CORPORATE UPDATES 18.03.2019

NO DILUTION ON FEB 12 CIRCULAR OVER STRESSED ASSETS: RBI

The Reserve Bank of India Saturday maintained that there is no dilution in its stand with regard to February 12 circular on stressed assets recognition and resolution. It is reiterated that the Reserve Bank maintains its stand on all aspects of the Framework as has been consistently articulated in its communications, including the clarification given during the post-monetary policy press conference on February 7, 2019, the central bank said in a statement. The circular directed lenders to refer any loan account over Rs 2,000 crore under the Insolvency and Bankruptcy Code (IBC) if it is not resolved within 180 days of default. It also underscored IBC's status as the cornerstone of the bad loan resolution framework, scrapping all previous mechanisms. The circular imposed a one-day default rule. Banks have to treat a company as a defaulter even if it misses repayment schedule by a day.

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NCLT DISMISSES STERLING BIOTECH’S SETTLEMENT PLAN APPROVED BY FINANCIAL CREDITORS AND PROPOSED BY SANDESARA BROTHERS

The National Company Law Tribunal (NCLT) has said that the financial creditors accepting the settlement proposal from the Sandesara Group (parent company of Sterling Biotech) creates suspicion even as the company’s promoters have been absconding. The Mumbai bench of the National Company Law Tribunal (NCLT) questioning the company’s lenders, led by Andhra Bank said that how the proposal submitted by the Sandesara Group is accepted by the financial creditors creates suspicion when the promoter/director is absconder and ED/CBI is searching for them. The NCLT had sent notices to the Ministry of Corporate Affairs, Income Tax office, Enforcement Directorate (ED), SEBI, CBI and RBI for their representations before passing an order. Sterling Biotech’s lenders had previously agreed to a one-time settlement plan (OTS) made under Section 12A of the Insolvency and Bankruptcy Code (IBC), 2016.

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‘COMPANY SECRETARIES TO BE IN GREAT DEMAND’

The rise in demand for qualified company secretaries will continue for the next four-five years, according to Chethan Nayak. Nayak said a company with a capital of more than ₹5 crore should have a full-time Company Secretary. As of now, such companies outnumber qualified Company Secretaries. Stating that this will lead to rise in the demand for qualified company secretaries, he said such a demand will continue for the next four-five years. He said the students who have completed the pre-university course and graduation can join the Company Secretary course to grab the opportunity. Qualified Company Secretaries can also practise as independent professionals, providing services in corporate matters, GST, Customs etc.

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COMPANY LAW TRIBUNAL BENCH TO BE SET UP IN INDORE

A bench of National Company Law Tribunal (NCLT) will be set up in Indore and issues related to companies in Indore and nearby districts will be heard instead of Ahmedabad bench, which held the jurisdiction over north western region of India. The ministry of corporate affairs, through its regional directors and registrar of companies, is searching for an appropriate place for the bench, which will require a courtroom, judge’s chambers and record room etc. At present, two locations – Indore Development Authority’s Scheme 140 near Pipliyahana and CGO Complex near income tax office- are considered being for setting up of the new bench. Keeping in mind all the requirements, the area needed for a bench of NCLT is approximately 20,000 square feet. The setting up of the bench will mainly be monitored by ministry of corporate affairs, said advocate Vijayesh Atre, who had moved a petition before the high court seeking this relief.

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BSNL TO APPROACH NCLT TO RECOVER RS 700 CRORE FROM ANIL AMBANI'S RCOM

State-owned telecom firm BSNL will approach National Company Law Tribunal this week to recover dues of about Rs 700 crore from Reliance Communications, according to official sources. It had moved the appellate tribunal, seeking directions to the 37 lenders led by SBI to release Rs 260 crore directly to Ericsson. However, lenders of RCom have opposed the plea, saying that it will lead to outgo of public money for settling payment of a private party. BSNL has already invoked bank guarantee of around Rs 100 crore submitted by RCom for default on payments. Decision was taken on January 4 by BSNL Chairman and Managing Director Anupam Shrivastava to start legal proceedings against RCom for recovery of dues of around Rs 700 crore, the sources told PTI.

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RELIANCE COMMUNICATIONS FACES BHARTI INFRATEL, BSNL DUES CASES

Reliance Communications (RCom), which must pay Rs 453 crore to Ericsson by Tuesday to save chairman Anil Ambani from a Supreme Court-ordered jail term, is facing more legal woes over pending payment An arbitral tribunal has asked the telecom operator and a subsidiary to furnish bank guarantees totalling Rs 16.43 crore to Bharti Infratel on a dispute over terminating contracts with the tower firm in 11 telecom zones. In a separate development, Bharat Sanchar Nigam is set to approach the bankruptcy court to recover some Rs 700 crore in dues. A government official said the arrears were towards interconnect charges — over calls made from RCom’s network to phones on BSNL’s network. The company, which is sitting on about Rs 46,000 crore debt, had earlier defaulted on a Rs 21-crore spectrum payment to the telecom department. Another Rs 281 crore is due to the government next month.

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ESSAR STEEL LENDERS MULL OPTIONS AFTER NCLAT ADVICE

Creditors to Essar Steel are weighing three options, one of which might be put before an appellate bankruptcy court on Monday, as they seek to draw to a close the insolvency proceedings that have dragged on for about two years. The options include asking ArcelorMittal to pay up the whole amount and keep the contentious payments to operational creditors in an escrow account or just comply with the suggestions made by the National Company Law Appellate Tribunal (NCLAT) in the last hearing on Friday. The third option is to stick to our stand that this is the agreed resolution and fight on, assuming further delays. All these options are being debated but there is no consensus as yet, said a banker with knowledge of the internal discussions. Lenders, especially those owned by the state, are under pressure to accept any solution suggested by NCLAT because they are desperate to close the long-pending case before the fiscal year ends. Meeting that deadline will allow them to write back against earlier provisions and escape higher ageingrelated provisions for the account. So, there is an outside chance that operational creditors may get a higher share of their dues than what now stands on paper.

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PUNJ LLOYD’S CLAIM AGAINST ONGC DISMISSED

An arbitration tribunal rejected a Rs 1,320 crores claim filed by the engineering, procurement and construction (EPC) contractor Punj Lloyd against Oil & Natural Gas Corporation (ONGC) and also the latter’s counterclaim against Punj Lloyd for Rs 1,153 crore for loss of production due to delay. Punj Lloyd had approached the arbitration tribunal after ONGC refused to pay the company the agreed amount due to alleged delay in the execution of the project. The company had claimed that ONGC has illegally, unreasonably and arbitrarily refused to pay all amounts or compensate the Punj Lloyd for changes directed by the respondent to the ‘Concept Design’ initially proposed by the ONGC in its bid documents. ONGC, on its part, argued that as per the contract, Punj Lloyd was given 16 months to complete the contract but instead it took 41 months. ONGC also argued that in a bid document, four new well platforms were to be designed for carrying the weight of drilling rig of 800 tonnes.

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ASSET MONETISATION: IL&FS TO RECEIVE FIRST SET OF BIDS UNDER ASSET MONETISATION PROCESS ON MAR 17

Cash-strapped IL&FS Group will receive first set of bids under asset monetisation process on Monday as part of resolution process, according to sources. The company’s board will later consider bids for Rs 8,000 crore renewable energy business that was put on the block in November 2018, the sources said. This will be the first set of bids that will be opened under asset monetisation process as part of resolution process by government-appointed and Uday Kotak-led new board, they added. The group, which is sitting on the debt of about Rs 94,000 crore, had decided to sell assets in various verticals, including roads, education, renewable energy, and broking in November last year. According to sources, nearly two dozen firms had participated in the expression of interest sought by the company that ended on December 10, 2018. Several companies, sources said, have completed their due diligence of the underlying assets. However, the completion of entire process and shortlisting of the final bidder will take a few weeks as multiple processes are involved.

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SOLO BID FROM JSW STEEL PROMPTS ACCIL LENDERS TO EXTEND DEADLINE

JSW Steel Ltd has emerged as the sole bidder for Asian Colour Coated Ispat Ltd (ACCIL), forcing the lenders to consider more steps to garner a robust response for selling the assets of the bankrupt downstream steel company. Sajjan Jindal-led JSW is the only company to have submitted a resolution plan for ACCIL, said two people familiar with the matter. Bidders had until 8 March to submit their offers. The committee of creditors (CoC) of ACCIL is considering extending the deadline or starting a second round so as to invite more bids, a member of the CoC and one of the two people cited above said. JSW is believed to have placed a bid in the ₹800-1,000 crore range, the second person said. ACCIL has outstanding debt of more than ₹5,000 crore. We’re disappointed with the number of bidders and the bid amount, the second person said. Banks are hoping to recover at least half of the outstanding dues through the NCLT (National Company Law Tribunal) process. The CoC will take a decision soon on what the next step shall be. ArcelorMittal is likely to show interest in ACCIL if its acquisition of Essar Steel goes through, the first person said. NCLT Ahmedabad has approved ArcelorMittal’s bid for Essar Steel. This is currently being challenged by the erstwhile promoters of Essar Steel in higher courts. JM Financial Asset Reconstruction Co. Ltd, which had submitted an expression of interest for ACCIL initially, did not submit a final bid either.

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A DEBATE REIGNITED - WHETHER ‘INTEREST’ ON DELAYED PAYMENT CONSTITUTES ‘DEBT’ FOR IBC?

The National Company Law Tribunal (NCLT) (Kolkata Bench) admitted Eastern Coalfields Ltd. to Corporate Insolvency Resolution Process (CIRP) for default in the payment of interest (Gulf Oil Lubricants India Ltd. v. Eastern Coalfields Ltd.). The order has reignited the debate on whether interest on delayed payment and default in respect thereof, constitutes admitted debt enabling a creditor to approach NCLT? Under the erstwhile Companies Act, winding up applications could be made on account of inability to pay debts. The Andhra Pradesh High Court interpreted inability to pay debts in Reliance Infocomm Limited v. Sheetal Refineries Private Limited to mean a situation where a company is commercially insolvent, i.e. the existing and provable assets would be insufficient to meet the existing liabilities. The Company Court could always hold that it was not ‘just and equitable’ to order winding up of an otherwise solvent corporate entity. The IBC takes away this discretion; CIRP would be initiated the moment default in respect of a debt is demonstrated.

 i) ‘Debt’ should be ascertained

Under the Companies Act, ‘debt’ referred to an ascertained and definite amount ‘due’, and not a claim requiring assessment before it became due and payable. Under Section 433(e), debt must be determined, or be a definite sum of money, payable immediately or at a future date. A Company Court, which follows a summary procedure, did not decide bona fide disputes requiring detailed investigations. Section 3(11) of IBC defines debt to mean a liability or obligation in respect of a claim which is due from any person, while Section 3(6) defines claim and Section 5(21) defines operational debt. In the context of an operational debt, NCLT has interpreted debt to mean an ascertainable claim recoverable in the eyes of law.

 ii) ‘Debt’ should not be disputed

Under Section 8(2)(a), a Corporate Debtor can reply to the demand notice highlighting the existence of a dispute before the demand notice is issued by the Operational Creditor, thereby avoiding CIRP. Section 5(6) of IBC defines a dispute in inclusive terms relating to the

(a) the existence of the amount of debt;

(b) the quality of goods or service; or

(c) the breach of a representation or warranty; the dispute should not be a sham, but must exist and be clearly discernible from previous conduct; the dispute should be a plausible contention requiring further investigation and not be a patently feeble legal argument or an assertion of facts unsupported by evidence.

 iii) Interest as ‘Debt’?

‘Debt’ may include not only the principal amount, but also the interest due thereon. This is clearly the case where a contract specifically provides for payment of interest for delayed payment of money or where a court/tribunal/arbitrator has decreed the payment of interest. However, the position is not very clear when it comes to demand of interest without a contractual clause. When the claim arises out of the supply of goods or services, and is made on the basis of purchase orders (without any written contract between the parties), the invoice issued by the supplier may stipulate payment of interest at a certain rate beyond the credit period. Even though the invoice or the bill is not signed by the receiver, would acceptance of the goods/services supplied pursuant to the invoice, result in those arising out of a concluded contract?

It is well understood that a contract need not necessarily be in writing and its terms can arise out of mutual understanding. Ordinarily speaking, the proof of such contract having come into existence and its terms, would require evidence to be adduced. However, for purposes of proceedings under Order 37 CPC, the Bombay High Court in Jatin Koticha v. VFC Industries Pvt. Ltd. and the Madras High Court in Olive Tree Trading Pvt. Ltd. v. F.lli De Cecco Di Filipro – FAra S. Martino SPA, have held that acceptance of goods/services pursuant to an invoice without demur, and despite invoices not signed by both parties, would make the suit maintainable as a summary suit as the invoices must be treated as a written contract. Regulation 7(b)(ii) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 enables the debt to be demonstrated through an invoice. One may argue that there is no reason not to read the invoice as a whole and restrict the assent of the receiver of goods/services only to the principal amount but not to also pertain to the stipulation for interest; the failure of the receiver of goods/ services to dispute the stipulation of interest either at the time of placing an order, or soon after receiving the goods/services, should be construed in favour of the supplier. Some courts held that non-payment of interest will amount to an inability to pay debt and therefore, afford a ground for a winding-up petition to be instituted these judgments primarily sought to avoid the multiplicity of proceedings that would inevitably result in case a creditor was required to institute separate proceedings for claiming interest while the principal amount was admitted/paid. However, certain other cases held that winding up proceedings do not lie to recover debt, and the Company Court cannot be used as a forum by the creditor for establishing a claim of interest. In the first line of cases are the Punjab & Haryana High Court judgment in Stephen Chemicals Ltd. v. Innosearch Limited and the Madras High Court decisions in Tube Investments of India Limited v. Rim and Accessories Private Ltd. and Rashid Leathers (P) Ltd. v. Superfine Skin Traders. The Delhi High Court, in Devendra Kumar Jain v. Polar Forgings and Tools Ltd., held that even in absence of an agreement between the parties as to the rate of interest, the Company Court can determine the reasonable rate of interest, and to avoid multiplicity of proceedings, also calculate its quantum. Some of the judgments, taking a contrary view are Multimetals Ltd. v. Suryatronics Private Ltd., Gangadhar Narasinghdaj Agarwal v. Timble Private Limited and Uni-Systems (P) Ltd. Stephan Chemicals Ltd. and Kitply Industries Ltd. v. Harinarain and Sons (P) Ltd. These judgments reason that a company can be wound up only when it is proved that the debt claimed is definite and undisputed. Section 61(2)(a) of the Sales of Goods Act as also provisions of the Interest Act confer discretion to civil court to award interest, and that too in a suit for recovery of money or damage, which winding up proceedings are not. The Karnataka High Court, in Jyothi Limited v. Boving Fouress Limited, attempted to synthesize the law. The Court held a credit bill or invoice to be a unilateral demand by the supplier and interest could be awarded on its terms only if it was supported by an agreement or promise to pay interest by the receiver. Such agreement, in turn, could be established with reference to correspondence, by counter-signing of the Bill by the purchaser, or by acceptance by the purchaser of the term in the Bill relating to interest. The Court held that in absence of a contractual or legal liability, mere omission to deny a demand made in a notice will neither create a liability, nor act as an estoppel for subsequent denial by the company. The Supreme Court, in Vijay Industries v. NATL Technologies Limited, relied upon the provisions for payment of interest in the Payment of Interest Act and the need to avoid multiplicity of proceedings to differentiate between two situations: one where the amount of debt was not definite or ascertainable because of bonafide dispute, and the other where though the principal amount stood admitted, but a question arose as to whether any agreement had been entered into for payment or the rate of interest. In the latter case, the Court held that the application for winding up cannot be dismissed and even awarded interest at a rate on its discretion. However, in Vijay Industries (supra), the Supreme Court did not specifically examine that very often, the conduct of parties is quite contrary to the terms of the purchase order. Moreover, the provisions for interest (under the Sale of Goods Act or Payment of Interest Act) are relied upon in proceedings for recovery, which a winding up petition is not, and the defense of counterclaim or set off are also not available to a corporate entity in such proceedings. Further, in Vijay Industries (supra), the purchaser having put a countersignature at the bottom of every invoice is also a very relevant fact – this signified that the invoice, containing the stipulation of interest, was not a unilateral document but constituted a binding contract between the parties. In M/s Wanbury Ltd. v. M/s Panacea Biotech Ltd., the NCLT (Chandigarh) found the interest mentioned in the invoices to be a unilateral act of the applicant and rejected the claim of interest. The Tribunal held that it was never the intention of IBC that the Tribunal should determine the rate of interest. In Swastik Enterprises v. Gammon India Limited, the NCLT (Mumbai) observed that the charging of interest ought to be an actionable claim enforceable under law, which it would be, provided it was supported by cogent admissible evidence, that is, it was properly documented and agreed upon. The Bench held that it was necessary for the rate of interest to also have been agreed upon between the parties. The Tribunal held mere filing of a calculation sheet of interest, that too a computer-generated statement, to be a self-serving document; it also observed that the operational creditor ought to produce its ledger account showing accumulation of interest, inclusion of such accrued interest in its income in the balance sheet for that year, and offering such income (on account of accrued interest) to tax. Recently, the NCLT (Kolkata Bench), in its decision dated 19.12.2018, found that the Corporate Debtor has defaulted in payment of interest which interest constituted ‘debt’ for IBC. The Bench found that the invoices clearly carried a stipulation of payment of interest @18% on overdue payment, and each invoice bore the signature of the authorized representative of the corporate debtor. Term No. 2 of the General Terms & Conditions of the demand letter also provided for interest @18% per annum on overdue/delayed payment. In these facts, the Tribunal found that the term to pay interest was accepted by the corporate debtor and non-payment of interest constituted default in payment of admitted debt, triggering CIRP. There continues to be some ambiguity on whether interest, which does not flow from a written contract, would form part of a debt. The IBC provides an expedited mechanism for resolution of corporate delinquency; the NCLT has not been envisaged as a body to enter into a detailed examination of evidence. In terms of this architecture, the jurisdiction to initiate CIRP under the IBC has been limited to payment of undisputed/admitted amounts. At the same time, the utter inequity in not considering a claim for interest as part of the admitted debt, clearly puts the supplier/provider of the goods/services into great difficulty. Of late, the Supreme Court has clearly expressed an intention to award interest on equitable grounds. In Dushyant Dalal v. SEBI, the Supreme Court has held the Payment of Interest Act, 1978 to enable Tribunals to award interest from the date on which the cause of action arose till the date of commencement of proceedings for recovery of such interest in equity. One may argue that it is unfair to restrict such award of equitable interest only to public laws/bodies, and not extend it to contractual matters. Several questions, waiting for a categorical answer, still remain – If the payment of principal was wrongly withheld, never disputed and then paid (for whatever reason), whether interest for delayed payment ought to be awarded? Why must the supplier be made to avail alternative remedies for its claim of interest in such matters and considering the delays that plague the regular judicial process, add to their numbers? One hopes that the issue ignited by the Kolkata Bench of the NCLT in its decision dated 19.12.2018 which is now engaging the attention of the NCLAT, is exhaustively debated and authoritatively settled.

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ESSAR: OUR REPUTATION IS AT STAKE, SAYS NCLAT WHILE HEARING APPEAL AGAINST ARCELORMITTAL'S RESOLUTION PLAN

Our reputation is at stake because of this case. It has been more than 500 days (since the insolvency proceeding began), Chairperson Justice SJ Mukhopadhaya of the NCLAT exclaimed while hearing a batch of appeals moved against the approval of ArcelorMittal’s resolution plan for Essar Steel. We are going to hear the case, he added as he laid down certain broad parameters such as equitable distribution of the money, maximization of Essar’s assets and payment of statutory dues etc, on which ArcelorMittal’s Rs. 42,000 crore resolution plan would be tested. A two-member Bench headed by Justice Mukhopadhaya has, therefore, directed ArcelorMittal to prepare a chart suggesting an equitable distribution of the money promised in the resolution plan among all the creditors of Essar Steel. Standard Chartered Bank, has challenged that March 8 order of the National Company Law Tribunal Ahmedabad Bench approving ArcelorMittal’s resolution plan for Essar Steel, on the ground that the approval process adopted by the Committee of Creditors was illegal. Appearing for Standard Chartered Bank, Senior Advocate Kapil Sibal contended that the CoC lead by the State Bank of India formed a ‘core committee’ which did not consult it while approving the resolution plan. He further submitted that as opposed to other financial creditors of Essar getting as much as 92% of their claim, Standard Chartered was merely offered 1.7% which amounts to Rs 60.71 crore. The total amount due to Standard Chartered was nearly 3,400 crore. Had there been a pro rata distribution, Standard Chartered would have received 85.6%, Sibal said. It was also alleged that ArcelorMittal has reduced its proposal of payment of Rs 42,000 upfront amount to Rs 39,500. Appearing for ArcelorMittal, Senior Advocate Harish Salve stated, How the operational creditors divide it amongst themselves, I do not know. It’s between the CoC and the creditors. I have given everything to the CoC. The Appellate Tribunal was also informed that apart from the upfront investment of Rs 42,000, ArcelorMittal has also made an additional investment to meet the requirement of Essar’s employees, small operational creditors and working capital infusion to run the plant. We have invested Rs 196 crore to clear dues of up to Rs 1 crore owed to small unsecured operational creditors; Rs 18 crore was spent on workmen and employees of Essar. After hearing Standard Chartered and ArcelorMittal, the Court asked the CoC to consider cutting 10% of its share for a more equitable resolution plan. Either you exercise your power, or we will, the Appellate Tribunal said as it reiterated that a resolution plan which is discriminatory towards any creditor is liable to be set aside. Meanwhile, the Appellate Tribunal also heard submissions made by the erstwhile Directors of Essar Steel, Prashant Ruia, Dilip Oommen, and Rajiv Bhatnagar, against the approval of ArcelorMittal’s resolution plan. Senior Advocate Mihir Thakore stated that the Directors did not get a copy of the resolution plan while it was being considered by the CoC in its meetings. Stating that the resolution plan has already been approved and the Directors should have objected at the relevant time, Justice Mukhopadhaya said, You have a bad case. You have a rotten case. The matter would be heard next on March 18.

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DOES A CHAIRMAN'S STATEMENT EXPRESSING INTEREST IN ACQUIRING ANOTHER COMPANY AMOUNT TO FRAUD? SAT ANSWERS

While overruling an order passed by the Adjudicating Officer (AO) of the Securities and Exchange Board of India (SEBI), the Securities Appellate Tribunal (SAT) has found that a substantial movement in the prices of a profitable company cannot be attributed to a news report alone The SAT was hearing an appeal filed by Chairman of Emami Limited, RS Agarwal, against an order passed by the AO imposing a penalty of Rs 8 lakh on him for giving out (mis)information. As per a news report published on April 3, 2010, Agarwal told journalist that he was interested in acquiring Amrutanjan Healthcare. Soon after, on April 5, 2010, NSE and BSE sought clarification from both companies. Emami claimed that their Chairman, Agarwal expressed a general intention to acquire The promoters of Amrutanjan responded by saying that they had no intention of selling their shares. The AO found that the news report had an impact on the price and volumes in the scrip of Amrutanjan to a considerable extent, and hence violated sub section (c) of Section 12(A) of the SEBI Act read with Regulation 3(d) of PFUTP Regulations, 2003. He, therefore, proceeded against Agarwal and penalized him under Section 15HA of SEBI Act. The AO’s conclusion was that there had been an increase in both volume and price after the statement was published as a news item, as compared to the period prior to April 3, 2010. In this regard, a specific comparison was made between two trading days – April 1, 2010, and April 5, 2010 – the last traded day and the first traded day before and after the press report. In the appeal, the question before the SAT was – whether a reported statement made by the Chairman of a Company about his interest in another Company amounts to fraud or a fraudulent act in the given facts of the case. The SAT found that the volumes on March 31, 2010, and April 5, 2010, are not much different while when one compares the volume of April 5 with that of April 1, the volumes are quite different. This shows that a two-day comparison can be misleading and is not sufficient to establish evidence for a serious offence like fraud, it was held. The SAT further found that there is no evidence of Emami acquiring any shares of Amrutanjan. SAT also noted that there was in fact, no effort for an acquisition. This was further read along with Emami’s response to the stock exchanges wherein they clarified that it was a general statement relating to his business interest. The SAT noted that the statement was further emphasized by the clarification provided by Amrutanjan itself which also stated that the said news item is false and without basis and the promoters of the Company have no intention to sell out and the promoters do not foresee any reason to dilute their stake and exit from the company. On the burden of proof required for proving fraud, the SAT held While dealing with a serious issue of fraud the authorities need to ascertain the motive in the absence of any connecting evidence. Therefore, the appeal was allowed.

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SEBI SLAPS RS 10 CR FINE ON SYBLY INDUSTRIES FOR GDR MANIPULATION

Markets regulator Sebi Friday slapped a fine of over Rs 10 crore on Sybly Industries Ltd in a matter related to manipulation in issuance of global depository receipts (GDR). The penalty follows a probe by the regulator regarding the firm's allotment of 1.51 million GDR amounting to USD 6.99 million on the Luxembourg Stock Exchange in June 2008. During the probe, Sebi observed that the entire 1.51 million GDR were subscribed by only one entity, Vintage FZE (now known as Alta Vista International FZE). The subscription amount for GDR was paid by Vintage after obtaining loan from European American Investment Bank (EURAM). Sebi further said that the GDR issue would not have been subscribed if the Sybly had not given such security towards the loan taken by Vintage. Such fraudulent arrangement was not disclosed to the stock exchange in a true and complete manner but was reported as misleading news and would have influenced decision of investors, the regulator noted. The fraudulent arrangement violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations and by not informing to the exchanges the delisting of GDR in April 2013, which was price sensitive information, the firm violated Listing Agreements, Sebi said.

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STRONG INFLOWS HELP PUSH RUPEE TO A SIX-MONTH HIGH

The rupee, which has been steadily appreciating in recent days, closed on Friday at 69.10 to a dollar, its highest level since August 10, 2018. Strong inflow in both debt and equity segments helped the currency to hit a six-month high against the dollar. This is the fifth straight week the rupee has closed higher against the dollar. After opening at 69.34 a dollar as compared to Thursday’s close of 69.35, the rupee went on to touch day’s high of 69.03 before closing at 69.10, up about 26 paisa or 0.37%. According to provisional figures, foreign portfolio investors (FPIs) were net buyers in equities at ₹4,323 crore on Friday. FII inflows have crossed ₹30,000 crore in Feb-March’19 till date, resulting in a flood of inflows after 2018 drought, said Jagannadham Thunuguntla, head of Research (Wealth), Centrum Broking Limited. According to data from the National Securities Depository Ltd. (NSDL), FPIs have been net buyers in equities at nearly ₹18,000 crore in the current month, following net purchases of ₹17,220 crore in the previous month. In the debt segment, FPIs are net buyers at ₹2,499 crore in March after being net sellers in the previous month at ₹6,037 crore.

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KOTAK BOARD OKAYS NARAYAN AS KOTAK SECURITIES CHAIRMAN

The Board of Directors of Kotak Mahindra Bank noted appointment of Narayan S.A as non-executive chairman of the Kotak Securities. Narayan S.A. aged 58 years, a chartered accountant, has over 30 years of experience. It also approved re-appointment of Prakash Apte and appointment of Uday Shankar as independent directors subject to shareholders approval. At the same time, it recommended K V S Manian, initially as an additional director acting as whole-time director of the bank. The board also suggested appointment of Gaurang Shah initially as an additional director acting as whole-time director of the Bank for a period of three years with effect from the date of approval of the Reserve Bank of India, and subject to necessary approval from the shareholders.

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FPIS NET BUYERS IN MARCH FIRST HALF; PUMP IN RS 20,400 CR

Overseas investors poured in more than Rs 20,400 crore in the domestic capital market in the first half of March, mainly driven by positive global cues. The expectation of a positive outcome from the US-China trade agreement along with US Fed’s decision to put rate hike on hold, have worked in favour of entire emerging market segment, analysts said. In February as well, foreign portfolio investors (FPIs) were net buyers as they had invested a net amount of Rs 11,182 crore in the capital markets both in equity as well as debt segment. As per the latest data available with depositories, net inflow in the equities stood at Rs 17,919 crore, while the debt market saw an infusion of Rs 2,499 crore on a net basis, during March 1-15, period. Together, it translates into a net investment of Rs 20,418 crore in the country’s capital markets for the period under review. With the expectation on US interest rate hike declining, there has been increased flow into emerging markets. Locally, since February, there is a clear trend of FPIs buying beaten down segments such as banking and finance stocks, Vidya Bala, Head said.

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WITH FRESH CAPITAL, LAKSHMI VILAS BANK LOOKS TO AVOID PROMPT CORRECTIVE ACTION

Private sector Lakshmi Vilas Bank has raised Rs 460 crore in a share sale from multiple investors helping it improve the finances which is battling to avoid getting into the Prompt Corrective Action of Reserve Bank of India. The Chennai-based lender will now try to work out a balance on how the fresh equity would be allocated between meeting regulatory requirements and growth capital. While the capital will address the short term needs, the bank may look at other avenues to mobilise more resources for growth funding. The central bank has relaxed the PCA norms and lifted five state-owned banks including Allahabad Bank, Bank of India and Bank of Maharashtra, Corporation Bank and Oriental Bank of Commerce out of the restrictive framework even the first three of the lenders still have negative return on assets. These banks primarily used the government's capital infusion to meet regulatory requirements to exit PCA.

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MINDTREE CO-FOUNDER SUBROTO BAGCHI QUITS GOVT ROLE TO TAKE ON RAIDERS

Subroto Bagchi — one of the co-founders of Mindtree — resigned on Sunday as the head of Odisha Skill Development Authority and will return to Bengaluru, he said. An imminent threat of hostile takeover of Mindtree has made me resign from the (Odisha) government, (so that I will be) able to go, (and) save the company, he said. I must protect the tree from people who have arrived with bulldozers and chainsaws, so that in its place, they can build a shopping mall.

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AIRTEL FINDS DISH TV APPETISING, SIGNALS INTEREST FOR MERGER

It’s not just telecom, but also TV distribution space where Sunil Bharti Mittal has decided to give a tough fight to Mukesh Ambani’s Reliance Jio. As Ambani’ Jio has taken control of the two largest cable operators – Hathway Cable & Datacom and DEN Networks — Mittal has initiated talks with Dish TV, to merge his DTH business, housed under Airtel Digital TV, said two people with direct knowledge of the development. The talks are at exploratory stage, said one of the persons. Idea is to consolidate operations and give a strong fight to Reliance Jio. Together, Airtel Digital TV and Dish TV will be a giant. If Mittal succeeds, the combined entity will be the world’s largest TV distribution company with over 38 million subscribers and 61% DTH market share in India. It was in March last year when Dish TV completed merger of Videocon d2h with itself, kick-starting the consolidation in the Indian DTH space, the only market with six (five pay and one free) DTH players.

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MAHARASHTRA: PROPOSED LAW WILL EMPOWER HOMEBUYERS TO REMOVE BUILDERS FROM DELAYED PROJECTS

A law aiming to empower home buyers in cases of delayed residential projects by builders is in the final stages of its passing by Maharashtra Real Estate Regulatory Authority (MahaRERA). The proposed law will enable home buyers a Standard operating procedure (SOP) under which they will have the authority to remove a builder from a private residential project, if he fails to complete the project on time. MahaRERA is aware of at least 20 such cases at present which relates to complaints against builder for non-completion of project by promised dates. With a view to effectively take some steps in this regard, MahaRERA has decided to frame guidelines under Section 7 of the RERA Act under which a society can take action against the builder if they have consent of 51 per cent or more members. The society will have the power to remove builder from the project. New guidelines regarding this law will be issued soon by MahaRERA. However, the law will apply to will apply to projects that are free of litigation before any other fora. When a homebuyer purchases a flat in any private apartment, then after receiving 10 percent of the flat value from the buyer, the builder has to register the flat sale agreement. As per RERA regulations, if more than half the flats are sold in any project, a society or an association of the flat owners has to be formed. Once the association or society is formed and majority of the members conclude that the builder won’t be able to complete the project on time, they can file a complaint in the name of the society and the builder can be removed from the project, MahaRERA secretary Vasant Prabhu told The Indian Express.

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INDIAN ANTITRUST WATCHDOG RAIDS GLENCORE BUSINESS, OTHERS OVER PULSE PRICES: SOURCES

India's antitrust watchdog raided units of global commodities trader Glencore and two other firms in Mumbai on Saturday in an inquiry into alleged collusion on the price of pulses four sources with knowledge of the raids told Reuters. More than 25 antitrust officials carried out the raids at the offices of local units of Glencore and Africa's Export Trading Group, and India's Edelweiss group which previously had a commodities business, two government sources told Reuters. The Competition Commission of India (CCI) has been investigating allegations that the companies formed a cartel to discuss the pricing of pulses while importing and selling them in the Indian market at higher prices in 2015 and 2016, when India faced an acute shortage, the sources said. A spokesman for Switzerland-based Glencore, Charles Watenphul, declined to comment, while India's Edelweiss, which sold its commodities trading business in November 2016, and the Export Trading Group did not respond to requests for comment. The raids on five company offices in India's financial capital began on Friday and were concluded on Saturday. The CCI's raids on commodities traders mark only its fourth such search operation in its near 10-year history. They can only be conducted with approval from a judge.

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KIRAN MAZUMDAR SHAW VOTED AGAIN TO INFOSYS BOARD, SOME DISSENT

Infosys’ shareholders returned Kiran Mazumdar-Shaw to the board with a clear majority but the dissent to her appointment was higher when compared to recent inductions of independent directors at the company. Nearly 8% of votes cast were against her reappointment. The last two independent directors nominated to the board were elected with less than 1% of dissenting votes. In 2014, when the Biocon chairwoman was first inducted on the Infosys board, less than 2% of votes were cast against the resolution. About 93.5% of votes from public institutions — mutual funds and portfolio investors — were in favour of Shaw’s appointment, while 6.4% voted against her candidature, with an advisory firm having recommended that shareholders vote against her renomination, citing governance concerns dating back to the tenure of former chief executive Vishal Sikka. Among public, non-institutional shareholders, about 81% voted for Shaw and 18.8% against, postal ballot results filed with the Bombay Stock Exchange on Friday showed. The promoters backed her unanimously. Stakeholders Empowerment Services (SES), a proxy advisory firm, raised questions about Shaw’s effectiveness as an independent director on the company’s nomination and remuneration committee. SES acknowledges without any doubt her capabilities, achievements and contribution in building Biocon as world leader in its field. Her leadership skills are something to write home about, the firm said in its advisory report on the postal ballot. However, when it comes to her role at Infosys board, unfortunately SES is unable to place her at the same pedestal SES founder JN Gupta told ET that the rise of e-voting, the regulatory requirement for insurers and funds to vote might also have played a role in the higher number of dissenting votes.

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MERGER OF DEUTSCHE BANK, COMMERZBANK COULD COST 20,000 JOBS, SAYS UNION CHIEF

A merger of Deutsche Bank and Commerzbank could put 20,000 jobs at risk the head of labour union Verdi said in a media interview on Monday. Some 20,000 or more positions could come under fire, Frank Bsirske, chief of Verdi and a supervisory board member at Deutsche Bank, told German newspapers Stuttgarter Zeitung and Stuttgarter Nachrichten. He said the two lenders were not a good fit for each other, while a crossover in an international direction would make more sense for them.

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RBI DATA LOCALISATION RULE MAY COMPROMISE FRAUD DETECTION IN INDIA: MASTERCARD

Mastercard Inc. is concerned that India’s strict data localisation rules could compromise its ability to detect frauds and money laundering in the domestic payments system. Storing customer data exclusively in India without creating mirror sites overseas is risky because it takes away the capability to see the broader world, said Mastercard’s Chief Product Officer Michael Miebach. However, he said the US firm intends to comply with the new rules despite missing last year’s deadline to localize all its Indian data. As an industry, we need to respect the reality, and the reality is that’s where the country is going,' Miebach said. Miebach said that Mastercard is still working on how to ensure the Indian data is protected once it moves all the information to storage inside the country. A mirror site overseas would help detect frauds and spot money laundering patterns because they often take place across borders, Miebach added.

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AZIM PREMJI’S CHARITABLE TRUSTS GROW RICHER ON DIVIDENDS, SHARE SALES

Billionaire Azim Premji’s two philanthropic trusts earned ₹11,357 crore ($1.65 billion) over the past nine years by way of dividends, share sales and buybacks, becoming one of the richest and largest charitable trusts in India. The earnings of the two trusts—Azim Premji Philanthropic Initiatives Pvt. Ltd or APPI (earlier called Azim Premji Foundation) and Azim Premji Trusts or APT—go into the Azim Premji Endowment Fund. The fund, which releases money for all philanthropic work done by the two trusts, is now valued at ₹1.45 trillion or $21 billion, making it one of the largest private endowments in the world. Between March 2010 and March 2018, the fund received ₹2,100 crore in dividends from Wipro Ltd, according to Mint research. It received ₹1,494 crore by selling Wipro shares in March 2010, March 2012, and earlier this month. It also received ₹1,963 crore and ₹5,800 crore, respectively, when it sold shares back to Wipro under the company’s two share buybacks in July 2016 and December 2017. The trusts also received bonus shares issued by Wipro in June 2010, June 2017 and March 2019. It is not clear how much of the ₹11,357 crore earned by the endowment has been spent over the past nine years. A spokesperson for APPI declined to comment. The value of the endowment fund has surged over the last four years: from $5 billion at the end of January 2015 to $21 billion as of 13 March 2019.

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MINDTREE PLANS DEFENCE AGAINST HOSTILE TAKEOVER BY L&T

Mindtree Ltd’s board will meet on 20 March to consider a proposal to buy back its fully paid-up equity shares from the market, the information technology (IT) company said in an exchange filing on Friday. The move comes at a time when engineering conglomerate Larsen and Toubro Ltd is in advanced talks to buy out a 20.4% stake held by Café Coffee Day (CCD) founder V.G. Siddhartha, the group’s flagship Coffee Day Enterprises Ltd and its step-down subsidiary Coffee Day Trading Ltd. If approved by the board, the move could act as a poison pill against a hostile takeover bid. It could push the potential buyer to offer a higher price to the public shareholders than that offered by Mindtree promoters for the buyback. Mindtree promoters are in a race to retain control of the company as potential buyers eye the big chunk of shares put on the block by Siddhartha. The promoters, who together own around 13%, have a two-pronged action plan: one, pledge their shares in exchange for money; two, raise money from a wealthy family office, according to a Mint report in January. In both cases, the ultimate objective would be the same: purchase Mindtree shares from Siddhartha to prevent a hostile takeover by an outsider. A purchase of more than 5% by promoters or a 25% stake by any other buyer in a listed firm triggers an open offer according to existing norms. As such, the buyer is required to make a public offer to buy at least another 26% stake. The pledge of promoters’ 13% stake could fetch around ₹1,000 crore and the rest ₹3,000-3,200 crore will come from the family office, said a person with direct knowledge of the plans of Mindtree. Mindtree’s move has been prompted by Siddhartha’s decision to sell off the stake held by him and the two CCD affiliate firms. As Siddhartha is the largest shareholder in Mindtree, his decision to exit the firm has motivated several large buyout funds and other companies to make a takeover bid through an open offer by buying Siddhartha’s stake and 5% more from other shareholders.

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HOW JOBLESSNESS EATS INTO HOUSEHOLD SAVINGS

In India, savings have become less and less of a private virtue, with consumption rates rising and savings rate of households falling. What’s more, while getting access to reliable jobs data has become increasingly difficult, economists point out that high unemployment rates are also to be blamed for the drop in financial savings rates. According to Ambit Capital Pvt. Ltd, there could be further erosion in the country’s savings to gross domestic product (GDP) ratio if the unemployment problem is not addressed. The strong correlation between savings ratios and employment growth is not just a phenomenon that holds true with respect to India, but in fact can be seen in the context of other emerging markets as well, it said in a note to clients. We wonder if the decline in overall savings rate is due to some combination of

(a) continued high consumption by households,

(b) low job creation in general and

(c) increase in financial liabilities of households to support short-term consumption, analysts at Kotak Institutional Equities said in a note to clients.

Where the data is fairly conclusive is that the domestic savings rate has fallen from 34.6% of GDP in FY12 to 30.5% in FY18, data collated by Kotak shows. The fall in the household savings rate has been sharper, from 23.6% to 17.2% during the same period, as the chart above shows. Meanwhile, household consumption as a percentage of GDP rose by nearly 3 percentage points to 59% in FY18. Given that consumption rates are estimated to have risen in FY19 to 59.5%, the expectation is the savings rate may have fallen again.

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WHATSAPP, NASSCOM FOUNDATION JOIN HANDS TO HELP CURB MISINFORMATION

WhatsApp announced on Monday that it has tied up with NASSCOM Foundation, the social arm of the industry body, National Association of Software and Services Companies (NASSCOM) to impart digital literacy training to tackle the challenge of misinformation. Whats App said this partnership aims to reach approximately 100,000 Indians with training to spot false information and provide tips and tricks to stay safe on WhatsApp. The company said that the co-created curriculum encourages people to be mindful about forwarding rumors. The training will include real-world anecdotes, tools that can be used to verify a forward and actions users can take like reporting problematic content to fact checkers and law enforcement. The curriculum will be disseminated in multiple regional languages. The first training will be on 27th March in Delhi followed by interventions like hosting training workshops for representatives from rural and urban areas along with roadshows across colleges. NASSCOM Foundation said it will activate its volunteer base to launch the ‘Each One Teach Three’ campaign that mandates every volunteer to share their learnings with three more persons leading to a network effect. These volunteers will post their takeaways from the workshops on their social media handles to increase the reach of these safety messages.

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SEC CHARGES VOLKSWAGEN, FORMER CEO WITH DEFRAUDING INVESTORS

US regulators charged Volkswagen and former CEO Martin Winterkorn with defrauding investors during its massive diesel emissions scandal. The charges from the US Securities and Exchange Commission come two years after the German automaker settled with the US over criminal and civil charges, as the company tries to distance itself from one if its darkest eras. The SEC said that between April 2014 and May 2015, Volkswagen issued more than $13 billion in bonds and asset-backed securities in US markets when senior executives knew that more than 500,000 vehicles in the country grossly exceeded legal vehicle emissions limits. Volkswagen made false and misleading statements to investors and underwriters about vehicle quality, environmental compliance, and the company's financial standing, which gave it a financial benefit when it issued securities at more attractive rates for the company, according to the SEC. In September 2015 Volkswagen installed software on more than 475,000 cars that enabled them to cheat on emissions tests, according to the Environmental Protection Agency. Volkswagen said on Friday that the SEC is simply repeating unproven claims about Winterkorn. The company has paid some $20 billion in fines and civil settlements. It has also pleaded guilty to criminal charges in the United States and several managers, including Winterkorn, were charged there.

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APPLE OWES QUALCOMM $31 MN FOR INFRINGING THREE OF ITS PATENTS: JURY

Mobile phone chip supplier Qualcomm Inc on Friday won a legal victory against iPhone maker Apple Inc, with a jury in federal court in San Diego finding that Apple owes Qualcomm about $31 million for infringing three of its patents. Qualcomm last year sued Apple alleging it had violated patents related to helping mobile phones get better battery life. During an eight-day trial, Qualcomm asked the jury to award it unpaid patent royalties of up to $1.41 per iPhone that violated the patents. The biggest case, filed by Apple in early 2017, begins in April. Apple has sought to dismantle what it calls Qualcomm's illegal business model of both licensing patents and selling chips to phone makers. Qualcomm has accused Apple of using its technology without paying. In a statement, Apple said it was disappointed with the outcome. The verdict on Friday could come into play in the trial in April because it puts a per-phone dollar figure on some of Qualcomm's intellectual property. Qualcomm's patent licensing model relies on charging phone makers a cut of the selling price of the phone, a practice Apple has alleged is unfair and illegal.

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FACEBOOK IS READYING AI TECH TO COMBAT 'REVENGE PORN'

Facebook Inc said on Friday it would use artificial intelligence to combat the spread of intimate photos shared without people's permission sometimes called revenge porn, on its social networks. The new technology is in addition to a pilot program that required trained representatives to review offending images. By using machine learning and artificial intelligence, we can now proactively detect near nude images or videos that are shared without permission, the social networking giant said in a blog post. This means we can find this content before anyone reports it. A member of Facebook's community operations team would review the content found by the new technology, and if found to be an offending image, remove it or disable the account responsible for spreading it, the company added. Revenge porn refers to the sharing of sexually explicit images on the internet, without the consent of the people depicted in the pictures, in order to extort or humiliate them. The practice disproportionately affects women, who are sometimes targeted by former partners. Facebook will also launch a support hub called Not Without My Consent on its safety center page for people whose intimate images have been shared without their consent.

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Thanks & Regards,
CS Meetesh Shiroya