| Retail FDI victory fuels govt's reforms push |
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New Delhi, 7 December The government is preparing to push through at least three pieces of key economic legislation in the winter session of Parliament, after securing votes for foreign direct investment (FDI) in multi- brand retailing. It has put aside the insurance Bill to raise the FDI cap in the sector from 26 to 49 per cent, as it would mean sending it back to the standing committee, which recommended retaining the cap at 26 per cent. Finance Minister P Chidambaram discussed the issue with senior leaders of the Bharatiya Janata Party ( BJP) a few days ago and appears to have virtually decided to put contentious issues aside. But the government wants to use the FDI victory impetus to clear the Companies Bill and those amending the banking and pension Acts. The session has about six working days left. The Banking Regulation Amendment Bill, critical for the government's plan to expedite the process of providing new banking licenses, could be moved as early as Monday. Parliamentary assent to the Bill will enable the Reserve Bank of India ( RBI) to curb misuse of banks by companies. The Bill will remove the 10 per cent voting rights limit in private sector banks, and increase the cap from 1 per cent to 10 per cent in public sector banks. RBI will have powers to impose penal interest on banks that fail to meet their required cash reserve ratio. The Companies Bill is also likely to be passed in this session, with BJP leaders indicating they will help the government in clearing it. The Forward Contracts Regulation Act ( Amendment) Bill is another legislation the government has lined up for passage in the session. Other important nonfinancial businesses include the Lok Pal Bill and several long- pending education Bills. Outside Parliament, the government machinery is preparing to capitalise on the positive sentiment created by the retail FDI victory. Rail rate increases and a tough Budget are in the offing, asenior source in the Prime Minister's Office said. "The fiscal situation is not good and there isn't too much choice," he said, adding the 2012- 13 Budget was expected to be a practical one, to ensure there is enough outlay to continue financing the flagship schemes. UPA'S WINNING STREAK The final tally in the Rajya Sabha VOTED FOR RETAIL FDI: 123 THE BILLS AGENDA |Banking Regulations Amendment Bill |Pension Fund Regulatory and Development Authority Bill |Companies Bill |Insurance Bill put on hold Source: Rajya Sabha secretariat; subject to correction Foreign retail chains cautious on India Foreign retail chains are not yet ready to talk about their India plans because the last hurdle — amendment to the Foreign Exchange Management Act — is yet to be crossed. That, too, has to be cleared by the Rajya Sabha. 4 > |
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| Foreign retail chains still cautious on India plans |
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New Delhi/ Mumbai, 7 December Even as the government won the retail foreign direct investment (FDI) vote in the Rajya Sabha today, following the victory in the Lok Sabha two days ago, foreign retail chains are still not ready to talk about their India plans. The last hurdle — amendment to the Foreign Exchange Management Act ( Fema) — is yet to be crossed, pointed out a source. It, too, has to pass the Rajya Sabha test. Although it may not be a stumbling block, foreign players would rather wait till it is all clear for them in the $ 500- billion (₹ 25 lakh crore) Indian retail market, said the source. According to experts, the real action on the ground linked to opening of stores could be expected only after a year. UK- based Tesco is the only foreign- owned chain to offer a comment after the Rajya Sabha vote. While welcoming the development, the company spokesperson said Tesco was " reviewing the conditions" without elaborating further. " We already have a successful franchise arrangement with Tata's Star Bazaar stores and we are hopeful that this development will allow more Indian consumers, business and communities to benefit from world- class retail investment," the spokesperson added. Early this week, Tesco had announced that it had initiated a review in the US market for its ' Fresh and Easy' stores there. The largest retailer of the world, Bentonville- based Walmart, declined to comment on the latest development in Parliament. Its 50 per cent Indian partner in the cash and carry or wholesale venture, Bharti Enterprises, too chose to be silent on the move. Currently, Walmart is facing an Enforcement Directorate investigation over its alleged investment into a Bharti arm, in violation of the Fema rules. Also, the American chain is probing likely corruption cases in the organisation in relation to the India market, among other geographies. French retailer Carrefour, which too has been in India with its cash and carry business hoping it can roll out its supermarket stores here, refused to talk around the political developments on retail FDI. For full reports, visit www. business- standard. com Real action likely after a year |
| Insider trading case: US court to hear Gupta's appeal on expedited basis |
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New York, 7 December India- born former Goldman Sachs director Rajat Guptas appeal against his conviction on insider trading charges will be taken up on an " expedited" basis by a US court, which said it will hear arguments in the case as early as April next year. The US Court of Appeals for the Second Circuit here said that briefs by Gupta on his appeal should be filed by January 18 next year while the governments motion should be submitted in court by March 15. Gupta, 64, would then have time till March 29 to reply to the governments motion after which a twojudge panel of Jose Cabranes and Reena Raggi in the appeals court would hear oral arguments in the case " on or after the week of April 1". "On a review of the record, it is hereby ordered that the conditions of release established by the District Court shall remain in full force and effect during the pendency of this appeal and the appeal will be expedited," the courts order said. It said pending ruling on Guptas appeal, any questions regarding bond and conditions of release should be referred to the two- judge panel. Gupta was set to begin his twoyear prison term on January 8 after being convicted this summer of passing confidential boardroom information in 2008 about Goldman Sachs to his friend and business associate, Sri Lankan hedge fund founder Raj Rajaratnam. However, earlier this week, the former McKinsey head won a major reprieve after the appeals court granted his request to stay his surrender to prison and remain free on a $ 10 million- bond while he fights his conviction. Gupta was arrested and charged in October last year with securities fraud and conspiracy. His bail conditions, apart from the $ 10 million- bond, required him to surrender his passport and imposed travel restrictions on him. The prosecutors had been opposing Guptas bid to stay free on bail saying he is a flight risk due to his strong financial and personal ties to his native India. In appealing his conviction, Guptas lawyers are expected to argue that the US District Court, which had handed down a twoyear prison sentence to their client, was wrong in allowing at the trial wiretapped conversations between Rajaratnam and Singapore- based portfolio manager at Galleon David Lau. In the conversation, Rajaratnam tells Lau that he had information about Goldmans stock position "from somebody who is on the board of Goldman Sachs". Guptas lawyers said there was no evidence that Lau had ever traded in Goldman stock and that Gupta was never a participant in these calls. They also are expected to present the case that the court erred by excluding as hearsay critical evidence that Guptas eldest daughter Geetanjali could have provided at trial regarding Guptas state of mind and about her fathers deteriorating relationship with Rajaratnam. The other argument on which Guptas case for appeal would be based is that the District Court erred by excluding wiretap evidence of an alternative Goldman Sachs tipper who provided inside information to Rajaratnam. Guptas lawyers have said the appeal would "raise substantial questions and a favourable decision is likely to result in reversal ( of conviction) or new trial. Rajat Gupta |
| Sebi probe shows DLF disclosures inadequate |
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Mumbai, 7 December Investigations by the Securities and Exchange Board of India ( Sebi) show that DLF Ltd, which raised a little over ₹ 9,000 crore through apublic issue in 2007, had made inadequate disclosures in its then offer documents. Sebi sources say their probe shows Sudipti Estates, against which a criminal complaint was registered with the Delhi Police, is part of DLF group. Yet, the company had failed to give details about it in their initial public offering ( IPO) prospectus. DLF has been denying that Sudipti was a group company. A criminal complaint was registered in April 2007 by a New Delhi- based businessman Kimsuk Krishna Sinha, who accused the company of duping him of ₹ 34 crore. Sinha, in his petition to the court, had alleged DLF intentionally made a false statement that it had no association with Sudipti Estates, so that details of the criminal complaint stayed hidden from prospective shareholders. According to Sebi's investor protection and disclosure guidelines, any company launching an IPO has to disclose all details about criminal or civil cases registered against it or its group companies, in the red herring prospectus (RHP). Sinha had alleged that Sudipti, DLF Home Developers Ltd and DLF Estate Developers Ltd were sister concerns and part of the DLF Group. A DLF spokesperson did not respond to phone calls, a text message and an email on the matter. Documents accessed by Sebi show that Sudipti is a subsidiary of Purandar Estates, which in turn is held by Felicite Builders and Construction. One of the shareholders of Felicite Builders is DLF Home Developers, which is also the original promoter of the company. Spouses of senior executives of DLF and its other arms hold majority stakes in Felicite Builders, a Sebi source said. DLF had named these officials, which hold majority shares in Felicite Builders, as key management personnel in the public issue documents. DLF Home was the original promoter of Felicite Builders but its shares were transferred on November 30, to a group employees wife. ( See Table for top 10 shareholders of Felicite Builders). A source with Sebi said filings with the registrar of companies (RoC) also show Shalika Estate Developers, the erstwhile holding company of Sudipti, was merged with Purandar Estates with effect from April 1, 2008. But, since Purandar is controlled by Felicite Builders, which is controlled by key management personnel and associates of DLF Group, the beneficiary of the assets of Sudipti Estates should be DLF Group, said the source. The registered office of Purandar Estates is at Jandewalan Extension, New Delhi, and belongs to DLF Ltd. Many other DLF group companies too, are registered at this address. Further, DLF Utilities Ltd, a shareholder of Purandar Estates, shares its registered office address in Gurgaon with DLF Ltd, the document with Sebi shows. DLF, in its draft RHP filed for a public issue in May 2006, had mentioned that Sudipti was its associate company but withdrew it and in a fresh filing in January 2007, did not mention Sudipti as an associate. The court then asked Sebi to investigate if Sudipti was an associate of DLF or not and to ascertain if the company had deliberately dropped this information from the IPO prospectus. Sebi, which sought DLFs filings with RoC as part of its investigation, found out that Sudipti was closely associated with the DLF group. DLF's submission in court has been that " between the filing of aforesaid DRHPs, the company ( DLF) had disassociated itself from the said companies (Sudipti and its holding companies) due to internal restructuring." DLF maintained Sudipti was a separate legal entity owned and controlled by different individuals. Earlier, DLF had moved the single judge- bench to quash Sebis summons saying it was passed " erroneously and in blatant violation of the principle of natural justice." The judge on January 3 this year had dismissed DLF's plea against the market regulators decision saying Sebis order was " based on reasons". Following this, DLF approached a division bench of Delhi HC, which too ruled in favour of Sebi on November 20. A top Sebi official said the regulator would take into account the judgement by Delhi HC Judge Vipin Sanghai, who had stated that " there is no dispute to the fact that spouses of key managerial persons of DLF group are shareholders in Felicite Builders", while passing the order. No. of shares held Shareholders (₹ 10 fully paid) Pudmaja Sanka wife of ( w/ o) Ramesh Sanka, former group chief financial officer ( CFO) of DLF Ltd. Currently head 2,04,000 of FacilityManagement and Utilities Business of DLF Madhukila Basak w/ o Surojit Basak CFO 2,03,000 ( Homes) in DLF Home Developers Ltd Meenakshi Gupta w/ o Adesh Gupta 2,00,000 VP ( Taxation) DLF Ltd Saroj Khanna w/ o Manik Khanna 2,00,000 Head Banking at DLF Ltd Ritu Chawla w/ o Sourabh Chawla, 2,00,000 Executive VP ( Finance) at DLF Ltd Mukta Jindal w/ o Vipin Jindal 2,00,000 Sr. VP ( Finance), DLF Ltd Nishi Goyal w/ o Atul Goyal 2,00,000 CFO, DLF Universal Ltd Sangeeta Gupta w/ o Shiv Kumar Gupta 2,00,000 Sr. VP ( Finance) DLF Ltd Rima Hinduja, w/ o Gaurav Monga 2,00,000 Former VP ( Finance) DLF Ltd DLF Home Developers Ltd 2,03,000 LACKS TRANSPARENCY Sudipti Estates is a subsidiaryofPurandar Estates, which is held by Felicite Builders and Developers. As per Registrar of Companies filing, the shareholding of Felicite Builders and Construction as on Aug 2, 2011 |
| EPFO takes steps to ensure compliance |
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New Delhi, 7 December The Employees Provident Fund Organisation (EPFO) has decided to take strict steps to ensure the money collected in the name of a worker by his or her employer is deposited and that action is taken against defaulters, specifically covering contractual staffers as well. It recently issued two circulars, on November 30 and December 5, to address such action by contractors or employers. These say the EPFO and its website would now have not just the total number of subscribers under the head of each organisation but also the names of workers for whom payments have been made by the company. The first circular was signed by the outgoing commissioner, R C Mishra, on the day he retired; the second one is an elaboration on it. Mishra refused to comment on the circulars, which deal with the illegal practice of 'bulk payments' but said it was the outcome of the organisation's effort to stop diversion of funds meant for the poor. " We have not changed the rules but tried to stop something that is contrary to the law,'' he said. Added EPFO sources: " The principal employer is not giving the names of workers for whom they are making PF contributions. Our PF officials are also not asking for the names of these workers. The moment we insist on names, the employee is empowered. And, if an employer does not cooperate, we proceed under law, with criminal action." The two circulars would put a lid on the prevailing practice of ' bulk payment'' of PF contributions by contractors, colluding with officials of the principal employer and EPFO employees, rather than into specific accounts, says a senior official. None of the workers in question would get the amount due, as nothing existed in their name, thanks to the arbitrariness prevailing in the matter of collection of payments, the official said. On lump sum payments, the circular of November 30 says: " The problem of lump sum assessments happens mostly in contractor establishments and in establishments employing workers of a migratory nature, having short- term project- based employment. The lump sum assessments happen because the default detection and the subsequent compliance action take place much after the occurrence of default. Further, the employer is either unwilling or unable to provide details of employees when so required during the course of enquiry.'' |
Company Secretary, Chennai
email csarengarajan@gmail.com
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