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Thursday, March 29, 2012
FIIs Stay with their Bearish Positions as Clouds Gather Indices end marginally lower; open interest dips 8% from the last expiry, indicating nervousness
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PM assured no retrospective taxation Wrote To Ex-UK PM Brown In 2010 That Voda Will Have Protection Of Law
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Wednesday, March 28, 2012
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India will be No. 1 economy by 2050: Report
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Tuesday, March 27, 2012
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New property tax system to be tabled today
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Monday, March 26, 2012
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Surplus estimate ends as 2,059cr deficit
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Telenor wants $14bn in damages from govt
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Coal block auctions to kick off by June
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Sunday, March 25, 2012
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Wednesday, March 21, 2012
Govt lost 10.7 lakh cr by not auctioning coal blocks: CAG
Draft Report's Estimate Of 'Undue Benefits' To Firms Is 6 Times 2G Loss Figure
New Delhi: The CAG is at it again. About 16 months after it rocked the UPA government with its explosive report on allocation of 2G spectrum and licences, the Comptroller & Auditor General's draft report titled 'Performance Audit Of Coal Block Allocations' says the government has extended "undue benefits", totalling a mind-boggling Rs 10.67 lakh crore, to commercial entities by giving them 155 coal acreages without auction between 2004 and 2009. The beneficiaries include some 100 private companies, as well as some public sector units, in industries such as power, steel and cement.
The CAG-estimated loss figure of Rs 10.67 lakh crore at March 31, 2011 prices is six times that of its highest presumptive loss figure of Rs 1.76 lakh crore for the 2G scam. This, it says,is actually a conservative estimate, since it takes into account prices for the lowest grade of coal, not the median grade. CAG says even by the price levels prevailing at the time of allocations, the estimate of loss would be over Rs 6.31 lakh crore.
Here's how the auditor has calculated the "windfall gains". First, an estimate of the cost of production for each block was arrived at by taking into account the actual cost of production in a similar Coal India mine for the same year. Then the difference between CIL's sale price and cost of production was multiplied by 90% of the reserves in each block. The figure thus obtained was the windfall gain for that block.
The reasoning behind taking 90% of the total reserves rather than the entire lot, according to CAG, is that "detailed exploration establishes reserves at a confidence level of 90%". The report points out that the coal ministry had maintained in 2004 that the chances of any allocatee not being able to recover this much from the reserves "would be, if at all, very remote". CAG has added that "the actual amount of gain to the allocatees may change depending upon the mining plan, cost of extraction of coal, market price of coal and quality".
The 110-page draft report, a copy of which is with TOI, takes into account the coal ministry's views and, sources say, is as good as a final report. It is expected to be tabled in Parliament after the Union Budget is passed. Calculated on the basis of the 90% of coal reserves indicated in the geological reports for each block, the auditors have worked out a total of 33,169 million tonnes (MT). Industry sources say this would be enough to fuel over 150,000 mw of generation capacity—a little less than the country's current level—for 50 years.
The report has listed both private entities and public utilities as beneficiaries of the alleged largesse. It says private firms cornered more than Rs 4.79 lakh crore of the giveaway, while around Rs 5.88 lakh crore went to government utilities. Significantly, most PSUs employ private miners to extract the coal. CAG dismisses coal ministry defence
Among the major private sector beneficiaries are Tata Group entities, Jindal Steel & Power Ltd, Electro Steel Castings Ltd, the Anil Agarwal Group firms, Delhibased Bhushan Power & Steel Ltd, Jayaswal Neco, Nagpurbased Abhijeet Group, and Aditya Birla Group companies. Essar Group's power ventures, Adani Group, Arcelor Mittal India, Lanco Group and a host of small to medium players also figure in the list.
A major player in power, Reliance Power, which is setting up the Sasan and Tilayia ultra-mega power projects (UMPPs), is missing from the list because the section on "Windfall benefit to private companies" does not include12 coal blocks given for the government's showpiece power projects as they were allocated through a tariff-based competitive bidding route.
(The blocks given to Reliance Power are dealt with in a separate section, which TOI first reported on February 15 and March 5. CAG's estimate of the "undue benefit" to Reliance Power for these two projects is now placed at Rs 15,849 crore over a 25-year period.)
Spokespersons for the Tatas, Adanis, A V Birla Group and Essar declined to comment. Bhushan Power spokesperson did not respond to a text message. Repeated attempts to get a response from the Abhijeet Group's Delhi office also were in vain.
But Jindal Steel and Power Ltd promoter Naveen Jindal responded, saying: "It is all project specific. Often you find (state-run) companies unable to start work. I am proud to say that JSPL has started two of our blocks and is contributing towards creating wealth for the country. For all these 155 blocks, Coal India did not have any mining plans as it found them unattractive... CAG may have its view but whether it is JSPL or any other private company, they are all Indian entities and are creating wealth for the country."
Among the public sector entities that have benefited the most are central generation utility NTPC and trading firm MMTC, several West Bengal government corporations, and mines and mineral development corporations of Chhattisgarh, Jharkhand and Madhya Pradesh.
Senior executives of several companies, on condition that neither they nor their company be identified, said many of these blocks are yet to be transferred. Some others said mining has not started in several mines in the absence of various clearances. However, a few agreed that there might have been some unforeseen gains as coal price has risen since the allocations. "If the draft report talks of windfall gains, it shows CAG's lack of sense of time or knowledge of market realities. It fails to see the price of everything-—from fuel, equipment to wages and industrial services—has risen in this period," said a top executive with one of the companies in CAG's list of beneficiaries.
The coal ministry's justification, quoted in the report, is not dissimilar: "... coal produced from captive blocks was not available for commercial sale and out of 137 blocks, 62 coal blocks were allotted to power sector where tariff is regulated on the basis of input costs and the transfer price of coal is assessed on actual cost basis. In case of steel and cement sectors, though prices of end products are not regulated, a competitive market ensures the best benefit for consumers."
CAG counters by saying, "While appreciating the constraints and the viewpoint of the ministry, the fact remains that coal being a natural resource ought to have been allocated to private players on competitive bidding as it brings in more transparency and objectivity in the system. In fact, audit observations have also been corroborated by the recent SC (Supreme Court) judgment on 2G spectrum which, inter alia, held that the State is deemed to have a proprietary interest in natural resources and must act as a guardian and trustee in relation to the same."
The draft report adds: "They (private companies) can augment their resources but the object should be to serve the public cause and to do the public good by resorting to fair and reasonable methods. Every action/decision of the State or its agencies/instrumentalities to give largesse/confer benefits must be sound, transparent, discernible and well defined policy. Thus, the State legally owns the natural resources on behalf of citizens and the natural resources cannot be allocated to private hands without ensuring that the benefit of low cost of the natural resources would be passed on to the citizens."
It uses the ministry's view, conveyed to the government auditor in June 2004, to bolster CAG's contention by noting that the ministry itself had said, "...there was a substantial difference between the price of coal supplied by CIL (Coal India Ltd) and the cost of coal produced through coal blocks allocated for captive mining and as such, there was windfall gains to the allocates, part of which the government wanted to tap through competitive bidding. The windfall gains to the allocatees were expected to be substantial".
The report rejects the ministry's argument that allocations to the power sector need to be viewed in light of the fact that Central Electricity Regulatory Commission (CERC) regulates the power tariffs. The report says such regulations do not apply to merchant power plants set up by independent power producers. "Further, CERC tariff regulations 2009-14, allow normative operation and maintenance expenses for coal- and lignitefired generating stations as against the actual cost of production of coal. In fact, for steel and cement sectors, the competitive market forces cannot ensure that the allocatee would pass on the benefit of low cost of natural resources to citizens."
The section in the report titled 'Competitive Bidding For Coal Blocks Yet To Commence' points out how "...the policy initiative to introduce competitive bidding with the objective to bring in transparency and objectivity in the allocation of coal blocks commenced from 28 June 2004. However, the process got delayed at different stages and the same was yet to materialize even after a lapse of seven years".
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REGULATOR GETS CRACKING ON MARKET MANIPULATION
Sebi Short-lists 19 Cos in 2011 IPO Fraud Case
Regulator to probe possible misuse of fund or price manipulation by some cos last year
Capital market regulator Sebi has widened the scope of its investigation to probe misuse of fund or price manipulation by some of the companies that came out with IPOs last year.
Sebi's integrated surveillance department and investigation department have short-listed 19 companies that were listed in 2011, said a person familiar with the probe. This is in addition to seven companies and a few merchant bankers who were pulled up by the regulator in December 2011. "In the past few weeks, exchanges have been told to share bidding details, merchant bankers have been asked to provide due diligence details and some companies have been directed to give details on the utilisation of fund proceeds," said the person. "Soon, banks will be told to give account statements. It will take some time to complete the investigation." Sections of brokers and intermediaries may also come under the probe. Within a short time, stock prices of most companies that figure in Sebi's list have dropped significantly from prices at which the shares were issued. Sebi has taken recent initiatives to bring down instances of manipulation in IPOs. It has formed a forensic accounting unit under its corporate finance department to step up the rigour in inspection. It also introduced listing-day circuit filters to rein in price swings on the listing day and mandatory reporting of merchant bankers' track record. In the recent cases that are being investigated, sources said the regulator has come across instances where a few thousand IPO applications came from the same set of investors in most of the small-sized IPOs. "It will be probing if there are any KYC issues," sources added.Most of these are dummy applications and investors who lend their names are provided an assured return by operators. Operators and brokers end up controlling thousands of applications to influence the price of new listings with low floating stock. "While Sebi's December order restrained companies and its promoters from accessing markets in some cases, investors' continue to remain in losses. There should be a way to compensate investors without causing moral hazard," said Ashok Bakliwal, president, Bombay Shareholders Association.
But market sources said that on charges like fund misuse, the ministry of corporate affairs (MCA) has to step in. "Many companies are yet to deploy the IPO proceeds as stated in the DRHP. Some of them have not even informed exchanges in a timely manner to update the status of funds raised," said a source.
"While the statement of IPO proceeds is filed with stock exchange, it is the MCA that has the power to take action against erring companies. Filings on RoC happen with a lag of 12-18 months which make monitoring difficult. Most independent directors, who are supposed to defend shareholders' interests, are found to be ineffective. There should be a detailed format that provides specific details about the investments with status of the project for which funds were raised," said Pavan Kumar Vijay, MD of Delhi-based Corporate Professionals.
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‘Property Registrations in Mumbai Fall 11% in Feb’
Small discounts fail to work; buyers hold back on hopes of rate cuts
Property registrations in Mumbai fell 11% year on year in February, as consumers continued to shy away from buying homes and offices. However, developers can draw some relief from the fact that the absolute number of registrations rose to 4,203, which is relatively higher than the bottom of 4,060 witnessed in November 2011.
Property sales dipped 19% in the island part of Mumbai, while suburbs saw the number fall 9% from a year ago, according to a report by the broking firm Prabhudas Lilladher. In the month, the number of lease transactions grew to 8,515, up 6% from a year ago. However, no offer or incentive scheme seems to be working as outright sales numbers remain weak. Market experts expect this to improve with new launches starting around Gudi Padwa — considered an auspicious time for new purchases — later this week.Developers are also pinning their hopes on new launches and are expecting a revival in sales volume on hopes of interest rate cuts by the Reserve Bank of India soon. But many of them are not sure if anything other than a price cut will work.
"Sales volume has been falling for over a year and a half now, it's scary. It clearly indicates that developers will have to cut prices across the board now, and announce it than making it customer specific," said Ramesh Nair, managing director - west, Jones Lang LaSalle India.
Although some prospective home buyers are waiting for an interest rate cut, price correction will be the most feasible factor that will attract customers, he said. However, developers do not seem to be convinced that prices can be reduced now. "Given the various proposals in the Union Budget, construction cost will go up by 5%. Apart from this, there is the additional burden of service tax, all of which will be passed on to the consumer. Not much of supply is also likely to hit the market as approvals from various committees and departments are still taking time," said Sunil Mantri, chairman, Real Estate Committee of Indian Merchants Chamber.
Following the clarity emerging on amended development control rules in January, new launches have started gaining the momentum. However, most developers are in the process of submitting revised project plans to the civic authority to take advantage of new fungible floor space index. This may affect execution at these projects for some time as approvals under new DCR would take at least three months, acting as a further dampener on sales, said Kejal Mehta, real estate analyst at Prabhudas Lilladher.
Developers have almost failed to attract home buyers in Mumbai, the country's biggest property market, with marginal price discounts and other incentives as they are deferring their decision to buy property in the anticipation of an interest rate cut. In January, property registrations had declined 13% from a year ago to around 4,427 in Mumbai, after witnessing a spike in December to 5,900, led by higher transactions in the secondary market.
kailash.babar@timesgroup.com
Posted by Unknown at 2:07 AM 0 comments
Kingfisher Teeters as DGCA Loses Faith
Airline to halt foreign flights; aviation minister talks tough
Troubled Kingfisher Airlines teetered on the edge on Tuesday, fast losing support of both the government and the regulator and unable to come up with a credible plan to revive its flailing fortunes.
Vijay Mallya, chairman and promoter of the airline, emerged from a two-hour meeting with the Director General of Civil Aviation (DGCA) sounding confident and promising a revival, but the government remained far from impressed, questioning Mallya's optimism and highlighting various financial and legal issues. For the first time since it was launched with great fanfare in 2005 — with Mallya promising a completely different flying experience — the airline stands on the brink of closure. The government has so far shied away from commenting publicly on the airline's fate. But on Tuesday, a chorus of voices led by Civil Aviation Minister Ajit Singh seemed to indicate a substantial and complete rethink on the government's part.On Tuesday evening, Singh tossed the ball firmly in Mallya's court, saying the onus of revival is firmly on the liquor baron. More importantly, he held out the prospect of legal action by saying dues and taxes have to be paid. "Kingfisher Airlines is liable for prosecution over unpaid taxes," Reuters quoted Singh as saying. Civil Aviation Min Sounds Caution
Schedules can't be jeopardised in this business. But the bigger thing is non-payment of airport, fuel and salary dues. Today he should be able to convince the DGCA that he can clear those dues," Singh added. Singh said if the DGCA report is of the opinion that safety cannot be assured in Kingfisher operations, then the government could suspend the airline's licence. "We are not giving last or first chance to Mallya. He has to decide whether to run the airline or how to run the airline. To continue to have the licence, they have to have five aircraft but at present the financial situation is bad," the minister admitted.
The DGCA, Bharat Bhushan, also doubted the revival plan submitted by Mallya, his fourth schedule in as many months and this time with just 16 aircraft.
"The airline is severely hamstrung for want of funds and there is no assurance on whether he (Mallya) will be able to defray his liabilities," Bhushan said, adding he may submit a report on the airline to the government "as early as tomorrow (Wednesday)". Kingfisher has debt of . 7,057 crore and accumulated losses of about . 6,000 crore. The airline has cut domestic operations and is set to suspend all international flights. Banks have refused to give more money till the promoter brings in new equity and fuel companies have put the airline on cash and carry. The International Air Transport Association has suspended KFA from its inter-airline transaction body IATA Clearing House (ICH) and Billing & Settlement Plan (BSP) accounts on March 9 for non-payment of dues.
Its five-star rating service has also been suspended by SkyTrax Research after cuts in its international network. State-run AAI has decided to allow Kingfisher to operate only those flights for which the airline has paid from Monday midnight to Tuesday midnight.
Posted by Unknown at 1:57 AM 0 comments
Monday, March 19, 2012
HC: Follow DCR rules in Aarey no-devpt zone
Mumbai:Developer RoyalPalms' sprawling projectin Aarey Colony hascomeunder thescanner of the Bombay high court. Declining to stay the sale of over 3.25 lakh sq ft of officespace, a division benchof Chief JusticeMohit Shah andJustice Roshan Dalvi directed the BMC,state government anddeveloper to strictly follow the developmentcontrol regulations(DCR)in the no-development zone.
The court was hearing an application filedby activistRajendra Thacker,objecting toRoyalPalms' plan to sell 6,000 sq m of land with sanctioned construction rights in the form of floor space index of 3.35 lakh square feet for setting up IT infrastructure for Rs 85 crore. The judges asked Thacker to file a separate petition if he had grievances in the Royal Palms' case.Advocate Sumedha Rao told the high court that Royal Palms may go ahead with the sale and create third party rights. "It will be at their own risk," remarked the judges.
The land, spread over around 240 acres, is located in Marol-Maroshi and falls in the no-developmentzone.Over 73,000sq m of this plot was covered with slums. According to the BMC, it had left out the slum land and allowed development by dividing the area into a tourism development zone (TDZ) and no-development zone (NDZ). Plansfor threehotelswere permitted in the TDZ area, while 14 IT buildings and 78 residential buildings, including 50 bungalows, were approved in the NDZ area.
Assistant government pleader G W Mattos told the court that even in an NDZ area, some relaxations are permitted. This allows 20% of the total FSI to be used for constructing IT parks and residences. Setting up tourism infrastructure is also allowed.
Advocate Rao claimed that the proposed sale was in violation of rules. The lawyer representing Royal Palms denied the allegations and said that all rules were complied with.
Posted by Unknown at 6:55 PM 0 comments
State boon for 24 developers
Mumbai: The state government on Monday said developers will have to pay the authorities only half of what was stipulated in its public parking policy, in a bonanza for those who have already received permission under it.
The Brihanmumbai Municipal Corporation (BMC) had earlier said that developers pay 40% of the ready-reckoner rate (RRR) for availing the incentive floor space index (FSI) under the parking scheme. But a notification by the urban development department on Monday reduced it by half, or 20%, of the RRR.This will benefit around two dozen developers who had procured sanctions, including letters of intent and commencement certificates before the controversial policy was amended by civic chief Subodh Kumar last May. Builders who submit proposals now will have to pay the full 40% premium to the BMC and state government.
A developer described it as "discriminatory''. Few builders who had got permission moved the Bombay high court, after the BMC insisted they pay the new rates. They contended that the state and not BMC could issue a circular asking them to pay a premium. The court concurred with the developers and Monday's notification was an outcome of its directive.
The scheme was introduced by then chief minister Vilasrao Deshmukh in 2008
and pushed through at breakneck speed by his successor Ashok Chavan. It offered incentive construction rights to builders who erect parking towers on part of their land and hand it over free to the BMC.
Last March, chief minister Prithviraj Chavan told the BMC to review the policy. Developers used the scheme to plan 50-60 storey-high luxury skyscrapers, mainly in central Mumbai.
Posted by Unknown at 6:49 PM 0 comments