-owned companies' initial public offerings (IPOs) have been more beneficial for investors in the past decade than private companies, which tend to price their offers at steep valuations.
A study of 243 IPOs that were listed between 2001 and 2009 shows that stocks such as Maruti Suzuki and Indian Bank have returned more than companies such as DLF and Future Capital Holdings which led to losses for investors.
"Wealth creation in PSU IPOs handled was substantially higher than that of private companies," says Virendra Jain, who runs a non-profit organisation, Midas Touch Investors Association (MTIA), which has conducted the study. "This raises a question as to why there is such a difference in the performance of the same merchant banker in relation to PSU and private IPOs. Bankers in their quest to grab business give in to demand of the private issuer companies to maximise issue price."
Pricing of IPOs by private companies has come into focus in recent months, with Sebi chairman CB Bhave criticising investment bankers for fleecing investors. Some of the recent issues such as Orient Green Power and IndoSolar have led to losses for investors, while those of Coal India and MOIL, a state-run manganese ore miner, yielded substantial gains.
But bankers believe that the theory need not hold true across the board and that market conditions determine the pricing. "It is difficult to generalise that PSU issues are priced attractively than private ones,'' says Ganeshan Murugaiyan, MD & head of investment banking at UBS Securities India. "A lot depends on deal to deal and the market conditions at a given point of time."
Some state-run companies' issues such as hydro-power generator NHPC and follow-on offers of power utility NTPC did not yield returns for investors. IPOs managed by JM Morgan Stanley (before split), DSP Merrill Lynch and JPMorgan were some of the biggest wealth creators, the study shows. They have yielded a return of around 137%, 73% and 46%, respectively, during the said period through the issues raised by them.
Kotak Mahindra Capital and Enam Securities have done the maximum number of issues of 52 and 57, respectively, creating a wealth of over 54% in all the issues comprising the private and public sectors handled by them during this period. Investment banks that raised 10,000 crore or have handled more than 10 issues were the samples for the study. Prithvi Haldea, managing director, Prime Database, feels that merchant bankers have no role in deciding the price. "It is up to the investors to decide whether to subscribe to an issue or not. Also, bankers cannot be held responsible for issues based on their performance post listing in the secondary market".
A study of 243 IPOs that were listed between 2001 and 2009 shows that stocks such as Maruti Suzuki and Indian Bank have returned more than companies such as DLF and Future Capital Holdings which led to losses for investors.
"Wealth creation in PSU IPOs handled was substantially higher than that of private companies," says Virendra Jain, who runs a non-profit organisation, Midas Touch Investors Association (MTIA), which has conducted the study. "This raises a question as to why there is such a difference in the performance of the same merchant banker in relation to PSU and private IPOs. Bankers in their quest to grab business give in to demand of the private issuer companies to maximise issue price."
Pricing of IPOs by private companies has come into focus in recent months, with Sebi chairman CB Bhave criticising investment bankers for fleecing investors. Some of the recent issues such as Orient Green Power and IndoSolar have led to losses for investors, while those of Coal India and MOIL, a state-run manganese ore miner, yielded substantial gains.
But bankers believe that the theory need not hold true across the board and that market conditions determine the pricing. "It is difficult to generalise that PSU issues are priced attractively than private ones,'' says Ganeshan Murugaiyan, MD & head of investment banking at UBS Securities India. "A lot depends on deal to deal and the market conditions at a given point of time."
Some state-run companies' issues such as hydro-power generator NHPC and follow-on offers of power utility NTPC did not yield returns for investors. IPOs managed by JM Morgan Stanley (before split), DSP Merrill Lynch and JPMorgan were some of the biggest wealth creators, the study shows. They have yielded a return of around 137%, 73% and 46%, respectively, during the said period through the issues raised by them.
Kotak Mahindra Capital and Enam Securities have done the maximum number of issues of 52 and 57, respectively, creating a wealth of over 54% in all the issues comprising the private and public sectors handled by them during this period. Investment banks that raised 10,000 crore or have handled more than 10 issues were the samples for the study. Prithvi Haldea, managing director, Prime Database, feels that merchant bankers have no role in deciding the price. "It is up to the investors to decide whether to subscribe to an issue or not. Also, bankers cannot be held responsible for issues based on their performance post listing in the secondary market".
Source : ET
Tuesday, December 21, 2010
Investors to get weekly update of MF trade
From January, mutual fund investors will get a weekly consolidated statement of their transactions instead of the monthly statement they get currently. The fund industry is finalising an investor database that will help registrars despatch consolidated account statements to investors every week.
The move is an offshoot of a Sebi suggestion, calling for a central statement processing hub, common for all mutual funds. Once the database is ready, fund registrars, like CAMS , Karvy and Franklin Templeton, will despatch consolidated statement of accounts to investors every week.
“Investors will get one consolidated statement having transaction details across funds, including scheme or fundwise NAV and even the overall portfolio value. This service is ideal for investors who have more than one investment folios,” said a senior official in a registrar.
According to the official, CAMS, Karvy and Franklin Templeton RTA are already despatching consolidated monthly statements to investors, having their money in schemes managed by 25 asset management companies. The registrar group is expecting non-participating mutual funds to join in when the weekly despatch of consolidated statements commence.
“By weekly despatch, we mean that if any investor has done any transaction in their fund portfolio, he’ll get a statement of his actions and the impact thereof, in a week’s time,” the official said.
“Post-July , after Sebi’s directive to send consolidated statements, we’ve been sending deal details only once in a month. Weekly statements will help active fund investors keep a tighter tab on their fund portfolios,” the official added.
According to mutual fund officials, consolidated statements will help people who have invested in multiple fund schemes. In the absence of consolidated statements, the investor will receive individual statements from every fund he has invested. Consolidated statements will cut down the number of statements to just one. The consolidated statement will have scheme-wise transaction details and also net portfolio value. This move will reduce the paperwork and to some extent, even the cost for AMCs.
The cost of sending consolidated statements will be borne by fund houses; it will be calculated on the basis of transactions effected by the investor. Fund houses expect the charge to be around . 5-6 per active client for every month. SIP investors will get consolidated accounts once in every three months. The statement will be mailed to investors in a paper-andenvelope format, sources said.
“This is a good move, but it will hit our marketing campaigns badly,” said the marketing head of bank-promoted fund house. “The statement of accounts, which fund houses mail to investors once a year, is a carrier of our print ad campaigns. Consolidated statements , which include details of other fund houses, will not have any advertisement or promotional material,”
The move is an offshoot of a Sebi suggestion, calling for a central statement processing hub, common for all mutual funds. Once the database is ready, fund registrars, like CAMS , Karvy and Franklin Templeton, will despatch consolidated statement of accounts to investors every week.
“Investors will get one consolidated statement having transaction details across funds, including scheme or fundwise NAV and even the overall portfolio value. This service is ideal for investors who have more than one investment folios,” said a senior official in a registrar.
According to the official, CAMS, Karvy and Franklin Templeton RTA are already despatching consolidated monthly statements to investors, having their money in schemes managed by 25 asset management companies. The registrar group is expecting non-participating mutual funds to join in when the weekly despatch of consolidated statements commence.
“By weekly despatch, we mean that if any investor has done any transaction in their fund portfolio, he’ll get a statement of his actions and the impact thereof, in a week’s time,” the official said.
“Post-July , after Sebi’s directive to send consolidated statements, we’ve been sending deal details only once in a month. Weekly statements will help active fund investors keep a tighter tab on their fund portfolios,” the official added.
According to mutual fund officials, consolidated statements will help people who have invested in multiple fund schemes. In the absence of consolidated statements, the investor will receive individual statements from every fund he has invested. Consolidated statements will cut down the number of statements to just one. The consolidated statement will have scheme-wise transaction details and also net portfolio value. This move will reduce the paperwork and to some extent, even the cost for AMCs.
The cost of sending consolidated statements will be borne by fund houses; it will be calculated on the basis of transactions effected by the investor. Fund houses expect the charge to be around . 5-6 per active client for every month. SIP investors will get consolidated accounts once in every three months. The statement will be mailed to investors in a paper-andenvelope format, sources said.
“This is a good move, but it will hit our marketing campaigns badly,” said the marketing head of bank-promoted fund house. “The statement of accounts, which fund houses mail to investors once a year, is a carrier of our print ad campaigns. Consolidated statements , which include details of other fund houses, will not have any advertisement or promotional material,”
Friday, December 17, 2010
IRDA Plan To Introduce Demat Account For Insurance Policies
From January, you can handle your insurance needs with an insurance account number with more speed and convenience, thanks to a new initiative of the Insurance Regulatory and Development Authority (IRDA). The Authority is working on introducing insurance accounts for each and every buyer of insurance that would facilitate electronic issue and monitoring of both life and general insurance policies.
“At present, we are talking to NSDL and several other players to launch the system by first week of January,”a senior IRDA official told the media.
The modalities such as issuing account numbers to prospective insurance buyers and extending it to over 7 crore insurance policy-holders in the country, digital signatures are being firmed up, he added.
HASSLE-FREE
The proposed insurance account would be ‘customer-friendly' as it could be operated in a similar fashion to the demat accounts.
The electronic issue of policies based on an account number would make buying travel or health insurance and even life insurance faster and simpler.
“Once assigned an account number, a policy-holder will have ready-proof even if his/her policy document is lost. More importantly transactions such as changing nominations can be done easily,” the official said.
From an insurer's perspective, the administrative costs could be cut down and the data storage/access could be hassle-free.
“More importantly, implantation of Know Your Customer (KYC) norms and Anti- Money Laundering guidelines will be easy and transparent,” he added.
One of the focus areas for IRDA of late has been preventing money laundering and insurance transactions based on unaccounted/black money.
NEED FOR CLARITY
According to Dr P. Nandagopal, Chief Executive Officer of IndiaFirst Life Insurance Company, the demat form would be beneficial for both the policyholders and the insurance companies as it will reduce transaction costs.
“Customers can now have a single point of transaction for insurance. For companies, the advantages will be the reduction in costs on account of lesser paperwork and other administrative work,” he said.
The procedures, however, need to be sound and clear. “Regulatory changes are expected for direct online models. There are still some issues like mobile money transfer and digital signatures where there is not much clarity,” said Mr Joydeep Roy, Chief Executive, L&T General Insurance.
In most of the foreign countries, different types of policies such as motor, health, engineering and travel are sold online, he added.
Source : IRDA
Thursday, December 16, 2010
Big entities can create big mess, says Bhave
With less than two months to go before his tenure ends, Securities and Exchange Board of India (Sebi) Chairman C B Bhave expressed his frank views for the second time in less than a week. This time, the target was big companies that, according to Bhave, are a challenge to regulate.
“Big entities can create big mess. And, the challenge before the regulators is: Can we impose extra regulations on big entities... because if they fail they create a big mess,” said Bhave at a function here.
The statements of the Sebi chief assume significance when seen against the backdrop of the some recent investigations and orders passed by the capital market regulator.
Last month, Sebi barred two Sahara Group entities — Sahara India Real Estate Corporation and Sahara Housing Investment Corporation — from accessing the securities market for alleged withholding of information from investors and the regulator. It also cast doubt on the balance sheet of the Lucknow-based business house because of the alleged lack of transparency over the source of funds.
In another instance, the regulator issued a showcause notice to Anil Dhirubhai Ambani Group (ADAG) Chairman Anil Ambani in a matter related to alleged violation of overseas debt norms.
Bhave, however, said the problem of regulating big companies was a global phenomenon and not restricted to India alone. The world is grappling with this question, he said, referring to the collapse of Lehman Brothers in 2008.
“Is it possible at all practically to say, because you are ‘X’ size, you need more capping; you can’t take more than ‘Y’ risk; or the choice is to say you can’t be this big, we are just going to break you up,” he asked.
The Sebi chief further said the challenges were compounded by the fact that large companies had access to political and media circles and, more often that not, the regulator ended up being criticised for its actions.
“This is more difficult to handle because these big entities have big persuasive ability... their political and media access is tremendous and, therefore, regulators are going to be at the receiving end when they try and do something about these entities,” he said.
“We have not found an answer to this... and they have tremendous ability to work around regulation... we need to handle this and it will be interesting to see how this gets handled in the days to come,” said Bhave, who had only last week openly advocated provisions for maintaining adequate autonomy for regulatory bodies.
Source : Business Standard
“Big entities can create big mess. And, the challenge before the regulators is: Can we impose extra regulations on big entities... because if they fail they create a big mess,” said Bhave at a function here.
The statements of the Sebi chief assume significance when seen against the backdrop of the some recent investigations and orders passed by the capital market regulator.
Last month, Sebi barred two Sahara Group entities — Sahara India Real Estate Corporation and Sahara Housing Investment Corporation — from accessing the securities market for alleged withholding of information from investors and the regulator. It also cast doubt on the balance sheet of the Lucknow-based business house because of the alleged lack of transparency over the source of funds.
In another instance, the regulator issued a showcause notice to Anil Dhirubhai Ambani Group (ADAG) Chairman Anil Ambani in a matter related to alleged violation of overseas debt norms.
Bhave, however, said the problem of regulating big companies was a global phenomenon and not restricted to India alone. The world is grappling with this question, he said, referring to the collapse of Lehman Brothers in 2008.
“Is it possible at all practically to say, because you are ‘X’ size, you need more capping; you can’t take more than ‘Y’ risk; or the choice is to say you can’t be this big, we are just going to break you up,” he asked.
The Sebi chief further said the challenges were compounded by the fact that large companies had access to political and media circles and, more often that not, the regulator ended up being criticised for its actions.
“This is more difficult to handle because these big entities have big persuasive ability... their political and media access is tremendous and, therefore, regulators are going to be at the receiving end when they try and do something about these entities,” he said.
“We have not found an answer to this... and they have tremendous ability to work around regulation... we need to handle this and it will be interesting to see how this gets handled in the days to come,” said Bhave, who had only last week openly advocated provisions for maintaining adequate autonomy for regulatory bodies.
Source : Business Standard
Wednesday, December 15, 2010
CBI's 2G scam raids: Suspects & allegations
The CBI carried out searches at the premises of corporate lobbyist Niira Radia and former TRAI chairman Pradeep Baijal in connection with the alleged Rs 22,000 crore 2G spectrum scam, a week after conducting raids at the residences of former Telecom Minister A Raja.
Delhi - 7 Raids
Case file?
CBI registers a case on October 21, 2009, against unknown persons in telecom dept & private firms.
Allegation: For causing Rs 22k-crore loss to the exchequer in 2G scam.
On the radar are the likely conduits in stashing away kickbacks from 2G scam.
The big fish: Niira Radia
Vaishnavi Corporate Communications Radia's PR agencies manage all 90 Tata group accounts and also Mukesh Ambani's RIL, among others Vaishnavi also handled Unitech's account earlier.
Alleged role in scam: CBI is looking if bribes were paid during the 2G licensing process by Raja in 2008 & Radia's role in it.
Radia is alleged to have helped some telcos get mobile permits.
Radia's telephone tapes indicate lobbying on behalf of her clients for A Raja to stay on as telecom minister after 2009 general elections.
CBI & ED probing alleged illegalities in foreign funding brought in by telcos, and Radia's role in it Raids indicate Radia may be named in the 2G spectrum scam chargesheet.
Pradip Baijal:
Former chairman, Trai Joined Noesis, a firm owned by Radia, a year after retirement
Alleged role in scam: CBI examining if his job at Radia's firm was in exchange for any favour extended during his tenure as TRAI chief.
A Raja said in his affidavit in the SC that Baijal acted out of turn to allow Tata Tele get nine extra mobile licences in 2004.
Major policy decisions regarding 2G spectrum sale formalised during his tensure as TRAI chief between 2003-06.
Noesis is alleged to be involved in pushing for policy changes and decisions to suit the requirement of Vaishnavi's clients His role in advising Radia &
Vaishnavi to help its clients bag 2G permits in 2008.
TN Chief Minister M Karunanidhi's daughter and MP Kanimozhi is a director in this organisation.
Kanimozhi is also reportedly close to Raja The NGO is best known for its annual cultural event 'Chennai Sangamam'.
Claims to work towards promoting Tamil art, literature and culture.
Alleged role in scam: CBI is investigating if NGO was used to park/route funds
& kickbacks from 2G scam
Other suspects:
Mahesh Jain and brother Alok Jain, aka Bobby Known for proximity to A Raja; owned JG Exports, raided by CBI.
A Kamaraj, associate editor of pro-DMK weekly Tamil magazine Nakkeeran; known to be close to DMK circles. Believed to be a director in a company owned by A Raja's family.
Ratnam, Karunanidhi's wife's auditor Chartered accountant of Rajathi Ammal, Karunanidhi's third wife and mother of Rajya Sabha member Kanimozhi. Believed to be the link between Radia & Karunanidhi's wife.
Likely fallout:
A Raja to be summoned by the CBI for questioning. Charge sheet may name Raja leading to possible arrest DMK-Congress relations could come under further strain. The two parties, however, have no option but to persist with the alliance.
Delhi - 7 Raids
- Residence and offices of corporate lobbyist Niira Radia
- Former Trai chairman Pradip Baijal Tamil Nadu - 27 raids
- NGO Tamil Maiyam
- Relatives and associates of A Raja
Case file?
CBI registers a case on October 21, 2009, against unknown persons in telecom dept & private firms.
Allegation: For causing Rs 22k-crore loss to the exchequer in 2G scam.
On the radar are the likely conduits in stashing away kickbacks from 2G scam.
The big fish: Niira Radia
Vaishnavi Corporate Communications Radia's PR agencies manage all 90 Tata group accounts and also Mukesh Ambani's RIL, among others Vaishnavi also handled Unitech's account earlier.
Alleged role in scam: CBI is looking if bribes were paid during the 2G licensing process by Raja in 2008 & Radia's role in it.
Radia is alleged to have helped some telcos get mobile permits.
Radia's telephone tapes indicate lobbying on behalf of her clients for A Raja to stay on as telecom minister after 2009 general elections.
CBI & ED probing alleged illegalities in foreign funding brought in by telcos, and Radia's role in it Raids indicate Radia may be named in the 2G spectrum scam chargesheet.
Pradip Baijal:
Former chairman, Trai Joined Noesis, a firm owned by Radia, a year after retirement
Alleged role in scam: CBI examining if his job at Radia's firm was in exchange for any favour extended during his tenure as TRAI chief.
A Raja said in his affidavit in the SC that Baijal acted out of turn to allow Tata Tele get nine extra mobile licences in 2004.
Major policy decisions regarding 2G spectrum sale formalised during his tensure as TRAI chief between 2003-06.
Noesis is alleged to be involved in pushing for policy changes and decisions to suit the requirement of Vaishnavi's clients His role in advising Radia &
Vaishnavi to help its clients bag 2G permits in 2008.
NGO Tamil Maiyam
TN Chief Minister M Karunanidhi's daughter and MP Kanimozhi is a director in this organisation.
Kanimozhi is also reportedly close to Raja The NGO is best known for its annual cultural event 'Chennai Sangamam'.
Claims to work towards promoting Tamil art, literature and culture.
Alleged role in scam: CBI is investigating if NGO was used to park/route funds
& kickbacks from 2G scam
Other suspects:
Mahesh Jain and brother Alok Jain, aka Bobby Known for proximity to A Raja; owned JG Exports, raided by CBI.
A Kamaraj, associate editor of pro-DMK weekly Tamil magazine Nakkeeran; known to be close to DMK circles. Believed to be a director in a company owned by A Raja's family.
Ratnam, Karunanidhi's wife's auditor Chartered accountant of Rajathi Ammal, Karunanidhi's third wife and mother of Rajya Sabha member Kanimozhi. Believed to be the link between Radia & Karunanidhi's wife.
Likely fallout:
A Raja to be summoned by the CBI for questioning. Charge sheet may name Raja leading to possible arrest DMK-Congress relations could come under further strain. The two parties, however, have no option but to persist with the alliance.
Monetary conditions too tight for RBI rate hike
Monetary conditions in the banking system have been so tight that the central bank will have to refrain from raising rates this week despite inflation being above comfort levels and at risk of trending higher.
From credit-deposit ratios in the system to the huge amounts of cash banks are having to borrow each day from the Reserve Bank of India (RBI), most indicators point to a huge cash deficit in the banking system.
The RBI has been using ad hoc open market operations, barely enough to curb market, and market players reckon it will be a while before the tax payments and other surpluses lying in government coffers are back in circulation.
The RBI governor said last Thursday that the government's cash balances with it stood at around 910 billion rupees $20.2 billion) from 777.36 billion rupees as on Oct. 31.
A deputy governor at the central bank had said at last month's policy review that the RBI was comfortable with either a deficit or surplus of around plus/minus 1 percent of deposits -- roughly 500 billion rupees. But daily borrowings by banks have been about 1 trillion rupees on an average since November.
An increase in currency in circulation during the festival season from October and low government spending are the key reasons for tight liquidity, while high inflation has led to the public holding more cash for spending as expenses mount.
The headline inflation in November stood at 7.48 percent, above the central bank's 5.5 percent projection by next March when the current fiscal year ends, after staying in double-digits for six straight months through July.
A slowdown in the pace of foreign fund inflows has also reduced the dollar funds with banks adding to the cash tightness.
CREDIT GALLOPS, DEPOSITS DWINDLE
Loan growth accelerated this year as banks extended lending to telecoms for wireless spectrum auctions held in May. But with deposit rates lagging inflation, the RBI at its November review said there was room for raising deposit rates.
BANK BORROWINGS, SHORT-TERM RATES SPIKE
Banks have been borrowing heavily from the central bank through its reverse repo window. Short-term rates also spiked in response to the tight cash conditions with the 1-year OIS rising as high as 7 percent, its highest in 26-months, last week.
($1 = 45.3 rupees)
(Editing by Malini Menon & Kazunori Takada)
Tuesday, December 14, 2010
'Govt may introduce plastic currency to counter fake notes
The Government is seriously considering introduction of plastic currency notes in the country to check the menace of fake notes, RBI Governor D Subbarao said here today.
"We are seriously considering introducing plastic currency notes in the Indian economy to check the fake currency problem and also for their longevity," Subbarao said while interacting with students of Ranchi University.
"We will also take into consideration the experience of countries like Australia and New Zealand who have been using plastic notes," he said.
The problem of fake currency notes being circulated has been affecting the economy and the RBI was taking steps to check it, he said.
The RBI, Subbarao added, was consulting other banks of the country and the Centre on the ways to check the problem.
When a student pointed out that fake currency notes were being distributed even through bank ATMs, he said the RBI was preparing stringent standards in this regard and very soon they would be implemented.
Subbarao said the RBI was focusing on inclusion of the rural economy into the banking system as it was imperative for faster growth of the country's economy.
"RBI is organising several outreach programmes in association with other banks to reach the rural population and the objective is to provide core banking facilities in all the panchayats of the country," Rao said in reply to another query by a student.
The Indian economy, he added, was fast growing and with the inclusion of rural population, it would even surpass Chinese economy.
Subbarao, who is on a two-day trip to the state to popularise rural banking, attended a high-level meeting here later in the evening, where Jharkhand Chief Minister Arjun Munda , chief secretary A K Singh and other senior officials were also present.
"We are seriously considering introducing plastic currency notes in the Indian economy to check the fake currency problem and also for their longevity," Subbarao said while interacting with students of Ranchi University.
"We will also take into consideration the experience of countries like Australia and New Zealand who have been using plastic notes," he said.
The problem of fake currency notes being circulated has been affecting the economy and the RBI was taking steps to check it, he said.
The RBI, Subbarao added, was consulting other banks of the country and the Centre on the ways to check the problem.
When a student pointed out that fake currency notes were being distributed even through bank ATMs, he said the RBI was preparing stringent standards in this regard and very soon they would be implemented.
Subbarao said the RBI was focusing on inclusion of the rural economy into the banking system as it was imperative for faster growth of the country's economy.
"RBI is organising several outreach programmes in association with other banks to reach the rural population and the objective is to provide core banking facilities in all the panchayats of the country," Rao said in reply to another query by a student.
The Indian economy, he added, was fast growing and with the inclusion of rural population, it would even surpass Chinese economy.
Subbarao, who is on a two-day trip to the state to popularise rural banking, attended a high-level meeting here later in the evening, where Jharkhand Chief Minister Arjun Munda , chief secretary A K Singh and other senior officials were also present.
Source : ET
IT Dept may tax over 380 firms under scrutiny for merger and acquisition deals in FY'08
Having scrutinised more than 380 merger and acquisition deals from 2007-08, the Income Tax department is expected to soon slap entities concerned with notices for tax totalling several crores of rupees.
Although the scrutiny has been on for a couple of years now, the department must raise tax demands or else the cases will get barred by time this year under the provisions of the I-T Act, sources said.
The multi-million dollar deals involving overseas mergers, acquisitions and infusion of private equity into Indian companies pertain to fiscal 2007-2008 for which December 31 is the last day for scrutiny, assessment and raising of tax demand, a top source in the I-T department said.
While some deals among these 386 have already been dealt with, a number of deals struck during that period will be sent tax notices.
Sunday, December 12, 2010
Six of top-10 firms lose over Rs 42,000 cr this week
The combined market capitalisation (m-cap) of six of the country's top-10 firms went down by Rs 42,791 crore during the past week, with two of the country's top lenders, SBI and ICICI Bank, bearing the maximum loss.
Amid a weak stock market, which fell by 458 points, or 2.29 per cent, last week, the market valuation of State Bank of India also declined by Rs 21,256.29 crore to Rs 1,73,768.19 crore as on Friday's trade. Similarly, private sector lender ICICI Bank too saw its m-cap diminishing by Rs 7,385.32 crore to Rs 1,28,343.91 crore.
During the last week, SBI's scrip plunged 10.89 per cent, while ICICI's tanked by 5.44 per cent on the Bombay Stock Exchange.
Among the top-10 firms, RIL , ONGC, Infosys Technologies and NTPC led the gainers front, while SBI, ICICI, TCS, Coal India , ITC and Bharti Airtel emerged as losers in the list which is decided as per their market capitalisation.
Top private telco Bharti Airtel also saw its valuation eroding by Rs 5,639.31 crore to Rs 1,25,659.94 crore.
IT major TCS too lost Rs 3,933.97 crore from its m-cap which stood at Rs 2,10,467.5 crore.
With an m-cap of Rs 2,00,039.12 crore, coal behemoth CIL witnessed an erosion of Rs 3,537.16 crore from its valuation.
FMCG honcho ITC also lost Rs 1,039.36 crore from its kitty to take its m-cap to Rs 1,30,919.79 crore.
Meanwhile, country's most valued corporate firm Reliance Industries added Rs 5,661.62 crore to take its m-cap to Rs 3,35,017 crore, while state-run ONGC saw its valuation swelling by Rs 256.66 crore to Rs 2,82,608.89 crore.
With an m-cap of Rs 1,80,681.96 crore, IT bellwether Infosys Technologies added Rs 1,409.27 crore to its valuation.
Power major NTPC too added Rs 5,895.5 crore to take its valuation to Rs 1,58,477.74 crore.
Amid a weak stock market, which fell by 458 points, or 2.29 per cent, last week, the market valuation of State Bank of India also declined by Rs 21,256.29 crore to Rs 1,73,768.19 crore as on Friday's trade. Similarly, private sector lender ICICI Bank too saw its m-cap diminishing by Rs 7,385.32 crore to Rs 1,28,343.91 crore.
During the last week, SBI's scrip plunged 10.89 per cent, while ICICI's tanked by 5.44 per cent on the Bombay Stock Exchange.
Among the top-10 firms, RIL , ONGC, Infosys Technologies and NTPC led the gainers front, while SBI, ICICI, TCS, Coal India , ITC and Bharti Airtel emerged as losers in the list which is decided as per their market capitalisation.
Top private telco Bharti Airtel also saw its valuation eroding by Rs 5,639.31 crore to Rs 1,25,659.94 crore.
IT major TCS too lost Rs 3,933.97 crore from its m-cap which stood at Rs 2,10,467.5 crore.
With an m-cap of Rs 2,00,039.12 crore, coal behemoth CIL witnessed an erosion of Rs 3,537.16 crore from its valuation.
FMCG honcho ITC also lost Rs 1,039.36 crore from its kitty to take its m-cap to Rs 1,30,919.79 crore.
Meanwhile, country's most valued corporate firm Reliance Industries added Rs 5,661.62 crore to take its m-cap to Rs 3,35,017 crore, while state-run ONGC saw its valuation swelling by Rs 256.66 crore to Rs 2,82,608.89 crore.
With an m-cap of Rs 1,80,681.96 crore, IT bellwether Infosys Technologies added Rs 1,409.27 crore to its valuation.
Power major NTPC too added Rs 5,895.5 crore to take its valuation to Rs 1,58,477.74 crore.
Indian black money finding way to Emirates' banks?
Someone following the money in a season of scams can rummage through dry data on the website of the United Arab Emirates' central bank. In the past few months, there has been an unusual surge in deposits in many high-street banks in Dubai, Abu Dhabi and financial centres in the UAE. Where the money came from is a subject of speculation in the Gulf with the regulator yet to spell out the sources.
But amid the buzz that much of it could be government money taken from reserves to help state-owned firms pay off debts next year, senior bankers and finance professionals have spotted an India angle to the fund flow.
The rush of deposits began weeks after India and Switzerland signed a revised treaty on August 30 to exchange information on tax-evaders. The pact was perceived as the first step to obtain details on money stashed away in Swiss banks. India struck a similar agreement with Bermuda, a tax haven.
Total bank deposits jumped more than 40 billion dirhams ($11 billion) in October, as per data compiled by the Central Bank of UAE , against an average monthly growth of 10 billion dirhams ($2.7 billion) since January. "It may be more than a coincidence. It's a fact that money is moving out of Swiss banks and Dubai is an obvious choice for many Indians," said a senior chartered accountant who has structured such transactions.
Before October, the highest jump in monthly deposits was 14.6 billion dirhams ($3.9 billion) in June - less than two months after Indian tax authorities notified they had initiated information exchange agreements with nine jurisdictions, including British Virgin Islands, Isle of Man and Jersey, which has been a favourite tax haven. "Some of these pacts are yet to be notified, and data will be shared by a tax haven only after precise information is sought. But, such announcements push people to move their money," said a finance professional who specialises in foreign exchange norms.
Swiss pact from April 2011
The pact with Switzerland will come into force from April 1, 2011.
"But nobody wants to wait till the last day. Structuring the deal and remitting the money can take two to three months," he said.
Dubai is convenient because there is no tax and banks ask few questions if money deposited has no drug or terror trail. The whole transaction can be broken into a few simple steps. First, a firm is floated in the Dubai Free Trade Zone and then staffed with local directors, many of whom are Indians working in the Gulf. Secondly, a bank account is opened in the firm's name. The money is then wired from Switzerland or a tax haven to either a Dubai bank, or to the UAE arm of an MNC bank. Finally, it is transferred to a local Emirate bank. The cash received by the newly-formed company in Dubai is shown as trading income or consultancy fee from international clients.
But persons moving unaccounted money have to submit a list of names as to who will own the shares of the firm in the event of their deaths. Under the principles of Shari'ah (or Islamic law), one must name the inheritors.
"It can be easier if the person is a private banking client in a Dubai financial centre. If a wealth manager is simultaneously given to run a portfolio worth a few million dollars, the relationship becomes stronger," said a banker in Abu Dhabi. He said non-residents also ask foreign institutions and funds outside the Emirates to invest the money in the UAE financial and property markets. "There is a slow revival in interest among hedge funds and arbitrage funds"
But amid the buzz that much of it could be government money taken from reserves to help state-owned firms pay off debts next year, senior bankers and finance professionals have spotted an India angle to the fund flow.
The rush of deposits began weeks after India and Switzerland signed a revised treaty on August 30 to exchange information on tax-evaders. The pact was perceived as the first step to obtain details on money stashed away in Swiss banks. India struck a similar agreement with Bermuda, a tax haven.
Total bank deposits jumped more than 40 billion dirhams ($11 billion) in October, as per data compiled by the Central Bank of UAE , against an average monthly growth of 10 billion dirhams ($2.7 billion) since January. "It may be more than a coincidence. It's a fact that money is moving out of Swiss banks and Dubai is an obvious choice for many Indians," said a senior chartered accountant who has structured such transactions.
Before October, the highest jump in monthly deposits was 14.6 billion dirhams ($3.9 billion) in June - less than two months after Indian tax authorities notified they had initiated information exchange agreements with nine jurisdictions, including British Virgin Islands, Isle of Man and Jersey, which has been a favourite tax haven. "Some of these pacts are yet to be notified, and data will be shared by a tax haven only after precise information is sought. But, such announcements push people to move their money," said a finance professional who specialises in foreign exchange norms.
Swiss pact from April 2011
The pact with Switzerland will come into force from April 1, 2011.
"But nobody wants to wait till the last day. Structuring the deal and remitting the money can take two to three months," he said.
Dubai is convenient because there is no tax and banks ask few questions if money deposited has no drug or terror trail. The whole transaction can be broken into a few simple steps. First, a firm is floated in the Dubai Free Trade Zone and then staffed with local directors, many of whom are Indians working in the Gulf. Secondly, a bank account is opened in the firm's name. The money is then wired from Switzerland or a tax haven to either a Dubai bank, or to the UAE arm of an MNC bank. Finally, it is transferred to a local Emirate bank. The cash received by the newly-formed company in Dubai is shown as trading income or consultancy fee from international clients.
But persons moving unaccounted money have to submit a list of names as to who will own the shares of the firm in the event of their deaths. Under the principles of Shari'ah (or Islamic law), one must name the inheritors.
"It can be easier if the person is a private banking client in a Dubai financial centre. If a wealth manager is simultaneously given to run a portfolio worth a few million dollars, the relationship becomes stronger," said a banker in Abu Dhabi. He said non-residents also ask foreign institutions and funds outside the Emirates to invest the money in the UAE financial and property markets. "There is a slow revival in interest among hedge funds and arbitrage funds"
Source : ET
Wednesday, December 8, 2010
Jhunjhunwala to unlock value in six companies
Investor Rakesh Jhunjhunwala , whose personal wealth is around $1 billion, has said six companies in which he holds stakes would go public in the next two years.
Mr Jhunjhunwala holds stakes in 15 companies that are not listed on the stock markets. “We will list six companies in coming years,” he told journalists in Ahmedabad on Tuesday.
He will sell 0.87% stake in A2Z Maintenance and Engineering Services, a Mumbai-based company that will come out with an initial public offering (IPO) on December 8. The Rare Enterprise chairman will sell five lakh shares at the higher end of the price band of Rs 400-410 per share and receive more than Rs 20 crore, an amount he invested in the company four years ago. At that time, the shares were purchased at a little less than Rs 14 a piece, a price that has zoomed 30 times and the investment is now valued at close to Rs 500 crore.
A2Z Maintenance & Engineering Services Ltd. is engineering, procurement and construction (EPC) company in India and have been providing services to power transmission and distribution sector. The company is diversifying this business to provide EPC services to power generation companies and telecommunications. Company is also active in generating power from renewable energy sources. It provides municipal solid waste management services too.
His portfolio was built since 2003 and two Ahmedabad companies John Energy and Concord Biotech in which he has 25% and 31% stake respectively are also planning to get listed. Another company Topsgrup, Mumbai-based security solution provider, too is contemplating listing but is yet to decided the time period, a Mumbai-based market professional said.
Top officials in John Energy said the company is likely to bring its public issue during 2011-12. In 2007, Jhunjhunwala invested Rs 60 crore in the company that undertakes onshore drilling for public and private oil exploration and production companies. John Energy company has presence in Algeria, Kazakhstan and Uganda with clients like ONGC , OIL, RIL. Cairn, GSPC and HOEC.
Similarly, Concord Biotech with Rs 105 crore turnover too will go public next year. Jhunjhunwala has invested Rs 50 crore in two phases. During 2006 he bought 11% and later acquired 24% more in 2009. The company has been growing at a 30% CAGR since five years. The Warren Buffet of India - as Jhunjhunwala is described - is a chartered accountant and was rated 51st richest Indian.
Vadodara-based stock market analyst Anirudh Sethi recently paid Rs 14.02 lakh to win a charity auction for lunch with him. The funds were meant for Children’s Movement for Civic Awareness, a non-governmental organisation. “It’s a social and a charitable contribution and also an opportunity to meet a charismatic person like Mr Jhunjhunwala,” Sethi then said.
Source : ET
Mr Jhunjhunwala holds stakes in 15 companies that are not listed on the stock markets. “We will list six companies in coming years,” he told journalists in Ahmedabad on Tuesday.
He will sell 0.87% stake in A2Z Maintenance and Engineering Services, a Mumbai-based company that will come out with an initial public offering (IPO) on December 8. The Rare Enterprise chairman will sell five lakh shares at the higher end of the price band of Rs 400-410 per share and receive more than Rs 20 crore, an amount he invested in the company four years ago. At that time, the shares were purchased at a little less than Rs 14 a piece, a price that has zoomed 30 times and the investment is now valued at close to Rs 500 crore.
A2Z Maintenance & Engineering Services Ltd. is engineering, procurement and construction (EPC) company in India and have been providing services to power transmission and distribution sector. The company is diversifying this business to provide EPC services to power generation companies and telecommunications. Company is also active in generating power from renewable energy sources. It provides municipal solid waste management services too.
His portfolio was built since 2003 and two Ahmedabad companies John Energy and Concord Biotech in which he has 25% and 31% stake respectively are also planning to get listed. Another company Topsgrup, Mumbai-based security solution provider, too is contemplating listing but is yet to decided the time period, a Mumbai-based market professional said.
Top officials in John Energy said the company is likely to bring its public issue during 2011-12. In 2007, Jhunjhunwala invested Rs 60 crore in the company that undertakes onshore drilling for public and private oil exploration and production companies. John Energy company has presence in Algeria, Kazakhstan and Uganda with clients like ONGC , OIL, RIL. Cairn, GSPC and HOEC.
Similarly, Concord Biotech with Rs 105 crore turnover too will go public next year. Jhunjhunwala has invested Rs 50 crore in two phases. During 2006 he bought 11% and later acquired 24% more in 2009. The company has been growing at a 30% CAGR since five years. The Warren Buffet of India - as Jhunjhunwala is described - is a chartered accountant and was rated 51st richest Indian.
Vadodara-based stock market analyst Anirudh Sethi recently paid Rs 14.02 lakh to win a charity auction for lunch with him. The funds were meant for Children’s Movement for Civic Awareness, a non-governmental organisation. “It’s a social and a charitable contribution and also an opportunity to meet a charismatic person like Mr Jhunjhunwala,” Sethi then said.
Source : ET
Tuesday, December 7, 2010
April-Nov direct tax receipts up 17.85%
India's net direct tax receipts, including corporate and personal income tax, rose 17.85 per cent year on year during April-November period in the current fiscal ending March, a government statement said on Tuesday.
Net direct tax receipts touched Rs 2.17 lakh crore in the first eigth months of the fiscal, crossing 50 per cent of the government's target of Rs 4.3 lakh crore for 2010/11, the statement said
Corporate tax receipts were up 22.3 per cent in the first eight months of the current fiscal to Rs 1.38 lakh crore, while personal income tax rose 10.7 per cent to Rs 77,770 crore agains the same period a year ago, it added
Source : Business Standard
Net direct tax receipts touched Rs 2.17 lakh crore in the first eigth months of the fiscal, crossing 50 per cent of the government's target of Rs 4.3 lakh crore for 2010/11, the statement said
Corporate tax receipts were up 22.3 per cent in the first eight months of the current fiscal to Rs 1.38 lakh crore, while personal income tax rose 10.7 per cent to Rs 77,770 crore agains the same period a year ago, it added
Source : Business Standard
Wall St rallies to 2-year high after tax cut deal
Stocks jumped to a fresh two-year intraday high on Tuesday as investors bet that a deal to extend tax breaks will prompt increased spending and buoy the economy.
A stronger euro, rising commodity prices and an acquisition in the energy sector also combined to push Wall Street higher.
US President Barack Obama announced the deal to renew Bush-era tax cuts for wealthier Americans -- as Republicans had wanted -- as well as the middle class. The deal was expected to extend breaks on dividends and capital gains.
Investors have said the tax cuts were necessary to keep the fragile economic recovery on track and could lead to more spending and investing. Keeping the capital gains tax steady could make investors less inclined to sell shares.
"This is tantamount to another stimulus plan," said Joseph Battipaglia , market strategist at Stifel Nicolaus in Yardley, Pennsylvania.
"That's going to add to GDP, which will then add to consumption and will in turn support the profit picture."
The Dow Jones industrial average rose 84.88 points, or 0.75 per cent, to 11,447.07. The Standard & Poor's 500 Index gained 11.31 points, or 0.92 per cent, to 1,234.43. The Nasdaq Composite Index advanced 24.48 points, or 0.94 per cent, to 2,619.40.
The S&P 500 rose to a fresh two-year high and hit a new intraday high for 2010. The index also broke above the 61.8 per cent Fibonacci retracement of the 2007-2009 bear market slide, a key technical indicator that had been seen as a strong resistance point.
Nicor Inc climbed 5.1 per cent to $49.16 after natural gas distributor AGL Resources Inc agreed to buy Nicor, a peer. AGL shed 4 per cent to $35.65.
The energy sector led the broad rally, with the S&P energy index up 0.5 per cent. Oil futures trimmed gains after climbing above $90 a barrel for the first time in 26 months. Chevron Corp was up 1.4 per cent at $86.11.
Source : ET
A stronger euro, rising commodity prices and an acquisition in the energy sector also combined to push Wall Street higher.
US President Barack Obama announced the deal to renew Bush-era tax cuts for wealthier Americans -- as Republicans had wanted -- as well as the middle class. The deal was expected to extend breaks on dividends and capital gains.
Investors have said the tax cuts were necessary to keep the fragile economic recovery on track and could lead to more spending and investing. Keeping the capital gains tax steady could make investors less inclined to sell shares.
"This is tantamount to another stimulus plan," said Joseph Battipaglia , market strategist at Stifel Nicolaus in Yardley, Pennsylvania.
"That's going to add to GDP, which will then add to consumption and will in turn support the profit picture."
The Dow Jones industrial average rose 84.88 points, or 0.75 per cent, to 11,447.07. The Standard & Poor's 500 Index gained 11.31 points, or 0.92 per cent, to 1,234.43. The Nasdaq Composite Index advanced 24.48 points, or 0.94 per cent, to 2,619.40.
The S&P 500 rose to a fresh two-year high and hit a new intraday high for 2010. The index also broke above the 61.8 per cent Fibonacci retracement of the 2007-2009 bear market slide, a key technical indicator that had been seen as a strong resistance point.
Nicor Inc climbed 5.1 per cent to $49.16 after natural gas distributor AGL Resources Inc agreed to buy Nicor, a peer. AGL shed 4 per cent to $35.65.
The energy sector led the broad rally, with the S&P energy index up 0.5 per cent. Oil futures trimmed gains after climbing above $90 a barrel for the first time in 26 months. Chevron Corp was up 1.4 per cent at $86.11.
Source : ET
Wednesday, December 1, 2010
Ketan Parekh still 'active' in market, ramping up stocks: IB report
Dalal Street never believed that Ketan Parekh , widely referred to as KP, left the market. And now a 'secret' report by the Intelligence Bureau appears to confirm the fact.
According to the report, ‘KP’ has been ramping up different stocks and placing some of them at inflated prices to large institutions, like LIC, through little-known investment entities, market operators and a string of loyal brokers.
The posterboy of the technology shares-led bull run in 1999-00 , KP is said to be using front entities to trade in shares, like Orchid Chemicals , GMR Infrastructure, Cairn India, Deccan Chronicles Holdings, Reliance Industries, Punj Lloyd , Indiabulls Real Estate, Pipavav Shipyard, Amtek Auto, Hindustan Oil Exploration, UCO Bank , State Bank of India, EIH and JSW Steel , among others.
He is said to have been instrumental in ramping up the share price of SKS Microfinance from Rs 850 to Rs 1,100 soon after its listing in August, the report claims. Also, in collusion with Kolkata-based associates, KP is said to have rigged IPOs of little known companies by buying out 50% of the issue . The report did not identify the sources of its information. Its authenticity was confirmed by people familar with it.
The Intellegence Bureau, which traces its origin to the British Raj, and is in charge of intelligence related to internal security . In the recent past, with the liberalisation of the Indian economy, it has started monitoring the capital market. In a case involving share placements, one Raju Bartar is said to have identified two foreign institutional investors for a qualified institutional placement in Edserv. The understanding, according to the IB report, that the promoter would later return the amount to Bartar, and proceeds from the sale of shares would be shared.
Subsequently, around 50% of the issue was placed with Sparrow India Fund, the report added. A senior official of Edserv denied links to any Raju Bartar, saying that the QIP was done in accordance with Sebi regulations. ET was not able to obtain any phone numbers or email of Mr Bartar.
The report doesn’t claim there was anything illegal in Sparrow picking 50% of the issue. The report alleges that Mumbai-based proprietary investor Sanjay Dangi colluded with the promoter of Welspun Corporation to ramp up the stock price, and that Dangi, along with the promoter of a domestic broking firm and a foreign fund, were trying to “inflate” the prices and get the Life Insurance Corporation to buy the stock at higher levels.
Dangi is also said to have been active in shares of Prakash Steelage, Amar Remedies , Sahyadri Industries , Core Projects and Panasonic Home Appliances. Mr Dangi denied allegations of stock price rigging and that he had placed the shares of Welspun Corporation with institutional investors “in the normal course of business” . Welspun, too, denied the charge.
Source: ET
According to the report, ‘KP’ has been ramping up different stocks and placing some of them at inflated prices to large institutions, like LIC, through little-known investment entities, market operators and a string of loyal brokers.
The posterboy of the technology shares-led bull run in 1999-00 , KP is said to be using front entities to trade in shares, like Orchid Chemicals , GMR Infrastructure, Cairn India, Deccan Chronicles Holdings, Reliance Industries, Punj Lloyd , Indiabulls Real Estate, Pipavav Shipyard, Amtek Auto, Hindustan Oil Exploration, UCO Bank , State Bank of India, EIH and JSW Steel , among others.
He is said to have been instrumental in ramping up the share price of SKS Microfinance from Rs 850 to Rs 1,100 soon after its listing in August, the report claims. Also, in collusion with Kolkata-based associates, KP is said to have rigged IPOs of little known companies by buying out 50% of the issue . The report did not identify the sources of its information. Its authenticity was confirmed by people familar with it.
The Intellegence Bureau, which traces its origin to the British Raj, and is in charge of intelligence related to internal security . In the recent past, with the liberalisation of the Indian economy, it has started monitoring the capital market. In a case involving share placements, one Raju Bartar is said to have identified two foreign institutional investors for a qualified institutional placement in Edserv. The understanding, according to the IB report, that the promoter would later return the amount to Bartar, and proceeds from the sale of shares would be shared.
Subsequently, around 50% of the issue was placed with Sparrow India Fund, the report added. A senior official of Edserv denied links to any Raju Bartar, saying that the QIP was done in accordance with Sebi regulations. ET was not able to obtain any phone numbers or email of Mr Bartar.
The report doesn’t claim there was anything illegal in Sparrow picking 50% of the issue. The report alleges that Mumbai-based proprietary investor Sanjay Dangi colluded with the promoter of Welspun Corporation to ramp up the stock price, and that Dangi, along with the promoter of a domestic broking firm and a foreign fund, were trying to “inflate” the prices and get the Life Insurance Corporation to buy the stock at higher levels.
Dangi is also said to have been active in shares of Prakash Steelage, Amar Remedies , Sahyadri Industries , Core Projects and Panasonic Home Appliances. Mr Dangi denied allegations of stock price rigging and that he had placed the shares of Welspun Corporation with institutional investors “in the normal course of business” . Welspun, too, denied the charge.
Source: ET
Investors lose money in 37 out of the 62 IPOs this year
Despite generally bullish market conditions, investors have lost money in 37 out of the 62 initial public offerings, or IPOs, that hit the market this calendar year.
Some of the issues, especially those of medium- and small-sized companies, saw investor interest wane soon after their listing, as investors opted to book profits, partly due to concerns over quality and pricing of the offers. Recent controversies and scams, involving a few recently listed companies, have further undermined sentiment.
Some investment bankers admit that many of the issues have been overpriced, as the promoters were confident of finding buyers in a bullish market.
“Essentially, investors now put money in IPOs for listing gains. They do so mostly in case of such offers which they feel are not priced reasonably,” said Almondz Global Securities associate director and head of investment banking Sharad Rathi.
Aster Silicates led the pack of the top losers, with the stock currently quoting at a 71% discount to the offer price. According to quarterly results filed with the BSE, the speciality chemicals company reported a sharp 81% fall in net profit to Rs 32 lakh while net sales declined 18% to Rs 16.7 crore in the quarter ended September 30, 2010.
Aster Silicates is followed by Tirupati Inks, Emmbi Polyarns, DB Realty, Tarapur Transformers and Cantabil Retail, among a few notable examples. Tirupati Inks saw heavy selling by foreign investors, including Somerset Emerging Fund, Taib Securities and Credit Suisse, on October 1, the listing day. While the stock was listed at a 25% premium to the offer price of Rs 43 per share, it declined sharply in the following days subsequently, before closing 3% up at Rs 15.6 on Tuesday.
Indosolar, Orient Green, Microsec Financial and Prestige Estates are a few other companies whose stocks are quoting at a substantial discount to their respective offer prices, after foreign funds sold holdings on their listing.
“Most of the current year’s issues were very finely priced and did not leave much on the table for investors,” said Anil Chopra, Group CEO, Bajaj Capital. Post-listing, the market tends to discover the fair value of the stock. And hence, the price falls resulting in erosion of listing gains, he adds.
DB Realty and SKS Microfinance are the two examples of the companies whose stocks have been hit worst by the negative news flows involving the companies.
The micro-finance firm is currently quoting 56% below the IPO price, after the company’s name cropped up in the multi-crore bribes-for-loans scam unearthed by the CBI last week. The company denied any involvement in the scam, but the stock price has taken a mauling over the past week.
Shares of SKS Microfinance, whose IPO was a big hit in the primary market, have fallen well below the offer price, currently quoting at a 28% discount at Rs 712. The company has been hit the by the controversy over the differences within the board which eventually led to the termination of its CEO and MD Suresh Gurumani.
On a brighter note, investors have earned positive returns in 25 IPOs, including Jubilant FoodWorks, Midfield Inds, Aqua Logistics , Talwalkars Better Value, ARSS Infra, Cox & Kings , Godrej Props and Coal India, among others.
Most of these offers, particularly CIL, were reasonably priced which helped them attract good participation in the markets, feel investment bankers. Attributing factors behind success of any particular IPO, Mr Chopra said, “It can be because of many factors such as good growth potential in the business, strong fundamentals or financial position, reputation of the promoters , the strength of the business model or franchise, pricing of the issue and conditions prevailing in the secondary markets.”
Source : ET
Some of the issues, especially those of medium- and small-sized companies, saw investor interest wane soon after their listing, as investors opted to book profits, partly due to concerns over quality and pricing of the offers. Recent controversies and scams, involving a few recently listed companies, have further undermined sentiment.
Some investment bankers admit that many of the issues have been overpriced, as the promoters were confident of finding buyers in a bullish market.
“Essentially, investors now put money in IPOs for listing gains. They do so mostly in case of such offers which they feel are not priced reasonably,” said Almondz Global Securities associate director and head of investment banking Sharad Rathi.
Aster Silicates led the pack of the top losers, with the stock currently quoting at a 71% discount to the offer price. According to quarterly results filed with the BSE, the speciality chemicals company reported a sharp 81% fall in net profit to Rs 32 lakh while net sales declined 18% to Rs 16.7 crore in the quarter ended September 30, 2010.
Aster Silicates is followed by Tirupati Inks, Emmbi Polyarns, DB Realty, Tarapur Transformers and Cantabil Retail, among a few notable examples. Tirupati Inks saw heavy selling by foreign investors, including Somerset Emerging Fund, Taib Securities and Credit Suisse, on October 1, the listing day. While the stock was listed at a 25% premium to the offer price of Rs 43 per share, it declined sharply in the following days subsequently, before closing 3% up at Rs 15.6 on Tuesday.
Indosolar, Orient Green, Microsec Financial and Prestige Estates are a few other companies whose stocks are quoting at a substantial discount to their respective offer prices, after foreign funds sold holdings on their listing.
“Most of the current year’s issues were very finely priced and did not leave much on the table for investors,” said Anil Chopra, Group CEO, Bajaj Capital. Post-listing, the market tends to discover the fair value of the stock. And hence, the price falls resulting in erosion of listing gains, he adds.
DB Realty and SKS Microfinance are the two examples of the companies whose stocks have been hit worst by the negative news flows involving the companies.
The micro-finance firm is currently quoting 56% below the IPO price, after the company’s name cropped up in the multi-crore bribes-for-loans scam unearthed by the CBI last week. The company denied any involvement in the scam, but the stock price has taken a mauling over the past week.
Shares of SKS Microfinance, whose IPO was a big hit in the primary market, have fallen well below the offer price, currently quoting at a 28% discount at Rs 712. The company has been hit the by the controversy over the differences within the board which eventually led to the termination of its CEO and MD Suresh Gurumani.
On a brighter note, investors have earned positive returns in 25 IPOs, including Jubilant FoodWorks, Midfield Inds, Aqua Logistics , Talwalkars Better Value, ARSS Infra, Cox & Kings , Godrej Props and Coal India, among others.
Most of these offers, particularly CIL, were reasonably priced which helped them attract good participation in the markets, feel investment bankers. Attributing factors behind success of any particular IPO, Mr Chopra said, “It can be because of many factors such as good growth potential in the business, strong fundamentals or financial position, reputation of the promoters , the strength of the business model or franchise, pricing of the issue and conditions prevailing in the secondary markets.”
Source : ET
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