Proposal for Rs 1,000 minimum monthly
pension approved: Govt
The decision of the government would immediately benefit 28 lakh pensioners including 5 lakh widows
| Govt proposes 49% FDI in Insurance
JOYDEEP GHOSH Mumbai, 7 July The government has proposed dropping a crucial rider for increasing the foreign direct investment ( FDI) limit in the insurance sector to 49 per cent from the current 26 per cent. The earlier proposal was that the higher FDI limit would be allowed only for health insurers. A draft note to the Cabinet, prepared by the Department of Financial Services on the official amendment to the Insurance Amendment Bill, 2008, has dropped the rider. The idea about enhanced FDI limits in only certain areas of the insurance sector was not tenable, as both life as well as general insurance areas required access to capital, the note said. In any case, most general insurance companies were already offering health insurance, the note said. In its proposal to increase the total holding of a foreign company to 49 per cent, the department, however, has stuck to its earlier stand that caps voting rights at 26 per cent — the current investment cap. Also, the chief executive officer (CEO) of the insurance company will be appointed by Indian shareholders subject to approval of a competent authority and a majority of the company's directors will have to be Indians. The proposal says the official amendment will incorporate suitable safeguards on foreign equity investment in the insurance sector while enhancing the overall cap to 49 per cent. Industry players feel the government has taken this decision to reduce voting in the Bill. Said Amitabh Chaudhry, managing director & CEO, HDFC Life: " It is a good first step. I would believe that the government wants to reduce the voting rights of the Bill easier." According to industry sources, the rise in FDI would bring in around $ 1 billion ( around ₹ 6,000 crore) of foreign investment. Insurance penetration has been falling in India consistently. Between 2008- 09 and 2013- 14, insurance penetration has fallen from 4.6 per cent to 3.9 per cent, according to a Swiss Re sigma study. In a meeting held on May 31, chaired by the finance secretary with all the stakeholders, including the Life Insurance Council, General Insurance Council and insurance players, issues related to the capital needs of the insurance sector were discussed. Insurers, in fact, had proposed that ideally the increase in limit without any qualification. They were also sceptical about restricting FDI in insurance to only one particular sector, say medical insurance. Insurance players, however, felt the government was being overcautious because in case of banks which manage depositors money, foreign holdings of 75 per cent are allowed. Also, they said even if voting rights were increased to 49 per cent, it wouldn't have made any substantial difference because the joint venture agreements were tight enough to protect Indian shareholders. "With the reduction in the voting rights, foreign players may seek a discount now," said Chaudhry. However, insurance players also admit since the Bill has been in cold storage for a long time, any forward looking move was welcome. The Bill has been pending in the Rajya Sabha since 2008. Said KK Mishra, CEO, Tata AIG General Insurance: " This Bill has been pending for so long that I believe that whatever the government plans to do, it should do fast." |Life insurance premiums rose 11. 5 per cent in FY 14 |Non- life insurance premiums rose 12. 2 per cent in FY 14 |Insurance penetration fell 0. 1 per cent – from 4per cent to 3. 9 per cent (down 0.7 per cent between 2008- 08 and 2013- 14) |
| What legacy does Raghav Bahl leave behind? | |
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New Delhi, 7 July Of the 131 entities Raghav Bahl follows on Twitter, 20 are politicians and political parties. The rest are a mix of journalists, policymakers, newspapers and Network18 news channels. He follows only one media CEO: Punit Goenka of Zee. This is the first indicator of what Bahl, 52, is likely to do now that he slips into the role of a non- executive director at Network18, the company he founded 21 years ago. The other indicator is his Facebook page about the Think India Foundation, launched by Network18 last year. It advocates, through TV shows, public events, et ceterapolicies for India that are " economically conservative and socially liberal". " If he was not an entrepreneur, he would have done something in public policy," says Vivian Fernandes, a former colleague from Network18 and now the foundation's principal editorial advisor. Can Think India Foundation, or any other initiative Bahl chooses now, work without the clout of the ₹ 2,692- crore Network18, home to CNBC- TV18, CNN- IBN, Colors, moneycontrol. comand other brands? The foundation got off to a great start, roping in everyone from Narendra Modi to Sheila Dikshit as speakers, arguably because till May 29 this year, Bahl was in control of a media empire that reached millions of people across mediums: TV, online and print. On that day, Mukesh Ambani's Reliance Industries took management control of the company. Actually, Reliance has had financial control since early 2012 when it financed the merger of the debt- ridden Network18 with ETV through the Independent Media Trust ( See Network18' s growth journey). The popular impression was that Bahl and his team would retain operational control. Reports suggest the network's coverage of Aam Aadmi Party chief Arvind Kejriwal's accusations related to Reliance got to the company and it decided to take charge. While Bahl and his top team have already resigned, an open offer for minority shareholders is set to end in the first week of August. That is when Reliance will own Network18 lock, stock and barrel. Bahl and his wife, Ritu Kapur, will leave with about ₹ 707 crore, with all the debt of the holding and listed firms paid off in a transaction of well over ₹ 3,300 crore. In the ₹ 83,000crore Indian media and entertainment sector where exits are rare, this is a fantastic deal. The only other promoter- CEOs to see decent exits are Ronnie Screwvala of UTV ( to Disney) and, possibly, Tariq Ansari of Mid- Day ( to Jagran Prakashan). It is, however, not a nice way to go. Not for the man who founded the company and has been its face for the past two decades. Will history then remember Bahl as the man who took money from Reliance in desperation and was shoved aside by it, or a visionary who had the courage to expand his onechannel company into one of India's top 10 media firms? Bahl declined to comment for this piece. The dozenodd people this reporter spoke to, who ranged from ex- colleagues to investment bankers and fellow media barons, say it will be abit of both. Almost all of them refuse to go on record. And, almost all of them agree on one thing: Bahl was an ambitious, optimistic, compulsive risk- taker who took one risk too many. In the process, he lost his company and the respect of many former managers who felt they were shortchanged through stock options that did not materialise and brands that were junked too early in the hurry to create Network18. Who really is Bahl? Bahl, an alumnus of St Stephen's College and an MBA, lived the corporate life before the media bug bit him. He was a management consultant with AF Ferguson and also worked with American Express, before launching Television18 in 1993. He started with The India Showon STAR Plus and later, was involved with India Business Report on BBC. In 1999, he roped in CNBC as a partner. That is what gave it the " gravitas to attract professional talent", Bahl had said in an earlier interview. He hired Haresh Chawla, an Indian Institute of Technology and Indian Institute of Management graduate, with stints at HCL, the Times Group and ABCL, with the promise of afree hand to make whatever changes he felt necessary. Bahl's first test came within months. There was a choice between shutting the content production business and focusing on broadcasting or cutting costs across the board and doing everything. Chawla opted for the former. It was painful and unpopular, though in retrospect it was the right decision, in which many Bahl loyalists and old- timers were let go of. But he went with it. Since then, Bahl has pursued the dream of creating something big with a single- mindedness that, at times, astonished colleagues. Network18 did whatever it took to grow: pick up debt, dilute equity, tie up, forge joint ventures or acquire. It took CNN away from right under NDTV's nose and then got Rajdeep Sardesai and Sameer Manchanda to set up CNN- IBN. At times, Bahl was in such a hurry to grab an opportunity that a term sheet on Friday would be converted into a signed deal by Monday, says a former insider. " The expansion was not all planned. You just took decisions quickly, as opportunities came by. about his personality," says a former investment banker, referring to thousands of Indian media owners who run little fiefdoms across the country, but refuse to merge, consolidate or professionalise. This creates ahyper- fragmented market, with 86,000 newspapers, 800- odd TV channels and millions of portals. The result: India is one of the world's largest media markets by audience and penetration, but also one of the most under- monetised ones. The size of the entire media and entertainment industry in India is less than at the way Bahl allowed at the company the duo created. Its accounting and corporate the stock — even in the good that foxed most analysts. entertainment channel in the entertainment channel — about It seemed a foolhardy idea. Exnothing other than accounting jugglery, say analysts. By September 2008, the Lehman crisis unfolded. Money dried up and the markets became jittery. Bahl, however, continued to invest— in Viacom18' s proposed movie channel, in Forbes and in a host of print and online properties. Soon, the slowdown in advertising and the rise in carriage fees and interest rates started causing a serious squeeze. By March 2011, Network18 had piled up close to ₹ 1,400 crore in debt on revenue that just about equalled that figure. That is when he started looking for a saviour. Enter Reliance The Reliance deal, however, cost the company Chawla, its operational brains. Insiders say Chawla left because he thought instead of dealing with Reliance, the group could have used Colors as leverage, selling achunk of its ownership in Viacom18. Also, he didn't agree that ETV, which in March 2011 was a ₹ 525- crore firm ( going by figures provided by Reliance), should be valued at ₹ 3,500 crore. Several analysts pointed this out in reports on the deal, much to Bahl's irritation. " He thought big, created a portfolio of diverse assets, picked up smart people and empowered them. The organisation he has created is quite magnificent. Sometimes, one or two calls pull you down," is how one former media baron puts it. "From the time the Reliance deal was announced, Bahl was a changed man," says a senior manager in the group. His entire focus was on getting the group back to profitability, and he did this through some ruthless cost- cutting. Finally, Network18 recorded an operating profit of ₹ 87 crore in March 2014. Apparently, Bahl was chuffed enough to start planning for the future, says a banker who met him earlier this year. " He was not talking like a man who knew he was quitting." But many saw it coming. "Why is everyone so surprised that this is happening? At some stage, Reliance had to convert (its zero- coupon optionally convertible debentures into shares). It (Reliance) bought the company at a bargain and it has turned around; so, it wants to quickly take charge before it becomes more expensive to acquire fully," says a former media owner. But why sideline Bahl? " In India, giving up is equated with abandoning the company. Exit has to be evangelised," says the former media owner. While the exit of dotcom or pharmaceutical entrepreneurs is celebrated, in the media business, it is seen as a comedown, say others. That is the version of his story that Bahl believes in, too. To an interview request, he wrote back saying, " I am still at Network18, and once I have completed asmooth handover, I could talk. The media has got this completely wrong! There is absolutely no hostility or acrimony. I have the highest regard for Mr Ambani, and am convinced Network18 is set for a much stronger innings from here on, one in which I will be happy to play the role of a friend, philosopher and guide." Going by the Reliance announcement today, that is exactly what Bahl will be doing as non- executive director. For some, he is a visionary who grew his one- channel firm into a media giant by the sheer dint of his courage; for others, he is a compulsive risk- taker 1993 TV18 is set up as a content production firm na 1999 Ties up with CNBC, Haresh Chawla joins as CEO 15 2003 CNBC- TV 18 turns profitable 30 2004 Company goes Public. IPO is oversubscribed 57 times 43 2005 CNN- IBN is launched na 2008 Colors is launched in JV with Viacom 647 2011 Losses pile up 1,484 2011 Reliance finances merger with ETV; CEO Haresh Chawla quits 1,484 2013 Company prunes staff 2,383 2014 Network18 back in the black; Reliance takes management 2,692 control; Bahl's top team exits NETWORK 18' S GROWTH JOURNEY Revenue in ₹ crore STARTING A NEW CHAPTER Network18 founder Raghav Bahl | |
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