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SAHIL MAKKAR New Delhi, 21 January When chief executive officers ( CEOs) of global companies were asked to rate three countries that would contribute largely to their overall growth, India fared slightly poorer than last year, according to the 17th Annual Global CEO Survey by PricewaterhouseCoopers. However, compared to their global counterparts, Indian CEOs were more upbeat about growth, with about half saying they were " very confident" of growth prospects in the next 12 months. In the survey, seven per cent of global CEOs reposed their trust in India, compared with 10 per cent last year. For Brazil, the number slipped from 15 to 12 per cent. While that for China rose from 31 to 33 per cent, Russia stuck to last year's figure of seven per cent. "China remains robust, thanks to vast foreign exchange reserves and extensive reform measures introduced by the central government. But Brazil is suffering from a huge debt hangover and India has been slow to open up its markets," says a report based on the survey. "Russia is unduly reliant on commodity exports and South Africa's growth has been impeded by heavy regulation." India has faced criticism over its dilly- dallying over foreign direct investment in organised retail and its policy to tax companies retrospectively. Scams such as those related to the allocation of second- generation telecom spectrum and coal block licences have further marred its image. Last year's report had identified Indian market as "decelerating", while those in Brazil, Indonesia and South Africa were said to be "accelerating". CEOs say now, they are exploring growth in countries beyond Brazil, Russia, India, China and South Africa ( BRICS), adding they see good prospects in Indonesia, Mexico, Turkey, Thailand and Vietnam through the next three to five years. The US, Germany and the UK have been ranked high on the list. Against half the Indian CEOs confident of growth though the next year, the corresponding number for global CEOs stood at only 39 per cent. From both the segments, 43 per cent felt the global economy would improve in the next one year. Asked whether they were paying a fair share of tax, 88 per cent of Indian CEOs agreed, against the global average of 75 per cent. While 57 per cent of Indian CEOs are expected to increase headcount in the coming year, only 13 per cent said they would cut jobs. The corresponding figures for global CEOs stood at 50 per cent and 20 per cent, respectively. Looking ahead The report said though an increasing number of CEOs felt the global economy was looking up, they continued to send out mixed signals. Last year, while advanced economies were struggling, emerging economies surged; this year, while advanced economies are returning to the growth path, growth in some emerging economies is decelerating "CEOs have begun to regain confidence. They've successfully guided their companies through recession and now, more CEOs feel positive about their ability to increase their revenues and prospects for the global economy," said Dennis M Nally, chairman of PricewaterhouseCoopers International. "However, CEOs also acknowledge generating sustained growth in the post- crisis economy remains a challenge, especially as they deal with changing conditions such as slowing growth in emerging markets." Nally added worries continued to loom large, with CEOs sending a clear message to governments about their concerns about over- regulation, fiscal deficits and tax burdens. Growth drivers Over 80 per cent of international CEOs believe technological advances will transform their businesses in the next five years. About 60 per cent feel demographic shifts, and an equal number feels a shift in global economic power, will drive their growth during this period. For the survey, 1,344 CEOs, across 68 countries, were interviewed between September 9 and December 6, 2013. The majority of these interviewees were from the Asia- Pacific. From India, Apollo Hospital's Preetha Reddy and ICICI Bank's Chanda Kochhar were included the list of those interviewed face- toface; the rest were interviewed through post, telephone and online. WORLD ECONOMIC GROWTH MIXED SIGNALS India has slipped on the global benchmark for the world's three most important foreign countries for business, suggests an annual report by PwC. The survey report says while last year advanced economies were struggling; emerging economies surged. This year sawa reversal of fortunes. However, more CEOs believe their companies will do much better than last year. A snapshot: US 36 India 49 China & Hong Kong 48 Mexico 51 Russia 53 S. Korea 50 Germany 33 Australia 34 CEOs' confidence in their companies growth prospects ( in terms of revenue) in 2014 ( in %) CEOs confident about revenue growth prospects over the next 12 months ( in %) Three most important countries for overall growth in 2014 ( in %) '04 ' 05 ' 07 ' 08 ' 09 ' 10 ' 11 ' 12 ' 13 ' 14 Source: PwCs 17th Annual Global CEO Survey. Report is based on interviews of 1,344 CEOs in 68 countries Indian CEOs World CEOs In the next 12 months ( in %) GROWTH PROSPECTS Very confident To increase jobs Will decline vs GLOBAL ECONOMY COST CUTS HEADCOUNT IN COMING YEAR THREAT 49 39 83 76 69 57 50 Will improve 43 44 5 7 Have cut cost in 2013 Will do in the next 12 months Exchange rate 84 volatility 60 Over regulation 82 72 Bribery and 65 corruption 58 Availability 70 of key skills 52 2013 2014 US 23 30 Germany 12 17 UK 7 10 China 31 33 Japan 5 7 Indonesia 7 7 Mexico 5 5 Russia 7 7 Brazil 15 12 India 10 7 64 20 13 To shed jobs 60 45 30 15 0 31 41 52 50 21 48 36 31 40 39 Seven per cent of global CEOs repose their trust in India, compared with 10 per cent last year: PwC survey |
| CAG had refused to audit us in 2002: Tata Power |
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New Delhi, 21 January Tata Power Delhi Distribution Ltd (TPDDL), one of the three private power distribution companies in Delhi, has said the Delhi government has failed to communicate the terms of reference for its audit by the Comptroller and Auditor General of India (CAG) despite repeated reminders. TPDDL also said the CAG had refused to appoint auditors to scrutinise its accounts on the company's own request made in 2002 soon after it started operation. "However, at that time, the CAG's stand was that since the discom is not a governmentowned company under section 617 of the Companies Act, the CAG cannot appoint astatutory auditor," the Tata Power subsidiary said in a statement. In 2002, the CAG had also turned down a similar request from the other two discoms —Reliance Infrastructureowned BSES Yamuna and BSES Rajdhani — said an executive close to the development. When contacted, a senior CAG official could not confirm whether a request from the discoms in 2002 for audit had been turned down by the auditor. He, however, justified the current audit by the CAG, which is likely to soon begin, arguing it is in " public interest". The audit was to begin on Monday but had to be halted after the discoms called the process illegal, he said. Delhi Chief Minister Arvind Kejriwal had requested the audit alleging the three discoms have manipulated accounts to seek tariff hikes. While the discoms have been opposing the audit, the CAG agreed after receiving a formal request from Delhi's Lieutenant Governor Najeeb Jung. The discoms have disputed the governments claim of revenue from Aggregate Technical and Commercial (AT& C) loss reduction. They have also rejected the allegations of undisclosed revenue from surplus power. Earlier this month, Kejriwal had slashed power tariffs for Delhi's 2.8 million domestic consumers by half through a 50 per cent subsidy announcement. The subsidy would cost Delhi government ₹ 260 crore in the current quarter ending March. The result of the audit could impact the subsidy handout. Says it hasn't received terms of reference for the current audit Delhi CM Arvind Kejriwal had requested the audit, alleging the three discoms have manipulated accounts to seek tariff hikes. While the discoms have been opposing the audit, the CAG agreed after receiving aformal request from Delhi's Lieutenant Governor. |
| DRAFT SUGGESTION BY THE MAYARAM PANEL Mayaram panel suggest overhaul of FDI rules
SURAJEET DAS GUPTA & INDIVJAL DHASMANA New Delhi, 21 January The country's foreign investment regime might see a major overhaul if the government accepts the draft recommendations of the Arvind Mayaram ( economic affairs secretary) committee. The committee has suggested that all individual foreign investments of up to 10 per cent of paid- up equity in alisted company be classified as foreign portfolio investment (FPI) and those above this limit be considered foreign direct investment ( FDI). At present, the size of investment is not a criterion for classification. According to sources, the committee has also suggested that the cap on aggregate default FPI in a company be set at 24 per cent. However, the investee company concerned could increase the limit to the sectoral cap allowed under automatic route. It could do so after its board passes a resolution, which is to be later approved by shareholders. For instance, in the telecom sector, foreign investment of up to 100 per cent is allowed but only 49 per cent can come through the automatic route. So, the FPI limit in telecom companies will be 24 per cent, but it could be increased to up to 49 per cent. The panel has also suggested that portfolio investment by a single investor should not exceed 10 per cent in the initial public offering (IPO), or follow- on public offering ( FPO), of a listed or to be listed company. Any foreign investment beyond the threshold of 10 per cent of paid- up equity capital in a listed company — and any foreign investment in an unlisted company — should be considered FDI. Foreign investment through a private arrangement also be treated as FDI. Besides, Investments by nonresident Indians ( NRIs) should not form part of these suggested definitions and should be reviewed separately, the panel has recommended. Analysts, however, seem sceptical about implementation of these suggestions. "The new FPI and FDI definitions, if accepted by the government, may be extremely difficult to implement. It will require fundamental amendments to several laws, such as the Sebi Act, Foreign Exchange Management Act, Securities Contracts ( Regulation) Act, Income Tax Act, etc," Punit Shah, co- head of tax at KPMG told Business Standard. These new definitions are not to apply to the current arrangements — such as the investment by Abu Dhabibased Etihad Airways in Jet Airways — since the panel has exempted existing deals from the new rules. Analysts also believe that it might be difficult to monitor FPI and FDI limits wherever there are separate sectoral caps. If FDI and FPI caps in a given sector are separately defined, exceeding the FPI cap of 10 per cent will convert the investment into FDI and sectoral caps may be breached. For example, for investment in stock exchanges, there is a 26 per cent cap on FDI but 23 per cent limit for foreign institutional investors. To avoid this problem, the panel has suggested that the default overall cap — for both FDI and FPI — be set at 49 per cent, if control of a company rests with Indians. Within that, the default FPI cap could be set at 24 per cent ( which could be raised up to 49 per cent). For full report, visit www. business- standard. com A) LISTED COMPANY |FPI is when foreign investment is up to 10% by individuals or individual entity |Investment beyond that be called FDI taken as FDI company be set at 24 % allowed under automatic route in the sector the company belongs to |Composite default foreign investment cap, comprising FDI and FPI, be set at 49 per cent where control rests with Indians |Sectors like insurance, media and defence to be exception to composite foreign investment rule NRIS | Not to be covered under this scheme. Their investments to be reviewed separately
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