Buffett: My successor is in the dark too

In his annual investor letter on Saturday, Buffett said Berkshire's board had identified someone who will replace him as CEO when the 81-year-old investor eventually leaves the post. But he did not identify that person in the letter, and in a CNBC interview on Monday, he rejected suggestions that he should. The public does not know who will be the next CEO of other major corporations, he said, and there is a disadvantage to having a "crown prince" in place. "Well, we have four stocks that we have $45 billion invested in: American Express, Coca-Cola, Wells Fargo and IBM. Every one of those four companies ... has changed management since we bought our shares. I didn't have the faintest idea who the successor of management would be in any of those four, but we've put billions and billions of billions of dollars in there," Buffett said in an interview from the printing plant of the Omaha World-Herald, the hometown newspaper he bought late last year.

Source: Reuters

Lower supplies likely to lift tea prices 10-15%

Consumers may have to pay about 10-15% more for tea soon as wholesale prices rise on the back of a faltering supply. "There is a shortage of tea in the country. We think prices of good premium teas will go up by Rs20 per kg to Rs 210-Rs 220 per kg. Similarly, low-end teas will go up by Rs15 per kg to Rs100. But there will hardly be any appreciation in orthodox tea prices. At the retail end, we see prices to go up as well but it will largely depend on companies and buyers who are operating at the auctions," Indian Tea Association chairman CS Bedi said. Dhunseri, one of the large players in western India and sells under the brand name Lal Ghora and Kala Ghorahas, plans to increase prices. "Within the next two months, our packet tea prices will increase by 10%," said Dhunseri Tea chairman CK Dhanuka.

Source: Economic Times

Budget 2012: Will the aam admi get some tax sops?

Budget being round the corner, the so called 'Aam Admi' would be curious to know if there will be any increase in their disposable income. Every year there is a general expectation from the individual tax payers on the budget proposals relating to personal taxation, especially on the tax rates/tax slabs. This expectation is further heightened this time due to the impact of global economic slowdown directly or indirectly impacting the growth in India and inflationary trends in the domestic market. Let us first look at the change in tax slabs over the last 5 years. As seen above, the exemption threshold has been increased over the years. One needs to keep in mind that Indian tax laws do not provide any major deduction (other than a threshold of Rs 1,00,000 & mediclaim) for expenditure to salaried tax payers and all income above the threshold limit is liable to tax. The budget 2012-13 may bring some cheer to the Aam Admi as the government is said to be considering restructuring of income tax slabs as well as the income tax exemption limit.

Source: Economic Times

Cotton exports to top 100 lakh bales this year

India's cotton exports will cross 100 lakh bales for the first time, marking a key milestone in the country's sevenyear journey from net importer to the world's second largest exporter with the cheapest cotton. At least one-third of the cotton crop may be exported this year given the pace at which deals are being signed. India is expected to harvest a record 345 lakh bales this season at a time when the textile industry is facing its most severe downturn. Buoyant exports have come to the rescue of lakhs of farmers in India's eight cotton-growing states that had otherwise been forced to make distress sales below the minimum support price due to slow purchases by local textile mills. India has the world's largest area under cotton, ranging between 10 million and 11 million hectares. Keen to garner revenue from this heavy outflow, mainly to China, government may consider collecting Rs10,000 per tonne as export duty from traders to fill its own coffers, said a senior official, who declined to be named.

Source: Economic Times

Budget 2012: India Inc debates on tax holidays for smaller IT firms

Small and mid-sized technology companies not only need tax incentives but also need a simpleto-operate tax regime with no ambiguities for the Indian IT industry to be competitive on a global scale, a panel of experts concluded at a recently-held pre-Budget debate. At The Economic Times Pre-Budget Panel Debate on Tax Holidays for Smaller IT Firms -- Do They Really Need It? held in Bangalore, KK Natarajan, Chief Executive Officer of Mindtree said, that like companies, nations need to have a vision to lead in a few areas and incentives must be aligned to the vision.

Source: Economic Times

Accumulating expectations from the Budget

Most of those watching closely the mining and steel market are eagerly waiting for something special to happen in the coming days, something that would diminish the fear of the unknown and take the industry boldly forward. The reality is indeed worrying.Growth in mining and quarrying sectors has nosedived to -2.2% in the current fiscal as opposed to 5% growth in last year. Construction sector is growing at 4.8% in 2011-12 against 8% clocked in the previous year.Manufacturing industry comprising around 80% of the industrial output has notched 3.9% growth in the first 10 months as opposed to 9% growth same period of last year. The impact on steel consumption was direct as it has gone up by a meagre 4.7% in the first 10 months against a corresponding growth of 6.2% last year.

Source: Financial Express

Wiser from FY12 shock, Budget to peg crude at $110

Union Budget 2012-13 will estimate the crude oil price of the Indian basket to average above $110 a barrel in 2012-13 as against $90 dollar a barrel set in the current fiscal, an assumption that led to a higher-than-expected subsidy outgo, officials familiar with the matter said. The finance ministry had to sanction an additional R45,000 crore in oil subsidies this fiscal, taking the total disbursal to thrice the budgeted R23,640 crore. Higher crude prices also boosted the fertiliser subsidy bill, which is likely to cross R95,000 crore as against the budgeted figure of R50,000 crore.

Source: Financial Express

NPCIL in talks with LIC, foreign banks to raise debt

After roping in State-run lending agency Power Finance Corporation, Nuclear Power Corporation of India Ltd (NPCIL) has now initiated talks with Life Insurance Corporation (LIC) as part of its debt raising programme to finance its ambitious Rs 3,00,000-crore investment plan for the 12th Plan Period. NPCIL, which will be raising 70 per cent of this proposed investment (or Rs 2,10,000 crore) through debt, has also shortlisted 10 out of 100 overseas banks to source its foreign funding. Apart from debt financing, NPCIL is also broadening its equity base by taking on board cash-rich PSUs, such as oil marketing companies, to pick up equities in different proposed nuclear power plants.“We are planning to take up work on 20 nuclear reactors during the 12th Plan Period, with the sites being almost finalised. Of these, 14 will be light water reactors, as part of our new thrust on this category of reactors to fuel India's future nuclear energy plans,” Dr S.K. Jain, NPCIL Chairman and Managing Director, told mediapersons on the sidelines of an international conference here.

Source: The Hindu Business Line

Government to set up agency to scan tweets, emails and updates

The government is setting up an internet scanning agency which will seek to monitor all web traffic passing through internet service providers in the country. The scanning agency to be called National Cyber Coordination Centre (NCCC), will issue 'actionable alerts' to government departments in cases of perceived security threats. The move comes as the government has been unable to prevent many terror attacks, in the absence of a credible internet scanning system. According to the minutes of a meeting held on February 3, 2012, at the National Security Council Secretariat under the PMO, the National Cyber Coordination Centre will 'scan whole cyber traffic flowing at the point of entry and exit at India's international internet gateways'. The web scanning centre will provide 'actionable alerts for proactive actions' to be taken by government departments.

Source: Economic Times

Sensex plunges 478 points on spiralling oil prices and profit booking

After an uninterrupted rise in stocks since January, investors needed an excuse to take home some profits. Higher oil prices offered them the perfect reason to dump stocks, resulting in benchmark indices posting their highest single-day fall in four months. Till last week, India was the best performer among global markets, and surprisingly even on Monday, when the market tanked, foreign portfolio managers were net buyers. Though Brent crude slipped below $125, snapping five days of gains, after touching 10-month highs, worries persist that tensions between Iran and Israel could lead to supply disruptions. "The rise in crude oil prices is the single reason for the fall in the markets today. It is difficult to know how long it will persist because these are geopolitical developments," said Nandan Chakraborty, MD-institutional equity research at Enam Securities. "That said, market has gone up a lot recently and it was waiting for a trigger to take a pause.

Source: Economic Times

Health ministry rejects DoP’s recommendation on pricing of essential drugs

The health ministry has suggested that the pricing of essential medicines be based on either the average price of the three cheapest brands or the government's bulk procurement price, rejecting a draft policy of the department of pharmaceuticals. The ministry's recommendation, made earlier this month, has drawn flak from drug manufacturers who say it can wipe out a third of country's Rs 60,000-crore drugs market. "It will have a crippling effect and erode at least one-third of the market," Ameesh Masurekar, director of drug market research firm AIOCD Pharmasofttech AWACS, told ET.

Source: Economic Times

Satyam scam: HC asks Sebi not to begin independent investigation

In partial relief to two accused in the multi-crore Satyam scam, the Bombay High Court on Monday directed the Securities and Exchange Board of India (Sebi) not to begin its independent inquiry into the controversy until May 7.The court's direction came after the two auditors alleged to be involved in the scam, S Gopalakrishnan and Talluri Srinivas, moved a petition demanding that Sebi should be restrained from holding its own inquiry while criminal proceedings are on against them. Arguing for the petitioners before a division bench of Chief Justice Mohit Shah and Justice Ranjit More, senior lawyer Fredun De Vitre contended that appearing before SEBI could adversely affect their defence in the ongoing criminal trial.

Source: Financial Express

VAT worth Rs 11,671 crore due from 424 companies in Guj: Vala

Gujarat's Finance Minister Vaju Vala today informed the state assembly that over 424 companies in the state owe over Rs 11,671 crore as Value Added Tax (VAT) dues to the government. Replying to a question from GPCC President Arjun Modhvadiya, Vala said that companies like GAIL, ONGC, RIL, Crompton Greaves owe the state government VAT dues of over Rs one crore in the last three years (2008-2011). "The government realised Rs 2,211.55 crore VAT from the companies in Vadodara in 2011, while Rs 605.53 crore was due," Vala said on floor of the house, in reply to the question of Modhvadiya.

Source: Economic Times

SEBI order for 'fair valuation' of short-term debt leaves fund managers in a fix

A recent Sebi notification on valuation of debt funds has left fund managers in a quandary. The regulator has asked fund houses to value debt instrument below 61 days on the basis of a "fair valuation" method worked out by asset management companies. What's worrying fund houses is the fact that there are 8 to 10 different ways of calculating fair valuation, each having a different impact on the returns of debt schemes. The Sebi order, which was notified last week, states that investment valuations are to be done on the principles of fair valuation - "in truth and fair manner through appropriate valuation policies and procedures." However, the regulator has asked boards of AMCs to identify fair valuation methodologies to value debt papers below 61 days. "The regulator has not proposed any 'fair valuation' model. To tell you the truth, we don't know what Sebi means by 'fair valuation'," said the fixed income head of a bank-promoted fund house.

Source: Economic Times

Power ministry moves Cabinet note for 19% duty on power equipment imports

The power ministry has moved a Cabinet note which is believed to have proposed imposition of 19 per cent duty on imports of elctricity equipment for large power projects. "We received comments from all the concerned ministries based on that we have sent a note to the Cabinet, now it can be taken up any time soon," Power Secretary P Uma Shankar told media, but did not divulge the percentage of duty to be levied on equipment imports for projects of more than 1,000 MW capacity. However, sources said that the concerned note is likely to approve up to 19 per cent import duty on power gear, in a bid to safeguard the interest of domestic equipment makers like BHEL and Larsen & Toubro (L&T).

Source: Economic Times

Earning up to Rs 5-L salary? No need to file returns

Individuals with annual income up to Rs 5 lakh are now exempted from filing personal income tax return for the current financial year. This relief was proposed in the Union Budget last year. However, a circular from the Central Board of Direct Taxes (CBDT) last week indicates that this relief has been extended for this financial year. An individual can now file tax returns for this financial year by July 31, 2012. However, the exemption comes with some terms and conditions, which determine the eligibility of an individual to seek the exemption from filing returns.

Source: Economic Times

Gati in talks to sell stake in shipping arm to Bernhard Schulte

Hyderabad-based logistics major Gati is in talks with German ship-management company Bernhard Schulte to sell a strategic stake in its loss-making shipping business to raise cash to tide over the financial crisis. Bernhard Schulte will acquire significant stake in Gati's demerged shipping business, Gati Ships, helping it to charter container vessels to capitalise on the growing cargo trade emerging out of India, said a person close to the transaction. Loss-making Gati Ships, founded in 1989, owns four container vessels, fetching a valuation of close to 200 crore, analysts said. Bernard Schulte, which manages a fleet size of more than 650 vessels, operates in 25 countries.

Source: Economic Times

Hero MotoCorp to buy minority stake in Erik Buell Racing

Hero MotoCorp, the world's largest two-wheeler maker, will buy a minority stake in US motorcycle firm Erik Buell Racing (EBR) for an undisclosed amount. "We have a flexible free-flowing pact with EBR, which would be developed into a equity partnership," Hero MotoCorp MD and CEO Pawan Munjal said. The move is aimed at securing uninterrupted technological support from the US racing motorcycle maker once associated with iconic brand Harley-Davidson. After Hero parted ways with Japanese major Honda, its partner for 27 years, last year, industry watchers had identified lack of cutting-edge technology as the biggest challenge for the Indian firm to hold on to its leadership position in the market. Hero had last week announced a technology tie-up with EBR, its first partnership after splitting with Honda.

Source: Economic Times

Budget 2012: Budget may bring sweet relief for ailing Air India

There could be some good news for ailing Air India in the upcoming Budget with the government considering a support package of about 10,000 crore for it, including 6,600 crore worth of equity infusion. The Union Cabinet is expected to consider this package shortly to enable inclusion of the provision in the general Budget, official sources said, adding that a Cabinet note has already been circulated for comments from various ministries. The cash-strapped airline is likely to get a 10,000-crore package in the next financial year, including additional equity of 6,600 crore and other support, the sources said.

Source: Economic Times

Berkshire Hathaway's Q4 net slides 30% as gains narrow on derivatives

Berkshire Hathaway Inc. said fourth- quarter profit fell 30% on smaller gains from Warren Buffett's portfolio of derivatives. Net income declined to $3.05 billion, or $1,846 a share, from $4.38 billion, or $2,656, a year earlier, Omaha, Nebraska-based Berkshire said on Sunday in its annual report. Buffett, Berkshire's chairman and chief executive officer, is investing in stocks and acquisitions as operating units generate cash. Derivatives bets, made in prior years on long- term gains in stocks and the solvency of borrowers, produced more than $2 billion of profit in the fourth quarter of 2010. "These are contracts that don't expire for another 10 or 15 years and might fluctuate a lot every quarter," said David Kass, a professor at the University of Maryland's Robert H. Smith School of Business. Buffett is "not really bothered by the volatility short term," said Kass, in an interview before results were released. Berkshire has slumped 4% in New York in the last 12 months, compared with a gain of 4.6% for the Standard & Poor's 500 Index.

Source: Economic Times

Budget team: Mix of old & new faces

As the countdown to the Budget begins, every movement in the finance ministry is closely monitored, outsider entry is restricted and phone lines of officials involved in the Budget process are tapped.This will be the first Budget for all five secretaries in the finance ministry in their existing capacity.Finance and Revenue Secretary R S Gujral came in place of Sunil Mitra, who was revenue secretary last year, while R Gopalan, who was financial services secretary last year, assumed additional charge as economic affairs secretary when Ashok Chawla, who was also the finance secretary at that time, retired in January 2011.

Source: Business Standard

Cheap ECB money to decide Dalal Street course

The extent of foreign institutional purchases amid the start of ECB's second round of funding operation for the region's lenders on Wednesday will be key to the prospects of Indian stocks in the week ahead. Though a section of the market feels that some fatigue is setting in, with the Sensex surging 16% so far in 2012 without any big breather, optimists are betting that a portion of the cheap money pumped by ECB into banks there could make its way to riskier assets, including Indian equities. Since January 2012, foreign funds have poured over $5 billion into Indian equities, after ECB's longer-term refinancing operations extended three-year loans to the tune of 489 billion (Rs 32-lakh crore) to 523 European banks. The money helped banks refinance debt and helped avert a possible crash of the continent's financial system.

Source: Economic Times

Microfinance firm Bandhan Financial Services to sell Rs 500-cr farm loans to IDBI

Microfinance company Bandhan Financial Services plans to sell Rs 500 crore worth of farm loans to IDBI Bank in what would be the biggest securitisation deal this year. Selling loans releases capital for MFIs and helps them deploy fresh loans to the poor without borrowing directly from banks. In securitisation, the portfolio goes off the seller's advances book and the risk gets transferred to the buyer. This, in turn, helps banks meet their annual priority sector and agriculture lending targets. "We are committed to strike a Rs 500-crore securitisation deal with IDBI Bank. The transaction will be through within a week," Bandhan chairman and managing director Chandra Shekhar Ghosh told ET.

Source: Economic Times

Govt to ease forward contracts curbs to facilitate strategic sales

The government plans to change rules and provide Indian companies with the flexibility of buying or selling shares to a strategic partner in future, easing decadesold restrictions on forward contracts. Companies, both in India and abroad, include clauses relating to put and call options in negotiated agreements to protect and hedge the interests of the seller and the buyer. India's securities laws don't allow certain contracts unless they are either related to spot delivery or settled in cash. The issue came to the fore last year when the Securities and Exchange Board of India (Sebi) directed Vedanta Resources and Cairn Energy to delete put and call options and preemption right clauses when Vedanta sought to buy Cairn's controlling interest in its Indian unit.

Source: Economic Times

Retail interest revives; small, mid-cap stocks see sharp rise

Retail investors seem to have been making a tentative re-entry into the stock market in the last couple of months, after having cut back on their trading activity as the indices fell sharply in 2011. At the National Stock Exchange (NSE), turnover in the cash segment has risen to 10.3 per cent of the overall turnover this month. Cash volumes, which made up 25-30 per cent of the turnover a few years ago, had fallen to a low of 6.7 per cent of overall volumes in December 2011. They have rebounded sharply in the first two months of 2012. Pointing out that higher cash volumes usually signal retail interest, Mr Motilal Oswal, Chairman and Managing Director, Motilal Oswal Securities, says: “There is a new set of investors coming into the markets. Systematic Investment Plans are bringing in first-time investors. More investors are taking the mutual fund route. Stock SIPs too are picking up, especially in the past six months.”

Source: The Hindu Business Line

Among nationalised banks, the small outperform the large in Q3

The macro environment has been hostile to the banks in the first three quarters of 2011-12. Elevated interest rates in an atmosphere of slowing economic growth have lead to pressure on asset quality on the one hand and higher provisioning on the investment portfolio on the other. How have the nationalised banks performed in this difficult milieu? In this article we consider the performance of nationalised banks (NBs) as a group which account for 50 per cent of the assets of the banking sector in India. To have a comparative sense of the performance across NBs, we consider two categories of them based on their business mix.

Source: The Hindu Business Line

Cost & energy audits now mandatory for Maharashtra sugar co-operatives

The Maharashtra government has made it mandatory for the co-operative sugar industry to perform cost and energy audits. This, if implemented seriously, is expected to save crores of rupees of the co-operatives. Maharashtra is the country's top sugar producer, having a turnover of about Rs 25,000 crore. The industry is concentrated in the co-operative sector which is controlled by political leaders. High level of inefficiency is one of its features and the industry often gets financial support from the state and Nabard. "We decided to make it mandatory for the sugar mills to do the cost audit because it is mandatory for the private sugar mills," Sugar Commissioner Vijay Singhal said.

Source: Economic Times

RBI for only ‘pure’ FDI in realty

The Reserve Bank of India (RBI), which has taken a firm stand against allowing external commercial borrowings (ECBs) in the real estate sector, now wants to clamp down on overseas investments in the sector through instruments that carry a fixed or variable internal rate of return. The central bank seems to be clear on allowing only pure foreign direct investment (FDI) in real estate where not firms but only specified projects can accept these foreign funds.In what could choke a crucial source of funding for the sector, the RBI has, in recent months, rejected investment proposals through the aforementioned instruments from foreign investors, including private equity firms, sources privy to the process told FE.

Source: Financial Express

Goverment mulls PSU banks to cut loan rates by March

The finance ministry is nudging state-owned banks to cut lending rates before March-end, though most lenders had initially taken a stand to review interest rates only next financial year. This has not been communicated in writing, but at a recent meeting, senior ministry officials asked bank chiefs to consider lowering interest rates. Even after the Reserve Bank of India cut banks' cash reserve ratio (CRR) in January, signalling a reversal in its monetary policy stance, bankers had said it would take a while for lending rates to soften.

Source: Economic Times

New chapter on company law

In India's history, the year 1857 is a landmark one , remembered for India's first war for independence. However, a few know that the first Companies Act in India was legislated in the same year, which after multiple iterations resulted in the Companies Act, 1956. Is it any wonder then that change is due? The Companies Bill, 2011 is a really positive step to modernise the law and make it relevant to match the current macroeconomic, microeconomic and corporate environment. While India is an ancient land, it is also a land of the very young, IT savvy population; it is also the land of entrepreneurs as well as a growing economy which is demonstrating its might in the world. This India is in line with the current global trends and, therefore, we should focus on the change that the Companies Bill, 2011 brings to corporate governance.

Source: The Hindu Business Line

Sebi to hire professional agency to educate investors

Capital market regulator Sebi will launch a big investor education programme through short films, TV and radio commercials in English and regional languages. To spread the awareness drive, it plans to hire a creative agency having an annual revenue of at least Rs 100 crore in the past three fiscal years. The objective is "to create general awareness on securities market, various products available in securities market and facilitate the participation of the retail investors in the securities market to invest with knowledge," Sebi said.

Source: Express India

Govt may hike duties on insulators to help local cos like Aditya Birla Group, BHEL

Chinese companies are threatening the survival of not just power equipment industry in the country, but also manufacturers of insulators for transmission systems who claim that a fifth of their market has already been usurped by subsidised products from across the border. The commerce department is working on a proposal for imposing higher duties on insulators - currently at a low 7.5% - to give a breather to local players such as the Aditya Birla group and public sector Bhel. "Representatives of power insulator manufacturing companies have approached us with details of Chinese products taking over the domestic market. We are studying the matter and may recommend higher import duties soon," a commerce department official told ET.

Source: Economic Times

VAT hike to offset CST crunch, says Ghadai

Finance Minister Prafulla Chandra Ghadai on Saturday defended the imposition of tax on sugar and textile fabric by raising the lower rate of VAT to 5 per cent, even as the Opposition Congress demanded a rollback of the proposal and staged a walkout protesting the Minister’s reply in the Assembly. The Opposition members cautioned that if the Government did not roll back its decision, there would be Statewide agitation. The issue of VAT hike came in for a marathon discussion for over three hours in the State Assembly on an adjournment motion moved by the Opposition.

Source: Daily Pioneer

Import duty on capital goods may be self-defeating

It goes without saying that the capital goods industry constitutes the fulcrum of the manufacturing base of any country. More than consumer goods the production of capital equipment can test the innovativeness of a society, its commitment to productivity norms and effort it puts in to attain higher levels at every stage. Innovations in consumer goods reflect the ability of a manufacturer to anticipate consumer tastes and product refinement in order to stay ahead of the competition; in capital goods, innovation's impact is felt all the way down the line such as on consumer goods manufacturers. To that extent the benefits of higher productivity levels and cheaper prices in capital equipment

Source: The Hindu Business Line

New tax deal for housing

It is proposed that the Direct Taxes Code, 2010 (‘DTC') will be introduced from April 1, 2012. It is an attempt to simplify the overall tax structure and lay-out of the tax provisions in a manner that these are better understood by the common tax payer. In this context, significant changes have been proposed in respect of taxability of house property income, which are worth noting. The income from letting of any house property owned by a person shall be computed under the head “Income from House Property”. The income from any house property (subject to certain exceptions) shall be computed under this head, regardless of the fact that the letting, if any, of the property is in the nature of trade, commerce or business. It has been clarified that provisions of taxability of income from house property shall not be applicable to the house property which is not ready for use during the financial year.

Source: The Hindu Business Line

Customs gets business friendly in tougher times

There have been several significant changes recently in Indian Customs laws, which have perhaps not received the attention they deserve. These changes include introduction of the concept of ‘self assessment' and post-import audit. Before these regulations came in, the primary onus of verifying correctness of classification, value, Customs duty and exemptions, etc, vested with Customs authorities, even though the importer/exporter were required to make all appropriate disclosures in the Customs documents, essentially Bill of Entry/Shipping Bill. With the introduction of ‘self assessment', businesses are expected to discharge their Customs duty liability, with no or minimal involvement of authorities at the port. Therefore, the onus in terms of correctly complying with the law substantially shifts to the businesses.

Source: The Hindu Business Line

I-T relief: House panel may push for higher deduction of Rs 3.20 lakh

The Standing Committee of Parliament on Finance is likely to recommend a deduction of Rs 3.20 lakh for income-tax relief. This limit may be made available for long-term savings, investment and expenditure on life insurance, health insurance and education for children. The committee may also recommend exemption limit for income-tax at Rs 3 lakh per annum as mentioned in the draft report, although some members are reportedly still pushing to increase it to Rs 5 lakh. The Direct Taxes Code (DTC) Bill tabled in Parliament had proposed a limit of Rs 2 lakh from the current limit of Rs 1.80 lakh.

Source: The Hindu Business Line

Templeton, UBS, others buy Citigroup's stake in HDFC

Citigroup, the global bank shoring up capital, sold its entire stake in HDFC for $1.9 billion, or Rs 9,300 crore, through block deals on the National Stock Exchange ( NSE) to many funds including UBS and Templeton, ending nearly a six-year courtship as investments more than doubled. The firm sold its 9.85% in India's largest mortgage lender at an average of Rs 658 apiece, realising an after-tax gain of approximately $722 million, or Rs 3,550 crore, Citi said in a statement. "The sale of Citi's remaining stake in HDFC is part of Citi's ongoing capital planning efforts," it said in the statement. HDFC's shares fell 3.6% to Rs 676.40. Oppenheimer, Waddell & Reed, UBS, Vontobel and Templeton were among the buyers of Citi's stake in HDFC, the transaction managed by Citi's investment banking unit, said people familiar with the deal. Citi's sale of its stake in HDFC is the biggest domestic share sale in almost a year.

Source: Economic Times

CCI approves Tata Power acquiring stakes in Tata BP solar JV

Competition watchdog CCI has approved the proposal of Tata Power to acquire remaining 51 per cent stake in Tata BP Solar from joint venture partner BP Alternative Energy Holdings. In an order, the Competition Commission of India noted that TPCL (Tata Power) and TBCL (Tata BP Solar) are not engaged in production, supply, distribution, storage, sale or trade of "similar or identical or substitutable goods or provision of services". "The proposed acquisition of further 51 per cent of the equity share capital of TBSL and other securities, if any, by TPCL is not likely to create any adverse competition concern... the Commission hereby approves the proposed combination under section(1)of section 31 of the Act," it said.

Source: Economic Times

HSBC Net Income Set to Rise With Standard Chartered Fueled by Asia Growth

HSBC Holdings Plc (HSBA) and Standard Chartered Plc, Britain’s two best-performing bank stocks last year, may say full-year profit rose as growth in Asia eclipsed the stagnating U.K. economy.HSBC may next week say earnings climbed 24 percent to $16.3 billion from the year-earlier period, helped by an accounting gain on the revaluation of its own debt, according to the median estimate of 19 analysts surveyed by Bloomberg. Net income at Standard Chartered will probably climb 9 percent to $4.73 billion, according to the median estimate of 17 analysts.

Source: Bloomberg

Sterlite to be merged with Sesa Goa: Vedanta

Anil Agarwal-led Vedanta Group has announced plans to merge Sterlite industries to Sesa Goa as part of its restructuring exercise. The merger will be done by an all-share transaction. Post consolidation Vedanta will own a 58.3 per cent shareholding in the new Sesa-Sterlite structure.“The merger of Sesa Goa to Sterlite will be at a 3:5 ratio,” Vedanta said after its board meeting Saturday. This means that for every 5 shares of Sterlite, 3 Sesa Goa shares will be issued.

Source: NDTV

Budget 2012: Tax offshore deals under DTC if 50% assets in India, panel may suggest

Mergers like the Vodafone-Hutchison , which are inked outside the country , will be subject to tax liability only if more than 50% of the assets involved are located in India, Parliament's standing committee on finance is expected to recommend in its report on the Direct Tax Code Bill. After detailed discussions at its meeting on Friday , where the suggested exemption limit was debated, committee chairperson Yashwant Sinha decided that the 50% cut-off was a reasonable compromise. Some members like CPI's Gurudas Dasgupta felt it was too generous, but others found it acceptable.

Source: Economic Times

Retail, HNI investors take fancy to MCX

The initial public offer (IPO) of the Multi Commodity Exchange (MCX) has brought the buzz back into the country’s primary equity issuance market. The MCX issue has clearly caught the fancy of retail and high net-worth individual (HNI) investors — the IPO was over bid 54.10 times till 6pm on Friday, the last subscription day of the issue.MCX, which was offering a little over 5.5 million shares through the book building route, received bids for nearly 300 million shares in three days. Till 6pm, category-wise retail investor portion was subscribed 23.8 times, while the non-institutional or HNI category was subscribed 150.35 times and the qualified institutional investor portion was over bid 49.12 times.

Source: Business Standard

United Bank plans to raise Rs 308 cr via preferential allotment

The board of directors of United Bank of India (UBI) on Friday proposed to issue equity shares on preferential basis to the LIC and the Union Government at a price of Rs 79.74 a share. The UBI stock closed at Rs 74.55, up 0.13 per cent, on the BSE. The bank said that it plans to issue 1.7 crore equity shares of Rs 10 each to LIC and 2.17 crore shares of Rs 10 each to the Government. The preferential allotment to LIC would help the bank raise capital (Tier-I) worth Rs 135 crore and an additional Rs 173 crore from the Government, taking the total to Rs 308 crore.

Source: The Hindu Business Line

FIIs net buyers at Rs 9,000 cr on Friday

Foreign Institutional Investors were net buyers for close to Rs 9,000 crore or $2 billion, on Friday, when the broader markets were down by about one per cent. This number gains significance in view of the fact that so far in calendar 2012, net FII investment in the Indian equity market has been to the tune of $5 billion. FIIs were net buyers at Rs 8,955.30 crore on the two main bourses, while Domestic Institutional Investors were net sellers at Rs 836 crore. On the BSE, they were net buyers at Rs 50 crore. While FIIs have been buying into Indian equities, the heavy investment on Friday was due to the Citi-HDFC deal which brought in close to $1.9 billion. Citi sold its 9.85 per cent stake, or 145.3 million shares, in HDFC on the NSE at Rs 657.56 per share.

Source: The Hindu Business Line

PEs use buybacks to exit realty ventures

Buybacks by promoters is turning out to be the only available route for private equity exits in the real estate sector. Slowing consumer demand, stringent conditions for raising debt, rising interest rates, and opacity have rendered the sector with a less than positive image for investors.Out of the 19 buyback exits in 2011, there were nine real estate deals. In all, the sector had just 14 exits. January has already witnessed a marquee buyback by Mumbai-based property firm Lodha Developers from Deutsche Bank, predicting a similar trend for the next fiscal.

Source: Financial Express

MCX public issue gets massive response

The initial public offering of Multi Commodity Exchange (MCX) was subscribed over 54 times as at 6 pm on Friday. The retail investor portion was subscribed 23 times as at 6 pm. The Qualified Institutional Buyers portion was subscribed 49 times, while the non-institutional investors' (HNIs) portion got subscribed 150 times. “The MCX IPO was priced at an index (BSE Sensex) level of 17,000. In the run-up to the Union Budget, the index is expected to gain. “So, the IPO could offer good listing gains. In the long-run also the scrip may give good returns,” said an HNI investor.

Source: The Hindu Business Line

Sensex posts first weekly fall in 2012

Indian shares posted their first weekly fall in 2012 on Friday, sliding 2 per cent over five sessions, as investors booked profits on renewed worries about rising global oil prices and the country's widening fiscal deficit. Lenders such as State Bank of India, ICICI Bank and HDFC Bank were the big losers, as expectations for a rate cut in March were tempered by the rally in global oil prices, which could make it difficult for the central bank to ease policy. Leading mortgage lender Housing Development Finance Corp fell as much as 6.2 per cent after Citigroup Inc sold its entire stake in the company for about $1.9 billion.

Source: Economic Times

FIPB accepts pharma FDI riders

The Foreign Investment Promotion Board (FIPB) has accepted some of the stiff riders proposed by the health ministry for multinational pharmaceutical companies trying to acquire Indian firms. However, it has rejected the ministry’s proposal to insist such companies must bring new technology and invest the necessary funds in research and development so that new molecules were developed keeping Indian conditions in mind. It has also rejected a proposed mechanism to monitor compliance of these conditions.The three pharma proposals where the health ministry’s proposed riders have been accepted and the requests cleared include the 100 per cent acquisition of Bangalore-based Pharmaceutical Ingredients and Formulations India Pvt Ltd by US company Levomed Inc and a proposal of US-based Akorn Inc to buy 100 per cent stake in Akorn India Pvt Ltd. The third proposal was of Edict Pharmaceuticals, in which the existing shareholders proposed to sell 100 per cent stake to Par Pharmaceuticals of the US.

Source: Business Standard

Sebi may change market making rules in SME bourses

Securities and Exchange Board of India (Sebi) is considering a proposal to tweak rules for market making in SME exchanges. According to the framework, market making is compulsory for three years for companies listing on these exchanges to provide an exit to investors. But, the exchanges have put forward certain practical difficulties and requested certain changes in the rules. Though the regulator is not too keen to relax the timeline of three years, it is considering other proposals, officials in the know said.

Source: Business Standard

Cut In RBI Rates Depends On Fiscal Deficit: Montek

Amid demand for softening of monetary policy to promote growth, the Plan panel on Friday said any move by Reserve Bank to lower interest rate will mainly depend on the government’s ability to contain fiscal deficit. “Interest rate is going to be determined predominately by what happens to the fiscal deficit. The industry is convinced that no matter what happens to fiscal deficit, the RBI will lower the repo rate,” Planning Commission deputy chairman Montek Singh Ahluwalia said here at an Assocham conference.India’s fiscal deficit is expected to be 5.6 per cent of Gross Domestic Product (GDP) this fiscal as against the budget estimates of 4.6 per cent of GDP.The central bank is expected to take more steps in its policy review on 15 March to ease liquidity situation to promote economic growth which is expected to moderate to 6.9 per cent in the current fiscal from 8.4 per cent a year ago.

Source: Business World

Parliamentary panel for raising income tax exemption limit to Rs 3 lakh

A parliamentary panel scrutinising the proposals of the new direct taxes code has recommended a sharp increase in the tax exemption limit on basic income to 3 lakh and on investments to 2.5 lakh. The recommendation represents a 67% increase over the current limit on basic income tax exemption limit of 1.8 lakh and 65% over the 1.55 lakh limit for investments, including health insurance. Health insurance for senior citizen parents will be eligible for another 20,000 rebate, the same as the current limit.

Source: Economic Times

GST to replace Central excise duty, sales tax

The Goods and Services Tax (GST), a value-added tax, will soon be implemented all over India concurrently by the Central and state governments, replacing the current Central excise duty and state sales tax levied on goods and services. A major step in tax reform in the country, it will metamorphose the functioning of the Central Excise Department. The role of excise and taxation officials has been transformed over the years, from enforcement officials to facilitators for trade, and all this with least possible interface requ-iring fewer visits on the part of tax payers to the offices.

Source: Deccan Chronicle

Competition Commission of India eases reporting requirements in M&As

In a bid to make the M&A process smoother for India Inc, the competition regulator has relaxed the reporting requirements when companies strike a deal. Only deals in which 25% equity or voting rights is acquired will need to be reported to the commission, an official in know of the new rules said. Under the current merger regulations, M&A and private equity transactions, where greater-than-15% equity or voting shares are acquired, are subject to a pre-merger notification under which a company needs to send a notice to the Competition Commission of India declaring the same. " The M&A culture in the country is very dynamic and we need the law to move along with it. We have decided to ease the norms to facilitate this investment option," a top official told ET. The notifications are expected to be made public by this week, he added.

Source: Economic Times

Goldman Sachs cuts forecast on commodity returns; sees gains for crude oil and gold

Goldman Sachs cut its 12- month prediction for commodity returns, while forecasting gains for crude oil and gold and keeping an "overweight" allocation in raw materials. The bank reduced its estimate for returns to 12% from 15% after prices rallied this year, analysts led by Jeffrey Currie said in a report on Wednesday. They kept their predictions for Brent and gold at $127.50 a barrel and $1,940 an ounce compared with $121.23 and $1,755.30 on Wednesday. Commodities advanced 8.5% this year to the highest level in six months as measured by the Standard & Poor's GSCI index of 24 raw materials. Prices climbed as the US economy strengthened and the Chinese central bank cut reserve requirements. While Morgan Stanley is also bullish on gold, it expects oil prices to decline in the first half as supply recovers and demand slows, it said in a report February 20.

Source: Economic Times

Cayman private equity fund tailors deal to buy Deccan 360

A Cayman Islands-domiciled private equity fund has offered a package deal which could result in it acquiring Deccan 360, the ailing air cargo operator founded by low-cost aviation pioneer G R Gopinath, a person directly involved in the negotiations said. Redclays Capital has offered to help raise $50 million ( 250 crore) for Gopinath's aviation services company Deccan Charters and buy Deccan 360 for between $2 million and $5 million, the person said, requesting anonymity. If the transaction is finalised, it will mean that Gopinath and Mukesh Ambani-controlled Reliance Industries, the main shareholders in the moribund freight and logistics company, will have to cede ownership in what will essentially be a fire sale. Reliance, which paid about 110 crore in April 2010 for a 26% stake in Deccan 360, declined to comment for this story, as did Redclays managing director Srini Chakwal. Gopinath, too, did not reply to an email and phone calls.

Source: Economic Times

Budget 2012: Tax dept on year-end overdrive

Under pressure from the North Block to meet budget targets, several chief commissioners of Income Tax have started making tax claims over and above what companies had filed in their tax returns. This is in addition to the government going slow on refunds as it faces direct tax shortfall of over Rs 40,000 crore, sources said. Despite protests, the standard response offered by income tax officials has been to get companies to deposit at least 50% of their fresh tax liability before their appeal can be heard by an appellate authority. The rules, however, stipulate that the government cannot force a taxpayer to deposit the disputed amount before h/his right to first appeal.

Source: Times of India

DoT, Finance Ministry spar over Budget allocation

The Telecom Ministry has told the Ministry of Finance that it will be forced to stop work on the crucial Defence optical fibre cable if adequate funds are not allocated in the forth coming Budget. The Department of Telecom had submitted an annual Plan proposal of Rs 6,767 crore for the year 2012-2013. This included Rs 5,000 crore for building the optical fibre cable network which is important from the point of view getting additional spectrum vacated by the Defence forces. Separately, the DoT had raised a demand of Rs 8,600 crore under Non-Plan head for the Universal Services Obligation fund.

Source: The Hindu Business Line

Nearly 20% of $7-billion foreign currency convertible bonds face default risk this year, says Fitch

At least 20% of the $7-billion foreign currency convertible bonds (FCCB) due for conversion this year face default risk as investors demand funds back due to stock prices languishing at less than half the stated conversion price, Fitch Ratings has forecast. Over 60% of such FCCBs are from the IT (34%) and pharma (30%) sectors. The ratings firm says FCCBs of 59 companies are up for redemption this year. About 63% of the $7-billion FCCBs are likely to be redeemed; the companies concerned would finance it with a combination of internal accruals and fresh borrowings. About 17% of the FCCBs are likely to be restructured (mostly maturity extensions), according to Fitch. But the remaining 20% of the amount of 19 firms are likely to default with ensuing restructuring, possibly having significant distressed debt exchange (DDE) features.

Source: Economic Times

You’ll Soon Get to Trade in BRICS’ Futures on BSE

While local investors will be able to trade in indices of multiple countries, foreign investors may also benefit from hedging against global indices in the Indian rupee. Investors in India may soon be able to take exposure to top stocks of Brazil, Russia, South Africa and China as BSE gets ready to launch derivatives contracts of benchmark indices of these countries. “The launch would be in March-April period, we are figuring out the launch dates,” said BSE deputy CEO Ashishkumar Chauhan. “Since our time zones match with these countries, we are expecting a good response from investors,” he said on the sidelines of the launch of BSE Greenex, an index of top 20 carbon-efficient companies.

Source: Times of India

Healthcare, finance sectors dominate BSE green index

At the launch of the Bombay Stock Exchange's (BSE) green index on Wednesday, authorities said that there were possibilities that the index could be used to develop green funds, exchange-traded funds and structured products. The 20-share index includes Tata Steel, State Bank of India, Larsen and Toubro, ICICI Bank, Sterlite Industries, NTPC and many more leading stocks. Stocks from the healthcare category make up 22 per cent of the index followed by finance, which makes up 19 per cent, and power stocks which make up 13 per cent of the index. This first of its kind eco-friendly index, BSE-GREENEX assesses the “carbon performance” of stocks based on quantitative performance-based criteria. The index aims to encourage socially responsible investing. It consists of the top 20 companies from the BSE-100 Index, which are efficient in terms of emissions.

Source: The Hindu Business Line

SC relief to banks on bad debts

In a major relief to banks, the Supreme Court has held that they can claim deductions for entire bad debts written off in respect of both rural and urban advances. It reversed the judgment of the full bench of the Kerala High Court that held that banks can claim deduction of the bad and doubtful debts actually written off only to the extent it exceeds the credit balance created and allowed as deduction.Catholic Syrian Bank and Dhanlaxmi Bank, in a batch of cases, had sought the apex court's intervention in deciding whether they are eligible for deduction of the bad debts actually written off only for non-rural branches in view of Section 36(1)(vii), which limits the deduction allowable under the proviso to the excess over credit balance made under Clause (viia) of Section 36(1) of the Income Tax Act 1961.

Source: Financial Express

Sensex falls from 7-mth high on profit-taking

Sensex closed down on Wednesday, reversing early gains, as investors turned cautious and booked profits after a recent rally that pushed up the benchmark index to its highest close in nearly seven months in the previous session. The 30-share BSE index closed down 1.54%, or 283.36 points, at 18,145.25, with 24 of its components in the red.Realty, consumer durables, metals, banking, power, PSU and capital goods faced sell-offs. The country’s largest lender SBI was the top loser from the Sensex pack, falling 7.91% on reports that the bank has committed to provide loan of around R 1,200 crore to the debt laden Kingfisher Airlines.

Source: Financial Express

ATF import licence for Airlines soon

Kingfisher and other cash-strapped airlines will now be allowed to import fuel directly on actual user basis against licences issued by the directorate general of foreign trade, or DGFT. The prescribed format for imports has been put on the DGFT website. "The government will only allow actual users to import ATF against licences. Traders who want to import to sell it to other customers will not be allowed," Commerce Secretary Rahul Khullar told ET. Kingfisher airlines chief Vijay Mallya had initiated the change in policy by asking the DGFT to allow his company to import ATF directly instead of canalising it through a state trading enterprise or STE, in this case IOC. His argument was that airlines were ending up paying huge local taxes that varied between states ranging from 4% to 30%.

Source: Economic Times

Auditor finds Lilliput review no child's play

In a new twist in the tussle between Lilliput Kidswear promoter Sanjeev Narula and investors Bain Capital and TPG, the Delhi High Court-appointed auditor, SS Kothari Mehta & Co, has expressed inability to complete the court-directed audit. The auditor's withdrawal could have a significant bearing on the sale of the business initiated by all shareholders. The auditor has cited the company’s non-cooperation in the audit as the reason. The auditor's report had been allowed to be inspected by the investors, promoter and the company. Narula declined to comment on the issue. The spokesperson of Bain Capital also declined to comment.

Source: Business Standard

UMPPs using local coal may have to buy domestic equipment

In a policy shift, the government proposes to make domestic procurement of power generation equipment mandatory for all bidders of ultra mega power projects (UMPPs) that enjoy the benefit of domestic coal linkage. The move is aimed at helping domestic equipment manufacturers such as Bhel, L&T, BGR Energy, JSW and Bharat Forge. It is also expected to encourage setting up of new manufacturing facilities for electrical equipment in India to cater to the growing demand from the power sector.The Prime Ministers Office has given its nod for the proposal and the power ministry would now move a note for approval of the Cabinet committee on Economic Affairs (CCEA), a top source in power ministry said.

Source: Financial Express

Irda set to revamp packaging of life insurance products

The Insurance Regulatory and Development Authority (Irda) is set to revamp product designing practices in the life insurance industry to protect consumer interest.The insurance regulator has proposed wholesome changes in various aspects — participating and non-participating products, group long-term covers, products offering ‘low’ insurance covers, single premiums or products with limited premium payment terms, net asset value (NAV)-guaranteed products and benefit illustration procedures.

Source: Business Standard

Indirect tax target may be met: FM

Finance minister Pranab Mukherjee on Wednesday said that indirect tax collection target of R3.92 lakh crore for the current fiscal is likely to be met despite a slowdown in the economy.Speaking at an event of Central Board of Excise and Customs, Mukherjee said he is confident that the revenue department would not spare any effort in meeting the target. "In fact, already indications are there (of meeting budget estimate)," he added. The statement from the finance minister came at a time when excise mop-up has registered muted growth.

Source: Financial Express

SEBI announces lot size of IPO to list on SME exchange

The stock exchanges can review the lot size once in every six months by giving an advance notice of at least one month to the market. Taking forward the framework for setting up of SME (small and medium enterprises) exchange platforms, market regulator Sebi today prescribed 'lot sizes' for shares being offered in IPO on these exchange, as per the price band of the public offers. At the IPO stage the registrar to issue in consultation with merchant banker/s, issuer and the stock exchange shall ensure to finalize the basis of allotment in minimum lots and in multiples of minimum lot size, as per the SEBI defined price band and lot size. The secondary market trading lot size shall be the same, as shall be the IPO lot size at the application/allotment stage, facilitating secondary market trading.

Source: Money Life

Cabinet okays VAT on sugar and textile fabrics

After putting the decision to collect tax on sugar and textile fabrics on hold for a year, the State Cabinet on Tuesday approved the Finance department’s proposal to levy Value-Added Tax (VAT) on these two items with effect from April 1. The Cabinet meeting, presided over by Chief Minister Naveen Patnaik, also decided to raise the lower rate of VAT on food items, medicines and some industrial and IT products from 4 per cent to 5 per cent. The new tax structure will be applicable from the next financial year.

Source: IBN Live

IT network for goods and services tax by August: Pranab Mukherjee

India will soon roll out an IT platform to integrate central and state indirect taxes regime, Finance Minister Pranab Mukherjee has said. "We are working with the state governments for an early implementation of goods and services tax. Towards this end, an IT network called GSTN is being created to ensure integration of the tax systems of the centre and the states," Mukherjee said at the investiture ceremony to confer Presidential Award of Appreciation Certificates to Customs and Central Excise officers. States had given their in-principle nod to launch the IT framework in August and the finance ministry is expected to soon take the proposal to the cabinet for its nod.

Source: Economic Times

Pramerica Mutual Fund to buy 39% stake in Prudent Corp for Rs 20 crore

Pramerica Mutual Fund is close to buying a 39% stake in Ahmedabad-based retail distribution outfit Prudent Corporate Advisory Services for about Rs 20 crore, according to two persons close to the deal. The stake acquisition will help Pramerica, which manages over Rs 2,100 crore worth of assets, widen its distribution base significantly as Prudent ranks among the top five retail fund distribution companies. Officials at both Pramerica Mutual Fund and Prudent declined to comment on the development.

Source: Economic Times

US airlines sue EximBank for giving loan guarantee to AirIndia

The US airline industry has sued the Export Import Bank (Exim) alleging that its financial support to Indian national carrier Air India, which itself is in deep red, will harm the American airlines. In a revised complaint filed before a US court on Friday last week, the Air Transport Association of America, Delta Air Line and Air Line Pilots Association International, alleged that Exim Bank's decision to provide a loan guarantee of USD 3.4 billion to Air India, to help it buy 30 aircraft from Boeing, would badly affect several US airlines, the Delta in particular. Arguing that without the financial support from Exim Bank, Air India, which in itself is in deep red, would not have purchased these aircraft and thus would deploy them on those routes where it gives a tough competition to US airlines.

Source: Economic Times

Walmart to buy majority stake in Chinese e-commerce firm Yihaodian

Wal-Mart Stores Inc said on Monday it is taking a controlling stake in Chinese e-commerce firm Yihaodian, as the world's largest retailer seeks new revenue sources to fend off rising competition in the world's fastest-growing major economy. The move comes two weeks after Wal-Mart announced the appointment of industry veteran Greg Foran as head of its China operations, capping a series of leadership changes at the unit, which has been tainted by food scandals, including a pork mislabelling issue last year that forced it to temporarily shut a dozen stores in central China.

Source: Economic Times

Pfizer talks to banks about unit’s $3bn part-flota

Pfizer is considering plans to raise $3bn this year through a part-flotation of its animal health division, as it examines ways to spin off a business valued at as much as $18bn. The pharmaceuticals group, the world’s second largest by market capitalisation, has been talking to bankers about arranging an initial public offering that would place up to 19.9 per cent of the unit’s shares in the autumn, in what is known as an equity carve-out or partial spin-off, according to people familiar with the talks. Floating a stake in a business ahead of a spin-off is a common tactic to establish a shareholder following, improving its ability to trade as a stand­alone company. The value of spin-offs globally is set to double this year.

Source: Financial Express

Budget 2012: Customs duty of natural rubber needs to be revisited for tyre industry, says FICCI

While the Customs Duty rate on tyres and the peak rate of Customs Duty on all non agricultural products were progressively reduced in the Union Budgets during the last few years, in the case of Natural Rubber the rate of 20% Customs Duty has remained unchanged for over a decade. This has resulted in a serious anomaly of Customs Duty on raw-material (Natural Rubber@20%) being higher than the Customs Duty on finished product (Tyres @10%).

Source: Economic Times

Corporate houses, SMEs flock to gold ETFs for better returns

India's purchase of paper gold doubled last year as corporates and SMEs, seeking a safe haven for their investments, invested heavily in gold exchange-traded funds (ETFs), a traditional favourite of wealthy individuals and households. Companies now account for nearly 50% of all ETF purchases in the country and SMEs, too have climbed on to the bullion bandwagon. "The gold collections of ETFs have risen from 15 tonnes in 2010 to 30 tonnes in 2011. The number of corporate portfolios under ETFs has also increased to 5,599 in 2011 as against 3,310 in 2010. For the first time, small and medium enterprises (SMEs) have invested in large numbers,'' said Amit Mitra, managing director of Middle East and India region at industry body World Gold Council.

Source: Economic Times

Like the polls, it is difficult to predict the Sensex

Sensex rose 0.8 per cent on Friday to record their seventh straight weekly rise, their best run in nearly two years, bolstered by strong foreign fund inflows amid growing concerns the market has run up too fast in a short span of time. The benchmark BSE index is up 18 per cent this year, mainly on buying by overseas portfolio investors who have pumped in $4.4 billion so far this year, after pulling out more than $500 million in 2011. The 30-share BSE index closed up 0.75 per cent, or 135.36 points, at 18,289.35, its best close in more than six months. Nineteen of its components ended in the positive territory. "The global liquidity conditions have improved in the last couple of months and India is benefitting from fewer investment opportunities in the developed markets," said Claugio Bernasconi, a Switzerland-based fund manager for AMC Expert India Fund. "Although a bounceback was expected after the Indian markets became the worst performer last year, I am turning cautious now because this sudden and strong rally is not supported by any improvement in the fundamentals of the country."

Source: Economic Times

Budget 2011: Retail sector calls for industry status

If organised retail is to grow at its own projected pace, the Union government needs to accord it an industry status first. It needs to also implement the goods and service tax ( GST), simplify taxes and invest on infrastructure development. These were the key budgetary recommendations of a star-studded panel comprising doyens of the retail sector, who discussed threadbare the topic "Revving up Retail: Opportunities, Challenges and Asks" - a pre-budget panel debate, organised by The Economic Times in Kolkata on Friday. The discussions, moderated by Dr Prashant Mishra, professor marketing and admissions chairperson at IIM, Calcutta, comprised honchos like Rakesh Biyani, joint managing director, Pantaloon Retail (India) Ltd, Vijay Jain, CEO, Orra, Harkirat Singh, managing director, Woodland, Rudra Kishore Sen, director, operations and business development (East), McDonald's India (North & East), Debashish Mukherjee, partner, AT Kearney and Harshavardhan Neotia, chairman, Ambuja Realty.

Source: Economic Times

Don't ignore tax-saving mutual funds in a beaten-down equity market

Investors are shunning equity-linked savings schemes (ELSS), or tax-saving mutual fund schemes, this tax planning season, say investment advisors. According to them, investors have invested a measly Rs 200 crore in the first four months of the tax saving season, which starts from October to March. A lacklustre stock market, attractive returns from alternative investments in debt and the 'confusion' about the status of ELSS after the implementation of Direct Taxes Code (DTC) have contributed to investor apathy towards these schemes, which served as the introduction to stock market for many retail investors. Though investors' decision may look solid from the short-term perspective, they may be letting go of a chance to create wealth in the long-term by eschewing tax planning MFs, say investment experts.

Source: Economic Times

Speed up roll-out obligation norms for dual-tech players: TRAI

The Telecom Regulatory Authority of India (TRAI) has asked the Department of Telecom to expedite decision on imposing roll-out obligation on dual-technology players – Reliance Communications and Tata Teleservices. The regulator had in July 2011 sent its recommendations that licences of dual-technology players have to be amended to include separate roll-out norms for GSM spectrum. But the DoT has not taken any action on this till now. In a communication to the DoT, the telecom regulator said that some industry associations have represented that “non-fulfilment of the contingent roll-out obligation by the dual-spectrum operators and non-enforcement of the same by DoT cast doubts on the implementation of the already disputed policy.”

Source: The Hindu Business Line

Investor snub makes DVRs issued by Tata Motors, Pantaloon Retail and Gujarat NRE Coke a losing proposition

Shares having differential voting rights (DVRs) issued by Indian companies have been quoting at sharp discounts to the ordinary shares, causing concern among holders over the restricted scope for capital appreciation. While only three companies - Tata Motors, Pantaloon Retail and Gujarat NRE Coke - have so far issued DVRs in India, there have not been many takers for these securities as the holders enjoy fewer voting rights than ordinary shareholders. This has restricted scope for improvement in valuation, prompting the promoters to exit, or to take such moves that would help boost liquidity in the counters, according to brokers.

Source: Economic Times

States want CST raised to 4% till row is settled

In ANOTHER twist to the row over the central sales tax (CST) compensation, a few states have now come up with a new formula: raise the tax to the original 4% and retain it at that level till the Centre is in a position to compensate states for the revenue loss arising from the proposed phasing out of the tax. Speaking to FE, the chairman of the empowered committee (EC) of state finance ministers, Sushil Modi, said that Maharashtra had suggested that if the Centre is unable to compensate states on revenue loss, then raising CST rate to 4% from the current 2% could be considered and CST could be eliminated when the Goods and Services Tax (GST) comes into effect.

Source: Financial Express

This year too, no tax returns for salaries up to Rs 5 lakh

Millions of salaried taxpayers will continue to enjoy a procedural relief of not having to file their income-tax returns even for the current financial year (2011-12). The Central Board of Direct Taxes (CBDT) has specified that individuals with total income of up to Rs 5 lakh in a financial year and comprising only incomes under the head ‘salaries' and ‘income from other sources' would be exempt from filing their income-tax returns for assessment year 2012-13 (financial year 2011-12). ‘Income from other sources' should only be by way of interest from a savings account in a bank, not exceeding Rs 10,000, according to CBDT.

Source: The Hindu Business Line

Gold may see profit taking; silver, crude oil look bullish

The European sovereign debt issue once again came to the fore last week with Greece – the centre of attention – while geopolitical tensions in West Asia continued unabated. Global commodity markets reacted to the developments. The immediate impact was seen on the crude oil market which broke out of its recent range trade and spurted given its constructive fundamentals. The status relating to Iran's supply of crude oil to Europe is far from clear. The OECD composite leading indicators, designed to anticipate turning points in economic activity relative to trend, point to a positive change in momentum for the OECD as a whole, driven primarily by the US and Japan; but similar signs are beginning to emerge in a number of other developed economies.

Source: The Hindu Business Line

Market will now pick up signals from Eurozone

Investors will take a cue from global developments this week, with the focus now shifting from domestic earnings to developments in the Eurozone. Top European leaders will meet on Monday to decide two crucial measures for Greece - a Euro 130-billion rescue package and a Greek bond swap with private bondholders. The outcome of the European leaders' meeting will weigh on sentiment when the market opens on Tuesday, after Monday's holiday on account of Maha Shivratri. The US markets will also be shut on Monday to mark the President's Day. The market is likely to be volatile ahead of expiry of futures contracts on Thursday.

Source: Economic Times

Budget 2012: Food Security Bill may get Rs 5,000 crore

Signalling its commitment to roll out the Food Security Bill in the next fiscal, finance minister Pranab Mukherjee is likely to announce a token allocation of Rs 5,000 crore in the forthcoming budget. The funds would primarily be directed at creating and strengthening the institutional arrangement to deliver the massive allotment promised under the scheme. The food security bill is of extreme political importance to the United Progressive Alliance (UPA) which had pitched the programme as an electoral promise in 2009. The government hopes that the scheme will bring in votes for the UPA in the next General Elections (2014) similar to the 2009 elections when National Rural Employment Guarantee Programme attracted the rural voters.

Source: Economic Times

Govt may hire CA firms to vet broadcasters’ data

Seeking more transparency in the wake of mounting workload, the information and broadcasting (I&B) ministry is planning to hire a panel of chartered accountancy firms which will scrutinise and evaluate the various financial and technical data provided by the broadcasters, FM radio companies and DTH operators. The job includes verification of net worth, cases of mergers/demergers, disinvestments, verification of gross revenue figures of DTH and FM radio operators, determination of interest on delayed payments and cases referred to the foreign investment promotion board (FIPB), among others. Sources say this will be the first instance when the I&B ministry is planning to hire such a panel to assist it

Source: Financial Express

Government may ease harsh rules for NBFCs suggested by RBI panel

Amid intense lobbying by finance companies, the government has stepped in to water down the harsh, new rules prescribed by a Reserve Bank of India panel. A group, constituted by the finance ministry, has suggested that since non-banking finance companies play a significant role in asset creation and reach out to borrowers that high-street banks can't deal with, they should be given adequate time to raise capital and fulfil stricter provisioning standards. While the RBI panel, headed by former deputy governor Usha Thorat, has given its recommendations for quite some months now, the regulator is yet to come out with the guidelines. Meanwhile, the key advisory group formed by the government and comprising senior bureaucrats, industry representatives, professionals and even central bank officials, has finalised a parallel set of recommendations which were submitted to the ministry less than a fortnight ago.

Source: Economic Times

Government to set up specialised body for auto sector growth by April

A specialised body for promoting sustainable development of the Indian auto sector, dubbed the National Automotive Board, is likely to be set up by April. "The proposed National Automotive Board (NAB), which is being finalised by the Department of Heavy Industry, is likely to be cleared by the Cabinet in a month," an official said. It will act as a facilitator between the government and the industry, promote research and development activities and have a larger role in developing skills for the growing automobile sector, he added. Besides, it would act as a think-tank for the government, especially for the growth of hybrid and electric vehicles in the country.

Source: Economic Times

SC decides on taxability of sales from bonded warehouses

The sales taxability of transactions relating in the course of import and export has been the subject matter of intense judicial scrutiny, particularly due to exemption from the tax granted to transactions under the Central Sales Tax Act, 1956 (“CST Act”). Section 5 of the CST Act provides that any transaction of sale or purchase that either occasions the import/export of goods into/outside India or is effected by a transfer of documents of title to goods before/after the goods cross the customs frontiers of India qualifies as a sale or purchase in the course of import/export is hence exempt from tax. The expression ‘crossing the customs frontiers of India’ has been defined in Section 2 thereof as crossing the limits of the area of a customs station in which imported goods or exported goods are ordinarily kept before clearance by customs authorities. The explanation to this Section states that ‘customs station’ will be as defined in the Customs Act, 1962, as any customs port, customs airport or land customs station. The above Act further defines ‘customs port’ as any port appointed as such thereunder as well as an inland container depot, appointed as such. The courts in India have repeatedly ruled on the above provisions of law.

Source: Business Standard

Filmmakers meet FM, oppose any move to impose service tax

Amid talk that service tax could be imposed on film tickets in the coming budget, a delegation of film makers along with Information and Broadcasting Minister Ambika Soni on Sunday met Finance Minister Pranab Mukherjee. After the meeting, the delegation which included Mahesh Bhatt, his brother Mukesh Bhatt, Ramesh Sippy and others, said they had conveyed their concern on any move to impose service tax on films in the coming budget. "We have put forth our concern to the honourable finance minister through the Minister of Information and Broadcasting. The finance minister gave a very patient hearing to each and every member," Mahesh Bhatt said.

Source: NDTV

Assessing officer can't be part of tax appellate body deciding the appeal

An income-tax commissioner, responsible for an assessment order, cannot be a part of the body that decides the appeal against the same order, a tax tribunal has said. The Income Tax Appellate Tribunal (ITAT), the second appellate forum that decides on tax disputes, said that involving a tax official in deciding an appeal against an assessment order would be against the principles of natural justice, especially if the official had been party to the same assessment order. The ITAT gave this order last month on an appeal filed by Lionbridge Technologies against an order of the Dispute Resolution Panel (DRP), a body set up exclusively under the Income-tax Act for resolving transfer pricing related disputes.

Source: Economic Times

Sharp increase in refunds dents tax collection

A steep increase in tax refunds is as much a reason for the less-than-expected tax revenue collection this fiscal as the slowdown in economic growth. In April-January 2011-12, the income-tax department has given R78,000 crore in refunds, up by R4,000 crore in the whole of the previous fiscal. Pertinently, the government was on a refund drive last year. According to sources, the revenue department asked many companies to pay more advance tax in the previous fiscal to meet its target and these companies are now being paid refunds. This has put pressure on the tax mopup at a time when direct tax target looks difficult.

Source: Financial Express

Uttarakhand, Himachal Pradesh manufacturing units to get tax breaks even if company is sold: CBEC

The finance ministry has said manufacturing units in Himachal Pradesh and Uttarakhand will continue to enjoy tax concessions even if its ownership changes, enabling mergers and acquisitions in such undertakings. Besides, the units will retain tax benefits on expansion or relocation within the exempted area, according to a directive issued by the Central Board of Excise and Customs (CBEC). "In case of change in the ownership of an already existing unit, (tax) benefits would pass on to the new owner as the exemption is extended to the 'unit' and not on the basis of 'ownership'," the CBEC said. The ministry's circular followed queries by companies seeking clarifications on the status of tax concessions after a change in ownership.

Source: Economic Times

Offshore supplies are tax free

The issue of taxability of 'offshore supply price' was settled by the Apex Court in the case of Ishikawa [288 ITR 408] wherein it was held that 'the entire transaction having been completed on the high seas, the profit on sale did not arise in India'. The Apex Court also observed that 'once the transaction relating of offshore supplies is excluded from the scope of taxation under the IT Act, the application of double taxation treaty would not arise.'The Hon'ble Court also held that 'where different severable parts of the composite contract are performed in different places, the principle of apportionment can be applied, to determine which fiscal jurisdiction can tax that particular part of the transaction. This principle helps determine, where the territorial jurisdiction of a particular State lies, to determine its capacity to tax an event.'

Source: Business Standard

I-T department asks for over Rs 413 crore as tax from BCCI

The income tax department has demanded over Rs 413 crore as tax from the world's richest cricket body, the BCCI as per its income assessment for the year 2009-10 of which only Rs 41 crore have been paid, an RTI reply has said. The department said BCCI used to get income tax exemption as a charitable organisation but now that exemption has been withdrawn and its earnings now come under business income. Responding to activist Subhash Agrawal, the department said that the BCCI had made over Rs 964 crore for the assessment year 2009-10 for which the department had demanded tax of over Rs 413 crore but so far Rs 41.91 crore have been paid as tax by the cricket body.

Source: Times of India