NEW DELHI: Fabindia has got the foreign investment promotion board’s (FIPB) clearance to induct up to 49.5% FDI in the company. This would allow the company to expand its business in the country without being restricted by the norm that foreign investment in the sector should only be by the owner of the brand. With less than 50% FDI, the company won’t lose its India tag and still get foreign funds.
As per rules notified in January 2012, 100% FDI is allowed in single-brand retail.
Lawyers familiar with retail-related FDI transactions say the new guidelines potentially prevent fast-growing Indian retail brands in sectors ranging from furniture to apparel from accessing funds from overseas financial investors, private equity players, and perhaps even from foreign single-brand retail companies.
In its request to the board, Fabindia said that it would increase FDI in the company from current 38% to 49.5% to keep it just under 50%, crossing which would have made it ‘foreign-owned’ but not by the owner of the brand, as is required. The US venture capital fund owned by ex-World Bank president James Wolfensohn, along with Louis Vuitton’s L-Capital and Delaware-based fund JLB Canton are invested in the company.
Recently, Premji Invest, the investment fund owned by Wipro chairman Azim Premji, acquired a 7% stake in Fabindia for R100-125 crore, valuing the company at over R1,500 crore.
Regarding Fabindia’s case, the department of industrial policy and promotion (DIPP) has accorded its approval without insisting on the condition that the brand has to be foreign-owned, since by keeping FDI component at 49%, the company is ‘Indian-owned’.
“The proposal is recommended for approval, subject to condition that the brand will continue to be owned by Fab India Overseas (the Indian company) and at no stage resident shareholding of the brand-owning company be divested to non-resident entities,” DIPP said in a note to the finance ministry.
Lawyers are crying foul over the difficult situation where a foreign brand can be brought to India in a wholly-owned Indian subsidiary that can be capitalised to any extent while an Indian brand cannot have access to private equity. “Indian brands cannot be forced to do to capital-rationing,” said Saroj Jha, partner Delhi-based law firm SRGR.
INDIA VALUE FUND ADVISORS EYES RS 500 CRORE STAKE IN MANIPAL
MUMBAI: India Value Fund Advisors (IVFA) may invest up to Rs 500 crore ($100 million) in Manipal Hospitals, the third-largest domestic healthcare service provider, as the latter holds talks with private equity (PE) firms to accelerate expansion plans. IVFA, with $1.4 billion in assets under management, is bullish on healthcare and has pursued deals, including buyout opportunities, in the sector. The PE firm may back Manipal to chase buyouts in an industry where many smaller chains and standalone hospitals are open to deal making. Ranjan Pai-led Manipal Hospitals is expected to finalise a fund raising move within three weeks, with IVFA seen as a front runner, said three separate sources briefed on the matter. “They are in active discussions with three funds, including IVFA and an agreement may be reached soon. The initial deal may fall anywhere between Rs 250 and Rs 500 crore,” added one of the sources mentioned earlier. (For details log on to : http://timesofindia.indiatimes.com/business/india-business/India-Value-Fund-Advisors-eyes-Rs-500-crore-stake-in-Manipal/articleshow/13129117.cms)
DEPARTMENT OF DISINVESTMENT WANTS SMALLER PSUS TO HIT MARKET FOR OVER 10% STAKE SALE
NEW DELHI: The Department of Disinvestment (DoD) has asked small PSUs, which intend to hit capital markets, to come with initial public offering (IPO) of more than 10 per cent of their paid-up capital. In a communication to the Department of Heavy Industries, the DoD has said that all profitable companies which come under the ministry should consider offers of 15-20 per cent of their paid-up equity. “To make the IPO cost effective we have asked the department to consider share-sale to raise maximum resources,” a top government official said. The Department of Heavy Industries has under its administrative control 22 companies and 10 subsidiaries. Apart from power equipment maker BHEL, the rest are all of small size companies. The Centre has already initiated the process of 5 per cent stake sale in BHEL. Besides, the Government has decided to divest its entire 95 per cent in Scooters India Ltd (SIL), which primarily manufactures three-wheelers, with an aim to revive the company that has been incurring losses since 2002-03. (For details log on to : http://economictimes.indiatimes.com/news/economy/policy/department-of-disinvestment-wants-smaller-psus-to-hit-market-for-over-10-stake-sale/articleshow/13119251.cms)
MERGING OF BUSINESSES IN INDIA THE RIGHT THING TO DO: AKZO NOBEL
RIO DE JANEIRO: Global paints and coatings major Akzo Nobel has defended its decision to merge various businesses in Indiawith its listed entity, saying “it is the right thing to do” for “creating value”. “It is a matter of scale…It (merging) will help in creating value for investors. The shareholders will benefit from it. It is the right thing to do,” Akzo Nobel Chief Executive Officer Ton Buchner said. He was responding to a query on how the company viewed reservations expressed by some shareholders about the company’s plans to merge different businesses in India. The company’s listed arm Akzo Nobel India Ltd had proposed to merge Akzo Nobel Coatings India Pvt Ltd, Akzo Nobel Car Refinishes India Pvt Ltd and Akzo Nobel Chemicals (India) Ltd with itself. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/indl-goods/svs/chem-/-fertilisers/merging-of-businesses-in-india-the-right-thing-to-do-akzo-nobel/articleshow/13119497.cms)
FLIPKART TO START SELLING EBOOKS TO TAKE ON RIVALS
MUMBAI: Flipkart, India’s largest e-commerce company by sales, which started as an online retailer of books and later diversified into music, movies and electronic goods, will soon start selling ebooks, a move which experts call ‘tactical’, to take on rival sites that offer steep discounts. An ebook is an electronic or digital book readable on computers, laptops, smartphones or specific reading devices known as ereaders. “Books are one of our largest categories and contribute to one-third of our revenues; getting into ebooks is a natural progression for us,” Ravi Prakash Vora, vice-president, marketing at Flipkart told FE. “We will try to leverage our partnership with various publishers once when we start selling ebooks.” “Flipkart’s discounts are comparable to that of rivals Infibeam, uRead and dial-a-book, among others, therefore, it has lost its unique appeal. Getting into ebooks is a good tactical move,” said an analyst tracking ecommerce trends. (For details log on to: http://www.financialexpress.com/news/flipkart-to-start-selling-ebooks-to-take-on-rivals/948858/)
MOOLCHAND HEALTHCARE TO INVEST RS 500 CRORE ON EXPANSION IN 5 YEARS
NEW DELHI: Delhi-based Moolchand Healthcare today said it plans to invest Rs 500 crore in the next five years for expanding existing operations as well as to acquire new hospitals. “Moolchand Group, plans to invest Rs 500 crore for further growth in healthcare services in the next 3-5 years based upon merger and acquisition opportunities,” the healthcare firm said in a statement. The investment will be deployed towards expansion of MoolchandHospitalin Delhi, new green field hospitals, acquisition of existing hospitals, it added. According to the company, funds would be raised through a mix of debt, equity and internal accruals. The healthcare firm also plans to utilise the funds for development of new healthcare service verticals, including fertility, diagnostics and renal care, it said. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/healthcare/biotech/healthcare/moolchand-healthcare-to-invest-rs-500-crore-on-expansion-in-5-years/articleshow/13117875.cms)
INDIA INC HIT BY A DOUBLE WHAMMY
Indian firms are being squeezed by rising input costs and cooling demand, resulting in a slowdown in earnings and revenue growth compared to recent quarters. An ETIG analysis of 600 companies that have announced results for the quarter ended March 31, 2012, shows that net profit, excluding firms in banking & financial services and oil & gas sectors, slid 2.5% from a year ago while revenue growth slipped to 14%, relatively slower than the previous quarters. Net profit fell for the third consecutive quarter, though the decline was not as marked compared to the 12% fall in the December 2011 quarter and 38% in the quarter prior to that. Revenue growth hasn’t dipped below 15% in the past couple of years. In the quarter ended September 30, 2011, revenue growth had grown in single digits. (For details log on to : http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/india-inc-hit-by-high-input-costs-low-demand-leading-to-squeeze-in-earnings-revenue-growth/articleshow/13126885.cms)
POWER COMPANIES MAY BE PUSHED TO HIKE TARIFF
NEW DELHI: As many as 18 upcoming power projects with an aggregate capacity of over 25,000 MW might be forced to violate their tariff commitments and seek a much higher price from consumers. This is because the coal ministry has rejected a request from the developers of these projects for assured coal linkages and they might have no other option but to resort to the open market for fuel. The projects to be affected include Essar Power’s Mahan, Adani’s Tiroda and GMR Energy’s Kamalanga stations. With no “tapering coal linkage” in sight, the developers of these projects won’t have the option of getting coal at (lower) notified prices from Coal India (CIL) until production commences at their captive mines. These projects are expected to be commissioned at various points of time during the 12th Plan period (2012-17). Union power secretary P Uma Shankar confirmed the development but said there was no cause for panic. “These projects (which have been denied tapering coal linkages) are fairly spaced out and can meet their fuel requirements through e-auction/imports on a temporary basis,” he told FE. (For details log on to : http://www.financialexpress.com/news/power-cos-may-be-pushed-to-hike-tariff/949019/)
NTPC’S CAPACITY ADDITION PLANS COULD GO AWRY
NTPC Ltd managed to improve its operating performance in the March quarter. It increased power generation by 4% from a year ago compared to a 0.7% gain for the full fiscal. Yet, problems of fuel availability and a slow pace of capacity addition dog the company, much like other power generators. Despite being in a better position to get fuel from domestic sources by virtue of being a state-owned company, NTPC faced higher costs. Fuel costs as a percentage of net sales have risen from 62.7% in fourth quarter of 2010-11 to 64.2% in March quarter last fiscal. Still, after hiccups in the earlier part of the year, the company was able to up capacity utilization in its factories. The plant load factor increased to 91% in the March quarter compared to 84% in December. However, note that it is three percentage points lower than what the company had registered a year ago quarter and the load factor is not likely to witness any significant improvement in the near future. (For details log on to : http://www.livemint.com/2012/05/13132611/NTPC8217s-capacity-addition.html)
PHARMA INC-GOM MEET TO TACKLE ‘THORNY’ PRICING
MUMBAI/NEW DELHI: As key stakeholders in the pharma industry — associations of drug makers, drug retailers and civil society groups — meet the group of ministers (GoM) led by agriculture minister Sharad Pawar on pharma pricing in New Delhi on Monday, two issues will be hotly debated: The span of control and the method of price fixation. The meeting assumes significance in the light of the ongoing debate on the high prices of certain medicines, leading to the patent office recently resorting to ‘compulsory licensing’, a governmental intervention, that allowed domestic drug maker Natco offer a cancer drug (Nexavar) at a fraction of the original cost charged by the innovator, Germany’s Bayer. During Monday’s meeting, the first ever involving all stakeholders since an unsuccessful, earlier one when Ram Vilas Paswan was minister for chemicals and fertilisers, top pharma manufacturers bodies including the Indian Drug Manufacturers’ Association (IDMA), the Organisation of Pharmaceutical Producers of India (OPPI) and the Indian Pharmaceutical Alliance (IPA) will be unanimous in putting across evidence to prove why the earlier method of cost-based pricing was flawed, and stress on the need to move to a market-based pricing mechanism. IDMA represents domestic pharma companies, while OPPI is the body for international drug companies operating in India. (For details log on to : http://www.financialexpress.com/news/pharma-incgom-meet-to-tackle-thorny-pricing/949022/)
RAHUL KHULLAR TO TAKE OVER AS TRAI CHIEF
NEW DELHI: Commerce Secretary Rahul Khullar is set to take over as the next chairman of the Telecom Regulatory Authority of India, two people familiar with the development told ET. Khullar, who has one more year to go in the commerce ministry, is likely to resign soon to take over his new assignment, these people said, adding that the Prime Minister’s Office has cleared his name. A trained economist, Khullar will replace JS Sarma, whose three-year term at Trai has come to an end. Khullar will be taking over at a time Trai has been facing opposition from telecom companies over its proposal of a 13-fold hike in base prices for spectrum. As Trai chairman, Khullar will have to walk the thin line between meeting industry demands and safeguarding consumer interests. Telecom companies, which have been reeling under increasing debt and dwindling margins, say if spectrum prices are revised, they will have no option but to recover them from consumers. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/telecom/rahul-khullar-to-take-over-as-trai-chief/articleshow/13127033.cms)
INDIA TO OPPOSE EU’S CLIMATE PROTOCOL MOVE
NEW DELHI: In climate talks beginning on Monday in Bonn, Indiawill oppose the EU’s move to start negotiations on the draft of a new climate protocol in 2012 itself. Considering it another shift in the goalpost by the Europeans, the Indian team of negotiators is expected to point out that no consensus was built at Durbanlast year that the only way forward is a new protocol that renders Kyoto Protocol redundant. The new protocol, as the EU demands, will kickstart the process to have a new global deal within three years that would bind Indiaand other emerging countries to a similar level of legally binding commitment to reduce emissions while ignoring the principles of equity. The Indian government is expected to object to the shifting stance of EU that would set the wheels in motion to end the Kyoto Protocol even before the developed world provides its emission reduction targets under the second phase starting in 2013. At Durbanlast year, a bargain had been struck to have a second commitment period of Kyoto Protocol with the developed countries officially giving their targets under the deal in 2013. In return, the developing countries led prominently by Indiahad agreed to start discussions on a new global deal under the existing convention that would come into play by 2020. (For details log on to : http://economictimes.indiatimes.com/environment/global-warming/india-to-oppose-eus-climate-protocol-move/articleshow/13126481.cms)
CORPORATE APATHY RENDERS CULTURE FUND REDUNDANT
NEW DELHI: The National Culture Fund (NCF), set up with much fanfare in 1996, has utterly failed in its aim to preserve and promote Indian culture with the help of public private partnership (PPP) owing to the dismal response from the PSUs and corporate sector. Data from the last three years show that only five PSUs — Gas Authority of India Ltd (GAIL), National Thermal Power Corporation Ltd (NTPC), Oil and Natural Gas Commission (ONGC), State Bank of India (SBI), and Shipping Corporation, have committed financial assistance, though not very huge, to the fund. “The scheme has failed to evoke response from the corporate sectors to donate liberally even though the Government provides income- tax exemption for donations,” a senior official from the Culture Ministry said. The NCF has Rs 19 crore in its corpus fund. (For details log on to: http://dailypioneer.com/nation/64892-corporate-apathy-renders-culture-fund-redundant.html)
OIL FIRMS TRY TO PUT A LID ON PETROL PRICES
NEW DELHI: PSU oil retailers have placed a suggestion before the government on petrol, which may stave off a price hike of the fuel. Sources said the firms had asked the government to either declare petrol a “regulated” product, temporarily, in line with diesel, kerosene and LPG, and provide cash compensation for under-recovery; another option put forward is to pay less excise duty on the fuel to the extent of under-recovery. The PSUs expect the finance ministry to provide some relief to stop a price hike, sources said. A petrol price hike is on the agenda of the PSUs since the passage of the finance bill in the Lok Sabha. The three PSU oil marketing firms — Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation — review prices on a fortnightly basis and take a call on increasing it after consulting the government. (For details log on to : http://www.telegraphindia.com/1120514/jsp/business/story_15485821.jsp#.T7CFgTJVJvR)
GOVERNMENT MAY AUCTION OFFSHORE WIND FARMS
NEW DELHI: The government has initiated the process of putting in place a policy to auction, or award, offshore wind farms in a way that could be similar to the auction of oil and gas blocks. The ministry of new and renewable energy has constituted an inter-ministerial panel of secretaries, which also includes heads of pertinent organizations such as Coast Guards, to frame policy guidelines, approve and oversee execution projects and identify private or public sector partners. The panel is using the petroleum ministry’s exploration block auctions as a model. Sources said it was too early to say whether sites would be auctioned or allotted. They added the ministry’s move has been sparked by “a slew of requests from various quarters for allocation of sites” . Indian companies’ appetites have been whetted due to financial incentives that make wind farms an attractive way to meet the Renewable Portfolio Standards, under which it’s mandatory to source a certain percentage of energy from renewable sources. (For details log on to : http://timesofindia.indiatimes.com/business/india-business/Government-may-auction-offshore-wind-farms/articleshow/13129006.cms)
CAG SUGGESTS EASY EXIT OPTION FOR SICK PSUs
NEW DELHI: The Comptroller and Auditor General (CAG) has advocated for a comprehensive exit policy with legal sanctity on the lines of the one proposed in the national manufacturing policy, to deal with growing sickness in public sector undertakings (PSUs) and boost confidence of domestic and foreign investors. “An effective exit law promotes responsible corporate behaviour by encouraging higher standards of corporate governance, including financial discipline, and mitigates the consequences of insolvency,” CAG said in its performance audit report of sick state-owned companies. This will also enhance the confidence of investors, for whom the state of existing law is an important criterion for making investment decisions, the CAG report, tabled in parliament, said. “But both the winding up of companies under the Companies Act and rehabilitation under Sick Industrial Companies (Special Provisions) Act (Sica) remain cumbersome and long-drawn resulting in locking of huge national resources in these proceedings,” CAG said. (For details log on to : http://www.mydigitalfc.com/news/cag-suggests-easy-exit-option-sick-psus-619)
POWER PRODUCERS TAKE ON CIL OVER LOPSIDED FUEL SUPPLY PACTS
NEW DELHI: Frustrated by uncertainty over fuel supply despite a presidential decree, top power generation firms have adopted a confrontational approach towards Coal India and decided to complain to the competition regulator against the state-run giant’s “monopolistic” rejection of liabilities for default. The power ministry is sympathetic to the concerns of private firms seeking fuel from the state monopoly and has sought the intervention of the prime minister’s office (PMO) to quash Coal India’s Fuel Supply Agreements (FSA). Power producers say the agreements are so heavily tilted in favour of Coal Indiathat banks are refusing to fund projects that depend on such contracts for fuel, officials said. CIL was forced to offer supply pacts to power producers after industrialists led by Ratan Tata and Anil Ambani sought the PMO’s intervention to resolve the fuel scarcity. When Coal India’s board did not approve new FSAs, the government issued a presidential decree, forcing it to sign the pacts, but the state monopoly offered diluted agreements, which guarded the monopoly from penalties if it defaulted. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/indl-goods/svs/metals-mining/power-producers-take-on-cil-over-lopsided-fuel-supply-pacts/articleshow/13127249.cms)
POWER MINISTRY WANTS PMO TO RESOLVE FSA IMPASSE
NEW DELHIl: With uncertainty continuing over coal supplies, the power ministry has sought the intervention of the Prime Minister’s Office (PMO) to resolve the issues related to Coal India‘s (CIL) new fuel supply agreement, sources said. Most of the power producers have reservations about certain clauses, including those related to penalty, in the revised Fuel Supply Agreement (FSA) put forward by CIL. Against this backdrop, Power Minister Sushilkumar Shinde has written to the PMO seeking intervention on the issue, the sources said. Shinde’s communication came after the central electricity authority (CEA) held discussions with various power generators on 9 May to gather their views on the FSA problem. (For details log on to: http://millenniumpost.in/NewsContent.aspx?NID=1709)
COAL BLOCKS OUTSIDE BIDDING TO BOOST PROFITS OF CPSEs
NEW DELHI: Central public sector undertakings that are set to be allocated new coal blocks under a special dispensation outside the bidding route will be allowed to sell 10% of the fuel in the open market through the highly profitable e-auction route. This will help these companies bolster their bottom lines in two ways — higher margins and reduced costs. According to government sources, companies such as NTPC, NMDC and SAIL will be among the beneficiaries of the move. These firms, experiencing pressure on their business volumes and margins due to the economic slowdown, would find e-auction of surplus coal an alternative revenue model promising assured profits. India’s monolithic coal producer Coal India (CIL), which is currently allowed to sell 10% of its produce through e-auction, has found this route highly lucrative with roughly 20% of its revenue already coming from this business. For coal users like power and steel companies, the new coal blocks will reduce their costs significantly, the sources said. (For details log on to: http://www.financialexpress.com/news/coal-blocks-outside-bidding-to-boost-profits-of-cpses/949020/)
CIL CAUGHT IN A COBWEB
Seldom in recent times has the public sector Coal India Ltd. (CIL) been caught in a predicament as it finds itself now. The Maharatna company, which marked its footprints in the equity markets with aplomb in November 2010, is now virtually entangled in knots over myriad issues, including some major policy matters such as changeover to the GCV (gross calorific value) system of pricing, and the imbroglio over the fuel supply pacts. It has faced unprecedented actions such as having to roll back prices and being forced to hammering out fuel supply agreements (FSAs) under government directive. And now, there is a possibility that it may have to rework some of the clauses in the FSAs which its main customer labels as biased. In the meantime comes yet another directive, this time to supply fuel to power companies on basis of the earlier memorandum of understanding route as FSAs remain largely deadlocked. At a time when increasing production and sorting out logistic problems should have been one of its prime tasks, the CIL top-brass, led by its less than month-old chairman, is busy smoothening ruffled feathers of its prime customers such as NTPC over issues such as gross calorific value (GCV) and certain clauses in the FSA which NTPC is uncomfortable about. (For details log on to: http://www.thehindu.com/business/companies/article3412444.ece)
TRAI REFUSES TO ALTER PROPOSED SPECTRUM PRICE
NEW DELHI: The telecom regulator on Sunday stuck to its recommended base price for the 2G spectrum auction at Rs 3,622 crore per MHz in the 1,800-MHz band. Telecom companies had earlier launched a strong attack on the Telecom Regulatory Authority of India (Trai) and said its recommendations would jeapordise the sector and force them to raise tariffs 30-40 per cent. The regulator has, however, given some leeway on its earlier proposal to auction only five MHz in each circle. It has now agreed that in nine circles, more spectrum, up to 10 MHz, could be put on the block if available after being reserved for refarming in the 1,800-MHz band. It has said, “Where more than five MHz of spectrum is available after reserving it for auction and refarming, a total of 10 MHz in eight blocks of 1.25 MHz each may be put to auction instead of five MHz of spectrum.” These circles include Andhra Pradesh, Karnataka, Kolkata and Tamil Nadu. The Trai was responding to clarifications sought by the Telecom Commission, the highest decision-making body in the Department of Telecommunications (DoT). The regulator suggested in states where sufficient spectrum is not available in the 800-MHz frequency, the government could consider lowering the reserve price. The regulator also stuck to its earlier stand that the spectrum regime should be liberalised and the usage delinked from the services offered. It means that 1,800-MHz spectrum can be used not only for 2G but also for 4G services, for instance. (For details log on to : http://www.business-standard.com/india/news/trai-refuses-to-alter-proposed-spectrum-price/474270/)
TWO IN THREE CARS SOLD WHITE OR SILVER IN COLOUR
NEW DELHI: Despite a good number of colours and shades offered by car companies, the regal white and silver still reign supreme. What’s more, their number as a percentage of total car sales is only rising. As many as 62-70 per cent of car sales come in these two colours. The number was 50 per cent five years ago. This is confirmed by the company that leads the passenger car pack, Maruti Suzuki, and tracks changes in colour preferences across the industry. Says Shashank Srivastava, its chief general manager (marketing), “Yes, white and silver still are the most dominant colours for cars. In fact, as a ratio, the share of white has become more than that of silver in recent years.” There are some other interesting findings. A larger number of diesel cars are in white, compared to petrol cars. “Since these cars are used for travelling long distances, they are replaced frequently and it is easier to find buyers for a colour with universal appeal,” says Srivastava. (For details log on to : http://www.business-standard.com/india/news/two-in-three-cars-sold-white-or-silver-in-colour/474273/)
FAB FIVE SECTORS SALVAGE INDIA INC’S BOTTOM LINE
MUMBAI: Five sectors have helped prop up the numbers for India Inc in an otherwise dismal quarter ended March. An analysis of 989 companies that account for 52 per cent of the total market capitalisation on the Bombay Stock Exchange shows net profit growth of 2.7 per cent over the previous year was reported mainly due to strong profit numbers registered by players in banking, cement, information technology (IT), pharmaceuticals and fast moving consumer goods (FMCG). Take these out, and the net profit of the sample size sees a substantial decline — as much as 9.6 per cent for the quarter. What’s worrying is the quality of overall earnings. In a May 12 report, Dipojjal Saha of Edelweiss Securities says, “For companies within our coverage universe which have declared results so far, year-on-year earnings growth came in at three per cent (the Edelweiss expectation was four per cent). The disappointment is on the core earnings front, as some part of the earnings surge may have been driven by higher other income (e.g. PSU banks, RIL and Maruti Suzuki). For companies that have declared results so far, we estimate that other income as a proportion of sales is at 2.7 per cent, which is a multi-quarter high (11 quarters).” (For details log on to : http://www.business-standard.com/india/news/fab-five-sectors-salvage-india-incs-bottom-line/474269/)
GOVT CONCERNED ON SUGGESTED MSP RISE
NEW DELHI/MUMBAI: There is unease in the government, especially in the finance ministry, on the implications of the 15-53 per cent rise proposed by the Commission on Agricultural Costs and Prices (CACP) in the Minimum Support Price (MSP) for kharif crops. However, the CACP has defended its recommendations as just enough to ensure a reasonable return to farmers and for food security. The Cabinet is likely to take a decision on the MSP next week, to give enough time to farmers on planning their sowing decisions. Official sources were doubtful if an increase could be sustained beyond 10-25 per cent, barring one or two crops where production needs to be enhanced or farmers had faced big losses due to unfavourable weather conditions, as in groundnut. Besides, the Prime Minister’s Office has ruled out any possibility of a bonus in addition to the MSP. Officials say a bonus is to be considered if the MSP does not take into account any sudden increase in cost of production or any external factor not factored in. There is no case for an additional, said officials. (For details log on to : http://www.business-standard.com/india/news/govt-concernedsuggested-msp-rise/474259/)
AFFORDABLE HOUSING POLICY SOON, AS ECB FAILS TO EXCITE
NEW DELHI: An affordable housing policy is in the works to attract developers and to meet the shortage of around 25 million houses in the country. The Union Budget had announced access to external commercial borrowing (ECB) for affordable housing but the industry wasn’t excited due to low margins in this category. Now, the Union Ministry of Housing and Urban Poverty Alleviation (Mhupa) is in the process of framing an affordable housing policy, expected to be finalised in two months. “We realise that ECB will work only if affordable housing is attractive. Therefore, we are coming up with this policy as a package, along with ECB, in the segment on the lines of what the Rajasthan government has done,” said an official at Mhupa. The policy will include increasing the floor space index (FSI) and easing of density norms. Compulsory parking lot norms will also be relaxed. “The policy will have provision for interest subsidy and capital subsidy to builders,” the official said. (For details log on to : http://www.business-standard.com/india/news/affordable-housing-policy-soon-as-ecb-fails-to-excite/474241/)
BOLLYWOOD CASHES IN ON FOREIGN SUBSIDIES, CUT PRODUCTION COST
MUMBAI: You might have been mesmerised by Pragueafter watching it in Bollywood flick Rockstar or by the bylanes of Berlinin Don 2. Most tourism boards are increasingly pitching for locations to producers and directors in Indiaby offering subsidies, which can bear almost 40 per cent cost of a film. “These incentives range from tax rebate, free stays, visa facilitation, and in certain cases, they even bear the cost of production. Cashing on the foreign government subsidies, production houses are now trying to film in exotic locales and in some cases, even alter the script to avail of this,” says Karan Arora, co-founder and chief executive, High Ground Enterprise, which deals in film production and does consultancy work with foreign governments on these issues. Eros International has already scheduled the shooting of its two films in Fiji. The Fijigovernment recently announced it would offer 47 per cent of the production cost for films being shot there. “3G, staring Neil Nitin Mukesh and Sonal Chauhan, has already gone on floor. It’s a psychological thriller that revolves around the 3G spectrum scandal,” said an official from Eros. (For details log on to : http://www.business-standard.com/india/news/bollywood-cashes-inforeign-subsidies-cut-production-cost/474252/)
DUAL TECH FIRMS WANT RESERVE PRICE LOWERED
MUMBAI: The telecom industry body for dual technology companies such as Reliance Communications and Tata Teleservices is batting for special treatment for these companies in the coming spectrum auction. The Association of Unified Telecom Service Providers of India or Auspi has written to telecom minister Kapil Sibal that they are not to be compared to GSM technology suppliers such as Bharti Airtel, Vodafone Indiaand Idea Cellular. The association said the reserve price of 800 MHz spectrum in the coming 2G auctions should be kept much lower than that for the 1,800 Mhz one. And, that the final price of 800 MHz could be derived by a separate and independent auction and not be linked to the final price of 1,800 Mhz. Auspi said banks and financial institutions were reluctant to provide further funding to telecom projects. It wanted the initial payment for spectrum acquisition for 800/900 MHz to be kept at 10 per cent, while that of 1,800 MHz may be kept at 15 per cent. (For details log on to: http://www.business-standard.com/india/news/dual-tech-firms-want-reserve-price-lowered/474253/)
MID-CAP IT COMPANIES SEEN AS SAFER BET AS BLUE CHIPS STRUGGLE
BANGALORE: With global market forces and slower decision-making dragging down revenue growth for IT bigwigs, analysts are now looking at mid-cap technology firms as a safer bet. After the quarter ended March, markets have their sights set on mid-tier firms, some of whom have delivered the best revenue growth rates in the sector for the year. Amongst them, Hexaware Technologies and KPIT Cummins InfoSystems are being seen as clear winners, outdoing top-tier counterparts in volume and revenue growth. Hexaware volumes grew at 6.6%, in contrast to Wipro which grew at 0.8%, and Infosys which reported a 1.5% decline. Mid-tier firms expect FY2013 growth to beat the Nasscom guidance of 11-14%, while the likes of Infosys expect close to 8%. “There is a sense in the market that mid-cap IT companies are a better bet than larger ones,” said Jagannadham Thunuguntla, strategist and head of research, SMC Global Securities. (For details log on to : http://www.financialexpress.com/news/midcap-it-cos-seen-as-safer-bet-as-blue-chips-struggle/948859/)
WEAK MARKETS NOT TO HIT RINL IPO PLAN
NEW DELHI: Undeterred by the poor response to recent share offer issues and a continued sluggish market, the government is going ahead with plans to begin disinvestment in the current financial year with the initial public offering (IPO) of Rashtriya Ispat Nigam Ltd (RINL). Disinvestment Secretary Mohammad Haleem Khan told Business Standard: “We are going ahead with the original plan of bringing the RINL IPO.” The premise is that market conditions don’t affect IPOs much if the price is reasonable. The filing of prospectus with the Securities and Exchange Board of India (Sebi) for the public offer of ten per cent paid-up equity of the government is set to be completed by the end of next week. From the plan of the Department of Disinvestment (DoD), an auction route would be preferred over follow-on public offers (FPOs). “Bringing in new shareholders when old shareholders are witnessing erosion of their wealth is not a good idea,” said a senior DoD official on why FPOs would be avoided in the current situation. (For details log on to : http://www.business-standard.com/india/news/weak-markets-not-to-hit-rinl-ipo-plan/474260/)
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