INSOLVENCY RESOLUTION FRAMEWORK FOR INDIVIDUALS SET TO BE
ISSUED SHORTLY
The government is soon
expected to put in place a framework for insolvency resolution in case of
personal guarantors to corporate debtors, and take up the issue of debt
resolution in case of proprietorship and partnerships in the second phase. As
the Insolvency and Bankruptcy Board of India (IBBI) has already finalised the
norms for individual bankruptcy resolution in case of personal guarantors, the
government is expected to notify these within a month, sources familiar with
the matter said. Under the new framework, individuals have been divided into
three categories
·
personal guarantors,
·
proprietors and
·
the third is common
individuals.
The government is ready
with norms for personal guarantors for corporate debtors and expects these to
be notified soon, sources said, adding that the Ministry of Corporate Affairs
is in final stages of approving the framework. M S Sahoo said: We are working
on rules and regulations for insolvency resolution and bankruptcy of personal
guarantors to corporate debtors. Learning from the experience, we would draft
rules and regulations for insolvency resolution and bankruptcy of
proprietorship and partnership firms. Thereafter, we will work on a framework
for other individuals. In each category of individual debtors, there are mainly
two approaches — one is insolvency resolution and other is the bankruptcy
process. The source said that the government may start individual insolvency
resolution initially and launch the bankruptcy process later for such debtors.
Within the individual category, while it is easy to start the process for guarantors
to corporate debtors and firms, in the case of individuals, the same approach
cannot be applied since each case is unique.
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FIVE POWER PRODUCERS PREPARE TO OPPOSE INSOLVENCY PROCEEDINGS
Five major stressed power
producers are preparing to oppose insolvency proceedings on the grounds that
lenders filed petitions against them as per a central bank circular on debt
resolution that was recently quashed by the apex court, people familiar with
the plans said. The five power projects of Lanco Amarkantak, Avantha Power, KSK
Mahanadi, Rattan India Power (Amravati project) and Rattan India Nashik Power
(formerly Indiabulls) account for over Rs 50,000 crore of unpaid dues. Power
Finance Corporation and Axis Bank filed the insolvency petitions in the five
projects, though all major lenders are part of the consortia that provided the
loans. Lanco Amarkantak, which owns a 1,920 MW project in Madhya Pradesh,
sought time from the National Company Law Tribunal on Wednesday to provide
documents to support its contention that Axis Bank had initiated insolvency
proceedings against it under the now-defunct RBI circular on stressed assets,
the people said. KSK Mahanadi, an operational project for which the Adani Group
had bid and later backed out, cited the apex court ruling at the NCLT on Monday
to argue its case for withdrawal from insolvency proceedings. Power Finance
Corporation had initiated the insolvency proceedings in this case. Avantha
Power’s Jhabua project has also made a similar contention in the National
Company Law Appellate Tribunal (NCLAT). Rattan India Power and Rattan India
Nashik are likely to follow suit shortly. We are awaiting fresh guidelines from
the central bank on resolution of stressed assets, but in cases where there is
no other way out, we will file an affidavit in court stating that they need to
be resolved through the Insolvency and Bankruptcy Code, said a senior executive
with Power Finance Corporation.
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DOT FORMS PANEL TO DEAL WITH INSOLVENCY ISSUES
The Department of
Telecommunications (DoT) has formed a six-member panel to ascertain, among
other things, how to safeguard the value of public resources such as spectrum,
in cases where telecom operators have filed for insolvency. The panel will look
into three areas the position of the DoT in terms of auction rules and licence
conditions in cases where telcos file for insolvency; the legal position
vis-à-vis licensed resources and as a creditor, in terms of recovery of dues;
and the precautions or actions DoT can take to safeguard the value of resources
like spectrum from getting locked in unproductivity or being disposed at
sub-optimal prices consequent to the resolution process, a senior DoT official
told. The panel, to be chaired by Shiwa Shankar Singh (member, technology), has
been formed at a time when two telcos – Aircel and Reliance Communications
(RCom) – are battling bankruptcies. While Aircel filed for insolvency under the
Insolvency and Bankruptcy Code 2016 in March last year—the month it shut its
mobile telephony services, RCom, which shut down its wireless operations at the
end of 2017, has also moved the relevant tribunal to start insolvency
proceedings for itself. Both Aircel and RCom have chunks of spectrum in the 850
MHz, 900 MHz and 1800 MHz bands lying mostly unused. RCom is sharing its 850
MHz band airwaves with Reliance Jio. Under the insolvency process, the
resolution professional tries to sell off assets – in this case spectrum is the
most critical asset of a telco – but usually the value that it gets, even
through a bidding process, is less than the market value. If the RP can’t find
bidders, then the company goes for liquidation, in which case the value erodes
further. Spectrum has been internationally acknowledged as a scarce, finite and
renewable natural resource which is susceptible to degradation in case of
inefficient utilisation. Spectrum lying idle is a waste of natural resource,
the official said. The Supreme Court has mandated that all airwaves for commercial
use need to be auctioned, which would ensure that the government gets the
market value for the public resource. Also, as per the IBC, DoT is deemed as an
operational creditor meaning it will be way down on the priority list in terms
of getting its dues from the sale of assets under the insolvency process.
Financial lenders have top priority. These incidents do not have precedence
and, therefore, we will have to look into them for the first time, another
official said. According to this person, RCom has signed a tripartite agreement
with the government and one of its banks, which allows the lenders to sell
spectrum to another licence holder or a company that has applied for licence
and meets DoT’s approval. But Aircel has no such agreement. This is the grey
area which the DoT will have to look into, the official said.
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IBC DELIVERING RESULTS; A REFORM MODI, JAITLEY SHOULD BE PROUD
OF
India rose 23 notches in
the Ease of Doing Business rankings to 77 from 100 this year. However, its
ranking in resolving insolvency cases, one of the 10 parameters on which these
rankings are based has fallen from 103 to 108. It is surprising that one of the
most successfully implemented reforms by the Narendra Modi government -- the
Insolvency and Bankruptcy Code (IBC) -- has gone unnoticed by the World Bank,
which comes out with these rankings every year. The rankings, which are based
on surveys by corporate executives and entrepreneurs in Delhi and Mumbai,
continue to show the rate of recovery (of debt from defaulting businesses) at
26.5 per cent, time of recovery 4.3 years and the cost of recovery 9 per cent
of the assets of the debtor. These parameters remain unchanged from 2016, when
the new insolvency laws were brought into force. IBC, despite all its
shortcomings, has changed the loan recovery landscape in the country. Just two
years since its launch, IBC has resulted in resolution of 88 corporate loan
default cases involving Rs 2.09 lakh crore non-performing assets (NPAs) and
facilitated recovery of Rs 1.12 lakh crore as of 25 March 2019. This is a
recovery rate of 54 per cent. Of course, not all cases have been resolved
within the stipulated time of 270 days. Some dragged on for much longer such as
the Essar Steel Case, which lingered on for over 500 days; yet it is a sharp
improvement from the average time of 4.3 years it used to take before the
advent of IBC regime. Even the cost of resolution has come down to less than 1
per cent against 9 per cent earlier. To the Modi government's credit, it was
quick to act on the need to have a new insolvency law. Within three months of
coming to power in 2014, the government had formed a committee to draft a new
bankruptcy law The speed with which the government acted and brought the law
was unprecedented and commendable. Clive Barnard, says, from a foreigner's
perspective, it is extremely remarkable how much has been achieved in such a
short span of time. We honestly thought what was being proposed is too
ambitious when we looked at the initial proposals; we were really frightened to
know what you were going from to what you were going to, and how dramatic and
quick that transformation was, admits Barnard. IBC has been a paradigm shift
from the earlier loan recovery legislatures like the Sick Industrial Companies
Act (SICA Act) and Securitisation and Reconstruction of Financial Assets and
Enforcement of Securities Interest Act (SARFAESI Act). While in the earlier
laws, borrowers were in control, in IBC it is the creditors who are in control
over the recovery process. This has brought about a complete change in attitude
towards the resolution. Under IBC, as the creditors are now in control they
want early resolution and maximum recovery. The law is such that once
insolvency proceedings begin under the IBC, against the loan defaulters,
promoters of these companies lose control of the company. This instils fear
among 'wilful' defaulters and establishes more responsible credit behaviour
among borrowers. Through the behavioural changes, the borrowing and lending
culture will get positively impacted and the NPA problem would be addressed to
a considerable extent at the company and bank level, says Injeti Srinivas. IBC
allows just anyone -- vendors, employees, or government authorities (for any
statutory dues like the unpaid tax, electricity bills, etc) -- to initiate
proceedings against the defaulting companies. Of the 1,484 cases admitted so
far, 742 or 50 per cent have been initiated by operational creditors, which
include vendors, employees, etc. According to Clive Barnard of Herbert Smith
Freehills, the insolvency laws in the United Kingdom underwent drastic changes
in the 1980s, then there was another round of changes in 2000s, and there are
yet ongoing talks about changes in the current law. He says, The law in the UK
is still not perfect and it is still evolving. Branard probably hints that the
(insolvency) law needs to continuously evolve here in India too. But he
appreciates the government and stakeholders, here in India, for the way they
have followed through with the required changes in the law even after it came
into existence two years ago. Of course, there are still gaps in the law and
infrastructure is overstretched Since these are early days for the law, there
are concerns that unscrupulous promoters might try to sabotage the whole
process in some cases, and therefore regulators and all other stakeholders must
maintain vigil against any such attempts. Bahram Vakil, says that though value
maximisation is the purpose of the law, it should not happen at the cost of the
process. He cites misuse of Section 12A of the law, which allows withdrawal of
insolvency proceeding against a corporate defaulter. Injeti Srinivas, says,
Majority of the cases that have been liquidated were BIFR (Board for Industrial
and Financial Reconstruction) cases -- may be more than 70 per cent. They were
long pending cases and there was no possibility of resolution because the asset
value had been more or less destroyed. If you look at the liquidation value of
such cases, it is hardly 5-7 per cent of the claims. Rajesh Begur, says that
while these issues will be resolved in a year or two, lack of infrastructure or
overstretched NCLT benches paint a sorry picture Gyaneshwar Kumar Singh, said
that 36 new members will be inducted and two new benches of NCLT will be set up
in Indore and Amravati in a couple of months. Despite all the constraints and
inadequacies in the insolvency law, it has proved to be a masterstroke of Modi
government that will, indeed, have a far-reaching impact on the country's
economy in the long term.
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NCLAT ASKS WINNING BIDDER TO RAISE OFFER FOR UNITED SEAMLESS
In a likely first in
India’s recent bankruptcy history, an appeals court has set aside a
lender-approved resolution plan on the ground that the proposed upfront payment
for the stressed asset, Indo-Malaysian joint venture United Seamless Tubular,
was significantly lower than the average liquidation value. The National
Company Law Appellate Tribunal (NCLAT) said that the resolution plan approved
by the committee of creditors (CoC) also discriminated against operational
creditors, and did not give them the same treatment as it did to financial
creditors. So, the court ordered the winning bidder, Maharashtra Seamless, to
raise its offer to Rs 597.5 crore from Rs 477 crore. United Seamless and one of
the dissenting lenders Indian Bank had moved the NCLAT, seeking action against
the resolution professional (RP). They accused the RP of colluding with the
bidder of his choice and favouring the bidder by undervaluing assets of United
Seamless. Hyderabad-based Kamineni group owns 60% of United Seamless, with
Malaysia’s UMW group holding the rest in the joint venture. Its facility near
Hyderabad manufactures seamless pipes used in the oil and gas and automotive
industries.
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NCLT LETS SREI INFRA FINANCE RECALL STERLING SEZ CASE
The dedicated bankruptcy
court has allowed the withdrawal of insolvency plea filed by Srei
Infrastructure Finance against Sterling SEZ & Infrastructure, a firm owned
by brothers Nitin and Chetan Sandesara, now fugitives from Indian law and
believed to be abroad. Gujarat-based Sterling SEZ is a subsidiary of Sterling
Group that owes over Rs 8,100 crore to its financial and operational lenders.
Promoters of the group are alleged to be absconders and the case is pending in
the Delhi court to declare them Fugitive Economic Offenders. On Wednesday, in
the case of Sterling SEZ & Infrastructure, the NCLT allowed the withdrawal
of the Corporate Insolvency Resolution Process (CIRP) in the matter of Sterling
SEZ as approved by over 92% of the creditors. The tribunal is of the view that
since more 90 % of the lenders have approved the withdrawal process it is a fit
case for withdrawal, said Mumbai bench of NCLT presided over by Bhaskara
Pantula Mohan and V. Nallasenapathy. However, since the company promoters are
absconding, the RP has been appointed as administrator of the company as an
interim measure, said the tribunal in an oral order.
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AKASHIKA FOODS SELECTED TO REVIVE MAIYAS
Sadananda Maiya-backed
Akashika Foods has been selected by the National Company Law Tribunal’s
resolution professional to resurrect the beleaguered Maiyas Beverages and
Foods, sources told. MTR, Haldiram’s Kamal Agarwal and Akashika Foods, a
consortium of employees, vendors and distributors of Maiyas, were in the last
bout to get control of Maiyas, the food venture founded by Sadananda Maiya in
2008. Three others – Peepul Capital, one of the investors in Maiyas, Sadananda
Maiya in his personal capacity, and Sanjeev Goenka’s Guiltfree Industries – had
also submitted initial bids but stayed out of the process of submitting a
resolution plan that was initiated by the committee of creditors (COC) led by
Karnataka Bank in Mangaluru last week. The bank has a nearly Rs 75 crore
exposure to Maiyas. Sources told that Sadananda Maiya might have backed out of
the final bidding process to avoid any legal hassles Sudarshan Maiya, he said
Dr Maiya has decided to support Akashika Foods. If they win the bid, he will be
guiding them and extending support through his knowledge, expertise and 47
years’ experience in the food processing industry.
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NCLT CLEARS STERLING SEZ'S ONE-TIME SETTLEMENT OFFER
The National Company Law
Tribunal (NCLT) on Wednesday cleared a controversial proposal by public sector
banks to withdraw bankruptcy proceedings against Sterling SEZ and
Infrastructure Ltd after the company’s absconding promoters made a one-time
settlement (OTS) offer to the lenders from overseas. As the promoters of the
company are not in India, the court asked the company’s resolution professional
to act as an administrator of the company till further orders. The banks have
taken a haircut of close to 65 per cent in the account and 90 per cent of its
lenders have agreed to the one-time settlement. However, the lenders’ attempt
to withdraw the insolvency proceedings against Sterling Biotech did not
materialise in the last hearing on March 27, and the NCLT has listed the matter
for hearing on April 26.
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HOTEL LEELA, JM FINANCIAL GET TIME TILL MAY 28 FOR SETTLEMENT
The National Company Law
Tribunal (NCLT) has granted time till May 28 to luxury hospitality chain Hotel
Leelaventure and JM Financial Asset Reconstruction Company to arrive at
settlement ahead of its ongoing sale to Canadian fund Brookfield. On March 18,
Brookfield Asset Management Company had agreed to acquire four hotels and a
land parcel in Agra from Hotel Leelaventure for consideration Rs 3,950 crore.
The deal is yet to go through. A two-member NCLT bench of VP Singh and
Ravikumar Duraisamy had on Tuesday directed Hotel Leelaventure and JM Financial
ARC, which owns majority stake in the luxury hotel chain for some years now, to
submit a settlement agreement by May 28, when the tribunal will hear the matter
afresh. Though Hotel Leelaventure has sought three to four months time for the
settlement, the tribunal has granted only time till May 28.
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PATANJALI MOVES CLOSER TO ACQUISITION OF RUCHI SOYA
Patanjali Ayurved’s
proposed acquisition of Ruchi Soya has reached the final stages with the
Committee of Creditors (CoC) meeting on Tuesday to clear the proposed deal, two
officials directly aware of the developments said. The deal is likely to be
announced this month, one of the officials mentioned above, said. SK Tijarawala
confirmed the committee of creditors meeting on Tuesday but declined to comment
on details.
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75 COMPANIES SET TO GIVE AWAY RS 1.1 LAKH CRORE IN DIVIDENDS
Based on fiscal 2018
financial statements of the BSE 500 constituents, 75 companies can return cash
of up to Rs. 1.1 lakh crore to shareholders These companies have large cash
holdings and can distribute about half of their on-balance-sheet cash
(including cash equivalents) to shareholders, as dividends or buybacks. The
cash available for distribution approximates one year’s profit after tax for
these companies and is in addition to the Rs 62,100 crore paid out as FY18
dividend by these companies last year, said a iiAS study. The excess cash, if
distributed by these 75 companies, translates to a median dividend yield to 5.2
per cent, significantly higher than the current 1.4 per cent. There are five
companies where the excess cash translates into an additional dividend yield of
more than 15 per cent: Indian Energy Exchange Limited, MOIL Limited, Multi
Commodity Exchange of India Limited, Bharat Heavy Electricals Limited and Godfrey
Philips India Limited. Further according to the IiAS stuy, of the 75 companies,
just five companies aggregate over 50 per cent of the total incremental
distributable cash of Rs.1.1 trillion, these are Hindustan Zinc Limited, ITC
Limited, Wipro Limited, TCS Limited, Bajaj Auto Limited. Public Sector
Undertakings continue to pay consistent dividends on account of regulations
requiring them to pay at least 30 per cent of their profits as dividends. The
median payout ratio for them at 28 per cent is the highest, ahead of all other
ownership groups: promoter-owned (18 per cent), institutionally-owned (25 per
cent) and multi-national corporations (21 per cent).
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WHISTLEBLOWER ALLEGES DELOITTE HAS HELPED IL&FS FUDGE ITS
ACCOUNTS YEAR AFTER YEAR
An anonymous
whistleblower, who claims to be part of the senior management team at Deloitte,
Haskins and Sells LLP (Deloitte) and has been privy to several internal
irregularities in providing professional services to the IL&FS (Infrastructure
Leasing & Financial Services) group has written to us outlining how the
audit firm benefited by helping the failed group fudge its accounts year after
year. In fact, Deloitte ensured a clean chit to IL&FS even when the Reserve
Bank of India (RBI) claims to have red flagged a few issues and asked it to
reduce its outstanding debt. It is another matter that IL&FS did nothing.
The whistleblower says, The extent of the scam is mind boggling and hopes that
investigation agencies would question members of the audit team, thereby giving
him a chance to disclose how the senior management at Deloitte is aware of the
financial mismanagement and impropriety by the IL&FS group and actively
helped fudge facts. Deloitte has an internal reporting system; but the whistleblower
says, I have no faith in the current leadership and, hence, am consciously not
resorting to our internal whistle-blowing mechanism. He goes on to provide a
few details which need to be understood in the context of what we already know
about its relationship with IL&FS. Deloitte has audited IL&FS Financial
Services Ltd (IFIN) for 10 years and remained the auditor until it completed 10
years in 2018. The audit report had absolutely no adverse findings even in
2017-18. On 3rd April, the new IL&FS management headed by banker Uday Kotak
said that 90% of the loans advanced by IFIN, the lending arm of IL&FS, had
turned bad.
KEY ALLEGATIONS
1. Deloitte was a
beneficiary of IL&FS’s ‘unmitigated growth’ over the decade in multiple
ways. It enjoyed a ‘preferred advisor role’ and was awarded several advisory
contracts on a ‘single sourced basis’ at ‘substantially high fees’ as
compensation.
2. When audit findings
would not show IL&FS in a ‘favourable light’ and Deloitte had to take a
position, the auditor conveniently relied on management explanations and
comfort letters by compromising on its independent opinion. At times,
IL&FS’s top management would meet and coerce Deloitte partners for a more
favourable position or watered down position. This was in addition to the
‘watering down of views’ that already happened internally at Deloitte, in the
first instance.
3. Over the years, says
the whistleblower, this led the entire audit becoming susceptible to legacy
positions and compounded the financial misreporting. In many cases the language
of the management response was agreed before hand by Deloitte to close its
internal reviews.
4. The whistleblower
claims that, in the past three years, Deloitte discovered enough facts that
would have qualified the report. However, a specific audit partner would hold
close-door meetings with IL&FS’s senior management and find ways to
‘manage’ these by relying on management explanations and opinions.
FINANCIAL BENEFITS
As a compensation, for
accommodating IL&FS in audit it was agreed that the group will remunerate
Deloitte by way of consulting and advisory fees Deloitte Consulting, a separate
legal entity was paid crores of rupees under the guise of a ‘strategy study for
diversification’. He also says, Deloitte charged a very large sum of fees to
recommend creating a more complex financial services business and grow its
already stressed books. The audit partner allegedly worked with the consulting
entity partner to ensure that Deloitte earned a whopping Rs 20 crore annually from
the IL&FS group as a reward for ‘managing’ its audit. The ‘round-tripping’
of loans, which was disclosed in detail by a forensic audit ordered by the new
management at IL&FS, was not only well known to Deloitte’s senior partners,
but they also helped to identify new businesses to cover round-tripping.
The Institute of Chartered
Accountants of India is also investigating the role of all auditors and its
interim report has already accused them of acting in a ‘fraudulent and
negligent’ manner. The Deloitte whistleblower has only confirmed that this was
the result of a deliberate nexus with the auditor and for financial benefit.
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SEBI ISSUES DETAILED NORMS FOR COMPUTING CLEARING CORPS'
RISK-BASED CAPITAL, NET WORTH REQUIREMENTS
Sebi on Wednesday issued
granular norms to compute risk-based capital and net worth requirements for
clearing corporations. Besides issuing the norms for assessing credit and
business risks, the watchdog has said clearing corporations should regularly review
their net worth requirement and ensure that it does not fall below the
prescribed threshold. The minimum contribution required to be made by the
clearing corporation towards Core Settlement Guarantee Fund (SGF) would be
considered for computing capital requirements towards credit risk, according to
a circular. The credit risk from default of clearing members is captured
through the Core SGF framework. For credit risk, the CCP contribution to core
SGF (settlement guarantee fund) shall be at least 50 per cent of the minimum
required corpus (MRC) as mandated by the regulator, Sebi said in a circular.
Similarly it has laid down the capital requirements for business risk, orderly
wind-down, for operational and legal risks. The regulator said the capital requirement
for general business risk would be based on a clearing corporation's own
estimate. Further, the capital requirement for business risk would be subject
to a minimum of 25 per cent of annual gross operational expenses. The total
risk-based net worth requirement for clearing corporations would be computed as
the aggregate of capital requirements each for counterparty credit risk,
business risk, orderly winding down or recovery of operations and legal and
operational risks, as per the circular. Thus, the clearing corporations shall
be required to maintain, at all times, in the form of liquid assets, a net
worth of either Rs 100 crore or as determined in the manner specified above,
whichever is higher, it noted.
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SEBI GETS MORE TEETH AGAINST INSIDER TRADING
Insider trading is
prohibited since it allows certain individuals with access to UPSI to profit
from information asymmetry. In recent times, SEBI has stepped up the regulation
of insider trading In 2015, SEBI had put in place a new framework for
prohibition of insider trading based on the report of an expert committee.
Subsequently, SEBI set up another committee in 2017 under the chairmanship of
TK Viswanathan to review the 2015 regulations. Based on the recommendation of
this committee, SEBI made significant amendments to the 2015 regulations on the
last day of 2018. To allow market participants to realign their internal
procedures, SEBI has made these amendments effective from April 1, 2019. The
recent amendments have broadened the applicability of the regulations The
requirement for reporting trades and seeking pre-clearance before trading in
the company’s shares has been extended to senior employees of material
subsidiaries and promoters of listed companies. The new requirements mandate
that listed companies have to maintain records of personal information
(including PAN, mobile number) of their directors, employees and their
immediate relatives, and persons with whom such employees share a material
financial relationship. The inclusion of persons with whom employees have
material financial relationship is a much-needed inclusion. However, SEBI has
decided to drop the requirement of disclosures about persons staying at the
same address, as was recommended by the committee, based on public comments.
These records, especially mobile number, will make it easier for SEBI to
establish a connection between the company and the person who trades, and
provide valuable inputs during the investigation of leakages of UPSI. While SEBI
already has access to call data records, it has now decided to send a proposal
to seek power to intercept calls and electronic communication to the
government. SEBI has also used Facebook to establish connections between
insiders in certain cases. With the use of these records, technology and SEBI’s
sophisticated surveillance systems, we can expect a much higher possibility of
insider trading complaints being more effectively investigated. These
amendments come on the heels of several directions passed by SEBI against
listed companies (including Axis Bank, Tata Motors, HDFC Bank) to ascertain
leakage of confidential financial results in private WhatsApp groups ahead of
their official announcements to the respective stock exchanges. The recent
amendments make it clear that the regulator is rightly concerned about leakage
of sensitive information and difficulty in identifying the origin of such
leaks. To assist in identifying the source of leaks, listed companies are now
required to have internal controls for identifying inside information and
maintain lists of employees and other persons with whom such information is
shared. They are also required to periodically review their internal processes
to evaluate effectiveness of internal controls. Listed companies are required
to intimate the persons receiving UPSI of their obligations towards preventing
misuse of such information for insider trading, by way of an advance notice.
The latest amendments require boards of listed companies to put additional
policies in place, including a policy for determining what constitutes
legitimate purpose, whistle-blower policy for reporting leaks of UPSI and
inquiry policy for determining the source of leaks. These policies are aimed at
monitoring the flow of UPSI and encouraging employees to inform the company
about any suspected leaks of UPSI. It will be interesting to see how effective
the whistle-blower policy for reporting leaks turns out to be and whether
internal investigations by listed companies are able to identify the source of
leaks. In its efforts to increase ease of doing business, SEBI has added
certain defences to the charge of insider trading such as any transaction that
is carried out in pursuance of a statutory or regulatory requirement. SEBI has
also included exercise of stock options at a predetermined price as an
exception. The defence available for off-market inter se transfers between
promoters, who were in possession of the same UPSI, has been extended to all
insiders. A similar defence has been included for trades carried out through
the block deal window mechanism.
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GODREJ PROPERTIES’ PROJECT EXECUTION SHOULD BE ON
SHAREHOLDERS’ RADAR
After being flat for most
of the year, the Godrej Properties Ltd (GPL) stock is now in the limelight. Following
several project launches, it zoomed 29.4% in the past month, outperforming
peers. GPL had indicated it wanted to launch one project every quarter.
However, in the last two quarters, it has launched 10 projects. This has
enthused investors, who were waiting to see if the company can scale up as
indicated. Furthermore, this quarter, it made one of its highest pre-sale of
inventory worth about ₹2,000 crore. In FY19, it had 16 project launches. These were
in its target markets of the Mumbai Metropolitan Region, the National Capital
Region, Bengaluru and Pune. With this, GPL will develop an additional 11-12
million square feet, twice that of FY18. The company has been very aggressive
over the last two-three months with respect to new projects. Prima facie, it
looks very attractive. Given the momentum of the new launches, we see healthy
pre-sales for FY20, says Param Desai, vice-president at Elara Securities
(India) Pvt. Ltd. The new projects are expected to add significantly to the net
asset value of the company, which develops properties along with landowners,
thus keep its business asset-light. Larger developers are seeing the business
outlook improving, post the implementation of the Real Estate (Regulation and
Development) Act, 2016, and the goods and services tax. The liquidity squeeze
is also driving smaller builders out of the market, or forcing them to tie up
with larger developers. Most of GPL’s projects are on a revenue-sharing basis.
Hence, profitability depends on the launch price, demand for the project and
cost-control. Also, revenue sharing varies from project to project. We need to
monitor the timely execution of these projects because otherwise the management
bandwidth will be stretched. Also, we need to monitor the profitability in some
of these projects, says Desai. The company may also have to raise resources to
execute these projects. In the December quarter, its debt had increased
slightly to ₹1,795 crore, taking the debt-equity ratio up marginally to
0.69%.
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SEBI STREAMLINES PROCEDURE TO ISSUE CERTIFIED COPIES OF
ORDERS, CIRCULARS
Markets regulator Sebi has
streamlined the procedure for issuing certified copies of orders and circulars
to the parties involved and other applicants. For the parties involved in the
proceedings, the regulator said certified copies of the orders passed by Sebi
will be provided without charging any fee However, for additional certified
copies of the order, the applicants will have to pay fees, the Securities and
Exchange Board of India (Sebi) said in a circular dated April 4. A fee of Rs 50
per order or circular or Rs 5 per page, whichever is higher, will be charged as
fees for each certified copy. The amount can be paid along with the application
by way of a demand draft or direct credit in the bank account of the board.
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WIPRO GETS SEBI NOD FOR RS 12,000 CRORE SHARE BUYBACK, SAYS
REPORT
IT major Wipro is set to
announce its largest ever buyback of Rs 12,000 crore ($1.7 billion) following
the Securities and Exchange Board of India's (Sebi) nod to the proposal. This
will be the third time in three years that the IT firm has got approval t buy back
shares. A buyback can be done once in 12 months. The shares are likely to be
bought at Rs 320 a piece, a 17 percent premium to the prevailing share price of
Rs 273 on the BSE, the report said, adding that the price is 33 percent higher
than the six-month average share price of Rs 240. The report said there was a
lack of clarity on whether the buyback would be launched while a scheme of
amalgamation was pending before the National Company Law Tribunal. The
amalgamation scheme relates to Wipro's proposal to merge four of its units —
Wipro Technologies Austria, Wipro Information, Wipro Information Technology
Austria, NewLogic Technologies SARL an Appirio India Cloud Solutions — with
itself.
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SEBI REVISES CHARGES RELATED TO BASIC SERVICES DEMAT ACCOUNT
Annual maintenance charges
levied on debt securities held through basic services demat accounts will be
revised from June 1, according to Sebi. The move is expected to further boost
participation of retail investors in the debt market. Basic Services Demat
Account (BSDA) offers limited services at a lower cost for retail investors. Based
on representation received from market participants. it has been decided to
revise the structure of charges for debt securities, Sebi said in a circular on
Wednesday. For debt securities worth up to Rs 1 lakh held through BSDA, there
would no annual maintenance charge. A maximum charge of Rs 100 would be levied
if the value of holdings is above Rs 1 lakh and up to Rs 2 lakh. The revised
charges would be effective from June 1. Currently, a uniform annual maintenance
charge of Rs 100 is levied on securities worth over Rs 50,000 and up to Rs 2
lakh irrespective of type of holding. There is no such charge for holdings
valued up to Rs 50,000. In 2012, Sebi directed depository participants to make
BSDA available for retail individual investors as part of efforts to reduce the
cost of maintaining securities in demat accounts.
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BSE ASKS STOCK BROKERS TO SUBMIT COMPLIANCE REPORT ON AI TOOLS
BY APRIL 15
Leading stock exchange BSE
has asked stock brokers to make quarterly disclosures about compliance with
Sebi's cyber security framework by April 15. The stock exchange has asked stock
brokers who are using applications based on artificial intelligence (AI) and
machine learning (ML) to submit compliance report for January-March 2019
quarter in the format given by Sebi. Besides, stock brokers not using AI and ML
based applications are also required to submit the requisite form, BSE said in
a notice.
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SEBI FINES 2 ENTITIES RS 10 LAKH FOR MANIPULATIVE TRADE IN BSE
STOCK OPTIONS SEGMENT
Sebi has imposed a total
penalty of Rs 10 lakh on two entities for carrying out fraudulent trade in the
illiquid stock options segment of BSE. Securities and Exchange Board of India
(Sebi), during an investigation between April 2014 to September 2015, found
that 81.38 per cent of all the trades executed in stock options of the exchange
were non-genuine. The two entities were among those that executed trades by
reversing their buy or sell positions in a contract with the same counter party
during the same day with wide variations in prices, Sebi said.
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SEBI BANS BHABISWAJYOTI INFRASTRUCTURE, DIRECTORS FROM
SECURITIES MARKET
Sebi Wednesday banned
Bhabiswajyoti Infrastructure India and its eight directors from the securities
market for at least four years for raising funds illegally. The regulator also
directed them to refund the money to the investors with an interest of 15 per
cent The regulator after a probe found that the firm had made an offer of
non-convertible debentures in 2012-2013 and 2013-2014 to raise at least Rs 7.55
lakh from at least 55 investors. The actual number of allottees and the amount
mobilised could be higher, the regulator said. The firm created a charge for an
amount of Rs 100 crore in 2012 and appointed Bhabiswajyoti Debenture Trust as
its debenture trustee. As the number of allottees was more than 49, it was
deemed to be a public issue and required a compulsory listing on a recognised
stock exchange, according to Sebi order. The company was also required to file
a prospectus, among others, which it failed to do. Regarding the directors,
Sebi said they were liable to be debarred as the issuance of NCDs took place
during the period of their directorship.
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MAJOR RESIGNATIONS AT VEDANTA CAIRN; CEO, CFO QUIT LAST WEEK
Anil Agarwal-led Vedanta’s
oil and gas division Cairn has seen three high-profile exits in the past three
months, of which two, including chief executive Sudhir Mathur and chief
financial officer Pankaj Kalra resigned last week. According to sources privy
to the development, the company’s chief internal audit and risk assurance director
Arup Chakraborty left three months ago. Mathur’s exit is crucial as he would be
the fourth CEO moving out of the company since Vedanta completed acquisition of
the company in late 2011. Ajay Dixit, who was CEO of aluminium and power
divisions of Vedanta, took charge of the oil and gas division as interim CEO
after Mathur's exit. The other three CEOs leaving the company after Vedanta
acquisition include Rahul Dhir in August 2012, P Elango (interim CEO) in May
2014, and Mayank Ashar in June 2016. The company management remained
tight-lipped about the resignations, but indicated there was nothing unusual in
these movements. Such movements are part of a natural evolution in any
organisation, and are in line with career aspirations and personal priorities
of individuals, a company spokesperson said in response to emailed questions.
The exits come at a time when Vedanta is planning to invest around Rs 12,000
crore in its Barmer asset to augment production. Though Vedanta Resources
announced the acquisition of 58.8 per cent of Cairn India from Cairn Energy for
$8.67 billion in August 2010, the acquisition got completed in December 2011.
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INDIA INC’S EARNINGS LAG UNDER MODI GOVERNMENT, BUT OPTIMISM
REMAINS
India’s Prime Minister
Narendra Modi’s moves to cut red tape and streamline the tax system have won
him plaudits, but data shows that the Modi government’s pro-business agenda has
failed to translate into earnings growth for most Indian corporations. As
India’s top software services companies Tata Consultancy Services Ltd and
Infosys Ltd get set to kick-start another earnings season – the last under
Modi’s current tenure – expectations remain muted. Yet, Indian stock markets
trade near record highs and many investors remain upbeat. Interest rates have
fallen quite drastically and retail investors are left with less choice, says
Krish Subramanyam. Equities have been a preferred investment, and having Modi
has kept markets buoyant. Hopes of Modi returning as prime minister after elections
that get under way on Thursday have kept foreign investors bullish on India,
while the domestic audience rides a wave of patriotism after tensions with
arch-rival Pakistan spiked in February. Local markets rose after the tensions
eased in March. Foreign inflows into Indian equities were a net $6.7 billion in
January-March, more than reversing outflows of $4.4 billion in 2018. The NSE
index has risen about 7 percent this year, and about 63 percent since Modi took
office in 2014. Recent opinion polls suggest Modi’s Bharatiya Janata Party-led
(BJP) alliance will win a thin parliamentary majority in the elections. If
opinion polls suggest Modi will not return, that could cause some nervousness,
said Gautam Chhaochharia, head of India research and a managing director at
UBS. The stock market has rallied without support from earnings. Aggregate data
on 399 of India’s largest listed companies for which comparable data is
available shows earnings have fallen in four of the five years of Modi’s
tenure, whereas they rose in four out of the five years his predecessor
Manmohan Singh was prime minister. The data, sourced from Refinitiv, also shows
that on average, earnings rose 11.94 percent annually under the prior
government, while they fell 3.72 percent during Modi’s time. The underlying
earnings trajectory is not even average, it’s one of the worst, said
Chhaochharia. The ratio of corporate profit to gross domestic product (GDP) for
companies in the Nifty 500 Index was 2.8 percent in 2018, the lowest in 15 years,
according to a report by Motilal Oswal Securities. The nearly 75 percent rise
in the Nifty 500 index during Modi’s tenure also reflects a flight of money
from traditional investments such as real estate and gold into shares following
his shock 2016 ban on high-value bank notes.
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VODAFONE INDIA’S $3.5 BILLION EQUITY ISSUANCE NOT ENOUGH:
FITCH
Vodafone India’s $3.5
billion equity issuance may be insufficient going ahead, says Nitin Soni. If
you talk about Vodafone-Idea, the entity is a bit stretched right now. They are
losing revenue market share rapidly to Jio and Airtel as well, the director,
Asian corporates, told, adding that it may come down eventually to 30 per cent.
If that does happen, it would be down from 40 per cent at the time of merger of
the British telecom giant Vodafone and the Aditya Birla group's Idea Cellular. They
have to at least invest about $3.5 billion plus annually on the capex to avoid
any network congestion and their EBITDA has fallen significantly, said Soni.
Soni pointed out that Vodafone India’s EBITDA is only $600 million plus which
means their net debt to operating profit is quite high. Fitch also believes
that Bharti Airtel will raise another $3 billion through the African IPO by mid
this year and another $2 billion from the sale of stake in Indus and Infratel
merged entity. That will give a lot of relief to the balancesheet. Bharti’s FFO
adjusted net leverage is quite high and that equity injection will reduce the
leverage considerably and we do believe that after all these transactions,
Bharti will be left with deferred spectrum liabilities in its Indian operations
and will have about $2-2.5 billion at its African entity which will be quite
comfortable, he added.
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MUTUAL FUNDS WITHHOLD, ROLL OVER FMPS WITH EXPOSURE TO ZEE
GROUP
The debt market-related
troubles have finally started casting their long shadow over mutual funds.
Kotak Mahindra Asset Management Co. Ltd has been forced to withhold a part of
the redemption due to unit holders of a fixed maturity plan (FMP) maturing on 8
April. The asset management company (AMC) was forced to take this step because
it is facing delayed repayments in some of the debt instruments it has invested
in, particularly paper issued by companies belonging to the troubled Essel
Group. We have returned 100% of the principal amount to investors except for
one FMP. The impact is primarily on the returns. We have kept aside some units
with their corresponding Net Asset Value (NAV) and we expect to allow investors
to realise these units once the Essel Group companies pay us back, latest by 30
September 2019. We refrained from selling the shares that were collateral for
the paper concerned because this would have caused market panic and wouldn’t
have allowed us to realise their full value, said Lakshmi Iyer, head (fixed
income) at Kotak AMC. Mutual funds have ₹7,000 crore exposure to
the Essel Group. The paper in question was backed by shares in Zee
Entertainment Enterprises Ltd. Nilesh Shah, pointed out that the mutual fund
had secured additional concessions in lieu of the forbearance. We have taken
personal guarantee of Subhash Chandra, the promoter of the Essel Group, over
and above Zee shares for better security. We have also secured upside sharing
on a graded basis on stake sale in Zee over and above the coupon rate of the
existing debentures, he said. Meanwhile, HDFC Asset Management Co. Ltd has also
announced rollover or extension of maturity of one of its FMPs. The close-ended
scheme was due for maturity on 15 April 2019, and is now extended till 29 April
2020. The purpose of rollover or extension is due to the current interest rate
scenario and portfolio positioning, the yields prevailing in the short maturity
bucket present an option for investors to lock in their investments at current
prevailing yields, a HDFC AMC statement said. Typically, in the situation where
assets are not realised, AMCs have three options: take a hit on their books,
roll over the scheme, or mark down the security to zero. Altogether, nine AMCs
are exposed to the Essel Group across 87 schemes, including FMPs and open-ended
debt funds. As a percentage of scheme assets, exposure to the Essel Group
ranges from a negligible amount to as much as 11.96% in the case of an HDFC FMP
maturing on 31 July 2019. Kotak AMC has exposure to Essel Group debt across six
FMPs and two open-ended funds. The Securities and Exchange Board of India
(Sebi) is examining the situation very closely, said a person with direct
knowledge of the matter. Sebi will write to Kotak for an explanation that
whether trustee approvals were taken before the decision on holding back some
of the paper in the FMP. Sebi has so far not given any opinion on the agreement
between the fund houses to not sell the Essel Group securities. But Sebi is
concerned and has asked all the fund houses to provide details of debt schemes
which hold paper backed by promoter shares. The roles of trustees on giving
approval to such debt schemes is being monitored very closely, said this
person, requesting anonymity. To be sure, there is nothing in the regulations
that prevents such a carve out.
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AIRTEL TIES UP WITH ERICSSON TO OFFER HD QUALITY CALLING ON 4G
SMARTPHONES
Bharti Airtel on Wednesday
announced it has selected Swedish telecommunications manufacturer Ericsson to
expand its pan-India voice over LTE (VoLTE) services to offer HD-quality
calling over 4G smartphones and smart watches Airtel will deploy the Ericsson
Cloud VoLTE solution to deliver VoLTE services onto a customer data centre. We
remain committed to building a future-ready network as part of our network
transformation programme 'Project Leap' and deliver best-in-class digital
experience to our smartphone customers, said Randeep Sekhon. As part of Project
Leap, Airtel is offering innovative communication services. The Ericsson Cloud
VoLTE solution enables high-definition voice (HD voice) and provides modern
communication service experiences across many types of devices, over LTE, Wi-Fi,
and future 5G access. According to the latest Ericsson Mobility Report, India
is expected to have more than 780 million VoLTE subscriptions by 2023. VoLTE
technology will also be the foundation for enabling 5G voice calls on different
types of 5G devices.
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WORLD NEEDS FASTER ECONOMIC GROWTH TO CURB POVERTY: WORLD BANK
CHIEF DAVID MALPASS
The new World Bank Group
President David Malpass said he is concerned the global economy is not growing
fast enough to lift people out of poverty. Its very important that global
growth be faster, Malpass told, in his first media appearance since being
confirmed last week as the development lenders chief. That is a key part of
meeting the challenges in poverty, on shared prosperity, to have more growth
from the developed countries as well as the developing countries, he added. Earlier
on Tuesday, the International Monetary Fund cut its forecast for global growth
to the lowest since the financial crisis a decade ago, amid a bleaker outlook for
major advanced economies. The move came as finance ministers and central
bankers gather in Washington for this weeks semi-annual meetings of the
International Monetary Fund (IMF) and World Bank, which focuses on reducing
extreme poverty. The mission of the bank is urgent, and that is because every
day more people are needing jobs and working in challenging situations, either
in fragile or conflict states, said Malpass, a former senior Treasury official
who was nominated for the World Bank position by President Donald Trump. Malpass
said there was no need for a restructuring at the development lender, though he
would like to see it focus its programs on specific benchmarks, such as raising
median incomes. He also said that the bank will continue to fight climate
change, which he described as a key problem. The United States (US) under Trump
has pulled back from international efforts against global warming.
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ERICSSON SHOWCASES 5G, IOT USE CASES
Telecom technology major
Ericsson on Wednesday showcased use cases of 5G and Internet of Things (IoT)
here, including Ericsson Spectrum Sharing, Intelligent Managed Services and
Communication on Smart Devices. The Swedish company also showcased other
technologies such as the concept radio access network products called Radio
Stripes, to new Artificial Intelligence (AI) and Machine Learning (ML) based
ready solutions. Ericsson now has 18 publicly announced 5G deals with customer
names globally and we have already shipped 3 million 5G hardware ready radios
till now, said Nitin Bansal, Head of Ericsson India and Head of Network
Solutions, South East Asia, Oceania and India.
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OVER 6 LAKH ATTACKS ON MUMBAI CLOUD SERVER HONEYPOT
Cybercriminals attempted
attacks on a Mumbai Cloud server honeypot more than 678,000 times in a month,
which was second to Ohio in the US that recorded more than 950,000 login
attempts, among a total of 10 honeypots placed globally, global cyber security
major Sophos said on Wednesday. The honeypots were set-up in 10 of the most
popular Amazon Web Services (AWS) data centres in the world, including
California, Frankfurt, Ireland, London, Ohio, Paris, Sao Paulo, Singapore and
Sydney over a 30-day period from mid-January to mid-February. A honeypot is a
system intended to mimic likely targets of cyberattackers for security
researchers to monitor cybercriminal behaviour. Cloud servers were subjected to
13 attempted attacks per minute, per honeypot, on an average. With businesses
across the globe increasingly adopting Cloud technology, the report revealed
the extent to which businesses migrating to hybrid and all-Cloud platforms are
at risk. The aggressive speed and scale of attacks on devices demonstrates the
use of botnets to target an organisation's Cloud platform, Sunil Sharma,
Managing Director, Sales, India and Saarc, Sophos, said in a statement. Continuous
visibility of public Cloud infrastructure is vital for businesses to ensure
compliance and to know what to protect, the report emphasised.
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HONG KONG'S STOCK MARKET OVERTAKES JAPAN TO BE WORLD'S THIRD
LARGEST
The city’s equity market
has overtaken Japan to be the world’s third largest in value, behind only the
U.S. and mainland China, courtesy of a rebound in Hong Kong stocks after their
worst year since 2011. Hong Kong’s market cap was $5.78 trillion as of Tuesday,
compared with $5.76 trillion for Japan. The Asian city’s Hang Seng Index
climbed 17 per cent this year through Tuesday, when it closed at its highest
since June 15. Internet giant Tencent Holdings Ltd. has been the main driver
with a 22 per cent gain. Japan’s Topix Index advanced 8.3 percent in that
period. Both markets declined Wednesday, as an economic outlook from the
International Monetary Fund renewed concern about a slowdown in global growth
and after the US threatened tariffs on the European Union. The Hang Seng Index
slipped 0.1 per cent, still closing above the 30,000-point level that it broke
through earlier this month. The Topix fell 0.7 per cent.
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CHINA’S BITCOIN BAN: ELECTRICITY WASTAGE IS PUSHING WORLD’S
BIGGEST CRYPTO MINING CENTER TO ELIMINATE IT
After remaining the
epicentre of global bitcoin mining, China has finally proposed to ban
cryptocurrency mining The Chinese government has drafted plans to stop
cryptocurrency mining amid as part of industrial activities it wants to end,
news agency Reuters reported. World’s second largest economy is known as the
largest market for computer hardware designed to mine cryptocurrencies. On
Monday, China’s central state planner, the National Development and Reform
Commission, included cryptocurrency mining in a list of 450 wasteful and
hazardous activities slated for elimination. The list includes over 450 activities
that the agency wants to phase out as they fail to follow regulations and are
unsafe, wasted resources or polluted the environment. The popular
cryptocurrency bitcoin surged nearly 20 per cent since hitting a record-high in
2017-end and broke $5,000 for the first time since mid-November. In the recent
times, nations with cheap electricity have come out as major hosts of
cryptocurrency mining.
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APPRAISAL TIME! THIS CITY HAS HIGHEST SALARY HIKE EXPECTATION
THIS YEAR, SAYS SURVEY
Professionals in the
financial capital are looking at higher pay hikes of 20 percent or more, while
those in Delhi-NCR and Bengaluru expect only about 10 percent increment this
year, says a survey. Professionals in Mumbai, Pune and Chennai are looking for
higher pay hikes of above 20 percent, while their counterparts in Delhi-NCR and
Bengaluru expect only 0-10 percent hike, says a survey by jobs portal Shine.com
conducted across professionals from across industries in Mumbai, Delhi-NCR,
Bengaluru, Hyderabad, Pune and Chennai. It has found that in Mumbai almost 37
percent of those polled are expecting increment of above 20 percent, while in
Pune and Chennai it is 36 and 38 percent, respectively. As many as 62 percent
of employees in Mumbai are looking for over 20 percent appraisal in the
education or training sector, around 56 percent in the auto sector are eyeing
the same. Further, 48 percent in the auto sector and 38 percent in the
education/training sector are also looking for over 20 percent hike in Pune. In
Bengaluru, professionals are expecting up to 10 percent hikes, while those in
Delhi-NCR are on a lower side. Over 46 percent of e-commerce sector employees
in Bengaluru are only expecting an average growth of 11-15 percent.
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GITA GOPINATH JUMPS INTO INDIA’S ‘UNREAL’ GROWTH DEBATE
Gita Gopinath is the
latest to join the chorus of the prominent people raising doubts over India’s
real economic growth, after a recent letter by 108 economist raised concern and
sparked a debate on the credibility of official data. There are still some
issues with the way India calculates its growth rate and the IMF is paying
close attention to the new numbers that are coming out, Gita Gopinath said. India,
being touted among the fastest growing economies is also an aspiring nation
with one of the youngest populations in an aging world. However, the official
growth numbers have come under severe criticism from time to time as the growth
rate does not resonate with the situation on the ground, according to various
experts. Although Gita Gopinath welcomed the changes made to the method of
estimating GDP growth rate such as revision in base years, she raised concerns
over the use of deflator in the process. GDP deflator is a measure of inflation
which captures the rise in GDP due to higher prices rather than an increase in
output, she said.
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SAMSUNG IS LOSING TO CHINESE TECH GIANTS IN INDIA, CAN IT
BOUNCE BACK?
Since the fourth quarter
of 2017, when Counterpoint Research pegged China’s Xiaomi the number one brand
in India Samsung has had to settle for the runners up spot despite a much wider
product range across multiple price points. Even the likes of OnePlus — with a
single model every year in the Rs 30,000-plus segment and deft use of social
media and online channels — have challenged Samsung’s premium hegemony. Mobile
handsets comprise 62.9% of its Rs 59,370-crore (as of March 2018) business in
India. Another 14.14% is from sale of network equipment. The rest comprises
consumer durables — seen as less challenging and more stable than smartphones
—where Samsung is losing ground. Barring microwaves, for which volumes in India
are not much to speak about, Samsung has had to face brutal competition,
particularly in mass market segments — like sub-40 inch television sets, 165
litre refrigerators, 1.0-1.5 tonne air-conditioners and so on. Only in January
2019 did it launch the Galaxy M Series in the affordable- to mid-market range
to take on growing competition from the Xiaomi Redmi models and other popular
brands. Faisal Kawoosa, chief analyst, TechArc, says, South Korean brands are
more R&D driven and think more long term. The Chinese are quicker to
respond to market changes. Pankaj Mohindroo, says, The Indian mobile phone
market has gone through tremendous consolidation. Samsung’s value market share
has dropped from over 40-45% in 2013-14, to current levels of 20-25%. Even its
results have been a challenge for Samsung. Though revenues increased, actual
realisations suffered dramatically, says Anchal Agarwal. Samsung and Xiaomi
command 52% of the Indian smartphone market. According to Counterpoint, between
the fourth quarters of 2016 and 2018, Xiaomi increased share of smartphone
shipments from 9% to 27%, while Samsung dropped from 24% to 20%. In the premium
category (Rs 30,000-plus), Samsung led in 2018 with 34% market share. But here
too, competition is intensifying. Anshika Jain, says, Word of mouth helped
OnePlus. With its Galaxy M Series targeted at millennial buyers, Samsung is
selling specs-rich handsets at prices it never attempted earlier. Next, it
relaunched the Galaxy A series, targeting millennials and GenZ, attempting to
touch $4 billion sales this year from this series alone. Online accounts for
around 36% of smartphone sales. The Chinese were first to move online as
Samsung watched from the ringside, relying on its large distribution network
and retail partnerships. Samsung has now made its online foray but it won’t
have the advantage of Xiaomi and OnePlus — the deep discounts that the new
ecommerce policy has stopped. As per trackers, Xiaomi has around 50% share in
online smartphone sales. Samsung has entrusted the online challenge to
corporate vice-president Asim Warsi (head of the online smartphone business)
and consumer electronics head Raju Pullan (also online business for televisions
and home appliances). The last quarter saw sales of almost 2 million units of
the Galaxy M series, but it’s still feeling the heat, says an expert who wished
not to be named. In appliances, Samsung trails at number 2, with South Korean
rival LG India dominating in categories such as refrigerators and washing
machines. Among air-conditioners, the Tata-owned Voltas is the leader, with 23%
share, and LG is at second spot, with 16%, as of January 2019, says sales
tracker GfK. Samsung has progressively lost share from when it was number 2 in
the AC market to around 4.5% now, with brands such as Lloyd, Hitachi, Daikin
and Blue Star outpacing it. However, it is also true that the top three TV
makers — Samsung, LG and Sony — have been cornered in the entry-segment, or the
32 TV set, by price-aggressive online brands, he adds. As per industry
estimates, the 32-inch contributes half of total TV sales by volume and 35% by
value.
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GOOGLE UNVEILS SOFTWARE-BASED OPEN PLATFORM 'ANTHOS'
Google has introduced a
new open platform called Anthos to run and manage apps from anywhere. Based on
the Cloud Services Platform that Google announced in 2018, Anthos lets users
run applications on existing on-premise hardware investments or in the Public
Cloud. Anthos not only allows customers to deploy Google Cloud in their own
data centres but also gives them the flexibility to build, run and manage their
workloads within their data centre, on Google Cloud, or other cloud providers
(Multi-Cloud), without making any changes, said Thomas Kurian. Anthos will also
let users manage workloads running on third-party clouds like Amazon AWS and
Microsoft Azure. Google also announced Anthos Migrate in beta, which
auto-migrates virtual machines (VMs) from on-premises, or other clouds,
directly into containers in Google Kubernetes Engine (GKE) with minimal effort.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
SOCIAL MEDIA A POPULAR, YET NOT TRUSTED, NEWS SOURCE: POLL
About half of Americans
and Canadians get their news primarily from social media yet most don't trust
this source of information, according to a survey released Tuesday. According
to the Maru/Matchbox poll, 52% of Americans and 48% of Canadians said they find
out what's happening in the world through social media platforms such as
Facebook, Instagram and Twitter. Only television (64%) and news websites (49%)
in the United States ranked higher as sources of news. But while trust in
traditional news services including radio and newspapers rated above 80% in
both countries, trust in social media was lowest among all sources at 43% in
the United States and 32% in Canada. Political news is the most likely to
contain misinformation, according to respondents. That was a significant
concern for Americans (84%) worried about fake news in the upcoming 2020 US
presidential election. But half were confident they could easily spot false or
inaccurate information. Social media is changing our relationship with the
news, said Sara Cappe of Maru/Matchbox.
#For Source of Information copy and paste the heading in google.
Thanks & Regards,
CS Meetesh Shiroya
Thanks & Regards,
CS Meetesh Shiroya
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