Sat, 27th May 2017

Anirudh Sethi Report


Archives of “business houses” Tag

Non-corporates should get preference in bank licences: C Rangarajan, PMEAC chairman

The Reserve Bank should give preference to the non-corporate sector for new bank licences, Prime Minister’s Economic Advisory Council ChairmanC Rangarajan said. 

“It is possible for the Reserve Bank to start with initially non-corporate business and find out whether there are suitable applicants and thereafter proceed to look at the other applicants,” he said in an interview. 

The RBI is in the process of finalising the guidelines for giving new bank licences after Parliament approved Banking Laws (Amendment) Bill last month. 

The central bank, Rangarajan said, “should look at various types of financial institutions that are available currently and decide”. 

“…. many of the strong private sector banks today have been at one time or other in the financial system. They can look at it first and look at the other later on,” he said.  Read More 

India Export Growth Hits Slowest Pace in Two Years

Exports expanded in November 3.87 percent year-over-year

India’s exports in November grew 3.87 percent to $22.32 billion year-over-year, the lowest growth rate in two years.

Total exports from April through November, the first eight months of fiscal 2011-12, increased 33.2 percent to $192.7 billion from a year earlier.

“The poor showing in November was mainly on account of the weak demand for Indian goods in the traditional markets such as the European Union and the U.S.,” a Commerce Ministry official said.

Imports for November expanded 25.6 percent to $35.9 billion year-over-year, creating a trade gap of $13.6 billion.

Overall imports during April to November surged 30.2 percent to $309.5 billion, expanding the trade gap for the eight-month period to roughly $116.8 billion.

Based on current indications, the trade deficit for fiscal 2011-12, which ends March 31, is expected to reach $155 to $160 billion. The ministry expects exports to in the fiscal year to grow 6.7 percent.

“To boost exports and arrest the trade deficit, the government should provide export finance at concessional rate of not more than 7 percent for small and medium export segment, and 9 percent for large business houses,” a representative of the Federation of Indian Export Organisations said.

India, one of the world’s fast-growing economies, exported $246 billion in goods in fiscal 2010-11, which ended March 31, and has set an export target of $500 billion by 2014.

RIL-Seeking Vibhishana?

RILIn Deep Waters
“Always keep your friends close, but keep your enemies even closer”..Don Vito Corleone, The Godfather
While Sicilian mafioso’s have lived and practiced this adage for decades, so popularised to phantasmic proportions by Mario Puzo. Indians have have been nurtured on the ideologically correct but emotional deceit of Vibhishana. In the much younger days of this writer it was a known fact that RIL had mastered the Art Of Corporate Intelligence. So strong was gathering of information, that while everything a competitor did was chronicled with documentary proof, the fact that the demonic sword hung somewhere terrorised business houses that ever attempted to hold out against RIL.
But a sword always cuts both ways. So, while the evidence that was needed and used to destroy the ADAG group existed, similar evidence to destroy RIL perceivably also exists. The KG D6 basin extends into some 2000 sq kms of deep sea. Over a span of 2 decades extent of over-capitalisation aided and abetted by the MOPNG, DGH and even CAG existed in the realms of possibility. The siphoning over 2 decades was collectively whispered at over $10 bn, an amount that was laundered through more than 200 companies of the group to help one clansman to raise his Equity stake in RIL to over 50 per cent.
True or untrue no one knows. Except that in it’s new found “Avatar” the CAG has noticeably woken to corruption and doctoring of accounts. Something that was mandated for them from inception but conveniently ignored for decades. Now that another General Election looms large and movements like those of “Anna” herald an Indian Summer, the increasingly distressed Centre is trying to squeeze out businesses including RIL.
To be fair commentators like Gurumurthy and Gurudas Kamat had pointed at RIL cooking books for decades but to no avail. Nowhere did the lay investor understood that the ballooning KG expense was only meant to deny profit petroleum or revenue sharing to the country for existing pricing policies had assured RIL that nothing need be shared till the corporate recovered as much as 6 times the capitalisation of KG. 
So while the GOI could control the gas price for KG they could do nothing about Revenue share. If the black hole in RIL comes out to be as large as what the CAG now claims, investors can kiss a four digit price for the RIL stock for decades to come. Instead they could see lower 3 digit price in a very short time.
What one wonders is whether Vibhishana is once again siding with the GOI, to destroy Ravana? Time will tell.

Govt to withdraw stimulus

Watch PANIC in AUTO Sector ,As expected Bank Stocks in pressure -ASR TEAM/BARODA

The government will roll back fiscal stimulus on more than 300 products as it feels the economy, which is expected to grow by nearly 9 per cent in this fiscal year, is now in a far better shape.

Top finance ministry officials said most business houses and chambers of commerce were lobbying the government for keeping the tax sops doled out to guard the economy from the global economic crisis in 2008. However, finance minister Pranab Mukherjee feels the time has come to start winding down the stimulus measures.

In the wake of the global financial crisis, Indian industry had contracted for a few months, throwing millions of workers out of their jobs in textile and garment factories.

To stop the trend, the government had, two years back, provided tax benefits of Rs 40,000 crore in three tranches.

Some of the sops, including duty drawback and interest subsidy on select manufactures, were withdrawn last year. Besides, excise duty, which had been slashed from 14 per cent to 8 per cent in December 2008, was raised by 2 per cent to 10 per cent.

“We cannot continue with crutches for industrialists for all time. Some concessions will continue for the export sector but most will be withdrawn,” said top officials. Automobile industry executives say their discussions with finance ministry officials indicate that taxes on compacts and sedans can go up by 2 per cent.

The textile industry has been similarly lobbying to retain all the fiscal benefits given to them but fear some of these will be withdrawn. However, the finance ministry will have to brace for a tough time as the ministries of commerce, industry and textiles are expected to vigorously oppose much of the rollbacks.

The government hopes to raise around Rs 7,45,000 crore indirect and indirect taxes in this fiscal and wants to raise this target for the coming financial year (2011-2012) to nearly Rs 8,50,000 crore.

“While the bulk of the increase will come from direct taxes, indirect taxes will continue to be an important source of revenue,” officials said.

Over the last few months, most car makers and consumer durables firms have raised prices by 4-8 per cent putting additional pressure on overall inflation, which stood at 7.48 per cent in November.

However, despite hiking prices, car sales increased by nearly a third between April and November 2010. Most car makers, including Maruti, posted double-digit percentage growth in December.

“If car makers and others see a rise in demand even after raising prices, we don’t see why the government should be denied its taxes,” said officials.

The Reserve Bank has already rolled back its stimulus by ending the cheap money policy last year.

The RBI increased its benchmark interest rates by 1.5 per cent last year, the most by any monetary authority in Asia, to curb inflation, raising lending rates all around.

The finance ministry, too, thinks it is time to exit most of the stimulus as India “is less vulnerable to risky parameters, which beset Western economies”.

The need to withdraw stimulus measures also stems from the high fiscal deficit.

Fiscal deficit for the current year is expected to stand a little below the targeted level of 5.5 per cent, thanks to gains from the auction of 3G telecom spectrum and the sale of stocks in public sector companies.

“However, to slash it down to 4.8 per cent in the coming fiscal, every paisa of tax revenues will have to be accounted for,” said officials.

Leaked tapes’ speak of corporate gang-up against Anil Ambani

The release of more than a 100 telephone conversations, allegedly of a prominent corporate lobbyist, by the Outlook magazine has given a glimpse into the close links between big business houses and political parties.

The conversations, which allegedly took place in mid-2009, seem to feature the who’s who of the Indian corporate world, going by the names and voice tones.

The tapes — if authentic — indicate that at least some in the media and legal circles felt that a prominent industrialist was trying to secure a favourable verdict in the Supreme Court, in one of the most closely-watched corporate legal battles. The tapes — posted on the magazine’s website — also allegedly show how the lobbyist tried to — and succeeded — in bringing together warring corporate houses to fight against the low-on-luck Anil Ambani.

“I know what he is doing on the Supreme Court front,” a prominent and well-connected journalist warned the lobbyist on her client, just before a big corporate battle was to be heard in the Supreme Court. He urged the lobbyist — perhaps the most powerful in the country due to her illustrious clients — to tell her client to be cautious. “What he’s doing is known to the rest of the world, which is not good… Just convey that the way he is going to the Supreme Court is not the right way,” the voice, allegedly of the prominent journalist, added.

While the voices do sound like those of the persons after whom the digital files seemed to be named, there is very little to vouch for the authenticity of the tapes themselves — or the identity of the eavesdropper. While papers found with the recordings seemed to suggest that the phone-tapping was done by central tax authorities, the home ministry has already issued a denial that it had “authorised” any such exercise. Read More