UK's largest fund Schroders acquires 25% stake in Axis Mutual Fund

Britain's largest asset management company Schroders has acquired a 25% stake in Axis Bank-promoted Axis Mutual Fund for an undisclosed amount. The deal will help the Indian fund house access Schroders' global distribution network and advise overseas funds invested in Indian securities.The Economic Times had written on March 14 that Schroders Investment Management was in talks with Axis Bank to acquiring stake in its mutual fund arm. As part of the deal, Schroders will have one board member each on the AMC's board and Axis Mutual Fund trustee company. Schroders Investment Management is a UK-based firm managing $291 billion worldwide. Schroders had applied to the Securities and Exchange Board of India (Sebi) in April 2008 to start a mutual fund business in India, but did not secure a licence till last year. Axis Mutual, which started operations in 2009, has equity assets worth Rs 640 crore. Axis Mutual Fund's total assets under management (AUM) stood at Rs 8,815 crore as on March 31.Said Rajiv Anand, managing director & CEO of Axis Mutual Fund, the deal valuation is in line with other deals struck during the year."The deal will help us promote our fund products globally through Schroders' distribution network. Schroders will also bring their products to India," said Rajiv Anand, managing director and CEO, Axis Mutual Fund.

TRAI's spectrum auction proposal can raise tariff by 30 per cent, warn telcos

India's five mobile phone companies including Bharti Airtel on Friday accused the telecom regulator of issuing a 'highly retrograde set of recommendations on spectrum auctions' and demanded that communications minister Kapil Sibal reject all key proposals suggested by the Telecom Regulatory Authority of India (Trai). Using unusually harsh language, the chief executives of Bharti Airtel, Vodafone, Idea, Uninor and Videocon warned Sibal that accepting the regulator's 'flawed, retrograde, regressive and uncertain recommendations would irretrievably harm consumer interests, ring the death knell for the sector and lead to prolonged disputes and litigation.'.In their joint communication, Bharti Airtel CEO for India and South Asia, Sanjay Kapoor, Vodafone India MD and CEO Marten Pieters, Idea Cellular managing director Himanshu Kapania, Uninor chief executive Sigve Brekke and Videcon Telecommunications' director and CEO Arvind Ball, demanded that all airwaves in the 1800 MHz band be put up for auctions, and the reserve price be slashed by 80% to allow the market to discover the 'true' price.They also warned that high spectrum costs would lead to a 25-30% hike in call rates. Earlier this week, Trai had proposed that mobile phone companies that lost their permits after the Supreme Court cancelled licences awarded in the scandal-tainted 2008 sale, as well as incumbents and other new entrants pay a minimum Rs 3,622.18 crore for every unit of 2G spectrum in the upcoming auctions.

I-T amendments not to impact foreign investment, says Pranab

Assuaging concerns of foreign investors on proposed amendments to tax laws retrospectively, Finance Minister Pranab Mukherjee today said they are "clarificatory" in nature and will not have any impact on foreign investments. While replying to a query in the Lok Sabha during Question Hour, the Minister further said that proposed amendments will not override the provisions of the Double Taxation Avoidance Agreements (DTAA) with 82 countries. Proposed amendments "just clarify" what is already there in law to remove ambiguity and provide certainty, he said. "... it will not have any impact on foreign investment flow in the country. This is more so because these clarifications ... will not override the provisions of Double Taxation Avoidance Agreements with 82 countries...," he said. DTAAs are relevant for taxation of non- residents in the case of offshore merger and acquisitions.

Diageo starts talks to buy into Vijay Mallya-owned United Spirits; ropes in JM Financial

Diageo, the world's largest spirits company by value, has mandated investment banking firm JM Financial to negotiate a deal that could result in it owning a minority stake in Vijay Mallya-owned United Spirits.Negotiations are underway to structure a deal that would arm Mallya with enough cash to revoke pledges on shares of United Spirits, the flamboyant tycoon's flagship company. In return, Diageo will get the right to buy shares in United Spirits equivalent to the amount paid to Mallya, according to a person familiar with the proposed transaction.The deal is in its initial stages and there is no certainty of a successful conclusion, the person said. The structure of the transaction, including the manner in which Diageo would acquire shares, which may include an open offer, is still being worked out, he said.If a deal were to be consummated, Diageo is likely to pitch for a reasonable stake, possibly 26%, in United Spirits. The company had a market capitalisation of 9,100 crore at Tuesday's closing. It hit a peak of 20,960 crore on October 4, 2010.Mallya denied he was considering a stake sale in his core business while Diageo described talk of a deal as "speculation"."As a matter of policy, we do not comment upon market rumour or speculation," said Stephen Doherty, global head of communications at Diageo Plc.

State Bank of India slashes car loan rates by 75 BPS

State Bank of India, the largest bank in the country has slashed their auto loan rates by 75 basis points to 11.25%. This move will make other big lenders in the auto finance industry to also review and cut rates so as to keep abreast with SBI. Customers now taking advantage of SBI new loan rate cut will be able to save Rs 40 on every lakh. EMIs on a Rs.1 lakh – seven year loan will now be reduced from Rs.1,765 to Rs.1,725.In such a highly sensitive market, other banks and finance companies will also have to follow suit to stay ahead in the competition. This reduction in lending and deposit rates are due to a fall out of the RBI to signal cheaper funds by reducing its repo rate by 50 basis points in the monetary policy dated April 17, 2012.This step will not only improve the credit worthiness of Indian banks but also reduce the incidents of bad loans. Reduction in interest rates will thereby trigger a car loan rate war while it will come as a relief to buyers and auto manufacturing companies who have been suffering due to both inflation and the recent tax increases which came along with the 2012-13 Union Budget.

Basel-III to put pressure on bank earnings: RBI

Earnings of banks are likely to come under pressure due to the higher capital requirements for the implementation of new global risk mechanism, Basel III norms, Reserve Bank deputy governor Anand Sinha said. “There is going to be pressure on banks’ earnings, not only in India but across the world. That’s why, Basel-III implementation has been made longer, so that there will be least disruption,” he said. “However, if you have to do the same activity with significantly higher capital, there will be pressure on return on equity (RoE),” Sinha told reporters on the sidelines of a workshop on ‘Strengthening Microfinance Institutions’.

Introduce anti-avoidance rules only after Direct Taxes Code: Assocham

Industry chamber Assocham has urged the Government to defer the introduction of the proposed anti-avoidance rules, popularly known as GAAR, till the implementation of the new Direct Taxes Code (DTC).The Finance Bill 2012 proposes to introduce General Anti-Avoidance Rules (GAAR) provisions, which were originally slated to be part of the DTC.Rather than introducing GAAR through the Finance Bill 2012, the Government should wait for the implementation of DTC for its introduction, Mr Ved Jain, Chairman of Assocham's National Council on Direct Taxes, said at a press conference here.The Finance Bill 2012 is pending before Parliament and may be passed during the second leg of the Budget session beginning on April 24.Mr Jain said that the onus should be on the tax authorities to prove that there has been tax avoidance. According to the current GAAR proposals, the onus is on the taxpayer to prove genuineness of the transactions. He pointed out that the Standing Committee on Finance had also recommended that the onus should be on tax authorities.