New Delhi, June 21
Competition watchdog CCI on Thursday imposed a hefty penalty of about Rs 6,200 crore on 11 leading cement companies including ACC, Ambuja Cements, Ultratech and Jaypee Cements for price cartelisation.

The other companies found guilty are Grasim Cements now merged with Ultratech Cements, Lafarge India, JK Cement, India Cements, Madras Cements, Century Cements and Binani Cements. The industry body Cement Manufacturers Association (CMA) has also been fined.

The firms in violation of the competitive laws have been directed to deposit the penalty within 90 days.

"The Competition Commission of India has found cement manufacturers in violation of the provisions of the Competition Act, 2002 which deals with anticompetitive agreements including cartels." an official statement said.

The penalty is equivalent to 50% of their profit for 2009-10 and 2010-11, it added.

CCI passed the order following a probe by the director general of investigation on complaint filed by the Builders Association of India. "While imposing penalty, the Commission has considered the parallel and coordinated behaviour of cement companies on price, dispatch and supplies in the market," the statement said.

CCI found the cement companies had not utilized the available capacity so that there are reduced supplies in the market and they can raise prices in times of higher demand. The 11 cement firms have been directed to 'cease and desist' from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market. — Agencies

New Delhi, June 21
Crucial issues of spectrum price, payment terms and network rollout obligations for auction of airwaves continued to hang fire as the much-awaited meeting of the high-powered empowered group of ministers (EGoM) on auction of 2G spectrum was deferred on Thursday.

The group, headed by Finance Minister Pranab Mukherjee was first slated to meet at 1730 hrs today but was postponed to 2030 hrs. It later deferred indefinitely, official sources said.

The cancellation of the crucial meeting of the EGoM came just a day before Mukherjee is slated to file his nomination papers for the election of India’s president.

No reasons were given for the postponement. Also no new dates have been indicated of the next meeting.

The EGoM was slated to discuss crucial issues of high spectrum price recommended by sector regulator TRAI, payment terms and network rollout obligations for auction of airwaves due before August 31.

For the first time, the EGoM was to discuss loan against airwaves which are not a physical asset. As part of terms for payment, the EGoM would have taken a decision whether or not to allow telecom companies to mortgage spectrum or airwaves for seeking loans from banks and financial institutions.

The Telecom Regulatory Authority of India has recommended an auction start price of Rs 3,622 crore per megahertz of airwaves frequency, which amounts to over Rs 18,000 crore for a pan-India business of new companies or companies whose licences were cancelled by the Supreme Court on February 2.

New Delhi, June 21
The slump in global stock markets and the fall in the value of the Indian rupee against the US dollar over the past two years are hurting the 48 Indian companies that have foreign currency convertible bonds maturing in the rest of 2012. More than half of these firms would have to restructure the bonds to avoid a default on payment, according to a report by Standard & Poor's Ratings Services issued on Thursday.

"A tepid global economy has slowed FCCB issuers' revenue and profit growth, dragged down their stock prices, and left them less able to service debt," said Standard & Poor's credit analyst Vishal Kulkarni. "Redeeming the bonds will also be challenging for many FCCB issuers because they have limited access to funds and borrowing costs are high."

The report notes the restructuring options for these FCCB issuers include rolling over the bonds with later maturity dates and higher coupons, lowering the conversion-to-equity price or getting bondholders to accept only a partial repayment of their principal.

The report classifies the FCCB issuers into four categories depending on their likely strategy to tackle FCCB maturities: Likely to redeem at manageable cost; likely to redeem at high cost; likely to restructure the FCCBs; and could default on payment. Under S&P's criteria for distressed exchanges, some restructurings could be classified as a default, even though a payment default does not occur. This is due to the distressed circumstances for restructuring of the bonds close to the date of redemption.

"Even the weakest companies that have FCCBs maturing in 2012 are unlikely to consider defaulting on the payment of their bonds as their first option, given the messy litigation process in cases related to corporate defaults," said Kulkarni.

S&P expects troubles confronting FCCB issuers in 2012 to cause the worst hit companies to shy away from such bonds. However, companies that are ready to issue bonds with reasonable expectations — with 5%-6% interest rate and a conversion premium of less than 20% — may be better positioned to attract investors.

New Delhi, June 21
A senior finance ministry official on Thursday slammed the global rating agencies and assured that government is behind the Indian banking sector in case of any crisis that might arise out of the ongoing global economic downturn.

“The Indian banking sector is ready to face any global crisis and the rating agencies have no business to say that Indian financial institutions are in a bad shape as there is no crisis like situation, while these agencies are creating a further crisis by shaking the confidence of economies doing good globally like that of India,” said D.K. Mittal, secretary, department of financial services, while addressing an Assocham conference.

Raising the issue pertaining to the lack of capital with public sector banks in India, the secretary said: “The issue of crisis of capital in Indian banks is highly overrated as banks in India deposit about 28.75% of their deposits with the government and the RBI, i.e., 24% in the form of SLR (statutory liquidity ratio) and 4.75% CRR (cash reserve ratio), a practice which is followed nowhere else in the world but India and as such there can be no crisis of capital crunch”, he said.

Mittal added Indian public sector banks were fully and sufficiently capitalized and there was no cause for worry as we have a better plan and ample of capital infusion to avoid any sort of crisis. “Besides, the nonperforming assets aren’t at any significant levels where they can’t be managed looking at what is happening globally,” he added.

Assuring the government’s preparedness and policy measures being taken to deal with any crisis, Mittal said: “We’ve a crisis management group which meets regularly and have representatives of all regulators and key departments of the government.In addition, we have set up a group with regulators and government together headed by the RBI governor who meet together and look at all issues concerning the inter-regulatory coordination and more importantly on how to handle the ongoing crisis and what kind of preparation we have made”, he said.

New Delhi, June 21
The government is now pushing the proposal to open multibrand retail trade to foreign companies with new vigour and is preparing the ground to create a consensus among the states.

Commerce & Industry Minister Anand Sharma on Thursday wrote to chief ministers of three crucial states, Punjab, Uttar Pradesh and Odisha seeking their support to implement the proposal. The choice of these three CMs to send a missive is part of an exercise to get the non-BJP states that are not averse to the idea to agree to it.

While articulating the advantages of the policy for farmers, consumers and investments, Sharma in his letter to Punjab CM Parkash Singh Badal appealed for his support. In the letter to the CMs, Sharma emphasized a point that will be the government’s major argument this time around. Broadly, the government is saying in a federal structure, one state cannot have a veto power over another and since the implementation of this policy has been left to the states, those that want to should be able to get it started.

While Punjab deputy CM Sukhbir Badal had initially supported the proposal to allow 51% FDI in multibrand retail, Akhilesh Yadav and Samajwadi Party though having opposed the proposal are drifting closer to the ruling Congress, the latest instance being the presidential elections. Naveen Patnaik of Odisha is also understood to be not averse to the proposal. The letter was written on June 19 and Sharma, who is currently in Russia, is likely to take up this issue after his return and it is likely that the exercise may start with the northern states.

The government seems to have now decided that with the recent changes in equations with Trinamool Congress it is going to press ahead with some major reform measures, the first of which will be opening up retail. This is important because the cabinet has already cleared it and was put on pause mode in December last year following opposition from political parties and trading community. Since FDI liberalization is an executive decision and does not require parliamentary approval, the government has set its mind on moving on this issue first.

As part of the exercise to drum up support, some Congress CMs have already started making noises. Assam CM Tarun Gogoi had recently sought implementation of this proposal while Delhi CM Sheila Dikshit also supported the idea.

In his letter, Sharma made the point that extensive consultations had been held with all stakeholders including farmers’ and consumer bodies, traders, industry leaders and economists and there was broadbased support for introducing this policy.

Mumbai, June 21
J.P.Morgan upgraded Indian equities to "overweight" from "neutral", despite acknowledging the risk factors facing the economy, encouraged by what it called a number of more positive factors including historic valuations.

The bank said its yearend target for the Sensex was at 19,000 points, a nearly 12% upside from current levels. It expects the broader 50-share Nifty to trade in a 4,800-5,200 range in the near term.

Slowing policy reforms, however, remain a hindrance to economic growth and would be key to a recovery, J.P.Morgan said.

"If policy actions manage to revive corporate and consumer confidence, growth may accelerate into the second half of the fiscal year," the bank said in a note Thursday.

Despite calling the environment "clearly poor," because of risks including slowing economic growth, J.P.Morgan argued Indian valuations are trading at 12 times forward earnings, or one standard deviation below the 10-year historic average.

The Reserve Bank of India's 50 basis points cut in interest rates in April and its combined cut of 75 basis points in the cash reserve ratio so far this year should start impacting the economy late in the year, it said.

A slumping rupee would boost trade, while lower oil prices would ease pressures on India's current account and fiscal deficits, J.P.Morgan added. The investment bank said it remains "overweight" on private banks, citing "strong" growth in revenues on the back of loan growth momentum.

Its other "overweight" sectors are IT services and health care as part of a strategy of focusing on sectors that stand to benefit from rupee depreciation. — Reuters