| Experts say Etihad will exercise control over Jet Airways |
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Mumbai, 30 July Gulf- based Etihad Airways, which is in the process of acquiring a24 per cent stake in Jet Airways ( India) Ltd, will hold influence and control over the Indian carrier despite modifications to the shareholder and commercial pacts signed between them, corporate governance and aviation experts say. The government cleared the decks for the ₹ 2,060- crore investment by Etihad and the Foreign Investment Promotion Board (FIPB) gave a conditional nod to the deal on Monday. This was done after the two airlines watered down contentious clauses regarding control and management. However, some experts feel not enough has been done. JN Gupta, former executive director of the Securities and Exchange Board of India ( Sebi) and founder of SES, a proxy advisory firm, said; " The deal may appear compliant in letter and on paper. However, it will only be known in future what kind of control Etihad continues to exercise over Jet." It was Guptas firm that first raised the issue of effective control of Etihad and had asked shareholders to oppose the proposal to revise the airline's Articles of Association. Kapil Kaul, chief executive, South Asia, of aviation consultancy Centre for Asia Pacific Aviation ( Capa), too, believes Etihad will continue to influence Jets operations upon the share acquisition. " The FIPB approval is on expected lines. This is the first major FDI ( foreign direct investment) deal for aviation, which is significant for the sector and Capa welcomes it. However, Icontinue to believe the very liberal and exclusive bilateral granted was key to the valuation and this deal." The civil aviation ministry's decision to give additional flying rights of 37,000 seats to Abu Dhabi in April soon after Jet and Etihad announced their tie- up had triggered a controversy. "The manner of allocating bilaterals reflects poorly on how we govern India's aviation system. We see Etihad having a major role in Jet's operations and management going forward even though shareholders' agreement has been revised. Earlier in 2008- 09, W L Ross in Spicejet had very significant role in Spicejet's strategy and future direction even with under 15 per cent share holding and one Board seat," Kaul added. Saj Ahmad, an aviation expert in London, said: "Through its 24 per cent stake, Etihad still has the muscle to influence the strategic direction of Jet Airways. When you look at the success Etihad has had in turning around Air Berlin and Air Seychelles, ( promoter Naresh) Goyal and Jet Airways will almost certainly welcome such input that gets their airline operating in the black." |
| Govt may ease FDI norms in multibrand retail this week |
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New Delhi, 30 July The Cabinet Committee on Economic Affairs might relax the foreign direct investment ( FDI) policy on multibrand retail at its meeting on Thursday. Some of the contentious riders pertain to investment in back- end infrastructure, mandatory sourcing from small- scale industries and establishment of retail stores only in cities having population of one million or more. On back- end infrastructure, the government is planning to highlight the condition of creating "additional" infrastructure. "The main reason why the government opened up the sector to FDI is only to create additional and state- of- art back- end infrastructure such as cold storage chains, this is because the back- end facilities now are not enough and the existing players will get an easy exit route if foreign retailers buy them out, leading to a real estate business of sorts," a senior official told Business Standard. The policy on 30 per cent mandatory procurement from micro, small and medium enterprises ( MSMEs) could also change. The government might relax the condition that once the 30 per cent threshold is met, it can continue sourcing from the same supplier even if the total investment exceeds $ 1 million, keeping in mind quality consistency. The cap might now be changed to $ 2 million for three years, the official added. The policy now states that at least 30 per cent of the value of procurement of processed products has to be sourced from domestic small industries, with total investment of not more than $ 1 million in plant and machinery. The government might also change the rider that retailers can set up outlets only in cities with more than a million population. The government had allowed 51 per cent FDI in multibrand retail in September 2012. |
| Subrata Roy liable for contempt, Sebi tells SC |
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New Delhi, 30 July The Securities and Exchange Board of India ( Sebi) on Tuesday told the Supreme Court that Sahara India chief Subrata Roy was liable for contempt of court proceedings in his capacity as promoter of Sahara India Real Estate and Sahara Housing Investment. Sebi has moved contempt petitions against the companies, directors and Roy for allegedly willfully disobeying the order of the Supreme Court to deposit ₹ 24,029 crore, along with interest of 15 per cent. On Tuesday, the court heard the arguments of Sebi with regard to contempt, as well as Roy's role, and adjourned the matter to August 6. Sebi counsel Arvind Datar told the court the Sahara firms had clearly violated court directions. " There could not be a clearer case of contempt. They ask for more time, and then they don't comply. Then they say they have already paid and when this plea is dismissed, they again ask for more time, which is also dismissed. It must be taken that the court has not accepted their plea. Non- payment of money amounts to contempt," Datar said. He added the parties had violated Section 2( c), read with Article 129. " They have compounded the contempt by frustrating the orders of Sebi dated February 13, 2013 and March 26, 2013." On Roy, Datar said a Sebi wholetime member had issued a showcause notice to him and had recorded specific findings against him in a June 2011 order. " By virtue of being promoter of the companies and by virtue of the findings of Sebi, Roy is in the same footing as the directors of the company," he said. Therefore, Roy fell within the ambit of the term " officer in default" under the contempt proceedings, the Sebi counsel said. He produced several filings with the Registrar of Companies, including the red herring prospectus of the optionally fully convertible debentures issue in which Roy was named promoter of Sahara India Real estate, with 70 per cent stake. In a different filing, he was referred to as an individual with " significant influence". In a statement issued quoting its counsel Keshav Mohan, the Sahara group said the court didn't issue a notice of contempt against Subrata Roy on the second contempt petition. The statement said, " While referring to the affidavit filed by Sahara on January 4, 2012, Sebi argued in the said affidavit, an undertaking had been given, which had been violated. The Supreme Court also enquired with Sebi as to how the said other group companies, which were independent legal entities, were bound by the said affidavit, filed by the two Sahara companies. The Sebi counsel indicated this issue would be addressed by him separately." Sebi pointed to an advertisement in a newspaper on September 3 2012, terming it an instance of Sahara's contemptuous conduct. " The court, on referring to the said publication, observed this didn't amount to contempt and indicated Sebi may not read further advertisements," the statement said. Refers to filings by companies saying he is the " promoter" Fresh application against Roy in Mumbai court The Securities and Exchange Board of India ( Sebi) has filed a fresh application for issuing personal summons to Sahara group chief Subrata Roy, as well as three directors of the company, before a metropolitan magistrate court in Mumbai. These senior Sahara group officials would have to appear before the chief metropolitan magistrate before September 30. Last year, Sebi had initiated criminal proceedings against Sahara group companies — Sahara India Real Estate and Sahara Housing Investment — and Subrata Roy for violating a series of orders issued by it. Summons to Subrata Roy and three directors for personal appearances were issued by the court in May. BS REPORTER |
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Company Secretary, Chennai
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