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Global business groups warn India over new tax proposals
Finance Minister Pranab Mukherjee shakes hands with visiting British Chancellor of Exchequer George Osborne during a meeting of the fifth ministerial level India-UK Economic and Financial Dialogue in New Delhi on Monday. — Tribune photo
Is the party over for India’s ‘King of Good Times’?
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Ranbaxy resumes drug exports to US
SEBI allows listing of bourses
Top 10 business groups lose $25 bn in market wealth in fiscal 2012
Maruti posts highest ever March sales
Fidelity buyout makes L&T Mutual 13th biggest MF
Kingfisher flights disrupted as staff rejects assurances
Europe PMI data: Chances of strong global economic rebound dim
RBI relaxes overseas direct investment norms
HSBC names veteran Milne as India CEO
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Global business groups warn India over new tax proposals
Mumbai/New Delhi, April 2 The fiscal 2013 budget last month outlined a proposal to allow authorities to make retroactive tax claims on overseas deals and bring in new anti-tax-avoidance measures, moves that have been criticised for further denting investor sentiment. On Monday, George Osborne, Britain's finance minister, raised his concerns over the issue with his Indian counterpart Pranab Mukherjee. The warning, contained in a letter from seven foreign business groups, is the broadest criticism yet by the overseas business community of an Indian government that has failed to enact economic reforms to spur investment and revive growth. "The sudden and unprecedented move...has undermined confidence in the policies of the government of India towards foreign investment and taxation and has called into question the very rule of law, due process, and fair treatment in India," the groups said in a March 29 letter to Singh seen by Reuters. "This is now prompting a widespread reconsideration of the costs and benefits of investing in India," continued the letter, signed by bodies including the US-based Business Roundtable, the Confederation of British Industry, the Japan Foreign Trade Council and Canadian Manufacturers & Exporters. The Business Roundtable is chaired by Boeing Co chief executive James McNerney and represents firms with more than $6 trillion in revenue. "We’re concerned about the proposed budget measure," Osborne told reporters after his closed meeting with Mukherjee. "Not just because of its impact on one company, Vodafone, but because we think it might damage the overall climate for investment in India." India's reputation among global investors has taken a beating over the past year as the government has lurched from crisis to crisis, including a botched attempt to allow foreign supermarkets into the country and a long-running standoff with South Korea's POSCO over a $12 billion steel plant. INCREASING UNCERTAINTY:
A long-running tax struggle between London-listed Vodafone Group Plc, India's largest overseas investor, and the Indian government has come to symbolize the perils to foreign investors in the country.
— Reuters UK raises Vodafone issue with FM Britain on Monday raised the Rs11,000 crore Vodafone tax issue with the Indian government that proposes to retroactively amend the Income Tax Act to bring into net overseas mergers and acquisitions involving domestic assets. The issue figured prominently during a meeting between visiting UK Chancellor of Exchequer George Osborne and Finance Minister Pranab Mukherjee. — PTI
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Is the party over for India’s ‘King of Good Times’?
New Delhi, April 2 So, according to the Kingfisher boss, all junior staff will be paid before Easter, that is on Wednesday, April 4, and all pilots and engineers will be paid on Monday, April 9 and Tuesday, April 10. The bank accounts were unfrozen on Sunday after the airline paid a total of Rs 64 crore to various tax authorities before March 31, he explained. Incidentally, having not received their salaries for months, the airline staff had urged Royal Challengers Bangalore team, which is owned by Mallya, to boycott the Indian Premier League so that they get their dues. However, despite the latest assurance, it seems employees are unwilling to give Mallya any more leeway before ascertaining his long-term plan for the revival of the nosediving carrier. Engineers and pilots warned the management that if they are not assured that all their pending dues including salaries are paid by April 20 then they would strike work from Tuesday. Aviation experts, who are equally skeptical about this nondescript ray of hope, wonder where and how the “King of Good Times” is planning to get the money to run the airline, especially when times are hardly “good” anymore. “ Currently, the airlines’ credibility is at the rock bottom. He (Mallya) is operating at lowest possible load factor and fares….Only those passengers who are desperate are opting to fly Kingfisher. Unless an airline operates at a load factor of 70% to 80%, it cannot break even. Even in ‘good times’ when Kingfisher was flying with 75% to 80% load factor the airline was losing money. Mallya needs lot of money to keep the airline afloat. Now when inflows are low, how is he planning to break-even. Where is the money, what is the strategy,” questions aviation expert Jitendra Bhargava. So are the “good times” over for the king” or will he be able to ride the turbulence? According to government sources, time is running out for Mallya, and fast. They say that due to loss of credibility among passengers, the airline’s market share has come down significantly. Last week, the debt-laden Kingfisher terminated operations to half of its 56 destinations, making at least 40-50% staff redundant. Though technically not laying off employees, it termed this arrangement a “holding pattern” till such time as the airline was fully capitalized, much of which, according to Kingfisher, depended on decisions like direct oil import and the policy of allowing foreign airlines to pick up stake in it by the government and bankers. In a letter, Mallya pleaded with employees not to get carried away by media breaking news headlines on the plight of the airline, and vowed to get Kingfisher back on track. “Despite all my other commitments to UB Group companies, I’m personally passionate about and committed to your airline. Please stand by me and strengthen my hands. Let's fly with confidence”, he said. Kingfisher has a total debt of about Rs 7,000 crore and accumulated losses of about Rs 6,000 crore.
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Ranbaxy resumes drug exports to US
New Delhi, April 2 However, the firm said the anti-cholesterol tablets meant for the US market will be produced at its Special Export Zone (SEZ) plant in Mohali near Chandigarh, not at the three units banned by the US health regulator. “The resumption of supplies from India into the US market is a significant milestone for Ranbaxy. This is a testimony to our commitment to provide quality affordable medicines to the US healthcare system," Ranbaxy CEO and managing director Arun Sawhney said in a statement. In 2008, Ranbaxy had to suspend export of medicines in dosage forms to the United States following ban imposed on 30 generic generic drugs produced at its Dewas, Madhya Pradesh and the Paonta and Batamandi units in Himachal Pradesh by the FDA citing gross violation of manufacturing norms. "The supply of atorvastatin tablets from India supplements the company's current production from Ohm Laboratories Inc, US," the company added. The first consignment of atorvastatin tablets has been dispatched to the US market in March 2012, the company said. "Going forward, our Mohali facility will cater to the US and other geographies, improving access to medicines in these regions," Sawhney added. In January, the US Justice Department sought a permanent injunction against Ranbaxy, a move that required the Indian pharmaceutical major to make fundamental changes to its plants both in the US and India. In December, Ranbaxy had filed a consent decree with a US court as part of its settlement with the American authorities and said it had earmarked up to US $500 million for settlement with the American authorities. Ranbaxy's dosage forms facility at Mohali near Chandigarh was approved by the US Food and Drug Administration in October 2011. In the first quarter of fiscal 2011-12, the company received approval from the USFDA to manufacture and market atorvastatin in strengths of 10 mg, 20 mg, 40 mg and 80 mg tablets, the company said. Shares of Ranbaxy Laboratories were trading at Rs 459.15 on the Bombay Stock Exchange in afternoon trade, down 2.10 per cent from its previous close.
— PTI |
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SEBI allows listing of bourses
Mumbai, April 2 This was decided after considering the much-debated Bimal Jalan committee recommendations which had not favoured listing of stock exchanges. The board, however, in its meeting here accepted several other recommendations of Jalan committee on 'Review of Ownership and Governance of Market Infrastructure Institutions (MIIs)'. "The stock exchanges will have diversified ownership and no single investor will be allowed to hold more than 5 per cent except the stock exchange, depository, insurance company, banking company or public financial institution which may hold up to 15 per cent," SEBI said. "51 per cent of the holding of the Stock Exchanges will be held by public," the market regulator said. Stock exchanges may be permitted to list when they put in place the appropriate mechanisms for tackling conflicts of interest, it said, adding, the stock exchanges will not be allowed to list on itself. No stock exchange shall be permitted to list within 3 years from the date of approval by SEBI, the market regulator added. Prescribing conditions for listing, SEBI said, stock exchanges should have minimum net worth of Rs 100 crore and the existing stock exchanges will be given 3 years to achieve the threshold capital base. In case of listing of other Market Infrastructure Institutions like Clearing Corporation (CC), SEBI said the minimum net worth for CC and the depository will be Rs 300 crore and Rs 100 crore respectively.
— PTI |
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Top 10 business groups lose $25 bn in market wealth in fiscal 2012
New Delhi, April 2 In line with the overall downtrend in the markets, a majority of large business conglomerates saw their valuations taking a dip during the year ended March 31, 2012, but a few groups like Vedanta, Hero, Sun Pharma, Bajaj and Aditya Birla groups managed to improve their total market value. At the same time, a number of large business houses like Reliance Industries, GVK, Adani, DLF, GMR, Lanco, Jindal, Jaiprakash, Bharti and Wipro groups took a hit and the losses exceeded the market average in many cases, shows an analysis of market valuation changes for the fiscal 2011-12. In terms of cumulative market value of all listed firms, the total market wealth dropped by Rs 6,21,937 crore during the fiscal -- from Rs 68,36,878 crore to Rs 62,14,941 crore. The losses in last fiscal came after two straight years of gains -- Rs 6.7 lakh crore in FY11 and Rs 30.8 lakh crore in FY10 -- and were the second highest in over a decade. During the last 13 financial years, the overall investor wealth of Indian markets has dipped only four times, but the losses were higher only during FY08-09 (Rs 20.5 lakh crore). The losses stood at about Rs four lakh crore in fiscal 2002-03 and Rs 3.4 lakh crore in the fiscal 2000-2001. In percentage terms, the dip in the investors' wealth, as also the market barometer Sensex, was about 10 per cent during FY11-12. The Sensex lost over 2,000 points in the fiscal, while it fell by about eight points a day, on an average. Experts feel that headwinds from overseas markets, mostly fuelled by debt crisis in Europe, were the major triggers for the stock market plunge in India. The country's economic growth rate also slowed down to near six per cent and the corporate profitability took a hit as well. The total market value of ten biggest business houses dipped by about Rs 1.27 lakh crore to Rs 14.8 lakh crore. Among the top diversified business houses, Tatas saw their market value dip by less than one per cent to close to Rs 4,50,000 crore, while Mukesh Ambani-led Reliance Industries group dropped more than 28 per cent to Rs 2,46,000 crore. Anil Ambani-led Reliance Group's market wealth dipped by about 17% to Rs 76,000 crore, but the losses were smaller than business houses like Lanco, Adani, GVK, RIL, DLF, GMR and Naveen Jindal groups. — PTI
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Maruti posts highest ever March sales
New Delhi, April 2 The story was the same for the other car manufacturers as well with the second largest car-maker Hyundai Motor India reporting a 6.62% rise in total sales in March at 59,229 units. Nissan Motor India reported a stupendous 180% jump in its sales while General Motors India has posted a 13% growth. Maruti Suzuki said it recorded the highest ever domestic sales in March 2012 at 112,724 units, up 2.08% over 110,424 units in March 2011. For the entire fiscal 2012, however, sales declined by 10.80% to 1,133,695 units from 1,271,005 units in 2010-11. This was due to the three month long crippling strike at its Manesar plant which hurt sales badly, the company said. Hyundai Motor said its sales in March rose 6.62% at 59,229 units against 55,552 units in the year-ago period. Exports, however, fell 15.27% to 20,107 units from 23,730 units in the year-ago period. Nissan Motor reported its highest ever monthly sales with a record 5,880 units sold in March. March 2012 sales spurted by a massive 180% over 2,101 units in March 2011. This was the third successive month in which sales crossed the 5,000-unit mark. General Motors India registered a growth of 13% in March 2012, compared to the same period last year. It sold 10,588 vehicles in March 2012 as against 9,391 units in March 2011. The growth was primarily driven by the much sought after Chevrolet Beat and the Chevrolet Tavera.
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Fidelity buyout makes L&T Mutual 13th biggest MF
New Delhi, April 2 Fidelity, one of the world’s largest fund managers, was one of the marquee names in the industry. Its exit is being linked to a tough environment where agent commission has been stopped leaving hardly any incentive for distributors and also the markets themselves have been very volatile in the last few years. This in turn has led to investors losing interest in mutual funds as returns have been low and fixed income is offering better returns and security in a rising interest rate regime. The acquisition will leapfrog L&T Mutual Fund as the 13th largest fund house with total assets under management of Rs 13,497 crore and the 10th largest in terms of equity assets. While Fidelity assets are mostly equity oriented, L&T has been focused on debt. Fidelity AMC, which was set up in 2004, manages the 15th largest mutual fund in India with a market share of 1.3% and an average AUM for the quarter ended December 2011 of Rs 8,881 crore and around 68% of its assets are equity oriented. It has built a robust equity oriented franchise which has access to large HNI customers and a strong SIP portfolio. Its equity assets are the 10th largest in India with a market share of 3.1%. L&T Financial Services acquired the mutual fund business of DBS Chola in Jan 2010. Since then, L&T Mutual’s total average AUM has risen by Rs 4,616 crore.
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Kingfisher flights disrupted as staff rejects assurances
Mumbai April 2 away from work to press for immediate payment of their salaries. Flights from Mumbai to Bhuj and Jamnagar and from Delhi to Dehradun, Chandigarh and Simla were cancelled after some employees of the airline rejected a plea by promoter Vijay Mallya asking them to return to work. Mallya promised employees he would personally attend to their grievances in the coming week. However his plea was rejected with a section of the staff demanding all pending dues be cleared immediately. Some Kingfisher employees came out on the streets to protest delays in payment of salaries. Protests were also held outside the airline's headquarters near the Mumbai airport. |
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Europe PMI data: Chances of strong global economic rebound dim
London/Singapore, April 2 The downturn in Europe's periphery members has spread to the core countries of Germany and France, according to purchasing managers' indexes (PMIs) for March. The outlook is grim as new orders fell across the region for the tenth month. But while still far from robust, factory activity strengthened in China, South Korea and Taiwan, three of the Asia's leading exporters, as both export and domestic demand firmed. Data due later should show conditions have improved in the United States, the world's biggest economy.
— Reuters |
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RBI relaxes overseas direct investment norms
Mumbai, April 2 The norms have been liberalized to provide operational flexibility to Indian entities, the central bank said in a statement on Monday. However, all other norms required to open, hold and maintain foreign currency accounts for overseas investment remain unchanged, the statement said.
— Reuters |
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HSBC names veteran Milne as India CEO
The appointment comes amid HSBC's plans to grow its operations in Asia's third-largest economy, even as it continues to shed jobs and cut costs in other parts of the world. Milne has worked with the company's businesses in Europe, the Middle East, the United States and Asia since joining the bank in 1981, it said. — Reuters |
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International trade groups representing more than 250,000 companies have warned Prime Minister Manmohan Singh that new taxation proposals by his government have led foreign businesses to reconsider their investments.
Mumbai, April 2