Tuesday, 12 February 2019

CORPORATE UPDATES 12.02.2019





NCLT ASKS DIRECTORS TO SEEK APPROVAL BEFORE TRAVELING ABROAD

The Mumbai Bench of NCLT has recently asked four directors of Gammon India Ltd. to not leave the country without obtaining its permission This order was passed by NCLT while a Section 7 filing made by Union Bank of India is currently pending before the NCLT. Previously, two applications were filed by operational creditors against Gammon but both were dismissed. While Gammon was under the CDR Scheme, it ran into trouble after RBI put an end to all restructuring mechanism (outside IBC) in February 2018. The RBI further set tight deadlines for firms slipping into default It said cases involving more than Rs. 2,000 crore have to be settled in 180 days, failing which they have to be taken to bankruptcy courts. Gammon has offered settlement proposal to the Union Bank of India which is currently under consideration. During the pendency of this matter, however, the NCLT passed an order retraining four persons from travelling abroad in view of the pending criminal proceedings against the Directors. In its January 28 order, the NCLT, noted a previous DRT order, which directed all directors to inform the DRT in case they were to travel abroad. It, accordingly, modified its previous order to reflect the same, Since on similar circumstances an authority has already given those directions, therefore, on the same lines it is hereby directed that if the directors as listed above intend to travel out of country the same is to be informed to NCLT. The NCLT further added that all the directors cannot leave the country at the same time The NCLT also ordered that, since the proposal for settlement is in progress, the director in-charge of Finances would remain present to monitor the progress of settlement, and that no adjournment be sought on the ground of non-availability of the said director.
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AFTER NCLT NOD, ICAI ARM TO REOPEN BOOKS OF FINANCIALLY CRIPPLED IL&FS

An arm of Institute of Chartered Accountants of India (ICAI) will be reopening the books of the financially crippled infra lender IL&FS. The Mumbai bench of the National Company Law Tribunal (NCLT) had on January 1 directed the reopening of the books and recasting of the financial statements of IL&FS, IL&FS Financial Services, IL&FS Transportation Networks between fiscal years 2012-13 to 2017-18. In view of the substantial public interest involved in the matter, ICAI Accounting Research Foundation (ICAI ARF) will be carrying out the task an official statement said. The whole exercise will be independent, it said, acknowledging the Serious Fraud Investigation Office (SFIO) is also carrying out an investigation on IL&FS and its group/ subsidiary/associate companies. Being a 'section 25' company whose purpose is not for profit, ICAI ARF can outsource this assignment so that it is over within a reasonable period of time, the statement added. The NCLT had allowed for the reopening under Section 130 of the Companies Act to ascertain financial mismanagement. The government, which took over the board of the diversified and complex IL&FS last year, wanted to check the balance-sheets of the crippled group and its two listed subsidiaries. However, the auditors Ernst & Young owned SRBC & Co, Delloitte Haskins & Sells and KPMG affiliate BSR Associates had opposed the move citing that they had no role in the alleged frauds arguing financial accounts are made by the company and not the auditors. The NCLT had observed that based on the ICAI and SFIO reports though it cannot be concluded that the auditors and former directors had any role in preparing of the financial accounts, lets reopen it in the interest of fairness. After allowing the reopening and recasting the books of account of IL&FS, ITNL and IL&FS Financial Services, the tribunal clarified that the order is without any prejudice and will not affect the proceedings before ICAI and SFIO probe.
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NCLAT EXTENDS DEADLINE FOR ESSAR STEEL ORDER TO FEBRUARY 28

The National Company Law Appellate Tribunal (NCLT) has extended the deadline it had set for its Ahmedabad bench to pass an order on the Essar Steel insolvency case. The deadline, which was earlier set at February 11, has been extended to February 28. The judge has ordered that NCLT should finish off the hearings by February 19, an industry executive said. The Appellate Tribunal extended the deadline in its February 12 hearing. It was one in a series of court hearings in the Essar Steel insolvency case that were scheduled for the day. While NCLT will conduct two hearings, the Ahmedabad bench will hear a petition filed by Essar Steel directors. Though more than 570 days have passed since the case was admitted in the insolvency courts, the finishing line is nowhere near given that the 270-day deadline is well past. Though NCLAT had set the February 11 deadline, NCLT clearly has unfinished business.
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NCLT GETS EXTENSION TILL FEB 19 TO DECIDE OVER ARCELOR'S PLAN FOR ESSAR

The National Company Law Appellate Tribunal (NCLAT) Tuesday granted a week more time to NCLT Ahmedabad to decide over the Rs 42,000 crore resolution plan submitted by ArcelorMittal for the debt ridden Essar Steel. A two member bench headed by Justice S J Mukhopadhaya has directed the Ahmedabad bench of the National Company Law Tribunal (NCLT) to decide over the matter by February 19. During the hearing, NCLAT was informed that Ahmedabad bench has completed hearing on operational creditors plea and is scheduled to hear suspended Essar directors later in the day Tuesday.
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REID & TAYLOR EXPECTS 3-4 BIDDERS

Finquest Financial, one of the major financial creditors of Reid & Taylor, said it expects serious bidders to come forth for the ailing apparel maker now that it has been asked to be liquidated as a going concern by the National Company Law Tribunal (NCLT). The NCLT had ordered the move after investors, put forth by the employees association, either declined to invest after due diligence, or failed to prove the requisite net worth. There will be a buyer, not many, but about 3-4 companies, who would not want liabilities on their head or tax notices slapped on them by government authorities, Bharat Patel of Finquest told. I have already been approached by a buyer for the assets. He does not want to get into the resolution process. Being liquidated as a going concern under the Insolvency and Bankruptcy Code has two benefits: it helps lenders recover more money against unpaid loans and creates job opportunities for at least some of those who worked in the company. In comparison, selling such assets on a piecemeal basis is long, painful and makes no economic sense, a company executive said. Reid & Taylor, whose factory in Mysuru is running at much below capacity, has about 1,200 employees.
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133 IL&FS FIRMS INCORPORATED OUTSIDE INDIA TO CONTINUE RESOLUTION PROCESS: NCLAT

The National Company Law Appellate Tribunal Monday allowed 22 companies of crisis-hit IL&FS group to service their debt obligations Besides, a two-member bench headed by Justice S J Mukhopadhaya approved the appointment of former Supreme Court judge Justice D K Jain to supervise resolution process of IL&FS group. The appellate tribunal also lifted the moratorium and allows 133 IL&FS firms incorporated outside India to continue with the resolution process We allow (companies under green categories) the board to permit the company to service debt obligations as per schedule, the firm said. The NCLAT was hearing the government plea over the IL&FS group.
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IL&FS EXPOSURE: IBA MAY AGAIN TURN TO RBI FOR RELIEF TO BANKS

The Indian Banks’ Association (IBA) will likely approach the Reserve Bank of India (RBI) again, seeking a special dispensation for banks to defer provisioning requirements for their exposure to the crisis-ridden IL&FS. However, instead of a relief on banks’ total exposure of over Rs 50,000 crore to the entire group, the IBA may seek a breather for only ‘amber’ companies of IL&FS, sources told. The ‘amber’ category refers to those IL&FS entities that may have adequate cash flows for repayment to secured creditors but not enough to meet claims of unsecured creditors. Sources said in a meeting of senior bankers with corporate affairs secretary Injeti Srinivas on January 22, the official had suggested that the IBA take up the issue with the central bank again giving full justification for any such request. As per the plan, the ‘amber’ companies will meet operations and management expenses and other essential costs to preserve the value of going concerns. The rest of their funds will be kept in escrow accounts for distribution among creditors at a later date upon resolution of the stressed assets at the company level. The total exposure of banks to the ‘amber’ companies wasn’t immediately available. RBI had already turned down requests by some bankers in December 2018 to relax the asset classification rule for their exposure to all IL&FS entities. The bankers had argued that their recovery efforts were impacted due to the fact that the National Company Law Appellate Tribunal (NCLAT) was still hearing a government petition for a 90-day moratorium on repayments by IL&FS and its arms. Banks are required to make a provision of 15-40% on sub-standard NPAs in 6-12 months, based on whether these are secured or not.
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MALVINDER SINGH GOES TO COPS AGAINST SUNIL AND SANJAY GODHWANI

Businessman Malvinder Mohan Singh has filed a police complaint against his former associates Sunil and Sanjay Godhwani, along with some employees of Ligare Aviation Ltd, for allegedly defrauding Singh’s Malav Holdings Pvt. Ltd of 30 crore. One of the charges filed on behalf of Malav Holdings claims that the Godhwani brothers, along with officials working for Ligare, sanctioned bogus and fake invoices for fictitious expenses The complaint was filed on 30 November with the economic offences wing of Delhi Police. The airline was started in 2006 as Ran Air services. In the beginning, it offered turboprops, helicopter jets and later got into air ambulance services. The company offered services to corporates and politicians, among others. Later it diversified into crew training and aircraft maintenance, units that required huge investments. The first charge against the Godhwani brothers, along with some other employees of Ligare Aviation, relates to cheating and causing loss of approximately 18 crore and 88 lakh by fraudulently and dishonestly sanctioning payments.
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NEW DEMAT ACCOUNTS SCALED DECADAL HIGH IN 2018

Indians are making a rapid shift in their saving patterns from traditional instruments such as gold, real estate and bank deposits to alternatives like stocks, showed data from the Securities and Exchange Board of India (Sebi). The number of dematerialized accounts, or demat accounts opened in 2018 was the most in at least a decade at 4 million a 13% increase from the previous year, the data showed. According to Sebi data, the total number of demat accounts rose to 34.8 million in 2018 from 30.8 million in 2017. There were a total of 16.8 million demat accounts in India in 2009, an indicator of the sharp increase in retail investors in equity markets. A demat account is opened by an investor with a depository participant to invest in securities such as stocks and bonds. The securities are held in a digital format. In India, less than 10% of the population has any exposure to the stock markets as compared to developed economies where this number is closer to 90%. In 2017, the equity benchmark index Sensex jumped 27.91% followed by a muted 5.91% return in 2018 which did not curb enthusiasm of retail investors. The primary markets also cooled off last year with 24 initial public offerings (IPOs) hitting the markets which raised a total of 30,959.07 crore in 2018. In 2017, 36 IPOs hit the markets garnering 67,147.44 crore. Mutual funds have also attracted retail investors with money collected through systematic investment plans (SIPs) showing a growth trend. According to Association of Mutual Funds of India (Amfi), there are 80.3 million mutual fund folios or accounts as of December 2018, of which 99.5% is accounted for by individual investors. Of the total, 75.3 million comprised accounts of retail investors, 4.54 million high net-worth individual accounts while 438,203 accounts belonged to institutional investors. Retail investor accounts have shown a positive rate of growth since March 2014, said Amfi. In 2017, mutual fund folios were at 66.5 million. According to Amfi data, individual investors held 12.91 trillion in mutual funds as of December 2018, a year-on-year increase of 13%. Investments of individual investors in equity schemes increased 15% over December 2017. According to Amfi data, 64% of the assets of individual investors are from the top 30 cities.
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NCLAT ALLOWS 22 IL&FS GROUP FIRMS TO SERVICE DEBT OBLIGATIONS

The National Company Law Appellate Tribunal Monday allowed 22 companies of crisis-hit IL&FS group to service their debt obligations. Besides, a two-member bench headed by Justice S J Mukhopadhaya approved appointment of former Supreme Court judge Justice D K Jain to supervise resolution process of IL&FS group. The appellate tribunal also lifted moratorium and allows 133 IL&FS firms incorporated outside India to continue with the resolution process. We allow (companies under green categories) the board to permit the company to service debt obligations as per schedule, the firm said. The NCLAT was hearing the government plea over IL&FS group.
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SC CLEARS HURDLE FOR ESSAR CASE, REJECTS PLEAS BY OPERATIONAL CREDITORS

The Supreme Court (SC) on Monday dismissed a plea by 28 operational creditors of Essar Steel seeking to be heard by the National Company Law Tribunal (NCLT) before any decision was taken on ArcelorMittal’s bid for the company. The court also rejected their plea seeking a stay on the National Company Law Appellate Tribunal’s (NCLAT’s) order asking the NCLT Ahmedabad Bench to take a decision on ArcelorMittal’s bid by February 11. Now, the NCLT will be able to decide the fate of ArcelorMittal’s bid quickly. The court was of the opinion that the promoters of Essar Steel were acting through the operational creditors to delay the insolvency process. It said 571 days had passed since the insolvency process began for Essar, and it must not be delayed. The deadline for an insolvency process is 270 days. Operational creditors such as Indian Oil Corporation and the Gujarat government had moved court, claiming dues of Rs 3,500 crore and Rs 500 crore, respectively. In its order, the NCLAT had said only a representative of the operational creditors could be given the opportunity to raise any objections to ArcelorMittal’s resolution plan for Essar. On Monday, the NCLT, while reserving its order on the objections raised by operational creditors, asked all of them to give a written submission by February 13. If Essar went into liquidation, however, the operational creditors would get nothing. So, ArcelorMittal’s Rs 42,000-crore bid was the best option for them. The CoC’s counsel told the NCLT that they had tried to ensure that operational creditors would not get less than what they were entitled to during liquidation.
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SC ALLOWS NCLT AHMEDABAD TO DECIDE ESSAR STEEL INSOLVENCY CASE

The Supreme Court on Monday dismissed a plea by operational creditors of Essar Steel, including Indian Oil Corporation (IOC), which had sought a stay in insolvency proceedings against the debt-laden company. Accordingly, the matter will continue to be heard by the Ahmedabad branch of the National Company Law Tribunal (NCLT). Solicitor-General Tushar Mehta, appearing for IOC, told the court that it would need more time to argue before the NCLT Kamlaljeet Singh Ahluwalia, an operational creditor of Essar Steel, had moved the Supreme Court on 6 February challenging two orders of the National Company Law Appellate Tribunal (NCLAT) directing the Ahmedabad bench of the NCLT to pass an order in the insolvency case by 11 February. The plea had sought setting aside of the orders as it claims them to be contrary to the settled legal propositions and against the principles of natural justice. According to the petitioner, the NCLAT erred in passing the impugned orders and dictating the procedure to the NCLT in conducting a matter, which is contrary and beyond its scope of jurisdiction. The appellate authority, while exercising powers under Section 61 of the Insolvency and Bankruptcy Code, 2016, cannot assume supervisory jurisdiction over the adjudicating authorities and issue directions dictating the procedure to conduct the hearing of applications before the adjudicating authority, the petition said.
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BANKING BODY MAY AGAIN IMPLORE RBI TO DEFER PROVISIONING FOR IL&FS ARMS

The Indian Banks’ Association (IBA) may again approach the Reserve Bank of India (RBI) to defer provisioning for Infrastructure Leasing & Financial Service (IL&FS) group companies. This time around, IBA may apply only for 'Amber' companies of IL&FS after a meeting with the Secretary of the Ministry of Corporate Affairs (MCA) and new Uday Kotak-led board on January 22. Amber companies are those entities, which are unable to meet all their obligations (financial and operational), but can meet only operational payment obligation to senior secured financial creditors. Such entities are permitted to make payments necessary to maintain and preserve a going concern. Referring to IBA’s representation to RBI seeking temporary dispensation of asset classification requirements in relation to banks’ exposure to IL&FS group companies, MCA Secretary Injeti Srinivas told the new board of IL&FS and lenders of IL&FS that the same needs to be taken up once again. However, he added the same should be made with a full justification that the deferment of provisioning should be requested only for 'Amber' category companies, where banks are unable to enforce payments due to moratorium and the funds are available in the escrow account. IL&FS has total debt of Rs 89,393 crore as of date. Over 300 group entities are unable to service their debt. Rajnish Kumar, proposed that the special purpose vehicle of IL&FS, with adequate cash flow to meet payment obligations to secured creditors, should be excluded from this moratorium. Another concern was raised by PS Jayakumar, relating to prioritisation of claims among secured and unsecured creditors. He sought no change in priority claims of secured creditors. The progress report prepared by the new board of IL&FS, and filed by MCA with NCLT, mentioned the following challenges:

1) IL&FS has 301 group entities, of which 128 are located in offshore jurisdictions;
2) The remaining 174 companies are incorporated in the country, of which 71 companies have external debt; and
3) Since these companies are incorporated in an offshore destination, legal course of action will have to be pursued under the law of that land.

As per the report, the last date for receipt of expression of interest for IL&FS Securities Services and ISSL Securities & Trusteeship (ISTSL) was November 23, 2018 and 11 EoIs were shortlisted For renewable energy, the last date for submission of EoI was December 10, 2018 and 22 EoIs met the cut. For its domestic assets (roads; stadium; engineering, procurement, and construction (EPC); operation and maintenance (O&M) businesses the last date was January 8 and 32 EoIs qualified. The last day for receipt of bids for its education and Alternative Investment Fund businesses was January 11 and 11 EoIs qualified in both segment. Assets with an embedded debt of Rs 35,000 crore are being monetised and EoIs on an additional Rs 15,000 crore worth of assets are to be launched in the next 4-6 weeks, it stated.
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SEBI TO LOOK INTO SALE OF PLEDGED SHARES OF RELIANCE GROUP'S 3 LISTED FIRMS

Market regulator Sebi is looking into allegations and counter-allegations related to the sale of pledged shares of Anil Ambani-led Reliance Group's three listed firms by two lenders, senior officials said Monday. Reliance Group has accused L&T Finance and Edelweiss Group entities of illegal and motivated actions in invoking the pledged shares of Anil Ambani group firms and selling them in open market causing a steep fall in share values. L&T Finance and Edelweiss Group have refuted the allegations and have counter-alleged that Reliance Group failed to make timely payments, which they said necessitated sale of pledged shares. Officials said the regulator has asked exchanges to look into the trade details and seek clarifications from the concerned entities regarding open market sale of shares to ascertain whether any norms were breached in the process. The regulator will subsequently examine whether there was any violation of regulations relating to insider trading and disclosure norms, the officials said. Reliance Power has already written to Sebi to investigate the matter and impose restrain on entities that pressed huge sale orders significantly below the prevailing market price and and in-depth investigate the matter. Similar complaints are expected to be filed by Reliance Capital and Reliance Infrastructure as well, sources said. Reliance Group spokesperson said, As resolved by the boards of various group companies, we will take all legal steps necessary to protect and enhance the value of our stakeholders, including pursuing the matter with an appropriate regulator. In its letter to Sebi, Reliance Power has requested the regulator to issue a cease and desist directive to the concerned entities from engaging in market abuse, prohibiting them, from trading in the securities markets, which allegedly led to sharp plunge in the group's share price. It also asked Sebi to investigate the disruption of Reliance group shares that includes examination of the dealing room records including records of phone calls and SMS of all persons at the broking firms where the majority of the sale transactions took place, and the relevant fund flows.
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RELIANCE INSURANCE FILES FRESH IPO PAPERS; REMOVES EDELWEISS AS BANKER

Reliance General Insurance, part of Anil Ambani-led Reliance Group, has filed fresh papers with the Sebi to float an initial share-sale after the regulatory approval for its IPO lapsed in November, market sources said Monday. According to the sources, the company's IPO comprises fresh issue of shares worth Rs 200 crore, besides, an offer of sale of 79,489,821 shares by Reliance Capital. The company has removed Edelweiss as one of the lead merchant bankers to manage the IPO, said sources. The removal comes following the Reliance Group accusing Edelweiss Group entities of illegal and motivated actions in invoking the pledged shares of the group's three listed firms and selling them in open market causing a steep fall in share values. Further, it has appointed CLSA India and IndusInd Bank replacing UBS investment company and IDBI Capital. Also, it has roped in Yes Securities. Other merchant bankers--Motilal Oswal Investment Advisors, Credit Suisse Securities, Haitong Securities -- will continue to be associated with the company's IPO.
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SEBI PROPOSES CIRCUIT FILTERS FOR F&O SEGMENT TO CURB PRICE VOLATILITY

To check excessive price movements capital markets regulator Sebi Monday proposed a slew of measures including capping the maximum daily movement of up to 20 per cent for all stocks including that are part of the future and options (F&O) segment. There have been concerns that investors' wealth is getting wiped out in a single day by recent falls in stocks on which derivative products are available, as no price band are applicable on them. Besides, sharp plunge in the shares of several companies including Dewan Housing Finance and e-commerce player Infibeam have been noticed in recent times. According to Sebi, the examination of price movement of scrips, on which derivatives are available, during the last six months, revealed 40 scrips witnessed intra-day movement of over 20 per cent. Out of this, 29 stocks have seen intra-day movement between 20 per cent and 30 per cent. Derivatives markets or F&O segment reflect expectation of spot prices in the future and currently price bands or circuit filters are generally not applied on them. At present, there are over 200 stocks in F&O segment. To address the concerns arising out of significant price movements in scrips having presence in derivatives segment, Sebi came out with a consultation paper and sought comments from the public till February 20 in this regard. The final regulation will be out in place after taking into account suggestions of all stakeholders. The regulator has asked whether individual scrip wise price bands of 20 per cent either way be adopted for all scrips, including scrips on which derivatives are available, in the compulsory rolling settlement. Further, it suggested combination of dynamic and fixed price band or call auction mechanism. According to Sebi, the regulator asked whether the current framework for dynamic price band may be allowed to continue with the initial threshold set by the stock exchanges for flexing. This framework would be available up to a threshold (say 30 per cent intra-day movement in either direction). Upon reaching such threshold, it has been proposed to either fixed price band on the stock may be imposed or a call auction should be conducted for a fixed duration as per criteria to be prescribed relating to minimum trades, volume, etc. The price discovered in such call auction may be considered for continuous market. Also, it sought public view whether any measure may be required at this stage as the same may hamper free market and fair price discovery. Moreover, the regulator has also given benefits as well as challenges of all the three options suggested by it. Explaining the benefits of proposed daily price limits for stocks in derivative segment, Sebi said imposing such circuit filters may arrest abnormal movement of the price of the scrip beyond a certain limit. Besides, it may give some opportunity to listed firms and its promoters to assess the movement of the stock price and enable them to make market announcement, if any, to address market sentiments, which may restore the price to its normalcy. Sebi said that introducing call auction may ensure wider participation of investors thereby leading to better price discovery as compared to the current system of flexing of dynamic price bands which is based on limited number of trades.
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SEBI RELAXES NORMS FOR NON-RESIDENTS TO TRANSFER SHARES TO RELATIVES

Markets regulator Sebi Monday granted relaxation to non-residents such as NRI, PIOs, and foreign nationals from furnishing a copy of PAN card and allowed them to transfer equity shares held by them to their immediate relatives However, the relaxations are subject to certain conditions, Sebi said in a circular. Under Sebi's LODR (Listing Obligation and Disclosure Requirements) provisions, transferee as well as transferor is required to furnish a copy of their PAN (Permanent Account Number) card to the listed entity for registration of transfer of the securities. Many of the non-residents like Overseas Citizens of India (OCIs), Non Resident Indians (NRIs), Persons of Indian Origin (PIOs) and foreign nationals were facing difficulties in transferring the shares, as many of them do not posses the required PAN card. To address such difficulties, it has been decided to grant relaxation to the non-residents from furnishing PAN card details and allowing them to transfer equity shares held by them in the listed entities to their immediate relatives, Sebi said. However, the relaxation will only be available for transfers executed after January 1st, 2016 and, only for non-commercial transactions i.e transfer by way of gift among immediate relatives. Besides, the non-resident will be required to provide copy of an alternate valid document to ascertain identity as well as the non-resident status, the circular said.
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SEBI COMES OUT WITH FRAMEWORK FOR UTILISATION OF SECURITY DEPOSITS WITH CLEARING CORP

Capital markets watchdog Sebi Monday came out with a new framework for utilisation of financial security deposits available with clearing corporations, warehouse development and regulatory authority in order to rationalise such deposits. At present, on the same goods, security deposits are required to be maintained with both WDRA (warehouse development and regulatory authority) and clearing corporations, putting additional financial burden on warehouse operators. In order to rationalise financial security deposit (FSD) and, after consultation with WDRA and clearing corporations, Sebi in a circular said clearing corporations having commodity derivatives segment would need to adhere to the new norms laid by the regulator for utilisation of such deposits. The new framework will be effective from 30 days. Under the framework, the clearing corporations after the accreditation will immediately provide the details of WDRA registered warehouses accredited by them with full details of warehouseman registration, warehouse service provider (WSP) to WDRA. WDRA will in turn, share the details of security deposit received from these accredited warehouses to the respective clearing corporations. Further, clearing corporations will inform the changes, if any, with respect to these warehouses to enable WDRA to provide the required information. Moreover, WDRA will also inform clearing corporations of any hanges, if any, in the security deposit placed by such warehouses with WDRA. According to Sebi, the accredited WSP will be liable for any losses resulting from any action or inaction on its part or on the part of its warehouses that prevents the buyer or seller from exercising, in whole or in part, their rights. The clearing corporation will have to compensate the aggrieved clients for any such losses that have been appropriately established by debiting the FSD of WSP held with the clearing corporation, in accordance with its applicable rules. In case the FSD available at clearing corporation is not sufficient to compensate for the loss, clearing corporation will have to make part compensation with the FSD available with it and, the security deposit available with WDRA will be made available to such corporation within seven days of the release request from such corporation to WDRA, for settlement of the remaining claims. The settlement of security deposit by WDRA originates only after the stocks stored, if any, are disposed off by the holder. This arrangement is only for stocks stored in WDRA or clearing corporation accredited warehouses for the purpose of delivery on exchange platform. The discrepancy noted by any agency (clearing corporation or WDRA) will be brought to the notice of other agency irrespective of invoking the security deposits.
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CORPORATION BANK SWINGS INTO THE BLACK WITH RS 60.53-CR PROFIT IN Q3

Corporation Bank has swung into the black with a profit of Rs 60.53 crore in the December quarter 2018, as provisioning for bad loans saw a sharp decline, the lender said on Monday. The bank had posted a net loss of Rs 1,240.49 crore in October-December 2017-18. The total income of the lender came down to Rs 4,112.32 crore in the latest quarter as against Rs 4,841.37 crore in the same period of 2017-18, it said in a regulatory filing. The bank said its provisioning for non-performing assets (NPAs) or bad loans has been reduced to Rs 842.28 crore for the latest quarter, as against Rs 2,494.71 crore in the same period a year ago. However, the bank’s assets worsened, with gross NPAs growing to 17.36 per cent of gross advances as at December-end 2018, against 15.92 per cent by December 2017. In value terms, gross NPAs were at Rs 21,921.42 crore, as against Rs 21,817.96 crore earlier. Net NPAs surged to 11.47 per cent (Rs 13,521.22 crore) from 10.73 per cent (Rs 13,853.90 crore). The bank said it is maintaining higher provision in terms of NCLT (list 1 and 2 of RBI), and is holding a total provision of Rs 6,412.45 crore against outstanding amount of Rs 9,075.69 crore (or 70.66 per cent) on these accounts as on December 31, 2018. The provision coverage ratio of the bank as at December-end 2018 is 66.13 per cent, Corporation Bank said.
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STATE-RUN BANKS SPURN RISKY LENDING TO CONSERVE CAPITAL

The Reserve Bank of India (RBI), in its Monetary Policy last week, tweaked norms for risk-weights on bank loans to NBFCs in a bid to free up capital for lending But many public sector banks (PSBs) may well choose to shore up their capital ratios rather than grow their loan books. In the past one-and-a-half years, PSBs have done just that — consolidate their loan books and reduce their exposure to risky assets. Despite the Centre’s massive capital infusion of 88,000 crore into PSBs in FY18, these banks have since either shrunk their loan books or grown them only modestly. Importantly, they have reduced their risk-weighted assets (RWAs) by a faster pace (than decline in loans), implying they have been moving to safer and less risky loans assets. Between the September 2017 (before the mega bank recap) and December 2018 quarters, the RWAs for most PSBs fell 15-20 per cent. In the nine months ended December 2018 alone, RWAs fell 6-13 per cent for many PSBs. The RBI’s February 2018 circular on stressed assets had led to a steep rise in bad loans provisioning in the March 2018 quarter, eating into banks’ capital. Paring exposure to risky assets has eased up their capital. Numbers reveal that between the September 2017 and March 2018 quarters, the tier I capital ratio for weaker PSBs (placed under PCA) fell notably despite the massive capital infusion by the Centre and reduction in the banks’ RWAs. Banks such as IOB, Corporation Bank, Allahabad Bank, PNB and Andhra Bank were just about meeting their tier 1 capital ratio requirement of 7 per cent as of March 2018.
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KISHORE CHHABRIA MOVES DELHI HIGH COURT AGAINST DENA BANK

Liquor baron Kishore Chhabria has dragged Dena Bank to the Delhi High Court alleging the lender connived with an asset reconstruction company to transfer mortgaged land worth 72 crore though the land was disputed property. Dena Bank advanced credit facilities in 1971 to Vinedale Distilleries, a Chhabria-owned Hyderabad-based liquor company that sat on 64-acres of land. The Chhabrias dispute was with Aggarwal group. When the loan turned bad, the bank got hold of the land. The dispute between Chhabria's firm Sanman Distributors and Aggarwal group continued. In 2000, the bank filed recovery proceedings for the asset and subsequently claimed a one-time settlement in August last year before the debt recovery appellate tribunal for principal and interest worth 72 crore. Chhabrias contention is that Dena Bank transferred the disputed land to ANA ARC ex parte. The bank invited bids at a much lower price of 47 crore without the consent of the company and, thereafter, transferred it to ANA ARC, a Bengaluru-based asset reconstruction company at 52 crore, Chhabria's firm Sanman Distributors, claimed in its petition filed with the Delhi HC. Before the auction, we offered to pay the entire amount and requested to stop the e-auction which was done in haste. We are seeking a detailed investigation on the transaction that caused loss for Dena Bank and its shareholders, said Sanman Distributors in its writ petition. The liquor company also claimed the ARC has demanded 79 crore from Sanman for the 64-acre parcel as a settlement, higher than earlier amount.
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BANKRUPT RCOM ARM TO DEVELOP 132-ACRE LAND IN NAVI MUMBAI AS FINTECH CENTRE

Bankrupt Reliance Communications on Monday said it will develop a 132-acre land parcel on the outskirts of the city as a fintech centre. The 132-acre land parcel called Dhirubhai Ambani Knowledge City (DAKC) in the satellite city of Navi Mumbai used to serve as a corporate nerve centre for the company, which filed for insolvency earlier this month. In the past, chairman Anil Ambani had claimed that the plot had a development potential of Rs 25,000 crore. In a statement Monday, the company said its wholly-owned subsidiary Reliance Realty will be developing what it claimed as Maharashtra's first 'smart fintech centre'. It has received the go-ahead from the Maharashtra Industrial Development Corporation and the Department of Information Technology to develop the land under the state's fintech policy, the statement said. As per the fintech policy, the plot will have total saleable/leasable area of over 30 million square feet, it said, claiming that the space available is double the size of the Bandra Kurla Complex business district in the island city. It said there is a growing demand from the fintech, banking, financial services, insurance, NBFC, information technology services and knowledge sectors over the next 20 years and major infrastructure development has already been initiated in the regard.
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AMRAPALI 5-STAR HOTEL UNSOLD IN AUCTION, SC SUSPECTS CARTELISATION

Taking strong exception to two prime properties including a five-star hotel of the embattled Amrapali Group finding no bidders the Supreme Court on Monday said that prima facie it looks like cartelisation is at work and sought to know whether banks are part of cartels. The top court said that it is shocking and disturbing that bankers are not coming forward to finance the properties. The top court said that banks are ready to finance projects for National Building Construction Corporation (NBCC) but they are not coming forward to finance the Amrapali properties being sold by Debt Recovery Tribunal (DRT) in an auction. A five-star hotel 'Amrapali Holiday Inn Tech Park' constructed in Greater Noida and prime land in Vrindavan in Uttar Pradesh were put up for auction on January 31 by the DRT but no bidder had come forward to bid. The court appointed forensic auditor Pawan Kumar Aggarwal told the bench that he identified 5,229 unsold flats from where around Rs 6,000 crore could be raised by selling them.
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GOVERNMENT'S NEW SCHEMES TO FOCUS ON PROMOTING EXPORTS OF ELECTRONICS: IT SECRETARY

New schemes introduced by the government will focus not only on manufacturing of electronics in India, but also positioning the country as an export hub a top government official said Monday. Ajay Prakash Sawhney said there has been a widening and deepening of the electronics manufacturing ecosystem in the country. He added that apart from various brands coming to the country to set up manufacturing base, their supply chain partners have also started participating. The official said many multi-national companies are already using their Indian outfits for design and R&D of new products and services, and with electronics manufacturing ecosystem now growing strongly, there is a tremendous opportunity.
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TELECOM REGULATOR MAY SUGGEST NEW SPECTRUM BANDS FOR 5G SERVICES

The Telecom Regulatory Authority of India (Trai) could come out with the pricing and quantum of newer spectrum bands including millimeter wavelength (mmWave) range for the fifth-generation or 5G wireless technology rollout if the government seeks its view, a top official told. Government can ask for recommendations on new bands including millimeter wavelength (mmWave) band, and the telecom department can send us a reference, Trai chairman Ram Sewak Sharma said, adding that the authority was in a view of opening up of all kinds of bands for newer technology. The mmWave band ranging from 30 Gigahertz (Ghz) to 300 Ghz, has seen heightened traction in the US market, with top telecom carriers— AT&T and Verizon launching commercial 5G services. The Narendra Modi-led government has already established a high-level 5G Forum under the Indo-American engineer and Stanford University professor AJ Paulraj which has already recommended newer bands to aid 5G rollout. It has suggested mmWave band for the 5G technology and said that 140 Mhz spectrum for backhaul usage should be allowed in addition to opening up of new bands for indoor access in line with practices worldwide. The mmWave airwaves are being leveraged for streaming high-resolution video applications and multimedia content and services indoors— and could be of use cases in industry verticals such as entertainment, education, and healthcare. Sharma added that the regulator has though already suggested Gigahertz range that included E and V bands which were a part of mmWave frequency. The bands— E (71-76 GHz and 81-86 Ghz) and V (57-64 GHz) are widely used as backhaul, which means connecting the core of a telecom network to nodes and then onto towers, to transmit data.
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KUMAR MANGALAM BIRLA SAYS RS 25K CRORE ISSUE TO GIVE VODA IDEA FUNDS FOR 3-4 YEARS

Vodafone Idea will have enough capital after the completion of the forthcoming Rs 25,000-crore rights issue and will not need to raise equity for the next three or four years, chairman Kumar Mangalam Birla has said. The problems of the telecom sector and prospects of other Aditya Birla Group companies, Birla said the telecom company intends to be a pure-play mobility firm unlike rival Reliance Jio Infocomm, which has branched out to become a broadband and content provider. He denied the telco was underinvested, and asserted that both the promoters — AB Group and Vodafone Plc — were committed to investing funds. Birla, however, acknowledged that there were concerns in the market on whether the Rs 25,000-crore investment will be enough to help the telco survive the disruptive price war in the sector. It is not an entity to be scoffed at, Birla said about Voda Idea. Will it withstand Jio is a different question, but the fact that it is underinvested is not true because together the investment has been substantial. Birla declared his intention to focus on consolidating the gains of the past few years in cement and non-ferrous metals, especially after the acquisition of the cement businesses of Jaypee Group and Century. He said the focus of the financial services business is on quality assets, not just blind growth. He lauded the government for the insolvency and bankruptcy legislation, which he said is a deep reform. Who would have thought even three or five years ago that a promoter could actually lose his assets. I think a lot of promoters treated debt as equity and did not find the need to actually repay within a specified period, he said.
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AIRTEL REMAINS FASTEST NETWORK DURING Q3-Q4, JIO TOPS 4G AVAILABILITY: OOKLA

Sunil Mittal-driven Bharti Airtel remains the fastest network during Q3-Q4, 2018 in India with 4G LTE speed of 11.23 Mbps, followed by Vodafone with 9.13 Mbps speed and Reliance Jio and Idea Cellular at third and fourth position respectively, a report by Ookla said on Tuesday. We are delighted to be once again rated as the fastest mobile network even as our network availability crosses 99%, said Randeep Sekhon. When it comes to 4G availability, Ookla’s findings revealed that Reliance Jio ranked first with 98.8% 4G availability across the country, followed by Airtel at 90.0%, Vodafone and Idea with 84.6% and 82.8% respectively, across 15 largest cities of India. On general availability front, Jio’s general availability was recorded as best best, with users finding service in 99.3% of locations. Airtel was second at 99.1%, followed closely by Vodafone at 99.0% and Idea at 98.9%. General availability is the percentage of an operator’s known locations where a device has access to any kind of service including roaming. Airtel showed general availability of 99% or higher in all 15 cities where it was tested. Reliance Jio’s lowest score was recorded in Jaipur at 98.9%. Vodafone’s only score below 99% was in Kolkata at 97.9%. Idea, on the other hand, showed general availability scores below 99% in six cities: Hyderabad (98.8%), Delhi (98.3%), Jaipur (98.0%), Kolkata (97.9%), Visakhapatnam (97.9%) and Indore (96.6%). Ultimately, the expansion of 4G availability in India is a win for all mobile customers regardless of their operator. We are excited to see the growth in the Indian mobile market and are eager to see how coverage continues to expand in the coming year, said Doug Suttles, co-founder and general manager at Ookla.
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PAYTM LEADS IN UPI USAGE, GOOGLE PAY & PHONEPE FOLLOW

s UPI gains further ground, the field is turning competitive – Paytm clocked more than 221 million transactions, while Google Pay and PhonePe were at about 220 million each, said the people cited above. PhonePe, however, told all payment modes it had 225 million transactions worth Rs 30,000 crore in January. While the National Payments Corporation of India (NPCI) issues overall UPI transaction numbers. Overall, UPI clocked around 672 million transactions last month, up from 620 million in December. Google Pay did not provide specific numbers and Paytm didn’t respond to queries. Even as the number of transactions has jumped, peer-to-peer (P2P) transactions still dominate. As per internal calculations, the total number of merchant transactions is not more than 100-120 million per month, said a senior banker on condition of anonymity. However, merchant payments are growing as non-bank entities are pushing those transactions. Even the number of UPI payments for cab rides is recording almost 2 million per month, growing at a considerable pace. The government-promoted Bharat Interface for Money (BHIM) has been losing steam over the past few months as more transactions are flowing through private non-banking applications. As per the latest numbers shared by NPCI, BHIM reported 14 million transactions in January, down from 17 million in December 2018. A closer look at the number reveals that the amount of funds settled per BHIM transaction is still the highest in the industry, which means that people are using the application because they choose to and not because of incentives, which have dwindled. In January, the average amount per transaction on BHIM stood at Rs 4,436. It’s been hovering in that range over the past three months. The average ticket size of a UPI transaction is about Rs 1,600.
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OVERESTIMATING REVENUE FLOWS PUSHING INDIA'S BUDGET GAP WIDER

India’s budgets show the government’s been fixing unrealistic revenue targets and in the process setting itself up for falling short of fiscal deficit goals. While the government has estimated Rs 19.8 lakh crore ($280 billion) as revenue receipts for the year starting April, history shows it’s missed income targets in each of the past five fiscal years. The risk of trailing behind goals is a budget deficit that could be wider than the 3.4 per cent it estimates for both the current financial year ending March as well as the next. Overestimating the income it expects to receive from taxes, asset sales and other sources means increasing the need to borrow more to offset the revenue shortfall or a spending cut India is set to miss its budget deficit targets for a second straight year, seen as credit negative by ratings companies. While receipts in the 12 months through March 2018 were 4.7 per cent lower than initially projected, the government is already lagging behind on its revenue collections target in the current financial year. It budgeted Rs 17.3 lakh crore, but has mustered only Rs 10.8 lakh crore, or 63 per cent of the target, in first nine months of the year. The government is betting it will get a bump from asset sales and national sales tax in the final months of the fiscal year to help meet its goals. But economists are skeptical.
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60% COMPANIES CONSIDER WORKPLACE CULTURE TOP BARRIER TO DIGITAL TRANSFORMATION: KPMG SURVEY

Are companies equipped to solve the artificial intelligence (AI) and digital conundrum? Perhaps not. Less than half the human resources (HR) executives said in a KPMG survey that their companies had a digital work plan in place at the enterprise or HR level, although more than two-thirds agreed that HR had undergone or was undergoing a digital transformation. The Indian segment of KPMG International’s latest global ‘Future of HR’ survey, which has responses from 90 HR executives, indicates that HR leaders in India show better acknowledgement and recognition of the need for change in HR compared to their global counterparts. Business landscapes are changing rapidly. Most business and HR leaders who participated in the survey have recognised a pressing need for both a workforce and digital transformation and are keen on bringing in this change by making increased investment in newer disruptive technologies like AI and enhanced process automations, in the future, said Vishalli Dongrie, partner and head, People and Change, KPMG in India.
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XIAOMI LEADS INDIA SMARTPHONE MARKET IN 2018, SAMSUNG SECOND

Chinese brand Xiaomi with 28.9 per cent market share led the Indian smartphone market in 2018, followed by South Korean brand Samsung at 22.4 per cent and Vivo at 10 per cent, an International Data Corporation (IDC) report said on Tuesday. The premium end of the market outgrew all other price segments in 2018 with 43.9 per cent Year-on-Year (YoY) growth - OnePlus emerged as the leader in the price segment range $500-$700 and in the super premium segment and Samsung surpassed Apple for the top position with its Galaxy S9 series, said Upasana Joshi, Associate Research Manager, Client Devices, IDC India. According to the report, the online-focused brands drove the online channel share to an all-time high of 38.4 per cent in 2018 and a whopping 42.2 per cent in 2018 Q4 whereas offline channels had a rather muted year with a modest 6.7 per cent annual growth and a 5 per cent sequential growth in Q4. Shipments form Xiaomi, Asus, OnePlus and more grew online channels resulted by 47.3 per cent YoY in Q4, but the offline channel was unable to keep pace with the deep discounts and go-to-market initiatives from the e-tailers almost throughout the year, Joshi added. The overall smartphone average selling price remained flat in 2018 at $158, with high shipments in the mass segment of $100-$200 -- which accounted for more than half of the smartphone market in India. On the other hand, the feature phone market, primarily driven by Jio Phones -- which makes up 56 per cent of the total mobile phone market clocked 181.3 million-unit shipments in 2018, with 10.6 per cent YoY growth, the report said.
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PARLIAMENTARY PANEL SUMMONS TWITTER CEO TO APPEAR BEFORE IT ON FEBRUARY 25

The Parliamentary panel on information technology Monday summoned the CEO of microblogging site Twitter to appear before it on February 25, according to the committee’s chairman. Sources said the panel members took a serious note about the Twitter head not appearing before it on Monday. The committee’s chairman and BJP MP Anurag Thakur said Twitter head and other representatives have been summoned to appear before it on February 25.
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TO PROTECT INDEPENDENT JOURNALISM, AUSTRALIA’S WATCHDOG LOOKS TO CURB POWER OF GOOGLE, FACEBOOK

The head of Australia’s competition watchdog warned on Monday that tough new regulation of tech giants like Google and Facebook was needed to protect the future of independent journalism Rod Sims, said the market power wielded by Google and Facebook has had a devastating impact on Australian news media. While the number of journalists employed by Australian newspapers fell 20 per cent from 2014 to 2017 as print advertising revenues dwindled, Sims said, Google and Facebook between them captured nearly 70 per cent of all online advertising spend. This shift in advertising revenue online, and to digital platforms, has reduced the ability of media businesses to fund news and journalism, Sims said. We cannot simply leave the production of news and journalism to market forces, added Sims, whose agency has been carrying out a lengthy probe of the impact of digital platforms on the news industry in Australia. Virtually no media regulation applies to digital platforms and this contributes to regulatory disparity between media sectors that would appear to provide the digital platforms with an unfair advantage, he said.




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CS Meetesh Shiroya

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