BSE to suspend trading in securities of nine companies

Firms to be barred from trading with effect from 30 Apr following their failure to comply with provisions of the listing agreement


As per the BSE, if the companies comply with listing norms on or before 18 April, trading in their securities would be suspended for five days up to 7 May.Photo: Mint

Mumbai: The BSE has said it will suspend trading in securities of nine companies for their failure to comply with various provisions of the listing agreement. These companies will be barred from trading with effect from 30 April.

The nine companies facing suspension are—GCV Services Ltd, Indo-Pacific Software and Entertainment Ltd, IOL Netcom Ltd, Jai Mata Glass Ltd, Mahaan Foods Ltd, Midfield Industries Ltd, Priyadarshini Spinning Mills Ltd, Regency Trust Ltd and Suraj Industries Ltd. These firms have not fulfilled the BSE requirements for continuous listing till the quarter ended December 2012, BSE said in a statement.

 

            “Trading in securities of these nine companies will be suspended with effect from Tuesday, 30 April (being 15 trading days from issue of notice); on account of non- compliance with the provisions of the listing agreement,” it said.

As per the stock exchange, if the companies comply with listing norms on or before 18 April, trading in their securities would be suspended for five days up to 7 May.

However, if they fail to do so, the suspension would continue till such time the company complies with the procedure laid for revoking suspension, it added. “...suspension of trading in securities of a company will be revoked only if the company has complied with all the provisions of the listing agreement up to the latest quarter for which the compliances are required,” BSE said.

 

TOUHID HUSSAIN

PGDM 2ND SEM

I-T department slaps Rs 3900 crore tax order on A V Birla Group companies

In a major setback to the AV Birla Group, the income tax department has turned the heat on two group entities, Idea CellularBSE -2.73 % and Aditya Birla Telecom Limited (ABTL), slapping a tax demand of nearly Rs 4000 crores on a telecom business de-merger executed in 2009, three sources familiar with the development told ET NOW. ET NOW was the first to report the development.

Idea Cellular has been issued a tax demand order of Rs 1500 crores on business income arising out of the transfer of telecom licenses, assets & liabilities from Aditya Birla Telecom Limited as part of the de-merger. ABTL, which is a subsidiary of Idea Cellular has been issued a tax demand of Rs 2400 crore.

"The income tax department has treated the transfer of licenses, assets & liabilities from ABTL to Idea Cellular as a slump sale on which capital gains arose. " said a source close the development.

When contacted, Idea confirmed the development and said, "Idea Cellular and its subsidiary have received Tax Assessment Orders dated the last day of the Financial Year which was a Sunday. The demands are inconsistent with established tax laws and past precedents. The company believes the demands are unjustified and based on an erroneous interpretation of the current tax laws and the facts of the case. Idea Cellular has always maintained the highest standards of tax compliance and holds that these demands are misplaced and no tax is applicable.

These demands mainly pertain to a Scheme of Arrangement, specifically approved by the relevant Honorable High Courts in December 2009 and January 2010, under Section 391 to 394 of the Companies Act, 1956. The transaction involves a scheme of restructuring between a wholly owned subsidiary and a parent company with the sole objective of administrative consolidation of a telecom license of one service area in the parent company, without any financial transaction or transfer of funds. The company is evaluating all options including challenging the demand in the appropriate forums.


ABDUL WAHEED
PGDM 2nd SEM.
IIMT COLLEGE OF MANAGEMENT

Rupee down 14 paise against dollar in early trade 



The rupee on Wednesday lost 14 paise to 54.40 against the dollar in early trade on the Interbank Foreign Exchange due to strengthening of the US currency overseas.

Dealers attributed the rupee's fall to dollar gains against the euro and yen overseas boosted by solid US economic

data and a bleak outlook for the troubled euro-zone. Besides, a lower opening in the stock market also put pressure on the rupee, they said.
The rupee had gained three paise to close at 54.26 on Tuesday in line with strong local equities amid some dollar selling by exporters.
Meanwhile, the BSE benchmark Sensex fell by 66.26 points, or 0.34%, at 18,974.69 in early trade on Wednesday


ARUSI SINGH

PGDM 2nd SEM

Opening Bell 4 April | Weak US data drags sentiment

Indian stocks may take cues from weak Asian and US markets

 

A file photo of the BSE building in Mumbai. Photo: Mint  

          Mumbai: Don’t be “unduly pessimistic,” that’s the message Prime Minister Manmohan Singh has given to business leaders at a Confederation of Indian Industry conference. While admitting to the problems of corruption and bureaucratic inertia, the Prime Minister has expressed confidence about implementing more policy actions to push growth.

Asian markets are trading lower. Japan’s Nikkei lost 1.51% to 12,175 on speculation that the Bank of Japan may not meet forecasts for monetary policy expansion.

Also weighing on the investor sentiment is the weak economic data from the US. A survey has showed that private employers in the US added fewer jobs in March compared with the previous month. Employers have reportedly added 158,000 jobs last month, down from February’s gain of 237,000.

While economists have forecast the private sector will add 215,000 of jobs, the weak data spurred concerns about overall economic recovery in the US. The S&P 500 lost 1.05% to 1,553 on selling in shares of energy companies. Read the Bloomberg report.

Back home, the Ambani brothers are extending their new-found partnership beyond the telecom infrastructure space. Reliance Industries Ltd has parked more than Rs.800 crore in various mutual fund schemes of Anil Ambani’s Reliance Group. Reliance Mutual Fund is a part Reliance Capital Ltd. Read more.

Diageo Plc’s $2 billion deal to buy a majority stake in United Spirits Ltd (USL) will take longer to complete, reports Mint. The delay is partly due to lenders selling USL shares they held as collateral. Diageo now reportedly hopes to complete the deal in the current quarter to 30 June.

Meanwhile, lenders to the Kingfisher Airlines Ltd are planning to continue selling shares of the United Spirits Ltd pledged with them. Lenders have reportedly sold around 7.3 lakh of the 26 lakh shares of United Spirits pledged with them.

Kolkata-based industrialist Saroj Kumar Poddar, chairman of the Adventz Group has expressed his interest in taking over Mangalore Chemicals and Fertilizers Ltd from the UB Group. The Adventz Group has already acquired 10% stake in Mangalore Chemicals and Fertilizers Ltd. Read the Mint report.

Sterlite Industries (India) Ltd has halted deliveries of copper after it was forced to shut down a smelter due to complaints over emissions. The smelter that produces more than 300,000 tonnes of copper output per year, was halted last week by local authorities at least until a hearing into the complaints on 9 April. Read the Mint report.

Shares of TVS Motor Co. Ltd may continue to trade with positive momentum. The company has confirmed that it is in talks with BMW’s motorcycle division for a technology tie up.

Finally, gold is nearing a bear market as investor holdings dropped to the lowest level since August. The precious has metal lost 7.5% so far this year. Investors are paring their holdings on speculation that a recovery in the US economy will reduce the appeal of bullion as a safe haven. Read the Bloomberg report. 

 

TOUHID HUSSAIN

PGDM 2nd SEM

 

E-currency can make central banks powerless

The future of money: Have you ever redeemed your credit card loyalty points to purchase a product of your choice? Or converted air-miles received as a frequent flyer to get some free tickets? If you have, you have already been exposed to virtual, electronic money. After all, a key purpose for money to exist is to function as a medium of exchange. These loyalty points serve the purpose of allowing you to exchange them for tangible goods and services.

When we carry out any of the above transactions, we do not see it as an alternative currency. The loyalty points can typically be exchanged for a limited set of goods, and are not universally acceptable. But what if they were? What if they worked as electronic money and were widely accepted?

Fiat money - a promise to pay backed by "confidence": In a "Fiat Money" system - on which all contemporary economies are based, the notion of money - often represented by currency notes - is based on "confidence" that users have on the issuing authority. With no real assets backing the currency notes, issuers can issue as many notes as they want. However, economic growth cannot be assured by just printing money - it must come from higher production of goods and services. Consequently, if an issuer continues to "print" money, it will fall in value compared to other currencies or commodities.

One way to increase confidence is to back up fiat money by another commodity. Gold served as money for centuries, before it was replaced by "representative money" - where paper (representing the underlying commodity) could still be redeemed for gold. This changed in 1971 - when conversion was disallowed by the USA. Since then fiat money has been the basis of most transactions the world over.

Bitcoin - digital currency: All currency systems so far have required an issuing authority - with the ability to issue or destroy currency. In 2009, a yet unknown programmer using the pseudonym Satoshi Nakamoto published a proof of concept of a crypto-currency called "Bitcoin". As the website (bitcoin.org) explains "building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context, Bitcoin is designed around the idea of a new form of money that uses cryptography to control its creation and transactions, rather than relying on central authorities."

Interested readers can study the specifics in detail at the website, but in summary, a user can create an online "wallet" and receive and pay bitcoins from it. All data (including transaction data) is stored in a distributed environment on the web. Since there is no issuing authority, the algorithm for generation of new bitcoins fixes the total number that will ever be in circulation.

Transaction ease is tremendous - there are no transaction charges (or very small ones), payments are easy to make and receive - like sending e-mails. In effect there are no political boundaries, no bank holidays and no one to censor who can receive or make payments and for what.

With reportedly only one breach which was sorted out, the system seems to offer sufficient security for people to have "confidence" in it. Bitcoins can be exchanged for regular currency at an automated price discovered basis transaction history. At present, the bitcoin website reports that daily transactions exceed $1mn per day distributed over 40,000 transactions.

Why now? So what makes bitcoins attractive in the current market context - and popular they clearly are? The key driver for popularity of bitcoins is risk that investors face in the current global economic environment, with central banks engaged in competitive devaluation of currency, and large financial institution risk remaining unmanageable.

Imagine if the depositors in Cyprus' failed banks had, been holding their money in the form of bitcoins instead of holding their deposits in Euro. The Cyprus government, and European "troika" that forcibly took away almost 60% of the deposits would not have been able to get their hands on the money.

Investors have, over the past few years been using Gold and Silver as a portfolio insurance against currency devaluation and systemic risks of financial markets. However, like money, gold and other precious metals too are available to governments to usurp - and therefore, in a Cyprus like situation, are not adequate security. Bitcoins are however not accessible at a single location and, like the internet, cannot easily be controlled.

Bitcoins - the glitches: So long as bitcoins are used as a medium of transaction or as a store of value, it is highly likely that their popularity will grow. Questions arise on how governments would react - will bitcoin transactions be taxed for example? (Comment)

Bitcoins offer total anonymity. One can have as many accounts as one wants. With smooth transition across borders without the use of banks, bitcoins have the ability to facilitate illegal transfer and transactions. The fact the governments' are waking up to the emergence of online currencies is affirmed by a new law passed by the US government in mid March. It now requires that transactions more than $10,000 need to be reported.

Lastly, if its popularity rises, it will not take long for markets to start offering derivatives and structured products around it. With no regulatory framework, that would mean risk rise manifold. Despite these obvious road blocks, markets needs to look at this innovation carefully. The challenge that it throws to established order of central bank controlled currencies will, over time, lead to a re-examining of the very concept of money.

ABDUL WAHEED
PGDM 2nd SEM
IIMT COLLEGE OF MANAGEMENT

RIL parks over Rs 800 crore cash in Anil-led Reliance Group MFs

NEW DELHI: Flush with billions of dollars in cash, Mukesh Ambani-led Reliance IndustriesBSE -0.79 % Ltd (RIL) has parked more than Rs 800 crore in various mutual fund schemes of younger sibling Anil-led Reliance Group.

RILBSE -0.79 % has made these investments, totalling over Rs 800 crore, mostly in the Fixed Maturity Plans and other debt schemes of Reliance Mutual Fund, market sources said.

Reliance MF is part of Anil Ambani-led group's financial services arm Reliance Capital LtdBSE 0.68 %.


Incidentally, RIL and Anil Ambani group yesterday announced their first business partnership since a bitter family split in 2005. The two groups have agreed to share optic fibre cables and other telecom infrastructure including telecommunications towers for their respective ventures, Reliance Jio Infocomm and RCOM in a Rs 1,200-crore deal.

The two groups, which about three years ago had scrapped a non-compete agreement between them, have now also agreed for a comprehensive framework of business cooperation.

RIL's investment in Reliance MF schemes, which has been made over a period of last eight months, comes as a clear departure of the oil-to-retail conglomerate's earlier stance of parking surplus funds into almost all the mutual funds, except on those run by the Anil Ambani-led group.

At the end of fiscal 2011-12 ended March 31, 2012, RIL had invested over Rs 8,700 crore in various mutual fund schemes, including Fixed Maturity Plans (FMPs), but they did not include any scheme of Reliance MF.

In contrast, RIL has always figured prominently in the stock portfolios of various schemes of Reliance Mutual Fund.

At least 13 schemes of Reliance Mutual Fund had RIL as one of the biggest stock in their respective portfolios as on March 31, 2012 and together these funds held RIL shares worth well above Rs 500 crore.

According to market sources, there was a clear change in RIL's investment strategy in the last fiscal 2012-13 in terms of deployment of excess cash in mutual funds.

RIL holds one of the biggest cash balance among all the corporates in the country.

It had cash and cash equivalent of Rs 80,962 crore (about $15 billion) as on December 31, 2012. A large portion of these funds are parked in bank deposits, certificates of deposit, mutual funds, government bonds and securities.

RIL's outstanding debt as on December 31, 2012 stood at Rs 72,266 crore, making it a debt free company on net basis.

Its investments in various mutual funds had risen substantially from Rs 5,897 crore in 2010-11 to Rs 8,781 crore in 2011-12.

The Reliance MF schemes that had significant exposure to RIL at the end of 2011-12 included its Growth Fund, Vision Fund, Power sector fund, Quant Plus Fund, Equity Opportunities Fund, Top-200 Fund, Natural Resources Fund and ELSS Fund.

ABDUL WAHEED
PGDM 2nd SEM.
IIMT COLLEGE OF MANAGEMENT