EU imposes anti-dumping duties on Indian steel wire exports

The European Union has imposed provisional duties on India's exports of stainless steel wire to counter dumping that has hurt Italian, German and Spanish producers.

Indian government support and a policy of selling the wire used in batteries at below production costs meant European companies had been unable to benefit from a booming market, the European Union said in its Official Journal on Wednesday.

The European Union and Asia's third largest economy accuse each other of protectionism and talks towards a free trade pact that started in 2007 have stalled.

Europe wants access to India's vast market of 1.3 billion potential customers, but Indian Prime Minister Manmohan Singh and Germany's Chancellor Angela Merkel were unable to break the impasse during a meeting in Berlin in April.

The EU, which launched its steel wire investigation in August last year, said producers such as Germany's Hagener Feinstahl, Spain's Inoxfil and Italy's Rodacciai suffered as Indian imports grew by almost 50 percent between 2007 and 2011.

Indian companies that could be affected include Kei Industries and Mukand Ltd .

"Prices of imports from India have remained consistently below prices of imports from other countries," said European steel industry lobby group Eurofer, which brought the complaint.

"This has caused serious difficulties for European producers, which had to cut production and have reported significant losses from 2007 until 2011," Eurofer said.

The anti-dumping and anti-subsidy duties come into force on Thursday and EU governments must now vote on whether to make the duties definitive for a period of up to five years.

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Coal imports hit record high on slow domestic output

India's coal imports rose by nearly a third to a record 135 million tonnes in the last fiscal year, data from government sources showed, and are set to grow further as the world's third-biggest producer struggles to raise domestic supplies.

A drop in global coal prices, however, softened the impact of the surging imports on India's finances, with the country forking out about $15.5 billion for the commodity in the year ended March 31, a less than 1 percent rise from the previous year, the data obtained by Reuters showed.

India, which does not release coal import data on a regular basis, places no restrictions on the imports of the commodity, which are brought into the country by traders and consumers.

Utilities such as Adani Power, Tata Power, JSW Energy and state-run NTPC, are among the biggest consumers of imported coal.

Despite its abundant reserves of about 286 billion tonnes, the world's fifth-largest according to BP PLC, coal production in India has failed to keep pace with demand from utilities for several years now, leading to chronic power shortages that have crimped economic growth.

Must read: Coal Scam: SC calls CBI 'parrot speaking master's voice'

More than half of the country's 223.3 gigawatt installed capacity is produced from coal, according to the Central Electricity Authority.

India's total coal imports, which include coke and briquettes, apart from thermal and coking coal, were 105 million tonnes in 2011/12. The latest numbers mean imports have increased five-fold over the past decade.

POWER GROWTH PLAN

Imports of thermal coal jumped three-quarters to 97.23 million tonnes in the fiscal year through March, while those of coking coal, used in making steel, rose 1.2 percent from a year earlier to 32.2 million tonnes, the data showed.

Coal traders said they expect thermal coal shipments to rise further to 115 million-120 million tonnes in the year to March 2014 on growing demand. India plans to add generation capacity of 88.54 gigawatt in the five years to end-March 2017, compared with almost 55 gigawatt in the previous five-year period.

Coal imports in March rose 29 percent from a year earlier to 11.4 million tonnes, of which thermal coal shipments accounted for nearly 80 percent, the data showed.

Indonesia, the world's top exporter, shipped out 40 percent more coal to India from a year earlier at 77.49 million tonnes in 2012/13, the data showed. Australia and South Africa accounted for the bulk of the remainder.

Global coal prices have been under pressure since last year on weak Chinese demand growth coupled with healthy supply increments from traditional exporters and the United States.

Benchmark prices slid to as low as USD 80.82 a tonne during 2012-13 from more than USD105 in the prior year and are currently quoted at around USD 87

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Cobrapost expose: Banks suspend employees under FinMin heat

Saikat Das
moneycontrol.com

In the aftermath of Cobrapost 2, state-owned lenders including Punjab National Bank  (PNB), Bank of Baroda (BoB) and IDBI Bank on Tuesday suspended cumulatively five officials allegedly involved in money laundering and KYC (Know Your Customers) violation norms.  The finance ministry is exerting pressure on all institutions to take rapid actions, sources from the banking industry told moneycontrol.com.

All those suspension can be revoked provided final investigation reports exonerate them.

Online investigative news website Cobrapost had carried out a sting operation on 23 financial institutions including large public sector banks, insurance companies and some mid size private sector lenders. In a press conference on Monday, it alleged all those of helping people convert black money into white by way of investment in their schemes.

India's third largest lender Punjab National Bank (PNB) on Tuesday suspended two out of three employees allegedly involved in Cobrapost expose. Those were working in South Delhi and Noida branches in the capacity of cheif manager and assistant general manager. However, decision is not yet taken on the third employee based in South Delhi.

"The bank prima facie has not found any evidence of violations. The conversations between Cobrapost and bank officials were purely of colloquial nature. Investigation is on. We are looking into the matter," said a senior official from PNB confirming the development. He did not wish to be quoted.

Similarly, IDBI Bank suspended two junior officials based in New Delhi. Bank of Baroda too is believed to have suspended one chief manager at Parliament Street branch.

According to a BoB official, all involved managers were doing business on behalf of respective banks, not for individual gains. However, banks are probably acting under ministry pressure.

"Any suspension does not prove somebody's guilt. They will be relieved from work till the final investigation report comes out. We are conducting our own investigation. It is not our responsibility to cross check the source of money. We can always refer it to FIU," said a senior banker from IDBI Bank.

It is a normal practice for a branch manager (of any bank) to report any suspicious transaction to the Financial Intelligence Unit (FIU), the government agency which reports the same to the Income Tax Department.

Earlier on Monday, the finance ministry had started scrutinizing the video footage shown in the exposure. Rajiv Takru the secretary at Department of Financial Services had asked all state owned banks and the Life Insurance Corporation (LIC) of India to initiate actions.

"I assume that the DVDs contain what is genuine material because that would be in the fitness of things. I don't think anybody would do something like this on the basis of fabricated evidence, so we assume that whatever has been shown in the DVDs prima facie is correct or reflects the transaction as it happened. At this moment we are not talking in terms of forensic examination of DVDs," he told CNBC TV18.

saikat.das@network18online.com

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India Inc confident as mood in EU, globe worsens: Survey

The Young President's Organisation (YPO), one of the world's most powerful network connecting over 20,000 chief executives from leading companies, has released a survey on business confidence. The organisation says that business confidence across world is at a stand still and in Europe, it has worsened.

Also Read: PM confident Parliament will transact financial, other biz

Speaking to CNBC-TV18, Pashupati Advani, board member, South Asia, YPO says that corporate India's level of confidence is on the rise and the minimum public float requirement will boost domestic investment-mood and attract higher FII inflows.

Below is the edited transcript of the interview on CNBC-TV18

Q: The news doesn't look very good as far as business confidence is concerned. Europe down by about 4 points according to the YPO barometer…

A: Asia, on the other hand, has made up for more than the loss of confidence in Europe and flat world confidence at 60.4. We have been conducting this survey since 2009 and this is the 16th edition. Business confidence in Africa has turned out to be very exciting. Asian countries are also moving up and the big mover, though it is still below average, is Japan because the confidence is started to rise in Japan very rapidly because of the policies and leadership.

Q: What about India in specific?

A: Business confidence in India has remained reasonably flat and is slightly lower this time. But what is interesting about Indian business confidence is that CEOs are expecting to make fresh investment over the next 12 months — bear in mind this survey was conducted during the first two weeks of April. So, CEOs are looking to increase investment and sales for the FY14 fiscal without any significant change in hiring employees. Though the survey reveals tightening of the belt, there is an amount of confidence egging corporate India to make fresh investment.

Q: How do you expect global equities to perform?

A: Funds from all sources are flowing into the markets with Japan being recent driver of fund flow. Our survey shows that as people are willing to take risk they are going to make fresh investment in new capacities and India is one of the few countries that is going to attract those investments. The Indian economy actually benefits as commodities go down.

Q: Do you believe that FII flows will continue to be strong?

A: I am a firm believer in that thesis. It is the mega deals from multi-nationals are what will drive the India economy and domestic investment.

Q: As deadline for the minimum public float and the public shareholding requirement nears, there will be a host of companies issuing offers in the market. What will be the impact of this on the Indian market?

A: That will attract fresh investment as investors line up to participate in the growth of companies with a strong and proven track record.

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Companies 'cook the books to meet tough targets'

Hard-pressed company bosses across much of the world including India are under so much pressure to deliver on growth that many have resorted to cooking the books, Ernst & Young says in its latest Fraud Survey published on Tuesday.

One in five of almost 3,500 staff quizzed in 36 countries in Europe, the Middle East, Africa and India said they had seen financial manipulation in their companies in the last 12 months, the accounting and consultancy firm said.

In addition 42 percent of board directors and top managers surveyed said they were aware of "some type of irregular financial reporting".

And despite scandals and regulatory failures in the wake of the credit crunch, almost a quarter of top financial services staff surveyed said they were aware of manipulation and almost 10 percent of all staff said their companies had understated costs, overstated revenues or used unprincipled sales tactics.

Meanwhile, almost half of the sales staff surveyed across all sectors did not consider anti-corruption policies to be relevant and more than a quarter thought it acceptable to offer personal gifts or services to win or retain business.

Also read: SBI, LIC, pvt insurers part of money laundering: Cobrapost

In India, over a third felt justified in offering cash - triple the number in western Europe.

"Our survey shows that to find growth and improved performance in this environment, an alarming number appear to be comfortable with or aware of unethical conduct," said David Stulb, head of E&Y's fraud investigation and dispute services practice.

In Spain, ranked alongside Russia and just below Nigeria and Slovenia, 61 percent of staff believed companies often exaggerated results, compared with only 7 percent in Finland.

And E&Y said the vast majority of managers from Norway to Nigeria and Russia to Greece were feeling the pressure to deliver a good financial performance over the next 12 months, despite little optimism that business conditions would improve.

They were now forced to balance the risks of expanding into rapid-growth markets, where winning contracts can go hand-in-hand with corruption, cutting costs further and piling pressure on staff or suppliers - or distorting results, the firm said.

E&Y warned multinationals based in mature markets they could be more vulnerable to the risks of unethical behaviour. One quarter of those asked thought watchdogs in rapid-growth markets focussed more on the behaviour of foreign businesses.

The consultancy called on managers to ask more robust questions, focus on key risks, such as poor due diligence accounting checks of intermediaries and associates, and punish unethical behaviour.

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Court rejects Zee News editor's plea for anticipatory bail

A court has rejected the anticipatory bail plea of Zee News editor Sudhir Chaudhary in a fresh case registered against him by the Delhi Police for telecasting a show allegedly on the basis of forged documents against Jindal Group in connection with Coalgate.

Additional Sessions Judge Daya Prakash brushed aside Chaudhary's contention that the fresh FIR has been filed against him due to "a grudge as he is the editor of the channel which is running in public interest news against Jindal group regarding their involvement in coal scam."

He also said that no forged documents have been used by him. The police had registered a fresh case of forgery against Chaudhary for telecasting in October 2012 a show titled "media ka sauda" and showing on screen what they claimed to be a part of CAG report but were found to be forged.

The prosecution opposed his plea for anticipatory bail and said while showing the documents on screen, Chaudhary wrongly claimed that CAG report makes it clear how Naveen Jindal and companies associated with him have benefitted substantially and illegally in coal block allocation.

Public Prosecutor Rajiv Mohan said during investigation, it was found that the annexures shown during the programme were not part of the CAG report but were forged and fabricated documents. Mohan said the accused also showed documents of certain companies with name of Jindal as their promoter when in fact he does not have any kind of relationship with those companies.

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NALCO may cut output by 25%: Director

NALCO may have to cut its daily aluminium output by 25 percent due to coal supply shortages caused by an accident at a mine that supplies fuel to the state-run aluminium producer, a company director said on Sunday.

The company has received just 10,000 tonnes of coal a day for the past 10 days from Mahanadi Coalfields Ltd (MCL), a unit of state-run miner Coal India, against a daily operating requirement of about 16,000 tonnes.

Supply disruptions started when operations at the Bharatpur mine in Odisha were shut after an accident on April 21 in which one worker was killed. Authorities have suspended operations at the mine indefinitely, declaring it unsafe.

"We don't know when the full supply will resume. We have no other option but to cut production," S.S.Mohapatra, production director at NALCO, told Reuters.

Also read: Govt to pool coal supplies, pass on higher cost of imports

NALCO normally operates seven power units, producing about 800 megawatts of power to feed its smelter, which has an output of about 1,050 tonnes of aluminium daily. But the company does not have enough coal stocks to continue its normal operations.

"The aluminium smelter was operating 823 pots. We are planning to shut 200 of them gradually in next few days", Mohapatra said.

NALCO, the country's third-largest aluminium maker, produced 403,000 tonnes of aluminium out of its sole aluminium smelter at Angul in Odisha in 2012/13.

The disruption may affect the company's output this quarter but the shortfall may be made up later by ramping up production if normal coal supplies are resumed, Mohapatra said.

"Production may decline by around 10,000 tonnes this quarter," Mohapatra said, adding that the company could not buy costlier imported coal or coal auctioned in the open, domestic market, as this would mean incurring heavy losses.

NALCO has already been cutting domestic prices of its aluminium products in recent months, during which global prices have fallen.

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Inter-ministerial coal regulator panel may meet this week

The inter-ministerial panel, which is to decide on the setting up of regulatory authority for the coal sector, is likely to meet again this week.

Also Read: NALCO may cut output by 25%: Director

"The meeting of the Group of Ministers (GoM) that was to be held on May 6, will now take place on May 7," a Coal Ministry official said.

The GoM is headed by Finance Minister P Chidambaram. The last meeting of GoM remained inconclusive as there were differing opinions among members on certain issues, including the pricing of coal, sources said.

They added that the Ministry of Power felt that the regulator should have the fuel pricing power, while the Coal Ministry was opposed to it.

"We discussed the Coal Regulator Bill, but we are yet to arrive at any result," Coal Minister Sriprakash Jaiswal had told reporters after the GoM meeting last month.

Power Minister Jyotiraditya Scindia, who is also a member of the GoM, said that some more clauses may get inserted in the proposed Bill and thereafter a final draft of the Bill will be presented to the GoM for approval.

"Some important facts have been discussed. We will put 3-4 more clauses and in the next week or 10 days. Planning Commission, power and coal ministries will meet and prepare the final draft to be presented to the GoM," he had said.

In January, the government had said that it would soon appoint a coal regulator to monitor fuel pricing, sampling and other practices in the sector.

The setting up of an independent regulator for the coal sector is considered important for fixing guidelines for price revision, improving competitiveness in the e-auctions, setting trading margins and increasing transparency in the allocation of reserves.

Earlier, the Cabinet had discussed the proposal for the regulator and asked the GoM to make recommendations on its powers and functions.

The GoM also includes Environment Minister Jayanthi Natarajan and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

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Personalising ads further, challenge to advertisers: Google

Emphasising on the vital role a marketeer plays in any given business, Nikesh Arora, senior vice president and chief business officer, Google says given the change in consumers' perspectives, a marketeer's fundamental task is to relate to the consumer and know where the consumers are.   

With evolving technology, compact devices getting smaller and better and an excessive importance on consuming media, marketeers are constantly looking for ways to evolve marketing tricks. Arora believes the challenge to marketers today is to figure out ways to make advertising more individualised, more personalised.

Also read: Indian PC, mobile mkt not much different from China: Lenovo

Anant Rangaswami, senior editor, Firstpost and Durga Raghunath, vice president products and executive news producer, Firstpost.com interviewed Arora on Story Board on CNBC-TV18.

Below is the edited transcript of the interview. 

Rangaswami: To begin with I am trying to look at things from the marketer's point of view and just when they think they know they think they know everything that the internet has to teach them and ready for the next step you come out, you as in the internet or Google with something new and you got to start all over again and you suddenly feel like an idiot.

Arora: One thing which is constant even though stories change. Before we think at marketing you have to look at consumers and what consumers are doing. In that regard we could learn a lot of from what is happening in different parts of the world. I was in Korea last week and the US. There are things happening with consumers which are very interesting. If you look at consumers today they pretty much live their life on the mobile devices as opposed to sitting and watching TV. I grow up here and you look forward to that two hours in the evening where you could watch TV and it was compact programming, not 500 channels and you know there were two channels that you had to watch and today I cannot keep track of the number of applications my 16 year old uses. She said something interesting to me the other day, she said, dad e-mail is for formal communication. The perspectives of consumers have changed and fundamental task of any marketeer is to relate to consumer so they have to be where the consumers are.

Raghunath: Interesting point about mobile. When you were talking to ATD perhaps this year you made a statement where you said we limit ourselves by calling mobile, mobile. I would love to hear more about what you mean when you say that?

Arora: One of the fascinating thing that has happened as technologies evolved is we have been dealing with devices in isolation and that made sense a few years ago when your television was your television and it never talked to your computer. Your computer was your computer and your phone was your phone and none of these things talked to each other. But today if we think about it you are slowly beginning to see devices talk to each other. I can go like my music on my PC off the internet and I can use my phone to play it. Suddenly your phone is starting to talk to your PC.

There are many applications which I am sure you use on your PC and on your phone and if you see there are instances where people have put their televisions online as well as I can take a YouTube video and play it on my television. So, one is beginning to see devices talk. When devices talk, what happens in the future is that one has a multitude of screens around you. Your watch could be your screen. Your TV could be your screen. Your tablet, your computer, your phone all these are screens and over time services are going to become thing that you want to use across all these screens. So, the mobile becomes a context. It becomes your geospatial context. If I am sitting waiting for somebody in the meeting, I am more likely to read Firstpost, newspaper or something else. If I am sitting at home waiting for something or sitting at home I might watch a video and if I am at work I might search. So, certainly what happens is wherever you are becomes your context and that becomes your screen of choice. So, it is no longer mobile. When I am mobile I will always use my mobile screen. What if I use my tablet? What if my computer with me is WiFi? Suddenly, when I am mobile I can actually have access to multiple screens. As long as my screen knows where I am it can be more useful to me.

Raghunath: The consumer is constantly faced with making choices. Perhaps desktop is becoming almost passé. You have a tablet. You are moving to your mobile phone and a lot of us have completely deserted even a laptop for various reasons. This is hard for the advertiser. We have readers who are moving from a website classic format to the tablet format to the mobile format and each in a way is in terms of the old rules of impact probably diminishing in terms of strength. So, for advertising to remain hugely powerful on digital across these devices, how would you approach dealing with multiple devices, multiple attention consumption patterns?

Arora: There are just lots of interesting places we could take this to. Content and making money is important. Historically, as you have seen changes in media, there has typically been two or three ways money has been made by advertisers as content has been funded. If there were newspapers, it is a combination of advertising and subscription. Some people pay some money and some advertising comes in, that is how newspaper makes money, that is how television makes money.

There was a combination of some function of cable fees versus advertising on television and there are some channels which do not take advertising, for which you have to pay more. So, somewhere in that spectrum or continuum you pay for content or content gets monetized by advertisers and that is still true in any media that you can come up with.

Content will get paid for because consumers interact with content and it is going to get paid for either directly by the consumer or if the consumers are not willing pay, but they are willing to take advertising instead.

The question is what form does that advertising take on when you start interacting with a smaller screen or different sizes and different context. There what becomes very important is the big transitional shift. In the past we had very little idea on who the user is or was. Take a newspaper. You have no idea who is reading the newspaper. You can make up demographics of who the newspaper reader is. Take television. We kind of know there are households involved. There is some agency or some third party measurement services who could figure based on household samples to know who is watching it, but one really did not know.

However, if one looks at today's technology, one has a reasonably good idea of who that person is. You have a lot more data about them because of the applications they interact with or what they do. You have a lot more data about their physical context, you have a lot more data about their social context and that makes advertising three to five times more powerful. So, the big challenge for advertisers or marketeers is how do you leverage the information that you have about individuals and how do you go from a mass market broadcast type advertising concept to a more personalised, more individualised concept of advertising because if it is very useful for me I am willing to accept it if it is interesting and probably you end up making more money. 

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No clean chit to ICICI, HDFC Axis Banks: RBI

The Reserve Bank of India on Friday said it has not given a clean chit to ICICI Bank, HDFC Bank and Axis Bank, which are accused of money laundering and flouting KYC norms , and stated the probe against the three banks is still on.

"No we have not. And we are saying that we are (going) to issue show-cause notices. So, the inquiry is still in progress," RBI governor D Subbarao told reporters when asked whether the apex bank had given clean chit to the three banks.

Subbarao, speaking at the customary post-policy media interaction, asserted that while money laundering, which involves use of criminal money, has not been observed in any of the banks, certain "specific transgressions" on the know-your-customer (KYC) front have been discovered.

"We have talked to those banks, called those CEOs for a meeting, told them about what the deficiencies are and they have gone back and implemented some of the systemic improvements," Subbarao said, adding RBI officials have also spoken with forensic auditors appointed by these banks.

Subbarao said RBI launched a suo motu probe following the sting operation by news portal Cobrapost early February showing officials from ICICI Bank , HDFC Bank and Axis Bank selling investment products without paying heed to the mandatory KYC norms. It later turned into a thematic study involving over 30 banks in the country, the governor said.

Deputy governor KC Chakrabarty, who in March gave a near clean-chit to these banks saying there were no transactions, on Friday said the show-cause notices will be sent not just to these three banks, but all erring lenders.

"Whomsoever we find has made mistakes, transgressions or committed violations, we will definitely issue show-cause notice and take the appropriate action," Chakrabarty said, adding there are no systemic issues.

"The system is strong enough but there are aberrations and we are trying to improve that," Chakrabarty, who oversees banking regulation at the monetary authority, said.

In its annual credit policy review, Subbarao said the RBI's probe into the allegations has revealed that the banks did not follow KYC norms while selling third-party products and also came out with a string of corrective advisories for banks.

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It is hard to see growth accelerate above 6%: Chinoy

The India growth story should not be written off, but as of now, even for the optimists, it looks like it will take a while to see the light of day. Atsi Sheth of Moody's, Sajjid Chinoy of JPMorgan and Ficci president and country head of HSBC Naina Lal Kidwai discuss the state of the economy, the macros and the RBI policy on CNBC-TV18.

While Sajjid Chinoy of JPMorgan feels it is hard to see India's growth accelerate above 6 percent as fiscal consolidation, which impinges on growth, is going to be the focus this year. In addition to that, a wobbly global economy is not a great backdrop for the export market. The depth of the growth downturn has been unanticipated and was not expected to dip to 5 percent, says Atsi Sheth of Moody's. It is unlikely that there will be a jump in growth from 5 percent to 7 percent in a few quarters.

Looking at the positives, Naina Lal Kidwai  says the repo rate being cut by the RBI by 25 basis points on Friday comes as a breather, and this should now translate to lower lending rates for the industry.

Below is the verbatim transcript of the discussion

Q: Let me get your reaction to Reserve Bank's (RBIs) policy decision, ratings agency Moody's has today said that the RBI rate cut was along expected lines. Speaking about the Indian economy, Moody's has also added that though, India's inflation and current account deficit (CAD) are still high, it does see India's rating outlook as stable. They have added a word of caution, the Moody's is saying that it expects India's growth downturn to extend. So on the back of what we have heard from the Reserve Bank governor today, are we past that downgrade threat where we currently stand with the economy. What measures the government has taken. Do you believe on that basis we are past the downgrade threat for now?

Seth: The depth of the growth downturn has been unanticipated. People didn't expect growth to go as low as 5 percent and also how this downturn extended and I think that is what perhaps took people by surprise. What we are seeing now is that again the bottom has been reached in terms of growth. There have been some policies to assuage the effect of the global financial crisis etc. But in general the recovery in growth will be slow and it will be extended. Policy action that have been taken in the last six months help, but they can't really turn on a light in terms of growth. Growth recovery will still be slow.

Q: Where do you then see growth for FY14 because we have got disconnect between what the RBI is projecting at 5.7 percent, the government is projecting anywhere between 6.2-6.7 percent. Where does Moody's view growth for Indian?

Sheth: Our growth forecast for FY14 is about 5.9 percent. It is just a little below 6 percent. Again, this is because of our base case forecast that this recovery is going to be slow. You are not going to snap from 5 percent to 7 percent very soon in a few quarters.

Q: Would you belong to the camp that is saying just under 6 percent or just about 6 percent or do you believe that government when it says that the RBI is being too pessimistic about growth?

Chinoy: It is hard to see growth accelerate above 6 percent. Let's understand the drivers. It is going to be another year with fiscal consolidation which is great for a sentiment, good for medium term prospects. But in the near term, fiscal consolidation impinges on growth. By all accounts, the global economy is still wobbly so we will not get too much on export growth. We know that the investment constraints continue to bind. So it is hard to see where this big acceleration in growth is going to be. In the past, the RBI has had to scale down their growth forecast a couple of times last year so I am not surprised that they have been a tad conservative. Our own forecast is in the 5.8-6 percent range. So I think we have to accept that it is going to be a slow and halting recovery later in the year. Until some of these structural issues are resolved, we run the risk of reflating the economy too soon.

Q: The street's hopes for a CRR cut have been dashed. The governor seems to suggest that banks have enough liquidity but the bankers say that they can't do anything because liquidity continues to be tight.

Kidwai: Currently, the CRR rate is certainly an indication of the liquidity. There was a request from the banking sector to bring down the CRR rates. The RBI maintaining the CRR is a sign of assurance from the RBI governor that he keeping an eye on liquidity and take suitable measures as and when required. So I think we have to now rely on him for that. The truth is that liquidity is not at alarming levels, but liquidity is tight and therefore it is important to make sure that we have enough liquidity in the system. The good news is that the repo rate did come down 25 bps and now we have to translate this to more effective lower lending rates for industry to make use of the benefits.

Q: What do you make of the RBI's commentary on very little room for further monetary easing? The government is of the opinion that it created enough elbow-room and the macroeconomic fundamentals have improved to give the RBI room to be a little more aggressive. But when the RBI governor says there is very little room for further easing, do you expect another 25 basis point (bps) rate cut or perhaps nothing at all?

Chinoy: I think the RBI made it clear that given the current landscape of macro-financial risk, any monetary response will have to be very cautious. So, it has said very clearly that its short-term objective - those words have been used explicitly- is to see inflation headline wholesale price index (WPI) inflation at 5 percent.

Now if that's their objective, most estimates have set inflation well above that for the rest of the year and it would make it very difficult for the RBI to go on a larger easing cycle. I think that one more rate-cut of 25 bps is most likely at the review in July when it will be more clear if the progress of the monsoon is normal and at that point they will probably signal the end of the easing cycle.

So, I am in the camp that the RBI's guidance will be more hawkish barring a big fall in commodities. That's the only scenario in which I think the RBI can cut rates. Barring the fall in commodities, I think there will be only one more 25-bps.

Q: A 25-bps cut on the repo, the banking community says, is not enough for any real transmission to the economy. Do they anticipate being able to cut rates any time soon?

Kidwai: A lot is going to depend on the deposit structure of banks because deposit-rates are falling and that becomes a challenge for banks to bring lending rates down and make sure that the high savings rate of Indian households flow into productive investments like mutual funds and insurance.

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IKEA hails Govt’s nod; to offer affordable goods

Swedish major IKEA on Thursday welcomed the government's decision to open its stores in India saying the company will offer home furnishing solutions at an affordable price, besides ramping up sourcing from the country. "We feel very welcome in India. This is a big step in our journey to open IKEA stores in India. We feel very confident that the people of India will love to visit and to shop at IKEA," IKEA India chief executive officer Juvencio Maeztu said in a statement.

The company will offer "good quality home furnishing products and solutions at affordable prices," Maeztu added. The government on Thursday formally allowed IKEA to invest Rs 10,500 crore for setting up single-brand retail stores to sell mostly home furnishing items.

Commenting on the development, IKEA group president and CEO Mikael Ohlsson said: "This is a very positive development. Since many years already, India is an important market for the IKEA Group from a sourcing perspective. "We have been active in the country for more than 25 years and will continue to increase our sourcing in India from both existing and new suppliers building on long-term relations and shared values."

IKEA has proposed to set up 10 furnishing and homeware stores as well as allied infrastructure over 10 years in India by investing about Rs 10,500 crore. Subsequently, it plans to open 15 more stores.

The global furniture major has also been allowed to run cafes and restaurant within its single-brand stores in India but has been prevented from selling packed food items.

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SEBI fines RIL entity Rs 11 cr in IPCL insider trading case

In an over six-year old insider trading case involving shares of Reliance Industries' erstwhile subsidiary IPCL, market regulator SEBI Thursday imposed a penalty of Rs 11 crore on Reliance Petroinvestments Ltd.

Pronouncing Reliance Petroinvestments Ltd (RPIL) guilty of violating the insider trading regulations with regard to its dealings in shares of Indian Petrochemicals Corp Ltd (IPCL) in early 2007, SEBI said that RPIL made profits of over Rs 3.82 crore through these trades.

After taking into account the quantum and nature of the violations, SEBI decided to impose a penalty of Rs 11 crore on RPIL, which was listed as one of the promoter entities by IPCL itself in its regulatory filings as on March 31, 2006, the regulator said in its 17-page late night order.

The regulator said the penalty needs to be paid within 45 days to the account of "SEBI-Penalties Remittable to Government of India".

Once a subsidiary of Mukesh Ambani-led Reliance Industries Ltd ( RIL ), IPCL used to be a separately listed entity of the group, but was later merged with RIL and delisted from the stock exchanges.

SEBI said in its order that its investigations into charges of insider trading norm violations by RPIL showed that the company was having control over IPCL as "promoter having control over the company with the total shareholding of approximately 46 percent".

Further, RIL was shown as a 'person(s) acting in concert' with RPIL with regard to the shareholding of IPCL, SEBI said.

SEBI said it conducted an investigation in the trading of the shares of IPCL during the period from February 22, 2007 to March 08, 2007.

In the same case, SEBI recently passed another order wherein it dropped the charges of violations of insider trading norms in IPCL shares against Manoj Modi and his wife. Modi is known as a close confidante of RIL chief Mukesh Ambani and held some senior positions at group entities in the past. But, SEBI said that the charges of insider trading violations could not be proved against Modi.

SEBI's probe into the matter showed an irregular trading pattern in IPCL shares during the period under review, when two key announcements were made by the company -- one about an interim dividend payment and another regarding the amalgamation of IPCL with RIL.

IPCL originally used to be a government-owned entity and was sold to RIL group during a disinvestment exercise.

SEBI found that RPIL has violated the Prohibition of Insider Trading norms through its dealings in these shares while being in possession of "unpublished price sensitive information (UPSI) while trading in the scrip of IPCL prior to announcement of declaration of interim dividend and amalgamation of IPCL with RIL".

"It is observed from the Investigation Report that RPIL received a dividend of approximately Rs 1.28 crore and made a notional profit of approximately Rs 2.54 crore (difference between acquisition cost of IPCL shares and market price of RIL shares on dealing dates based on average price).

"Thus, the Noticee made a profit of approximately Rs 2.83 crore when in possession of UPSI relating to declaration of interim dividend and amalgamation of IPCL with RIL."

During the course of its inquiry, SEBI served a Show Cause Notice in January 2011, wherein RPIL and RIL were termed as 'insiders' on the basis of the shareholding patterns submitted by IPCL itself about their promoters and related entities.

Besides, Mukesh Ambani was Chairman of IPCL, as well as Chairman and MD of RIL during the period under review, thus putting both the companies under same management, while RPIL held more than one-third of total voting power of IPCL at that time.

Also, RIL held the entire share capital of RPIL through two wholly owned subsidiaries.

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Decision on IKEA proposal delayed as CCEA meeting postponed

The meeting of Cabinet Committee on Economic Affairs (CCEA), which was scheduled to consider the Rs 10,500-crore proposal of Swedish furniture major IKEA, did not take place on Wednesday due to paucity of time.

"It was on the agenda of the CCEA, but CCEA could not meet today because of lack of time as the Cabinet meet took nearly two hours and then we have the CCS...I think the CCEA meeting will be fixed now...may be tomorrow, may be early next week," finance minister P Chidambaram said.

In its application, IKEA had proposed to invest the amount for setting up 10 furnishing and homeware stores as well as allied infrastructure over 10 years in India. Subsequently, it plans to open 15 more stores. Earlier in January, Foreign Investment Promotion Board (FIPB) had cleared the investment plan of the firm to open single-brand retail stores in the country.

FIPB can clear foreign investment proposals worth up to Rs 1,200 crore. As IKEA's planned investment is higher than this,  the proposal has to be cleared by the Cabinet.

IKEA's would be the largest investment in the single-brand retailing ever since the government allowed foreign investment in this sector. The company has been sourcing many products from India for the past 25 years.

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Maruti, MM domestic car sales up in Apr; Tata down

The new financial year started on a mixed note for car makers with leading firms, including Maruti Suzuki , Mahindra & Mahindra , Honda Cars and General Motors, reporting growth in domestic sales in April.

However, other manufacturers such as Hyundai Motor, Tata Motors , Toyota Kirloskar and Ford India, witnessed decline in sales during the month.

On the two-wheeler front, market leader Hero MotoCorp and TVS Motor Company saw decline in sales, while rivals Honda Motorcycle & Scooter India and Yamaha Motor registered robust growth last month.

Car market leader Maruti Suzuki India reported its domestic sales at 90,523 units in April 2013, a marginal rise over 90,255 units in April 2012.

The country's second-largest car maker Hyundai Motor India Ltd (HMIL) recorded a decline of 7.60 percent in its domestic sales at 32,403 units compared to 35,070 units in the year-ago period.

"...The domestic market continues to witness pressure ...There are signs of recovery with the increase in demand for petrol cars," HMIL Senior Vice President (Sales and Marketing) Rakesh Srivastava said.

Homegrown auto major Tata Motors saw its passenger vehicles sales fall drastically by 48.94 percent to 11,570 units during April this year as against 22,658 units in the same month last year.

However, rival homegrown auto-maker Mahindra & Mahindra's domestic sales of passenger vehicles, including Scorpio, XUV500, Xylo, Bolero and Verito, stood at 20,748 units as against 20,554 units in April 2012, translating into a marginal increase.

"We remain cautiously optimistic of the current situation and do hope that with the much awaited and needed reduction in interest rates announcement by the RBI next week, the auto industry will look up," Mahindra & Mahindra Chief Executive (Automotive Division) Pravin Shah said.

He said the price increases due to hike in excise duty to 30 percent from 27 percent on SUVs have started having negative impact on sales.

The company is "extremely disappointed that the additional 3 percent excise duty on SUVs has not been reversed in the Finance Bill which would have brought about some cheer and momentum for SUV makers and provided them with a level playing field," Shah added.

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Implement tax panel suggestions to boost biz mood: Kanabar

The government has reached out one step beyond industry expectations and the clarification on the transfer residency certificate (TRC) was a welcome step, Dinesh Kanabar, deputy CEO and chairman, tax, KPMG told CNBC-TV18.

Regarding the lag between the announcement and implementation of an non-adversarial tax regime, Kanabar says, "The government must implement the recommendations of the the Shome and the Rangachary Committees to boost investor mood."

Kanabar adds that the government reduction of the tax on interest payments to foreigners on government and corporate debt to 5 percent from up to 20 percent for a two-year period is evidence of the government's ability to allay fears and boost business sentiment.

Below is the edited transcript of the interview on CNBC-TV18

Q: The tax residency certificate (TRC) was the big red herring in the Budget. Do you believe that the government has now allayed all apprehensions with the clarifications announced and the removal of Sub-Section 5 altogether from the Finance Bill?

A: The government has gone beyond the expectation of the industry when the Budget was introduced. The clarifications have removed the mandate of seeking more documents if the TRC did not contain sufficient evidence. But what is more important is the removal of the presentation of the TRC in a prescribed format which previously  placed a lot of undue pressure on investors as not all countries were willing to issue tax residence certificates in a format acceptable in India. So on the whole it is a welcome step.

Q: How significant are the changes and the clarifications regarding the withholding tax because the street believes the reaction in the rupee was linked to the kind of clarification on the withholding tax front?

A: The withholding rate was reduced by the finance minister from 20 percent to 5 percent and the removal of the requirement of the permanent account number (PAN) are significant. The rupee's reaction versus the dollar is really more procedural and indicates the considerable boost to business on the government's efforts to allay the investors' fears regarding taxation.

Q: Though the government has announced its objective of establishing a stable, non-adversarial tax regime, the reality on the ground is very different. There is an increase in the number of transfer pricing notices being issued, the latest being to Maruti and royalty payments under scrutiny. Do you believe, in general, that the hostility in the tax climate, has improved?

A: There are two aspects to my answer to that question. I do wish that the lag between the announcement of the policy of a non-adversarial tax regime and its implementation narrowed. The government constituted two committees the Shome and the Rangachary Committees- and it is now important that the recommendations of these two committees are implemented.

The finance minister has gone on record to state that he will sooner than later implement the recommendations. In my opinion, the moment they are implemented there will be a wave of positive investor sentiment on the tax front.

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Diageo's open offer for 26% stake in United Spirits fails

Moneycontrol Bureau

As expected UK based Diageo's open offer for a 26-percent stake in United Spirits has failed. However this is unlikely to stop alcohol giant from acquiring the Vijay Mallya-owned company, according to a report by Wall Street Journal. 

On April 10, London-based company had offered to acquire 38 million shares of United Spirits from public shareholders at Rs 1,440 per share. The open offer price was around 20 percent lower compared to the closing price of United Spirits' stock on the day before the offer opened.

SP Tulsian of sptulsian.com said that this outcome was expected as no investors would tender at such low offer price. "So now probably, the market is expecting that Diageo will really be very aggressive in buying it from the open market because prior to the open offer, they said that they won't be raising the open offer price. Since the open offer has come to an end, now there are no restrictions on them to buy from the market," he added.

Also read: United Spirits to be one of best consumer stories: Nomura

In November, Diageo had announced to acquire 53.4 percent in United Spirits for USD 2 billion. The failure of the open offer would leave Diageo with less than 30-percent stake United Spirits. According to the terms of the November deal, Diageo would get 19 percent from the promoter entities and would also be allotted a further 10 percent stake by way of a preferential allotment. Mallya's UB Holdings has said it will retain a 15 percent stake after the deal is completed.

Till April 26, investors have tendered their shares, however none of the companies involved have yet shared result of the open offer.

Now it remains to be seen how Diageo manages to increase its stake in the Malaya-owned company, as around 3 crore worth of shares of the company are lying with banks.

"Whether those shares will be routed through to Diageo pursuant to the contract having entered with United Breweries Group at Rs 1,440 or those lenders will impress upon the UB Group to pay at the market price is to be seen. The drama will really start now that how Diageo chalks out a strategy to increase its stake. It may first acquire a 26-percent stake from UB Group and then thereafter increase its stake marginally, maybe via creeping acquisition route every year by five percent," Tulsian noted.

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