New Delhi, January 2
The Cabinet today approved the conversion of preference shares held by the government in Indian Bank, UCO Bank and Vijaya Bank into equity.

These shares amount to Rs 400 crore, Rs 1,823 crore and Rs 1,200 crore, respectively for the three banks are being converted into equity shares, subject to the approval of shareholders, the Securities and Exchange Board of India (SEBI) and other authorities.

The conversion of the preference shares subscribed by the government into equity shares in the first instance and subsequently in other public sector banks would enhance the Tier-1 capital of the public sector banks (PSBs), thereby making available more funds at their disposal to meet the credit requirement of the productive sectors of the economy. It will also provide impetus to the economy by including the under-banked rural and semi-urban areas. The conversion is proposed to be done in the financial year 2013-14.

The Reserve Bank of India (RBI) has been consulted in the matter and it advised that the government may consider permitting the conversion of preference shares into equity subject to the approval of shareholders and SEBI and other authorities.

After the implementation of Basel-Ill norms, the thrust has been on equity capital in the Tier- I capital of banks. Other instruments without loss absorption capacity do not qualify to be counted for the Tier-l capital of banks. Non-equity instruments do not qualify to be counted for the Tier-l capital of the banks.

• Preference shares held by the government in Indian Bank, UCO Bank and Vijaya Bank are being converted into equity shares, subject to the approval of shareholders, SEBI and other authorities.
• The conversion will enhance the Tier-1 capital of the public sector banks, thereby making available more funds at their disposal to meet the credit requirement of the productive sectors of the economy.

New Delhi, January 2
The manufacturing sector decelerated marginally in December as a slowdown in domestic order flows led to slower output growth, an HSBC survey said today.

The HSBC India Manufacturing Purchasing Managers' Index (PMI) - a measure of factory production - dropped slightly from 51.3 in November to 50.7 in December.

Despite a slight deceleration, the manufacturing sector activity expanded for the second consecutive month. A PMI reading of above 50 differentiates growth from contraction.

"Today's numbers show that growth remains moderate and struggles to take off due to lingering structural constraints," said Leif Eskesen, HSBC Chief Economist for India and ASEAN.

The Indian manufacturing sector ended 2013 on an encouraging footing. Operating conditions improved for the second successive month in December, as both output and new orders increased, HSBC said.

Consequently, firms raised their workforce numbers further in December, the survey noted.

New orders placed at Indian manufacturers rose in December, albeit marginally. The higher levels of new work were largely driven by improved domestic and overseas demand.

A sector-wise analysis shows that the overall expansion in production volumes was largely centred on the consumer goods sub-sector. Moreover, export order growth was registered for the third consecutive month.

On the price rise, the survey said the overall rate of inflation remained "robust". The increase was largely on the back of higher prices paid for raw materials such as metals, chemicals and textiles. Output prices rose for the seventh month in a row.

"Even so, inflation pressures remain firm and are proving sticky. The Reserve Bank of India (RBI) may yet again have to flex its muscles and tighten monetary policy to bring down the elevated level of inflation," Eskesen said. — PTI

New Delhi, January 2
Unperturbed by the rise in the fiscal deficit, Finance Minister P Chidambaram today exuded confidence that it would remain within the target of 4.8% of GDP in the current financial year.

“We will maintain the fiscal deficit at 4.8%. That is the red line that will not be breached. I am confident that it will not be breached,” he said at a press conference.

The minister was responding to a question about the possibility of the fiscal deficit rising after it touched 94 per cent of the budget estimate at the end of November.

Chidambaram said government finances would improve in December and the fiscal deficit would decline. Advance tax receipts came in December and the General Financial Rules, which restrict expenditure, will come into play, he said, adding that they will have a positive bearing on the fiscal deficit.

The government has proposed narrowing the fiscal deficit to 4.8% in the current financial year and 3% in 2016-17. It was at 4.9 % in 2012-13.

The government, however, will have a tough task in restricting the fiscal deficit in the view of poor revenue realisation and tardy progress of the disinvestment programme.

There are indications that the government would go in for a massive cut of about Rs 1 lakh crore in plan expenditure to contain the fiscal deficit.

The government has so far received Rs 3,000 crore from disinvestment as against the budget target of Rs 40,000 crore.

India’s fiscal deficit touched Rs 5,09,557 crore during April-November, or 93.9 per cent of the annual target, the Controller General of Accounts (CGA) said on December 31. The gap was 80.4% of the budget estimate at the end of November in 2012-13. — PTI

New Delhi, January 2
Sahara group chief Subrata Roy today pleaded with the Supreme Court to lift the ban on his foreign visits to enable him to meet his vast overseas business commitments, particularly in the US and the UK.

Arguing for him, senior counsel Aryaman Sundaram told the Bench comprising Justices KS Radhakrishnan and JS Khehar that his client was running huge hotels in London and New York and had to immediately visit these two cities in that connection.

He would return to India on three-day court notice, if required, Sundaram assured the court. Market regulator SEBI, however, opposed the plea, contending that Roy had not kept it informed about his approaching the SC with the plea.

The SC had passed an order on October 28, 2013, restraining Roy from leaving the country until he provided property deeds worth Rs 20,000 crore to SEBI as surety for the funds two Sahara group companies had raised from the market in the form of fully convertible debentures. The apex court modified the order on November 1, allowing Roy to undertake foreign visits during the three-week deadline period set for submission of property documents.

The Bench also wanted to know the reason for Roy’s hurry in approaching the court despite the fact that SEBI’s main contempt petition was slated for next hearing on January 9. The court said it would consider the plea for overseas visits on January 9 and asked SEBI to verify Sahara group’s property documents and file the response before that.

The SC had passed the restraint order after hearing contempt petitions filed by SEBI against Roy and two of his companies, Sahara India Real Estate Corporation Limited (SIREC) and Sahara India Housing Investment Corporation Limited (SHIC), for their failure to return funds to the small investors.

New Delhi, January 2
British telecom major Vodafone, which has submitted its response to an offer of non-binding conciliation to resolve a tax dispute, has suggested that all tax claims against the company be clubbed together for a settlement.

Vodafone, according to sources, in its response to the Finance Ministry's offer for conciliation, had expressed keenness to settle the long-pending capital gains tax dispute. The company suggested that a transfer pricing case before the Income Tax Appellate Tribunal (ITAT) should be clubbed with the Rs 11,200 crore capital gains tax dispute, the sources said.

“Vodafone is likely to meet Finance Ministry officials this month. They have said they are keen on further conciliation talks,” according to the sources.

The ITAT last week stayed a Rs 3,700-crore tax claim by the Income Tax Department on Vodafone India in a transfer- pricing dispute and asked the company to deposit Rs 200 crore as initial payment and submit bank guarantees for the remaining sum. “Vodafone is pushing for early resolution of the transfer-pricing case. It also wants bundling of all tax cases against it for the settlement,” the sources said.

The Rs 11,200 crore tax dispute relates to Vodafone’s 2007 acquisition of Hutchison Whampoa’s stake in Hutchison Essar. The transfer-pricing case concerns Vodafone’s issue of shares in its Pune-based BPO arm Vodafone India Services to Vodafone Teleservices Mauritius for Rs 246.38 crore in FY08, which, according to the I-T department, was undervalued. The Cabinet had approved non-binding conciliation with Vodafone in June last year. The outcome of the conciliation, however, will need to be ultimately vetted by Parliament as it would require an amendment to the Income Tax Act. — PTI

BRIEFLY

Jet’s Abu Dhabi-Chennai flight from January 16
Mumbai: Private carrier Jet Airways will launch a daily flight service from Abu Dhabi to Chennai from January 16. The new service will now connect Chennai to several global destinations across Europe and Africa via Abu Dhabi, Jet Airways said in a release on Thursday. — PTI

Recover Rs 60k cr from Odisha miners: Shah panel
New Delhi: About Rs 60,000 crore should be recovered from miners for illegally mined iron and manganese ores, the high-level Justice MB Shah Commission report on illegal mining in Odisha has said. The commission has indicted both Centre and the Odisha Government on illegal mining of iron and manganese ores in its report and has asked the state government to recover over Rs 59,203 crore from the miners. — PTI

Salary dues: Kingfisher staff to go on hunger strike from Jan 6
New Delhi: Employees of Kingfisher Airlines who have not been paid salaries for the past 17 months on Thursday threatened to launch an indefinite hunger strike from Monday demanding stringent action against the defaulting company. — PTI

Coal Ministry slaps notices on 13 firms
New Delhi: The Coal Ministry has slapped show-cause notices on 13 firms, including AMR Iron and Steel, JLD Yavatmal Energy and NMDC while seeking explanation from three companies, including Balco, for delays in development of mines allocated to them for captive use. — PTI

LIC performs ‘better’ than private insurers
New Delhi: Private insurance companies fared poorly in terms of settlement of death claims in 2012-13 as compared to the state-owned Life Insurance Corporation (LIC), says the Insurance Regulatory and Development Authority (IRDA). “The claim settlement ratio of the LIC was better than that of the private life insurers,” IRDA said in its annual report.— PTI