New Delhi, September 22
Looking at the way Air India (AI) is going about its aircraft and spare parts insurance, it seems the airlines deliberately wants to risk its financial health in spite of all its cost-cutting measures.

Certain inconsistencies have been observed in case of underwriters proposed by the approved insurers to lead the airlines’ fleet of aircraft and spares parts.

AI had invited two consortiums of four private and four public sector (PSU) insurers in April this year for the insurance. However, the proposal was abruptly called off without any reason.

In June, again, AI called for new bids that were slated to be opened in August. The opening of the bids was held in abeyance for unknown reasons.

Finally, it was decided that New India was to lead the PSU consortium, and the private sector insurer consortium comprised of Iffco Tokio, Bajaj Allianz, HDFC Ergo led by Reliance General, and ICICI Lombard.

However, when the certificates of lead underwriters were opened, as per the rules of NACIL, which runs AI, certain inconsistencies were observed.

The certificate submitted by Reliance General had not specified its securities. Instead, the company verbally confirmed to the airlines committee that their lead underwriters were Mitsui Sumitomo for HSL policy, Liberty Syndicate for Hull and Spares policy, Axis for Xs 52 E policy and Aspen and Talibot for Hull Deductible policy.

It was soon pointed out that neither Mitsui Sumitomo nor Liberty satisfied the criteria as laid down in the tender. As per the tender specifications, the selected insurer should approach an international reinsurance company that has a record of handling an airline account of a group similar to that of NACIL.

Reliance General, then, produced an ambiguous faxed letter purportedly issued by Mitsui Sumitimo. On its claim that Mitsui Sumitomo has led All Nippon Airways, the PSU consortium produced a letter from group CEO of Global Aerospace, Nick Brown, attesting the fact that Global Aerospace has been leading All Nippon Airways for almost 40 years.

The PSU informed the authorities that Mitsui Sumitomo underwriters comprise of stakeholders who are mere capital providers like Mitsui Sumitomo Insurance, Munich Re Group, National Indemnity Group, Tokio Marine and Nichido Fire Insurance.

Meanwhile, a letter written by aviation war underwriter MT Hart on behalf of Liberty Syndicates, to New India stated that it had not led accounts of a similar size in the past. Liberty Syndicates is supposed to act as underwriters for hull and spare parts.

Given the lack of experience of these underwriters in the business, it seems AI is hell-bent on inviting its own doomsday by undertaking such a ‘risk’.

New Delhi, September 22
Economic recovery is clearly visible as advance tax collections were up 13.10 per cent at Rs 49,502 crore in the second quarter against negative growth of nearly six per cent in the previous qurter.

However, 12 of the top 50 biggest tax payers among corporations paid less advance tax in the second qurter ended September 15, 2009, indicating that the upturn will take some time to spread to all sectors.

A Finance Ministry official exuded confidence that the third qurater advance collections will improve further as companies are supposed to do better in the coming festival season, even though drought would impact some of them.

According to Finance Ministry sources, advance mop up of corporate tax registered a 14.7 per cent growth at Rs 44,010 crore in the September quarter against a negative growth of 3.7 per cent at Rs 20,728 crore in the first quarter.

Similarly, personal income tax advance collections recorded a 1.7 per cent growth in the second quarter at Rs 5,492 crore against a drastic negative growth of 44 per cent in the first quarter, the sources said.

While country's largest lender SBI was the biggest tax payer at Rs 1,832 crore in the second quarter, up by 17.44 per cent, ONGC and RIL were on the second and third slots.

However, ONGC, SAIL, ICICI Bank, Citi Bank, Ambuja Cements paid less advance tax in the second quarter on yearly basis as their profits came under pressure.

Indian industry has been on an upswing as it grew by 8.2 per cent in June and 6.8 per cent in July this year, after coming under the impact of a deepening global financial crisis since the middle of September last year.

The tax figures showed that consumer durables, led by automobiles, have shown a strong recovery as also the software sector. Maruti paid 97.76 per cent higher tax at Rs 265 crore in the second quarter against a year ago, while Bajaj Auto paid around 90 per cent more tax at Rs 170 crore. Auto industry posted a robust over 24 per cent jump in August sales at 10,08,702.

While Infosys tax outgo was 100 per cent higher at Rs 300 crore, TCS paid 171.60 per cent higher tax at Rs 220 crore.

The cement sector has also surged to leave its sluggish growth behind, while PSU banks continue to perform strongly. ACC paid 257 per cent higher tax at Rs 150 crore.

While SBI was ranked as the highest corporate tax payer, PNB paid Rs 475 crore, up 35.71 per cent. Bank of India paid 199 per cent higher tax at Rs 269 crore.The energy sector has rebounded, led by oil marketing companies as well as the power sector. BPCL paid Rs 312 crore.

The FMCG sector has also made significant strides, while healthcare and pharma continue to be strong. Hindustan Lever paid around 35 per cent higher tax at Rs 175 crore. However, the realty sector continues to be badly hit. Metals led by steel remained down. SAIL paid Rs 13.48 per cent less tax at Rs 918 crore. — PTI 

New Delhi, September 22
Communications and IT Minister A Raja today said the most keenly awaited deal of the year between Bharti Airtel and South African telecom major MTN was under the ambit of the Finance Ministry.

As the scrip of Bharti Airtel fell about 3 per cent on the BSE on reports that the company may have to further sweeten its offer as part of the proposed $23-billion deal, the minister said, "The deal is not within the domain of our ministry".

The statement from the minister came even as a South African government delegation met Indian officials today to push the deal. The team is also scheduled to meet officials of the RBI and market regulator SEBI.

Incidentally,the deal may also come up for discussion during Prime Minister Manmohan Singh’s talks with South African President Jacob Zuma during the G20 talks to facilitate the transaction.

The Telecom Minister said as far as he knew, the Finance Ministry was dealing with the issue.

Asked if dual listing would require any changes in the licensing conditions, he said, "Changing the licence condition is always within the domain of TRAI. If necessary, it will be referred to TRAI".

Meanwhile, a Bharti spokesperson said, “We can confirm that the structure, under discussion with MTN, will be fully compliant with the laws in both countries. All relevant approvals, including exemption from open offer from SEBI (if required), would be sought at the appropriate time."

As per the initial offer, Bharti had proposed to buy 36 per cent of the South African company by offering shareholders half a Bharti share, whereas MTN was to get a 25 per cent stake in Bharti for $2.9 billion and through issuing new shares equal to 25 per cent of its share capital.

However, reports suggested that Bharti was making a slew of last-minute concessions to South African shareholders of MTN to push the deal through.

These apparently include retaining the top management of MTN for at least three years, giving the option of an all-cash offer to minority holders of MTN, and more shares in itself for the same money. The latter would further push up the cost of acquisition.

The latest offer also gives MTN a 27 per cent stake in Bharti Airtel. MTN will also pay $2.9 billion in cash to Bharti. The deadline to conclude a deal is September 30.

MTN's minority shareholders will now have the option to take $13 billion in cash for a 36 per cent stake in the company instead of the earlier proposed $7 billion in cash and $6 billion worth of Bharti Airtel shares.

Sunil Mittal meets PM

Amid talks with South African telecom giant MTN for a possible deal, Bharti chairman Sunil Mittal on Tuesday met Prime Minister Manmohan Singh and is understood to have discussed some contentious issue like dual listing and exemption from open offer to be availed by MTN.

Mittal's meeting comes on a day when the market regulator SEBI revised the takeover norms that may have ramifications for the proposed deal between the Indian and the South African telecom firms to create a combined $23 billion entity.

As per the revised norms, an open offer will be triggered if any entity acquires GDRs/ADRs with voting rights amounting to a 15 per cent stake in any Indian company. While SEBI chairman C B Bhave declined to comment on Bharti-MTN deal in particular, the revised norms would require MTN to make an open offer if it is issued GDRs with voting rights.— PTI

Solan, September 22
With the Central Drugs Standard Control Organisation (CDSCO) deciding to issue the certificate of pharmaceutical product (COPP) from its Ghaziabad office instead of state agencies, region-based pharmaceutical companies that deal with exports are having a tough time.

The COPP, which is availed by a unit that exports its products, was initially granted by the state Drug Controller after a dual inspection by an inspector from the Ghaziabad office and another from the state administration. A recommendation was then forwarded to the local drug controller who then issued a COPP.

But, according to the latest order, pharmaceutical units in northern states, including Himachal Pradesh, Uttarakhand, Punjab, Haryana, Jammu and Kashmir and eastern Uttar Pradesh, will get this certificate from Ghaziabad.

While, there are about 60-70 units dealing in pharmaceutical exports in Baddi-Barotiwala-Nalagarh, Uttarakhand and J&K, which got the 2003 Central industrial package, too, have a number of such units. These states would face the maximum brunt of this new order.

“This would not only prolong the procedure but also create undue hassles for the industry, as time would be wasted in running to Ghaziabad time and again,” an owner of a pharmaceutical unit said.

Already, the CDSCO hardly manages to give approvals for all new products in time. How it plans to execute the new order that will bring a work load of nearly 250 units is the moot question.

Recently, drug manufacturers of the state expressed their concerns with the state Health Minister and urged him to take up the issue with the Union Health Minister. A request was subsequently sent to the Union Health Minister to do away with this new order as it would harm the industry that already is reeling under crisis following the rollback of the excise from the earlier 16 to 4 per cent.

BRIEFLY

Rupee nears 48-mark
Mumbai: The Indian rupee on Tuesday gained 18 paise to close at more than one-month high of below the psychologically important 48 against US currency on persistent capital inflows from foreign funds amids weakness of dollar in overseas. The forex dealers attributed the surge in the rupee to bullish stock markets amid weak dollar overseas against the basket of currencies.— PTI

This photo shows electric car NXG by Indian car manufacturer Reva at the 63rd International Motor Show in Frankfurt on September 16. Indian officials on Tuesday welcomed German auto and parts companies to compete in its market but warned that Indian consumers and partners were no push-overs. — AFP

Magna to cut 4,000 Opel jobs
Berlin: Canadian auto parts maker Magna will cut more than 4,000 jobs in Germany when it takes over the Opel business of struggling US auto giant General Motors, a report said on Tuesday. The Frankfurter Allgemeine Zeitung (FAZ), citing Magna's strategic plan for GM's European operations, said nearly 11,000 jobs will be lost out of a total 45,730, affecting all sites and including the politically sensitive closure of the Antwerp plant in Belgium. — AFP

Ballarpur Q2 net down 39 pc
MUMBAI: Ballarpur Industries on Tuesday reported a fall of nearly 39 per cent in its consolidated net profit to Rs 44.66 crore for the quarter ended June 30, over the same period a year earlier. Total income also slipped to Rs 727.24 crore during the last quarter of FY’09 from Rs 803.39 crore of June quarter last year. — PTI

SC notice to LG Electronics
NEW DELHI: The SC has sought reply from consumer goods major LG Electronics India on a plea by the Income Tax Department that the company is liable to deduct tax on goods outsourced for manufacturing. A bench headed by Justice SH Kapadia has issued the notice. Earlier, it had sought reply from Samsung India Electronics on a similar issue. — PTI

Rs 32 cr penalty on telcos
NEW DELHI: The government has slapped a penalty of Rs 32 crore on all mobile operators, including BSNL and MTNL, for failing to adhere to the subscriber verification norms in 2008-09. With a penalty of Rs 1,000 for each unverified subscriber, the number of such users comes to about 3.2 lakh. — TNS

GIC reduces stake in Citi
SINGAPORE/NEW DELHI: The Government of Singapore Investment Corp (GIC) on Tuesday reduced its stake in global financial services major Citigroup to below 5 per cent from 9 per cent through open market sales. “A stake below 5 per cent reflects GIC’s goals and desire to be a portfolio investor,” the statement issued by GIC said. — PTI

Philips to invest more in India
MUMBAI: Consumer durables maker Philips on Tuesday said it would scale up its investments in emerging growth markets like India and China by 27 per cent this year. The company is focussing on increasing sales through retail and distribution, for which it began setting up showrooms and lounges earlier this year. — PTI