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Thursday, November 28, 2013

Lodhas buy iconic London bldg for £300m

Mumbai: In one of the biggest real-estate deals this year, the Lodha Group has bought the iconic MacDonald House, a five-storey office-cum-home of the Canadian High Commission in London, for £300 million (around Rs 3,000 crore), giving it a toehold in the global real estate business. 

    It has a total floor area of 160,000 sq ft (gross internal area) and is built on a land area of 0.67 acres. Canada had bought the building from the US government in the 1960s. Lodha plans luxury homes on London plot 
Mumbai: The Lodha Group has bought the iconic Macdonald House in London. In February, the Canadian government had put on sale the palatial building, named after the country's first prime minister Sir John A MacDonald, to cash in on London's surging real estate market. 
    Industry sources said the deal was signed on Thursday after Lodha paid the entire bid amount, making it the group's first major property acquisition abroad. Four to five bidders from the Middle East and Asia were also in the fray for 
the property, whose reserve price was 250 million pounds. 
    International property consultants said the building is located off Grosvenor Square in Mayfair, one of the most desirable areas in London and prices here can reach up to 2,000 pounds a sq ft. "Lodha is planning to construct a highend luxury residential building here. The construction, however, will not start till next year as London planning authorities have not changed the use from commercial to residential,'' said consultants close to Lodha Group. 
    Abhishek Lodha, managing director of Lodha Group, 
did not respond to queries seeking comment while the Canadian Embassy could not be contacted. 
    Incidentally, this is the second property owned by a foreign government purchased by the Lodha Group. Last December, it bought Washington House, staff quarters of the US consulate on Altamount road in Mumbai, for Rs 342 crore.
    Lodha's MacDonald House buy comes three years after Sahara India Pariwar in 2010 acquired the iconic Grosvenor House hotel in London for 470 million pounds. Sahara has put the hotel back on the block.

CNG prices may rise by up to 50%


Mumbai: Prices of Compressed Natural Gas (CNG) could go up by anything between Rs 15 and Rs 20 in Mumbai from Sunday. 
    The hike, which could be as high as 50%, taking rates from the current Rs 38.95 per kg to a maximum of Rs 59 per kg, could directly affect fares of taxis, autos, buses and fleet cabs. 
    The price of piped natural gas (PNG) is also likely to go 
up by 40% to 60%, from the existing Rs 24 per standard cubic meter (scm) to anywhere between Rs 34 and Rs 39 per scm early next month, a move that may force many households to go back to subsidised cooking gas cylinders. 
    Vipin Chandra Chittoda, MD of Mahanagar Gas Ltd, which supplies CNG across the city, confirmed "the price of CNG will go up by Rs 15-20 akg and PNG by Rs 15 per kg". 
    An MGL official said the 
rates would be increased because the Supreme Court had recently upheld a Gujarat high court order saying prices should be uniform across the country. 
    CNG prices are not uniform across India due to short supply of gas. While some firms get subsidised APM (administered price mechanism) gas, others have to rely on expensive imported LNG. 
CNG price hike will be fourth in 13 months 
Mumbai: Mahanagar Gas Ltd managing director V C Chittoda told TOI: "Our APM gassupply at$4.2 per mmBtuislikely tobe cut by 30%, and we have imported that gas paying $19 per mmBtu or four times the price. We operate on very thin margins, so we can't absorb the price hike and will have to pass it [the cost] on to the consumers." 
    Union petroleum secretary Vivek Rae said, "MGL will be the worst hit because they werecompletely dependentupon subsidised APM gas. We can't help it because of the Gujarat HC order and have asked GAIL India, the national gas carrier, to divert APM gas to utilities in Gujarat [in keeping withtheorder]." 
    This will be the fourth hike in 13 months.CNG priceswerehikedby 85 paise in Mumbai in November 2012, followed by aRs2hikein July this year and a thirdhike of Rs3on September 1. 
    Post-hike,CNG priceswillbe almoston a par with diesel prices, and PNG prices will be on a par with subsidized cooking gascylinder rates. 
    Citizens are worried about the impact the hike will have on public trans
port, with unions likely to demand a fareincrease. 
The auto andtaxifarehike matter is al
ready in the high court, and despite three CNG hikes in the past one year, the state 
transport department has not hiked fares 
of taxis, autos and fleet cabs. In fact, transportofficialshavebeen saying they willonly "abide by court directives and not take any decision on farehikeson their own." State-run buseswill notbe affecteddue 
totheCNGhike asthey ply on diesel. 
THE PAST THREE HIKES SEPT 1 2013 
The price was hiked by 3, taking the CNG rate per kg 
in Mumbai up from 35.95 to 
38.95. The reason given for the hike: to recover part of increase in input costs, especially towards sudden and rapid depreciation of rupee against the US$. While the transport department did not hike fares of autos and taxis, BEST has got an approval for hiking fares by 1-5 for various stages from April 2014. JUL 2013 
CNG prices went up in 
Mumbai region by 2. The reason cited was increase in 
input costs. PNG prices went up by 2.19 per scm.NOV 2012 
CNG rates went up by 85 
paise, but it had an impact on public transport. Bus 
fares were hiked by one rupee from April 2013. Fares of autos and taxis remained unchanged.



Tuesday, November 19, 2013

Fresh policy set to boost cluster redevpt, extend it across Mumbai Govt Plans Incentives, May Help Acquire Land

 Cluster redevelopment is set to get a boost with a new policy offering more benefits to both developers and residents and making projects more attractive than standalone redevelopment. 

    For instance, the bigger a cluster undergoing redevelopment, the larger will be the flats of individual owners. Moreover, it will be easier for housing societies to band together and negotiate with a developer. Now, a developer buys out properties piecemeal and then takes up cluster redevelopment. 
    "While the minimum area will remain one acre, the larger the area taken up, the bigger will be the flats that residents can look forward to. The minimum size of a flat will be 300 sq feet," said a source. 

    The proposed policy that will replace the existing cluster redevelopment policy under Development Control Rules 33(9) is likely to apply across Mumbai and not just south Mumbai that has a large number of old and dilapidated buildings, added sources. 

    The BMC will mark the one acre areas that can form a cluster. Several suchclusters can then come together for a mega-cluster redevelopment. "Unlike the old policy, the focus this time is on land-pooling. The government plans incentives to ensure more 
societies come together for redevelopment. If there is some hurdle, it will help with land acquisition," said the source. 
    Along with basic size, the government may also define the incentives to be provided to mega clusters to avoid disputes and litigation. 

    A committee including the civic and MMRDA commissioners and the Slum Rehabilitation Authority chief and led by urban development principal secretary Manu Kumar Srivastava is reworking the policy. It has held consultations with the Property Owners Association and the Maharashtra Chamber of Housing Industry. 
    The sources said the urban renewal scheme is likely to comprise three levels of planning: macro (broad zoning of land and arterial roads), meso (the BMC's development plan that identifies land use) and micro (for every cluster). The three will fit in, allowing the authorities control over how the city develops. 
    Developers who have started cluster redevelopment will have the option to migrate to the new policy. 
    The move comes as the 2009 cluster redevelopment policy failed to deliver. The ambitious Rs 5,000-crore Bhendi Bazaar project of the Saifee Burhani Upliftment Trust spread over 14.5 acres is going very slowly. So far, only five proposals have been approved and one at Parel implemented. 

BIGGER FLATS, BETTER CITY PLANNING 

OLD POLICY NEW POLICY 
Minimum area one acre Minimum area one acre 
Developer obtains consent from residents, purchases properties and seeks BMC permission for cluster redevelopment BMC may get to draw boundaries ofclusters. Resident groups can come together to negotiate with builder for redevelopment Residents of various clusters can group together to form a megacluster 
Minimum flat size 300 sq feet. Larger flats at discretion of developer Minimum flat size 300 sq feet, but for mega clusters govt plans to offer larger flats 
Acquisition to be done by developer Govt to lay out options, including acquisition by the state to push redevelopment 
No urban renewal scheme master plan. BMC has no control on city's overall development Three-tier urban renewal scheme — a master plan, a 
development plan and a plan for every cluster. All redevelopment to be in sync with master plan. BMC to have control on overall development of city 
    Does not ensure enough public amenities. Skewed development 
    Proposes planned development of the city



Saturday, November 16, 2013

Bad loan waivers of corporates far higher than farmers, says RBI

Mumbai: Data collected by Reserve Bank of India over a period of one year blows the lid off what goes as loan classification in banks. In a presentation at the annual bankers' conference, RBI deputy governor K C Chakrabarty showed how banks have sacrificed over Rs 1 lakh crore by writing off bad loans to corporates, which is much higher than Union finance minister P Chidambaram's farm loan waiver in 2008 — a move that received flak from the industry. 

    Under the Debt Waiver and Debt Relief Scheme, 2008, the Centre had waived off around Rs 60,000 crore to farmers. 
    "In the past 13 years, banks have written off 1 lakh crore and 95% of these are large loans. Everyone talks of the farm loan write-off, but it is the medium and large enterprises segment that has a 50% share in NPAs," said Chakrabarty. 
    The deputy governor flayed banks for using 'technical write-offs' to reduce their nonperforming assets (bad loans) over the years. Technical writeoff is a process adopted by banks whereby they take a hit on their profits and stop includ
ing the defaulting loan in the list of those from whom repayments are due. It is called a technical write-off because although banks do not show these loans as receivables in their books, they continue to pursue recovery in courts or other forum. 
    A technical write-off en
ables banks to claim they do not have any bad loans on their books by fully providing for the loans from their earnings. It also reduces their tax outgo. 
    Chakrabarty also raised the issue of restructured loans — advances where potential defaulters are given more time to repay without being called 
defaulters. "Restructuring of loans with retrospective effect has killed credit quality in banks," he said. He warned banks that the leeway might not be available in future. 
    "We must move away from restructuring, there should not be any category called restructuring. The moment it is restructured, it should be declared as NPA, there should not be any technical write-off… be prepared for that, unless you do that you might not be able to get out of the mess," he said. 
    RBI numbers showed that the banks added Rs 4,94,836 crore to their bad loans between 2007 and 2013. During the same period, they reduced NPAs to the extent of Rs 3,50,332 crore. This was possible because loans worth Rs 1,41,295 crore were written off and another Rs 90,887 crore were upgraded to repaying loans and Rs 1,18,149 crore was recovered from defaulters. According to Chakrabarty, after a 
technical write-off, there is no incentive to pursue recovery. 
    "Between 2007-13, credit to 10 large corporate groups has more than doubled. We have seen that wherever credit growth has been higher, NPAs are also higher."


TCS starts 10,000 seat software development facility in Gujarat

NEW DELHI: Technology services major Tata Consultancy ServicesBSE -1.29 % (TCS), launched a 10,000-seat campus, Garima Park, in Gandhinagar, Gujarat today. The software development facility was inaugurated by Gujarat chief minister Narendra Modi, the company said in a statement.    TCS CEO & managing director N Chandrasekaran, said, "This will help TCS scale up its presence and drive the expansion of the IT industry in Gujarat."    Developed over 25.5 acres of land with a built-up area of 1.6 millio ..


Wednesday, November 13, 2013

With £1b, Arabs May Conquer Sahara’s NY & London Hotels Deal to fetch group thrice of what it had put in

The embattled Sahara Group has put up for sale the iconic luxury hotels it acquired over the last three years — The Plaza and Dream Downtown in New York and London's Grosvenor House — with an Arab business family said to have made a £1-billion offer for all of them, according to three people close to the development. The family based in the Middle-East has extensive interests in hospitality and has offered a little over . 10,000 crore for the three trophy properties in the "Sahara portfolio" of Aamby Valley Mauritius, said the people cited above. If the deal goes through, Sahara stands to get about . 4,000 crore, or almost three times what it invested in the hotels, after repaying its debt to Bank of China of close to $1 billion against the properties. Dealmakers in Europe told ET Sahara would be the only business group globally to have earned that kind of return on investment in hospitality since the 2008 financial crisis. 

Subrata Roy, founder and head of Sahara Group, has been in talks with royal and business families in the Middle-East and Europe to sell the hotels for more than two months now, said the people cited above. The UK's Halkin Investments, which has former Pakistan prime minister Shaukat Aziz on its board, is one of the key advisers to Sahara Group's Aamby Valley Mauritius. 
Sahara Group did not respond to emails. Halkin Investment said it "acts for Aamby Valley Mauritius in an occasional and advisory-only capacity". 
Sahara has to Pay Debenture Holders 
It did not answer other queries in the email. 
Sahara needs to repay holders of debentures that the capital market regulator said were sold in violation of rules. The Securities and Exchange Board of India (Sebi) was backed by the Supreme Court, which asked Sahara to refund the money. Sahara has said it has repaid much of the amount, but the regulator disagrees. 
The 494-room Grosvenor House, once home to the Duke of Westminster, was purchased by Sahara in 2010 from Royal Bank of Scotland for £470 million, or $726 million. In 2012, Sahara bought the Dream Downtown featuring 315 loftstyle rooms and suites and The Plaza with 230 rooms for close to $800 million. 

Bank of China's total credit facility against Grosvenor is $476.83 million (£305 million). Besides this, the bank extended a combined loan of $465.850 against The Plaza and Dream Downtown. The Chinese bank has reportedly been asking questions about the possible repercussions of Sahara's feud with Sebi. 
Sahara has been asked by the Supreme Court to refund, with interest, all the money raised from investors who had subscribed to the optionally fully convertible debentures issued by two group companies worth more than Rs 24,000 crore. The court has also asked Sahara to deposit land title deeds worth Rs 20,000 crore with Sebi. In February this year, the regulator had directed the attachment of bank accounts and property of the two Sahara companies as well as Roy's personal assets.


SBI Q2 profit slides 35% in worst quarterly fall in 2 yrs

Mumbai: State Bank of India reported a 35% drop in net profit for the quarter ended September 2013 — the sharpest fall in earnings in two years — with the bank's new chairman Arundhati Bhattacharya warning that the worst was not over.

    The bank's net profit for the quarter fell to Rs 2,375 crore from Rs 3,658 crore in the same period last year. 
    The bank's chairman said that its earlier proposal to merge associate banks with itself has been put on the back burner with the focus shifting to consolidation. This year the bank plans to raise Rs 8,000 crore through a qualified institutional placement (QIP) in addition to the Rs 2,000-crore capital that the bank has sought
from the government. 
    "Provisions for loan losses, provision for the staff wage hikes, provision for pensions and of course the investment depreciation were the reasons for the dip in the net profit in the quarter," Bhattacharya, 
the newly-appointed SBI chairman and managing director, said. 
    The bank's share price rose by Rs 22 to close at Rs 1,698 at the BSE. 
    Although the bank has seen an increase in bad loans, the rate at which loans have turned bad has slowed. The good news is on the individual loan front, such as mortgages, where demand is good and bad loans have come down. SBI's home loan portfolio has grown 20% to Rs 1,30,034 crore from Rs 1,08,381 crore last year. 
    According to Bhattacharya, the bank was tackling 
the challenges by focusing on preventing loans from going bad and working on upgradation of non-performing assets. "We have added 17,000 staff and 1,500 officers last year who have now been trained and deployed. We want to leverage our IT platform so that most of the back office functions are taken over by technology and our staff is free for marketing," she said. 
    Saday Sinha of Kotak Securities said, "The bank's net interest income has come ahead of expectations on the back of better than expected net interest margin along with 19% loan growth. However, profit after tax came a shade below our expectations due to higher than expected operating expenditure and NPA pro
visions." 
    Ritesh Parikh, VP, Motilal Oswal Securities, said, "SBI's reported profit was in line with our estimate, improvement in NIM was a positive surprise while lower slippages compared to previous quarter and provisions were in line with estimate."

FUTURE SHOCK: SBI chairman Arundhati Bhattacharya has warned the worst is not over yet

Net gain: India poised to beat US Internet Users To Grow To 243mn By June From Over 200mn Now, Says Study

Mumbai: Internet penetration in the country may not have crossed 16% of the population yet, but in absolute numbers this percentage works out to nearly 10 times the population of Australia. 

    By October, the nation had crossed the 200 million mark, says a report released by the Internet And Mobile Association of India (IAMAI) and IMRB. The report estimates 243 million internet users in the country by June 2014, overtaking the US as the world's second largest internet base after China. 
    The US today has an estimated 207 million internet users, while China has 300 million. The 205 million internet users that the IAMAI reports for India are not all active users, or those who use the internet at least once a month. 
    "There is every reason to believe that they will turn into active users in the near future," IMAI associate vice-president Nilotpal 
Chakravarti said. 
    While Indians primarily use the internet for communication, largely in the form of email, social media is also an important driver of internet use here. 
    This facet of the IAMAI report can be corroborated 
with data from other sources such as Facebook, according to which India had 82 million monthly active users by June 30, the second largest geographical region for Facebook after the US and Canada. Facebook does not operate in China. 
    Penetration in the country is driven largely by mobile phones, with some of the cheapest and most basic handsets today offering access to the internet. The country has 110 million mobile internet users, of which 25 million are in rural parts. 

    The contribution of mobiles to internet penetration in rural parts is especially significant, with 70% of the active internet population in non-urban areas accessing the web via cellphones; this may have to do with the difficulty in accessing PCs. 
    It was found that 42% of rural internet users preferred local languages. The high prevalence of content in English is a hurdle for most of them. 
    College-goers remained the largest users of the internet in the country, followed by young men. 
    While the IMAI report paints an optimistic picture, a report by the Broadband Commission for Digital Development ranked India 145th in around 200 countries for the percentage of individuals using the internet. 
    But IMAI associate vicepresident Chakravarti said India's performance when it came to internet penetration was an achievement given the country's current infrastructure. 

URBAN AND RURAL USAGE TRENDS 
    
Mobile net has penetration of 65% among the 108 million urban active net users (as of June). In rural parts, 70% of active net population accesses it using mobiles 
    In rural parts, 42% of people prefer accessing internet only in local tongues 
REASONS FOR GOING ONLINE 
    
Of the active internet users surveyed, close to 90% used the internet primarily for online communication, largely email. It was found that 75% engaged in social networks and 69% used the internet for entertainment


Tuesday, November 12, 2013

IIP CLIMBS 2%, BUT CPI JUMPS TO 10% Retail Inflation Puts a Spoke in Factory Wheels

Industrial production growth picked up in September but came in below expectations as retail inflation climbed to double digits in October, strengthening the possibility of a further rise in interest rates to tame prices, which in turn could weaken prospects for an economic recovery. 

Astrong increase in industrial production was widely expected to herald an improved second-half performance as a good monsoon delivers robust rural demand, the effects of an export recovery ripple through the economy and sentiment perks up as elections approach. 
The numbers, released after the markets closed, are likely to further dampen already weak sentiment. 
Growth in factory output as measured by the Index of Industrial Production (IIP) rose 2% in September, from a year ago, data released on Tuesday showed.
Expected Growth was 3.5% 
IIP growth for August was 0.4%, revised down from the 0.6% estimated initially. The consensus had been for a 3.5% rise in output in September after the core sector, which has a 38% weight in IIP, had risen 8% in the month and exports were up 13.5% in October. Higher production ahead of the October festival season had also been expected to add heft to the September numbers. "The numbers have disappointed as the core sector growth of 8% had raised expectations," said DK Joshi, chief economist, Crisil. "Even the core sector recovery can't be called sustainable based on a month's data. Overall industrial and manufacturing activity remains sub par." Second-quarter GDP growth will be weak at below 5% although the second half of the fiscal year may see a pickup, he said. 
Government officials said, however, that the data was positive. "It is moving in the direction which we all were hoping it will," said Arvind Mayaram, secretary, department of economic affairs. 
From 0.4% "it has gone to 2%, which I think is fairly good," he said, adding that the pickup in electricity generation showed coal had started moving. "September numbers are better than that of August. Now at least the numbers have turned positive and growth will accelerate from here in the second half of the fiscal," said C Rangarajan, chairman of the Prime Minister's Economic Advisory Council. Cumulative industrial growth in April-September was just 0.4%. 
Meanwhile, driven by high food prices, consumer price inflation rose to 10.09% in October from 9.84% in September, raising chances that the Reserve Bank of India (RBI) may lift interest rates further in its December 18 policy review. Industrial production was up 1.7% in the July-September quarter against a 1.1% contraction in the April-June quarter. Policymakers are counting on this small recovery to develop into a sharper rebound in the second half of the year to lift the growth rate for the entire fiscal to over 5% even as experts said second-quarter GDP growth is likely to be 
only slightly better than 4.4% reported in the first quarter. Growth had slumped to a decade-low 5% in the year to March. "Steps taken are beginning to yield results," finance minister P Chidambaram had said earlier this month, reeling out data that showed the economy was gathering pace, an assessment that does not yet have widespread backing. A stronger showing by the economy would bolster the chances of the United Progressive Alliance government at next year's general election. 
"Manufacturing, which accounts for the bulk of the IP index, is virtually flat from a year ago as demand for consumer durables and capital goods is still soft, mirroring poor consumer and business confidence," said Glenn Levine, senior economist, Moody's Analytics. Industry growth will remain subdued for now, said Soumya Kanti Ghosh, chief economic adviser, State Bank of India. "Going forward, IIP is likely to be weak over the next months, before showing a tentative recovery towards the end of the fiscal," he said.



NEW US LAW Immigration Bill will Decimate Indian IT Cos



The much-beloved India Caucus in the US House of Representatives organised the first-ever Diwali celebration on Capitol Hill recently, but it has also quietly deposited a very inauspicious gift at India's door. It is called HR 15, a bill that if passed in its current form would essentially shut down Indian IT companies or so reduce their strength as to make them negligible. It is one of the most anti-India pieces of legislation. Of the 135 members of the India Caucus, 63 have not only supported the bill but also co-sponsored it in a measure of serious support. The Democratic co-chair of the India Caucus, Congressman Joseph Crowley of New York, is among them. So far, 187 Congressmen are on board, including three Republicans, in the 435-member House. Much of the bill deals with illegalimmigration and border security issues but it also includes "killer" provisions on H1-B and L-1 visas. It is important to note that for the many complaints the US Congress has articulated against India lately, India has raised one real concern this year: against the visa provisions in the immigration reform bill. The bill, introduced on October 2, is essentially a replica of the equally harsh Senate bill, passed this summer. It does nothing to lessen the pain for Indian companies despite many representations and briefings to the US Congress and administration. The likelihood of the House bill being passed is slim because the Democrats are in minority. But be that as it may, the language reflects the current sentiment on the Hill. And that is worrisome. Like the Senate version, the House bill takes specific aim at H1-B and L-1 visas, the two categories used most frequently by Indian IT majors. Bothbills prohibit a company from having more than 50% of its workforce on H1-B or L-1, they drastically raise visa fees, require companies to pay much higher wages and they ask that mandatory ads be published to recruit US workers before hiring an H1-B visa holder. The only relief: the bills raise the cap on H1-B visas from 65,000 a year to between 1,15,000 and 1,80,000, depending on the demand. Visa fees for a company using H1-B workers could rise to $5,000 per application if 30-50% of its employees are on H1-B. If its workforce is 50-75% on H-1B, it will have to shell out $10,000 for each visa application. If this were not enough, thebills want companies to reduce dependence on H1-B visas by 2016 down to 50% of the workforce. Then there are several reporting requirements to the department of homeland security. India's software industry association Nasscom says the provisions amount to a non-tariff barrier. The push for penalising H1-B workers has come both from a few US tech giants and from the rank and file of American tech workers — both really don't like competition when it comes down to it. They are apparently concerned about the plight of H1-B workers who slave away in sweatshops on low wages. Yet, a study by the Brookings Institution found that H1-B workers make 26% higher wages than their American counterparts. Even if you accept that H1-B workers displace some American workers, it is equally true that other Indian companies have invested billions in the US and created thousands of jobs. To cite just one example: Essar is building a steel plant in Minnesota at the cost $1.7 billion, said to be the largest private sector project in North America. Back to the India Caucus and its role as guide and mentor on bilateral issues of concern. It might be time for the Indian community to ask some real questions: what does its money really buy besides photo-ops? Indian diplomats were equally ineffective in creating a balanced debate. They were unable to energise the Indian community to use its clout to calm down Congressional tempers raised by a US business community gone wild. When an SOS went out to Indian community leaders, a majority reportedly didn't respond. The USIndia Business Council has made an attempt to counter the anti-India atmosphere but with minor success. What's missing is an overall strategy that links Indian diplomats, consuls general in various cities, the Indian-American community, India's lobbyists and policymakers in New Delhi into an intelligent design. 
The writer is a geopolitical analyst

Seema Sirohi




Saturday, November 9, 2013

US signals greater acceptance for Modi Ready To Put Behind 2002 Riots Issue

Washington:The antagonistic official US view of Gujarat chief minister Narendra Modi is gradually being tempered, seemingly in the light of his frontrunner status to lead India. The subtle changes come amid continuing efforts by his expatriate fan base to exculpate him for the 2002 riots. 

    US officials, some lawmakers, and the country's corporate community at large appear keen to put behind the stigma 
associated with the controversial politician. They have sig
nalled they are keen to put the 2002 issue behind, a message that appears to stem from the perception that the UPA government's fortunes are in decline and that of Modi are on the upswing.
    Arecent Goldman Sachs report titled "Modi-fying our view: raise India to Marketweight" expressing bullish sentiment on India at the prospect of the Gujarat CM becoming PM seems has accelerated efforts to resurrect Modi's reputation. The Goldman Sachs report, which has caused heartburn in the UPA, isn't the 
first to speculate on these lines. 
American lawmakers and policy planners have been primed 
over the past year for the return of the BJP to power at the Centre, with Modi possibly at the helm as Prime Minister, following what US analysts say is a "precipitous" decline in the Congress party's standing. 
    A September 1, 2012, report by the US Congressional Research Service (CRS), a bipartisan and independent research wing of the US Congress that provides briefs for American lawmakers, has already gone where Goldman Sachs is now treading: boldly projecting a BJP resurgence. It has also fore
warned Washington about the possible elevation to the Prime Minister office of Narendra Modi, who was denied a US visa in 2005 for his alleged complicity in the 2002 riots. 
    "Although still in some disorder in 2011, there are signs that the BJP has made changes necessary to be a formidable challenger in scheduled 2014 polls. These include a more effective branding of the party as one focused on development and good governance rather than emotive, Hindutva-related issues," the report noted. 
    "Among the party's likely candidates for the prime ministership in future elections is Gujarat CM Narendra Modi, who has overseen impressive 
development successes in his state, but who is also dogged by controversy over his alleged complicity in lethal anti-Muslim rioting there in 2002," the report noted in a surprising projection, before Modi was officials declared PM candidate. It said Modi has in the past been denied a US visa under an American law barring entry for foreign government officials found to be complicit in severe violations of religious freedom. 
    That visa denial, US officials are now suggesting, will not apply if Modi indeed becomes PM. Dismissing visa as a non-issue, one US official was quoted telling PTI this week that it was largely a creation of the Indian media and not at all 
an issue in the US government. 
    "I think the US had a very strong relationship with the previous Indian government when it was under BJP leadership," the official said. The official explained "there is not a lot of angst about him (Modi)" in the US government, but the administration has decided to maintain the status quo... because it might be seen as an interference in India's domestic politics, with various political parties seeking to make capital out of any decision in the US. 
    But US lawmakers are not constrained by such perception issues. A day after the Obama administration indicated the denial of visa to Modi would be overturned if he becomes PM, key Republican lawmakers are reported to have invited him to address an Indian-American community event, albeit via satellite, on Capitol Hill next week.


Friday, November 8, 2013

NOT INTERESTED Tatas drop $1.9bn bid for Orient-Express

Mumbai: More than a year after it made an offer to buy Orient-Express Hotels, Tata Group's flagship hospitality company Indian Hotels Co (IHCL) withdrew its $1.86-billion bid for the London-based group amid concerns about the worsening global hospitality slump, taking pressure off chairman Cyrus Mistry. 

    Ever since IHCL, India's largest hotel operator, approached Orient-Express with a buyout proposal, its management had adamantly refused all Tata Group's overtures. It was in 2007 when IHCL had for the first time evinced interest in the Bermuda-registered company. 
    The Orient-Express board's continuous refusal to entertain the offer from the Tatas, the current economic environment as well as the Indian chain's changed priorities triggered the withdrawal, IHCL said in a statement. IHCL owns 6.9% stake in Orient-Express and said that it would look at various options with regard to this 
holding. IHCL added that it will continue to engage with Orient-Express regarding its investment and may also look at acquiring more shares of the luxury chain. 
    In October 2012, IHCL, best known for operating the Taj chain, made an "unsolicited" offer at $12.63 per share to acquire 93.1% in the luxury trains-to-hotelsto-cruises company. The Tatas had also roped in Ferrari chairman Luca Montezemolo and former Orient-Express CEO Paul White to broker the deal with the NYSE-listed company's board. But the latter rejected the offer, saying that it
was not considering a sale. 
    IHCL's withdrawal of offer for Orient-Express will ease its burden as it is going through a tough period and has been clocking losses for some quarters now, said an industry observer. 
    In a meeting on Friday, IHCL's 10-member board decided not to pursue the transaction and all contracts that were entered into to facilitate the bid have been cancelled, the statement said. 
    IHCL has seen a record decline in its investment in Orient-Express since it first checked into the British hotels group six years ago. Its stake is worth $106 million (Rs 664 crore at current Re-$ exchange rate) based on Orient-Express' Friday trading price. 
    The operator of Taj Mahal Palace in Mumbai and the Pierre Hotel in New York said that global recessionary conditions eroded the value of its investment and for the quarter ended March 31 it had recognized an impairment of Rs 373 crore in its investment in Orient-Express.


Thursday, November 7, 2013

CBI not a police force, can’t probe or arrest: Gauhati HC Fate of 2G, Guj Riots, Coalgate Cases Unsure

New Delhi: In a startling decision which has ramifications for sensitive cases, the Gauhati high court has ruled that the Central Bureau of Investigation (CBI) is legally not a police force and stripped off its powers to investigate crimes, arrest suspects and file chargesheets. 

    The ministry of home affairs (MHA) by a resolution dated April 1, 1963, had constituted the CBI as a police force under the Delhi Special Police Establishment (DSPE) Act, 1946. The CBI had drawn its powers to investigate cases from the DSPE Act. 
    A division bench of HC comprising Justices I A Ansari and Indira Shah on Wednesday upheld the constitutional validity of the DSPE Act but held that "the CBI is neither an organ nor a part of the DSPE and the CBI cannot be 
treated as a 'police force' constituted under the DSPE Act." 
    Unless this ruling is reviewed and amended by a higher court, the CBI will not function as a police force and be able to proceed—in fact, not even file FIRs—in high-profile cas
es like Coalgate, 2G spectrum scam and those related to the Gujarat riots. 
    In these cases, the agency was directed by the Supreme Court to investigate and report to it. 

'POWER LIMITED TO UTS' 

    Gauhati HC says CBI cannot be treated as a police force constituted under Delhi Special Police Establishment Act, 1946. (MHA set up CBI under the act by a resolution on April 1, 1963). This means the very existence of CBI rejected 
    Says CBI does not have 
power to investigate cases, file FIRs. This would negate charge-sheets filed in 2G spectrum scam, Coalgate & cases related to Gujarat riots 
    Also says DSPE Act applicable only in Union Territories. So, any police force set up under Act can investigate crimes only in UTs
Sleuths expect govt to oppose order 
    
The CBI will reportedly study the Gauhati HC order before taking a legal opinion, though it "expects" the Centre to oppose the order. Explaining its wide ambit, CBI officials say though the Delhi Special Police Establishment Act, 1946, gives the agency powers to probe offences in Union territories, its jurisdiction is conditionally extended to all states and even the railways. P 10 
HC quashes 1963 MHA resolution forming CBI 
    Once the cover of the law under DSPE Act is taken away, the very existence of the CBI has come to a naught. A worried Centre is preparing to rush to the SC on Friday to appeal against the HC judgment. 
    "We hereby also set aside and quash the impugned (under challenge) Resolution dated April 1, 1963, whereby the CBI has been constituted," the HC said. 
    Interestingly, the HC also limited the application of DSPE Act only to Union Territories. This means, even if a new police force was set up validly as per the HC's logic, its power to investigate crimes would remain confined to the UTs. 

    The bench said: "A careful reading of the preamble to the DSPE Act, 1946, would make it evident that the DSPE Act, 1946, has been made for the Union Territories. This legislative power cannot be exercised by Parliament except under Article 246(4) of the Constitution, which enables Parliament to enact laws on 
subjects covered by List-II (State List), in respect of Union Territories." 
    Allowing a writ petition filed by one Navendra Kumar, the bench quashed the chargesheet filed against him by the CBI but said that the alleged offence could be investigated afresh by the regular state police. As a triggering effect, this judgment would render all chargesheets filed by the CBI to date invalid. 
    The HC had on January 20 this year directed the CBI to produce the records relating to the creation of the CBI. After scrutinizing the records, the HC said that the 1963 MHA Resolution creating the CBI under the DSPE Act did not even receive the President's assent. 

    "Hence, strictly speaking, the Resolution in question cannot even be termed as the decision of the government of India. That apart, it is apparent from the records that the CBI is a newly constituted body and not the same as DSPE," said Justice Ansari, who authored the judgment on behalf of the bench.

 

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