Policy change triggers single-brand retail rush
NRETAILFDI IMPACT N
NIVEDITAMOOKERJI & RAGHAVENDRAKAMATH
New Delhi/Mumbai, 24 September
After proposals by IKEA and Pavers, another bunch of foreign
single-brand retail applications is on its way to India, prompted by
easier sourcing and brand ownership rules.
At least half a dozen such applications, including those from Celio,
Gruppo Coin and Artsana, are in the works and are expected to be sent
to the government in a few weeks. These global chains planned to
either raise foreign direct investment (FDI) in their existing
ventures in India or set up shop in the country afresh, with 100 per
cent ownership, said sources close to the development. Global chains
Hennes & Mauritz (H&M), Mango and Tommy Hilfiger could follow soon,
they added.
Last week, the Cabinet, while allowing 51 per cent FDI in multibrand
retail, tweaked single-brand foreign investment norms related to
sourcing and brand ownership. Instead of sourcing 30 per cent from
micro, small and medium enterprises (MSMEs), these chains would now
have to source that amount from India, "preferably from MSMEs". On
branding, the government has done away with the rule stating the brand
owner and the applicant company must be the same entity.
After the government had notified the 100 per cent FDI rules in
single-brand retail in January, it had received only a few
applications. While shoe chain Pavers UK proposed to invest $20
million in the country, Swedish furniture maker IKEA had sought to
invest ^1.5 billion. A proposal from Zara Holding to bring Massimo
Dutti stores into India was rejected by the Foreign Investment
Promotion Board (FIPB), as the brand owner and applicant company were
different entities.
French clothing retailer Celio and Italian apparel firm Gruppo Coin
(OVS) are likely to approach the Department of Industrial Policy &
Promotion in a few weeks with their respective proposals to increase
their equity in their Indian joint ventures (JVs) to 'absolute
majority', it is learnt.
Currently, Celio holds 50 per cent stake in a JV with the Future Group.
Oviesse SPA, a subsidiary of Gruppo Coin, owns 37.5 per cent in a JV
with Mumbai-based Brandhouse Retails. Both Celio and Gruppo Coin
didn't reply to questions emailed by
Business Standard .However, a senior Future Group executive confirmed
Celio planned to increase its stake in the venture. A Brandhouse
Retails spokesperson declined to comment on the matter.
On Celio increasing its equity, a Future Group executive said, "They
want to take advantage of the policy changes in single-brand
retailing, as they are bullish on growth." Swedish fashion major H&M
may also foray into India on its own. H&M is the second-largest
European apparel maker after Spain's Inditex group, which operates the
Zara stores.
Italian health and wellness products major Artsana SPA plans to open a
fully-owned retail business in India. Artsana, which currently has
acash-and-carry venture in the country, did not reply to questions on
the company's retail plans.
OPINION, P11
Nota common market
FM may clearsales taxcompensation if states supportGST
VRISHTI BENIWAL
New Delhi, 24 September
Finance Minister P Chidambaram is likely to drive a hard bargain while
deciding on central sales tax (CST) compensation to states. After the
empowered committee of state finance ministers returns from its study
tour of Canada and Japan this week, Chidambaram is likely to seek
states' support for the Goods & Services Tax (GST) in return for a CST
compensation package from the Centre.
Finance ministry officials told
Business Standard the Centre would provide the compensation to states
only after an assurance that they would cooperate in rolling out GST.
They added the Centre didn't have the fiscal space to provide
thousands of crores of rupees as CST compensation; if it was willing
to accommodate states' demands, they should reciprocate.
"A meeting of the empowered committee may be convened soon. The
finance minister would meet state finance ministers to iron out issues
related to GST and CST compensation. He is yet to take a final view on
CST compensation," said a finance ministry official, on condition of
anonymity.
CST is a tax on inter-state movement of goods imposed by the Centre,
but collected by states. Earlier, states were asked to gradually phase
out CST to enable the introduction of GST in 2010-11. The Cabinet had
approved aformula to compensate states for losses resulting from a cut
in the CST rate, till 2009-10. As the GST roll-out was delayed, states
demanded the Centre provide compensation for a longer period —
2009-10.
Though the Centre had allocated only ~300 crore towards CST
compensation in Budget 2012-13, states have pegged the losses for
2010-11 at ~19,000 crore. Before quitting as finance minister,
President Pranab Mukherjee had cleared a compensation package to
states, after states threatened holding back the money could
jeopardise the GST rollout. The issue was then referred to Prime
Minister Manmohan Singh, who was in charge of the finance portfolio
for a short period after Mukherjee's departure from North block. It is
understood the Prime Minister's Office (PMO) had questioned the move,
citing the country's rising fiscal deficit, which is already expected
to overshoot the Budget Estimate.
Though the finance ministry may approve the CST compensation, the
funds may not be released before Budget 2013-14. Also, states' support
for GST may only help the Centre secure parliamentary approval for the
required Constitutional Amendment Bill by the end of this year.
Currently, the matter is being examined by a parliamentary panel.
Option Ones ~1,000-crbond sale underMCAscanner
NSUNDARESHASUBRAMANIAN
New Delhi, 24 September
The Ministry of Corporate Affairs (MCA) is probing Gwalior-based
Option One Industries' ~1,000-crore debenture issue. Earlier, after
complaints from investors, the registrar of companies (RoC) had
demanded the company submit key documents, a demand Option One did not
respond to.
The ministry's regional directorate at Ahmedabad has already directed
the RoCs of Madhya Pradesh and Chhattisgarh to initiate prosecution
proceedings against the company. A show-cause notice in this regard
was issued on August 30.
Ministry documents obtained by Mumbai-based activist Bhupinder Singh
through the Right To Information Act showed despite repeated requests
since May, the company hadn't provided the details sought by the RoC.
Option One was engaged in "real estate" and would foray into "plot
sale" soon, said Mumbai-based promoter Samir Agrawal. "We have
responded to the show-cause notice. We are issuing debentures secured
through mortgage of properties and have initially placed these with
seven to eight companies, who would, in turn, sell these to
investors," he said, adding the company had also appointed adebenture
trustee. A detailed email questionnaire to Agrawal remained
unanswered.
However, there have been complaints the debentures are peddled through
agents on a commission basis. Speaking to Business Standard ,Ashok, a
Bhopal-based agent who peddled these debentures, said, "The debentures
are available in multiples of ~100 and can be bought through a career
plan, through which the seller would earn higher commission or an MLM
(multi-level marketing) plan, which involves bringing in new
investors." The registrar, in a communiqué to the ministry's regional
directorate dated August 31, stated it had received complaints "the
company is running an illegal money circulation racket under the garb
of an investment plan. Despite issuing a number of letters…the company
has not furnished any reply, which gives enough scope for suspicion."
The company's website states, "Option One has been engaged in
providing various fee-based services such as fund mobilisation through
the issue of debt, equity, structured hybrid instruments, etc, for
many clients, including financial institutions and private sector
companies." It adds, "Within a short span, Option One has emerged as
one of India's leading companies in the Indian fixed income market
through management of private placements. Ranked No. 1 in private
placement of fixed income instruments and among the top three players
in the debt market segment, Option One Industries has received various
accolades and is playing a very significant role in developing a
vibrant bond market in India." The company had appointed Bollywood
actor Aman Verma and singer Bappi Lahiri as its brand ambassadors.
When contacted, someone answering Lahiri's mobile phone said, "He is
not in the country." Aman Verma said his contract with the company was
limited to brand endorsements, adding he wasn't aware of the company's
financial structure. He directed finance-related calls to his
consultant R K Shetty, a Mumbai-based financial advisor. Shetty said
he was an income tax consultant for the Agrawal family and had
conducted a seminar on debentures in Madhya Pradesh. "I am not aware
of the legality and nature of this issue," he said.
Option One's website lists Verma, Shetty, Lahiri and Agrawal as
members of the company's advisory board.
Ministry records show Option One was incorporated in March. Since
then, it has filed forms for a debenture issue of ~1,000 crore.
According to the brochure for 'purchase of debentures' circulated by
the company, which Business Standard reviewed, the debentures could be
purchased under three different schemes -monthly income plans, fixed
deposits and recurring deposits. The schemes offered to collect sums
of ~1,0001,00,000 for tenures varying from one to 14 years.
Company allegedly selling bonds through agents under 'career plan',
'MLM plan' UNDER ACLOUD
were available in multiples of ~100 through a career plan or a
multi-level marketing plan complaints the company was running an
illegal money circulation racket number of letters, the company did
not give any reply, and this led to suspicion Aman Verma, R K Shetty,
Bappi Lahiri & Samir Agrawal as members of the company's advisory
board
NSE's new sweeteners to cut trading fee
PALAKSHAH
Mumbai, 24 September
The price war between stock exchanges has intensified, with the
National Stock Exchange (NSE) introducing various measures for a class
of members. This may effectively reduce the cost of exchange
transaction fee for a few existing players to about zero.
To counter the aggressive membership drive of arch rival MCX-SX, the
NSE has cut its deposit and net worth criteria by up to 50 per cent,
under the new 'Alpha' category. Existing members who fit the bill can
also convert to the Alpha category; their surplus deposits would be
used to pay the exchange's transaction and infrastructure charges for
three years. The membership fee of ~5 lakh for Alpha members has also
been waived by the exchange.
Under the Alpha category, the NSE would allow a broker to handle up to
50 client IDs. This would largely benefit companies that have direct
memberships in exchanges for treasury operations, propriety desks of
brokerages, institutions and fund houses that seek to directly connect
with the exchange. High frequency trading, which is estimated to
contribute about 20 per cent of the total market volume, is largely
carried out by propriety desks of brokers and foreign players. While
some feel NSE's move would act against broking firms, some say not
many small players are interested in direct memberships with
exchanges, owing to compliance issues.
The membership deposit for Alpha members would be ~45 lakh — for cash
and derivatives together. NSE charges a membership deposit of ~1.5
crore for companies and ~75 lakh for individuals and partnership
firms. The net worth requirement would be ~50 lakh for trading members
and ~1 crore for trading and clearing members, under Alpha.
"With the NSE on an aggressive mode, MCX-SX would find it difficult to
gain substantial market share. After NSE's move today, MCX-SX's
membership would be the key," said a Mumbai-based broker. Sources say
after its roadshow last week was well received by brokers across the
country, MCX-SX was eying about 500 members.
Experts say most foreign brokerages would prefer to have memberships
on all the exchanges.
Earlier, the Bombay Stock Exchange had seen several foreign
institutional investors flock to its platform, after it launched the
market making scheme.
MCX-SX had earlier announced a fee discount of 10 per cent for
accountants, chartered financial analysts, lawyers, those with a
masters' degree in business administration, etc, and a 20 per cent
discount to members from remote places. The membership deposit is ~20
lakh for cash and derivatives, while the net worth requirement is ~30
lakh, if enrolled during the introductory period. MCX-SX also charges
~5 lakh as membership fee. The move by NSE to keep the deposit and net
worth criteria higher than MCX-SX's is based on its leadership in the
segment.
NEWMEASURE Under Alpha, NSEwill allowa broker to handle maximum of50
clientIDs. BS PHOTO
--
.
-
CS A RENGARAJAN,, B.Com ,FCS, LLB, PGDBM
Company Secretary, Chennai
email csarengarajan@gmail.com
http://www.csarengarajan.blogspot.com
http://companysecretarytalent.blogspot.com/
http://companysecretarybenevolentfund.blogspot.com/
http://csvacancies.blogspot.com/
mobile 093810 11200
CS Benevolent Fund is a collective effort towards extending the much
needed financial support to the community of Company Secretaries in
times of distress Let us lend support and join for noble cause.
SHARING KNOWLEDGE SKY IS THE LIMIT
This mail and its attachments (if any) are confidential information
intended for persons to whom the email is planned for delivery by the
sender. If you have received this mail in error please notify the
sender of the error by forwarding the email and its attachments (if
any) and then deleting the mail received in error and the relevant
email trail in this connection without making any copies or taking any
prints.
------------------------------------
receive alert on mobile, subscribe to SMS Channel named "aaykarbhavan"
[COST FREE]
SEND "on aaykarbhavan" TO 9870807070 FROM YOUR MOBILE.
To receive the mails from this group send message to aaykarbhavan-subscribe@yahoogroups.comYahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/aaykarbhavan/
<*> Your email settings:
Individual Email | Traditional
<*> To change settings online go to:
http://groups.yahoo.com/group/aaykarbhavan/join
(Yahoo! ID required)
<*> To change settings via email:
aaykarbhavan-digest@yahoogroups.com
aaykarbhavan-fullfeatured@yahoogroups.com
<*> To unsubscribe from this group, send an email to:
aaykarbhavan-unsubscribe@yahoogroups.com
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
No comments:
Post a Comment