Early GST will give a kickstart to economy, says Godrej

The big thing is that the global economy is coming back on track, said Adi Godrej, chairman of  Godrej group. Speaking to CNBC-TV18's Menaka Doshi in Davos, Godrej said that with the US growth being restored and Europe not doing too badly, the next year should be better for developing countries.

Also Read: Post poll policy changes key to salvage economy: StanChart

Below is the interview of Adi Godrej with CNBC-TV18's Menaka Doshi

Q: I know you have just arrived in Davos. So, I won't ask you for what you are picking up in terms of the mood here but what are you hoping to focus on in the various business meetings that you have lined up through the course of the next week.

A: The big thing is that the global economy is coming back on track. US growth is being restored. Europe is also not doing too badly and next year should be better for developing countries than the last year, especially with elections in many countries, including ours.

Q: I think that is the sort of the view that is being echoed by most of the business leaders I have been in conversation with that this is going to be the year of recovery. It may not be a sharp up move but at least the decline has ended so far. Focusing on India where do you think we stand in the macro economy today? The investment cycle hasn't still picked up, there were serious concerns about the consumption cycle. We seem to be making a lot of last quick dash moves to fix the fiscal deficit but I am not sure how successful they would be. What is your assessment of where we are?

A: Some of the things the government has done over the last six months is certainly good, especially the fiscal deficit containment and the current account deficit containment. That will play out in better economic performance in the months to come but the fact is that because of lack of investment over the last couple of years growth has slowed down, consumption has also slowed down and we will need to have kick start. The best kickstart we can give to the economy to my mind is if the new government brings in the GST at an early date.

Godrej Ind stock price

On January 24, 2014, Godrej Industries closed at Rs 268.90, down Rs 13.05, or 4.63 percent. The 52-week high of the share was Rs 324.50 and the 52-week low was Rs 218.50.

The company's trailing 12-month (TTM) EPS was at Rs 6.25 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 43.02. The latest book value of the company is Rs 48.42 per share. At current value, the price-to-book value of the company is 5.55.

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Here's all the week-long entrepreneurial news

Jan 25, 2014, 04.49 PM IST

This is a round up of all the entrepreneurial headlines in the week gone by on the YT News Feed.

Tags  Young Turks, , YT News Feed, Tiger Global, Accel India, iProf, Google

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Here's all the week-long entrepreneurial news

This is a round up of all the entrepreneurial headlines in the week gone by on the YT News Feed.

Like this story, share it with millions of investors on M3

Here's all the week-long entrepreneurial news

This is a round up of all the entrepreneurial headlines in the week gone by on the YT News Feed.

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Here's a round up of all the entrepreneurial headlines in the week gone by on the YT News Feed.

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More Power To CAG!

Published on Sat, Jan 25,2014 | 16:27, Updated at Sat, Jan 25 at 17:12Source : CNBC-TV18 |   Watch Video :

'Every rupee flowing into the Consolidated Fund of India by way of revenue should be audited by the Comptroller and Auditor General Of India.' In reaching that conclusion for telecom service providers last week, the Delhi High Court may have opened the door for CAG to audit a wide variety of public-private projects. Payaswini Upadhyay asks experts if this is what the Constitution envisaged or has the Delhi High Court extended the CAG's brief? And what this will mean for India Inc!

Article 149 of the Constitution lays down the duties and powers of the Comptroller and Auditor General or the CAG. It mandates the CAG to perform such duties and exercise such powers in relation to the accounts of the Union, the States and of any other authority or body.

Over the last 4 years the government argued before the Delhi High Court that private telecom companies would be such bodies subject to the CAG audit. The telecom service providers argued that Article 149 does not cover private parties.

Last week, the Delhi High Court left that question open but held that the accounts of private telecom companies would be subject to CAG's audit. The High Court held that under Article 149, accounts would include a record of money received and spent by the government. It concluded that the private telecom service providers contribute to the revenue of the government by way of license fee. Since this revenue flows into the Consolidated Fund of India subject to CAG audit, the revenue of the telecom service providers can also be audited

CA Sundaram
Senior Counsel, Supreme Court
"They have not gone directly into the question as to whether these bodies would be authorities. Although there is some amount of observation in the judgment that the income of these companies is in many ways an income of the government itself because the government shares a part of the income. They have also gone into the issue of that this is more or less like a joint venture. So although, not having answered the question there are many many leads pointing in the direction that these are entities who, in a manner of speaking, are carrying out public functions and therefore there could be observation in the judgment which could- in later- case be taken to point towards defining these people as companies subject to the writ jurisdiction of the court under Article 12 as an authority."

Gopal Jain
Senior Counsel, Supreme Court
"The first laxman rekha which had to be crossed is what are constitutional boundaries and limitations. Clearly if you look at the constituent assemble debates as well as the parliamentary debates when the 1971 Act was made, they don't even include nationalized banks. They said it wouldn't apply to government companies which later became non-governmental companies. So private companies is far removed from even these two scenarios. Really that was the issue which had to be decided- what they've said is we'll allow a revenue audit but not allow to look into expenditure; that to my mind is a minor issue. The larger constitutional issue which has to be taken is what was the role of the CAG- was it to be an auditor of the government and of government departments and not of private companies."

SL Rao
Former Chairman, CERC
As I understand, the court is saying that while the CAG was primarily meant to audit State government use of central government funding and of government-owned corporations, the Court is now expanding that to say that the CAG would also be right in auditing situations where government gets substantial revenues from the operation of a particular organization because of an agreement on profit sharing or where the government has a significant equity holding in that organization.

But the Delhi High Court has carefully caveated this expansion by saying that the CAG can only audit the receipts and not inquire into aspects like faithfulness, wisdom and economy in expenditures.

SL Rao
Former Chairman, CERC
"When you come to other PPP projects – private public partnerships- there have been some suggestions that this should extend to all of them. I am not quite sure that it can apply to all of them. Let's take roads for example. There are large number of public-private partnerships in India on roads. They are first of all announced, various companies bid for them and there is what is called a viability gap funding. The person bidding for it says that I'll make this road and I'll charge a toll for let's say 30 years to recover my cost and to make some money. The one which is the lowest wins the bid and if that money is not enough, there is a small amount of funding that the government will give. Now here I don't see any scope from the government to want an audit because it's all agreed- you've got a small viability gap funding which is gone into the construction of the road; you've got the toll agreement with the government which is part of the bid and that's it. So wherever there is complete clarity; you're ok."

Gopal Jain
Senior Counsel, Supreme Court
Suppose the accounts are not joint accounts. The basis of this order is that an account is maintained on behalf of the government- that is very particular to a situation which as I said may not be factually correct. That's issue number 1. Issue two is suppose there is a nationalized bank- they will have a different case to put forward. Supposing you have NDDB- they will have a different case to put forward. So it's not easy to say that this applies to all situations.

In Aryaman Sundaram's words- CAG- in the recent past- has positioned itself as a super businessman, a super policy maker and a super finance minister. Could it be that this interpretation by the Delhi HC gives that position a super fillip? Since the telcom companies have appealed this order, hope the apex court settles the powers of the CAG to audit PPP projects super soon!

In Mumbai, Payaswini Upadhyay

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Video Volunteers: Addressing governance at grassroot levels

Jan 25, 2014, 04.44 PM IST

Founded by Stalin K and Jessica Mayberry in 2003, Video Volunteers trains rural communities to demand good governance by teaching them how to make short films to highlight their problems.

Tags  India, Jessica Mayberry, rural India, Stalin K, Goa, Video Volunteers, Young Turks

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Video Volunteers: Addressing governance at grassroot levels

Founded by Stalin K and Jessica Mayberry in 2003, Video Volunteers trains rural communities to demand good governance by teaching them how to make short films to highlight their problems.

Like this story, share it with millions of investors on M3

Video Volunteers: Addressing governance at grassroot levels

Founded by Stalin K and Jessica Mayberry in 2003, Video Volunteers trains rural communities to demand good governance by teaching them how to make short films to highlight their problems.

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Founded by Stalin K and Jessica Mayberry in 2003, Video Volunteers trains rural communities to demand good governance by teaching them how to make short films to highlight their problems. Headquartered in Goa, Video Volunteers currently has a network of 206 community correspondents mainly villagers and slum-dwellers, across the country. Having already grossed revenues of Rs 3 crore the venture hopes to have at least one correspondent in each district by the 2019 General Elections. Here's the Video Volunteers story.

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Here's how Nobel laureate Michael Spence sees EMs in 2014

CNBC-TV18's Menaka Doshi caught up with Nobel laureate and economics professor Michael Spence to discuss the global economy, his confidence in the emerging markets, the hard work that is yet to be done by EMs and what he expects 2014 holds in store.

Below is an verbatim transcript of the interview.

Spence: If you start with major economies, I think you are going to see a successful middle income transition and sustained growth at about 7 percent plus in China. This is systemically important because it is now a big market and helps support growth in most of the rest of the developing world. India has had a bit of a lull and it is probably going to accelerate now.

Obviously, it depends on the election coming up and the policies adapted by whatever government comes in. However, I think there is a huge amount of talent and capacity. There is determination to solve some of the problems that may be getting in the way and there is a reasonably healthy, not perfect, but healthy global environment to be relatively supportive. So, none of these are sure things but that looks pretty good.

Mexico is doing very well. I expect some acceleration in Brazil as they at the margin fix up some issues that caused consternation amongst the people. There are problems in certain places. Turkey is obviously having a difficult time politically at the moment. So, there are ups and downs but on the whole I expect this to be a pretty good year, an upward trend year.

In America, I would call it a partial recovery driven by private sector, structural shifts in the economy, rising exports, de-leveraging. We have got some challenges. We have got no agreement on how to deal with the fiscal situation in the government. So, we could get grid lock or dysfunctional choices or other bouts of craziness with respect to the debt ceiling and so on. So, there are a few clouds on the horizon. We are certainly not at full potential. We are under investing in America on the public sector side, in infrastructure and the effectiveness of some parts of the educational system. So, we have got ways to go and it will take some more time but it is improving.

In Europe, it is a difficult situation where it is very hard for me at least to convince myself that we won't have few more years. I don't know exactly how many of rather low growth. Southern European countries are not competitive at the moment. They have diverged badly when the eurozone came into effect.

It is a very difficult structure with the eurozone and big divergences in productivity in relation to income, some countries like Germany have an under valued exchange rate and other ones have an overvalued exchange rate.

I hoping the normalisation of the monetary policy in the US over time will actually cause the dollar to elevate a little bit which won't necessarily be good for America but if the euro declines it will help a lot in restoring growth. There is a pretty general interest in having Europe, which is: if you take it as a unit, a pretty big economy, about the same size as the US it will make a healthy comeback at some point.

Q: First about EMs specifically about China. There is considerable concern about what this year is going to mean and I think almost everyone will agree with you that they will manage to do better than 7 percent growth but the volatility and the sharp swings in China are what's worrying everybody. Then you have got the Plenum reforms that are set to sort of kick-in and it is a long haul for China, those are important changes that are going to take place. How China consumes drives a large part of the global economy, it drives commodity prices and all of that. Can you give us some more insight on how volatile you think this adjustment is going to be for China? Especially for instance last year we saw several pops in short term money markets because the Chinese government and the central bank were trying very hard to control liquidity flows in the China's banking system.

A: I think you will see some volatility. Here is what I think they are going to do, they have an enormous balance sheet. They could use investment as a lever to sort of accelerate growth pretty much anytime they want. The problem with that and they know this, if they use investment and push it in a low return territory it is just going back to the old growth model which had kind of run its course. So, they are not going to do that. They are going to restructure the financial system to both liberalize and to regulate. It is sort of two conflicting forces. So, the shadow banking system has to be regulated and that process is not complete. So, that is a certainly a source of volatility. Shadow banking means outside the main sort of state owned banking system. So, I expect some volatility. You will also see volatility in the markets because markets are very jittery about whether this is all going to happen or not and that doesn't necessarily reflect the underlying economic difficulties. It is just the mood of the market.

Q: In fact, today we got a below 50 PMI number for China. Even as we speak that is causing a bit of a flutter in Asia and emerging markets. Of course that will seep into how Wall-Street reacts later in the day, this is exactly what we are talking about, the volatility that China creates in the global markets.

Spence: What I am trying to say is there is some real sort of underlying kind of risk with respect to implementation and then on top of it there is a bunch of volatility that doesn't have much to do with what is going on. It is just reacting to the latest signal. The honest truth in my view is that growth might slowdown a little bit this year in China.

It will cause very big nervousness in markets but actually it is a good sign. If China cranked all the levers down, ran growth up to 8 percent. That is the time to get nervous because it would be the wrong growth model.

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Here's what the big deal about Enactus SRCC is all about!

It's now time for us to take you to the Shri Ram College of Commerce in Delhi University. Students here have taken up community outreach projects to impact the lives of people in need through business; and they call themselves Enactus SRCC!

Enactus or Entrepreneurial Action and Us is an international non-profit organisation of students present across 37 countries. SRCC partnered Enactus in 2007 and since then it has taken up 10 social projects of which eight have been completed.

Having already impacted the lives of over 4000 people, let us take a look at how these young leaders are helping puppeteers innovate and manual scavengers unveil a new life with their projects Kayakalp and Azmat. Here's their story!

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Constitution does not stop CM from protesting: Kejriwal

Delhi Chief Minister Arvind Kejriwal, who faced flak for his protest in the heart of the capital, on Saturday said the Constitution does not prevent the Chief Minister from holding a dharna.

"I read the Constitution, couldn't find anywhere that a Chief Minister cannot hold 'dharna'," he said on criticism to his two-day dharna outside Rail Bhavan. He also charged that "the media is getting paid to do negative stories on AAP".

Also Read: Yogendra Yadav backs Delhi CM Kejriwal, justifies dharna

Kejriwal's role in leading a protest while holding constitutional office has come under the scrutiny of the Supreme Court which on Friday slammed law enforcing agencies for allowing unlawful assembly of supporters of the Chief Minister in the heart of national capital.

In his Republic Day address at Chhatrasal Stadium, the Delhi Chief Minister said the Jan Lokpal Bill is almost ready and will be passed at a special session in Ramlila Maidan in February. Holding that security of women in the national capital is "highly compromised", he said the government has formed a committee under the Chief Secretary for the formation of Mahila Suraksha Dal in the city.

He said that it may not have powers like the police but the force will work like security guards stationed outside buildings and housing societies. "They will provide security to women. We will have retired army personnel, police and home guards as members of the suraksha dal," he said.

Kejriwal also said the committee under the chief secretary will make provisions to ensure that rapists are sent to jail within 3 to 6 months.

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Week Ahead: Central banks to hog limelight; rupee key

It is a busy week ahead, with RBI meeting on 28th January and Fed meeting on 28th-29th January along with expiry of F&O on 30th January.

In the RBI meeting, in most likelihood, some of the recommendations announced last week would be formalised while maintaining a status quo on rest of the monetary parameters.

Some of the recommendations include making 14 day rate as benchmark compared to prevalent overnight rate, CPI the main gauge of inflation and inflation being the main monetary policy objective ahead of economic growth and financial stability. To be noted is that inflation targeting framework would need legislative approval.

The RBI panel has also recommended a CPI target of 4 percent by 2016 – in that case rates are expected to remain elevated for longer than expected and that would actually keep a pressure on the interest rate sensitive sectors for quite some time.

Jon Hilsenrath, chief economics correspondent for The Wall Street Journal and an authority on Fed whom the Wall Street believes has an ear into Fed, is expecting that disappointing jobs report is likely to curb the Federal Reserve's enthusiasm about the U.S. economic recovery, but it seems unlikely to convince officials to alter the course Fed Chairman Ben Bernanke laid out for the central bank in December.

Bernanke strongly suggested at his December press conference that the Fed's inclination is to reduce the purchases by $10 billion increments at every meeting.

The expiry would keep the markets volatile, with the markets generally ignoring the fundamentals during the expiry week as F&O dynamics take over. Both the domestic as well as the global events may lead to some rise in implied volatility.

Rupee would be also in focus, not only due to the month end demand of importers but also due to the fact that the Argentinian crisis has fuelled aversion towards emerging market currencies.

(This article is contributed by Aviral Gupta, Investment Strategist, Mynte Advisors)

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NSE Funancial: Five teams battle out in semifinal 1

Jan 25, 2014, 05.19 PM IST

In NSE Funancial Quest Season 3, 15 champions from 15 cities will battle it out in three different semifinals to qualify to the national finale. The five teams in the first semifinal are from Nagpur, Pune, Hyderabad, Bhopal and Lucknow.

Tags  NSE, Funancial Quest Season 3, Nagpur, Pune, Hyderabad, Bhopal, Lucknow, Bhavans B P Vidya Mandir, Crescent High School, Mount Mercy School, Sagar Public School, Town Hail Public Inter College

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NSE Funancial: Five teams battle out in semifinal 1

In NSE Funancial Quest Season 3, 15 champions from 15 cities will battle it out in three different semifinals to qualify to the national finale. The five teams in the first semifinal are from Nagpur, Pune, Hyderabad, Bhopal and Lucknow.

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NSE Funancial: Five teams battle out in semifinal 1

In NSE Funancial Quest Season 3, 15 champions from 15 cities will battle it out in three different semifinals to qualify to the national finale. The five teams in the first semifinal are from Nagpur, Pune, Hyderabad, Bhopal and Lucknow.

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In NSE Funancial Quest Season 3, 15 champions from 15 cities will battle it out in three different semifinals to qualify to the national finale. The five teams in the first semifinal are from Nagpur, Pune, Hyderabad, Bhopal and Lucknow.

The participants are Aditya and Anshul from Bhavans B P Vidya Mandir from Nagpur, Manasi and Mohit from Crescent High School from Pune, Ehsaan and Rabiya from Mount Mercy School from Hyderabad, Ayush and Swaroop from Sagar Public School from Bhopal and Aditya and Satya from Town Hail Public Inter College from Lucknow.

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Weather in East India improves significantly

Weather in East India has improved and cold day condition abated from west Uttar Pradesh. As predicted by Skymet rain has dissipated from the entire state. Cold weather conditions gradually improved as a clear sky allowed the day temperatures to rise.

Considering the cold weather conditions, the district magistrate had ordered the closure of all schools in the state capital up to 12th standard till 22nd January. However, with the situation improving the schools have started reopening.

Here's a list showing rise in day temperatures-

Name of State Name of Places Maximum temp. on Friday (in °C) Maximum temp. on Thursday (in °C) Maximum temp. on Wednesday (in °C) Uttar Pradesh Kanpur 21.8 20.6 15.8 Uttar Pradesh Lucknow 22.9 22.6 17.9 Uttar Pradesh Bareilly 20.4 23.4 16.4 Uttar Pradesh Bahraich 23 23.8 19.4 Uttar Pradesh Meerut 19.1 21.5 14.7 Uttar Pradesh Agra 17.4 18.2 15.7 Uttar Pradesh Aligarh 17.6 17.8 15.6 In the last 24 hours, very marginal changes can be observed in day temperatures but the situation will gradually improve from now on. People in Uttar Pradesh are enjoying the much-awaited sunny afternoons. Fog in East India will become extensive tomorrow but sunny afternoon will not allow the maximums to fall considerably.

In many places over Rajasthan and Madhya Pradesh day temperatures are still below normal by 4°C to 7°C. Churu in Rajasthan is 6°C below normal at 16.5°C. In Madhya Pradesh, Bhopal is 4°C below normal at 20.5°C while, Indore is 7°C below average at 19.4°C.

picture courtesy- trekearth.com

By: Skymetweather.com

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Indian ADRs: ICICI, HDFC Bank, Infosys close lower

Jan 18, 2014, 04.54 PM IST

In the banking space, HDFC Bank was down 1.9 percent to USD 34.15 and ICICI Bank declined 1.28 percent to USD 35.58.

Tags  , Indian ADRs, Infosys, Wipro, ICICI Bank, HDFC Bank, Dr Reddys Lab, Tata Motors

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Indian ADRs: ICICI, HDFC Bank, Infosys close lower

In the banking space, HDFC Bank was down 1.9 percent to USD 34.15 and ICICI Bank declined 1.28 percent to USD 35.58.

Like this story, share it with millions of investors on M3

Indian ADRs: ICICI, HDFC Bank, Infosys close lower

In the banking space, HDFC Bank was down 1.9 percent to USD 34.15 and ICICI Bank declined 1.28 percent to USD 35.58.

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Indian ADRs saw selling pressure on Friday. Among technology stocks, Infosys fell 0.69 percent to USD 60.28 per ADR and Wipro lost 0.74 percent to USD 13.42.

In the banking space, HDFC Bank was down 1.9 percent to USD 34.15 and ICICI Bank declined 1.28 percent to USD 35.58.

Among others, Dr Reddy's Labs dipped 0.53 percent to USD 43.13 while Tata Motors gained 0.73 percent to USD 30.29.

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Ramesh Damani probes: Profiting from the Indian media boom

“The medium is the message," said the famous saying by Marshall McLuhan.

In a freewheeling interview with Vanita Kohli-Khandekar, media specialist and contributing editor for Business Standard, and Salil Pitale, Executive Director - Investment Banking, Axis Capital, renowned investor Ramesh Damani, for his special CNBC-TV18 show RD360, discussed the scope of the Indian media business.

Both believe the ongoing digitization wave is going to be a game-changer for Indian media companies.

"The single biggest change that television is seeing in a couple of decades is at a head," said Khandekar.

Pitale said that average revenue per user (ARPU), which has been stuck at around Rs 150 for over two decades since the launch of cable TV is set to go up drastically. "It could go up to Rs 500 in five years."

This, he said, will increase profitability of all three players in the game: broadcasters, distributors and content owners.

Also read: Not giving up on India; media long-term pick: Akash Prakash

The duo also discussed opportunities in the online and the print media spaces.

Below is the transcript of the interview.

Q: Last year, you wrote a column [for Business Standard] titled 'Good news on TV'. What is the good news?

Khandekar: The good news is: the single biggest change that television is seeing in a couple of decades is at a head -- digitisation is moving on schedule.

If I go by the ministry of information and broadcasting's numbers -- and they are quite alright -- three metros are fully digital [in phase 1], while phase ii is almost complete with 38 towns, except for know-your-customer forms that have to be filled up.

This means three things. It increases bandwidth -- the pipe that takes a TV signal to your house, its capacity increases. Once that happens, cost goes down because your tariff fees get eliminated, a whole lot of the junk is eliminated. So that is a little more money into the broadcasters' kitty.

Second, your pay revenues go up. For the broadcaster and for the trade itself because transparency goes up. I think the only person who will protest is the last-mile cable operator but even he will also realize as time goes up and average revenue per user (ARPUs) go up, he will also earn more money.

Lastly and most importantly, variety goes up because now the game changes from being a distribution game to a game of getting people to pay with their money to watch and subscribe to a channel.

The moment that choice comes into a play, it is no longer just sell-in-bundles, and you have to create content for which people are willing to pay extra money.

Q: That happened in multiplex, isn't it?

Pitale: It happened in a big way. Seven-eight years back, the multiplex business was nascent, or really did not exist at all. Your subscription price points, the ticket prices in the entire exhibition chain was so abysmally low, they used to be at Rs 30-40, that was a price of a ticket to watch a movie.

I remember, we did the initial public offering (IPO) for a company called Fame in 2005. They were planning to price tickets at Rs 100 and we were all palpitating over why anybody will pay Rs 100. Today, in 2014, you realize that ticket prices have gone higher.

It is because of the fact that you got a quality entertainment destination, which is the analogy here: that a quality pipe in a digital format, which is available to consumer today, is able to fulfill the requirements and content across board.

Q: People will pay if there is a value proposition?

Pitale: Definitely. I think so.

Q: What is the ARPU now stuck at?

Pitale: The ARPU has been stuck at a number between Rs 150 and Rs 200 forever. When cable TV started in India in 1991, people were paying Rs 150. Today, the average ARPU is Rs 170.

We watched five channels then at that ARPU. Today we are watching 600 channels. We are spending two and a half hours in front of a television everyday and we are still at the same ARPU today.

So yes, in terms of the math, with 150 million homes, at that ARPU level, it is a Rs 30,000 crore business.

Q: And it will grow you think?

Pitale: Definitely, it will grow.

Q: Does the 10+2 ad cap (12 minutes of ads per hour allowed) kill the profitability of broadcasters?

Khandekar: I think most broadcasters are all right now with the 10+2 except certain segments of the broadcast industry.

I have always maintained in my writings that 10+2 is premature. We should have waited for full digitisation to rule out and then once pay revenues are on par with advertising revenues, then put in the 10+2.

10+2 is a normal in most countries. So there is nothing wrong with 10+2 but this is a wrong time to implement it.

Q: But ad rates will go up in 10+2, won't they?

Khandekar: In any case, the rates are high for the leaders and some of the top channels don't go beyond 14 or 16 minutes.

It is the genres like music or news where it has gone to 24-25 minutes. That is the place where inventory buying happens by the kilo. That is where you might see a lot of shutting down of channels, you might see a lot of consolidation happening there because of the 10+2.

Q: It is good thing, you don't want 500 channels.

Khandekar: But they have the right to compete in a fully-structured market. Let them shut down because consumers don't want them not because advertisers don't want them.

Q: In this brave new world we are talking about where ARPUs will be Rs 300 per day, who will make money? Is it going to be the broadcasters, the content owners or distributors? Is it going to be the local cable operator? How does this pie break down?

Pitale: The entire chain becomes wealthier. The Rs 30,000 crore size of the chain is going to grow in a multiple and not in percentage terms.

Q: Five years from now?

Pitale: I do not think we should be surprised that we are looking at Rs 500 ARPUs. I guess we will have the benefit of hindsight then.

Khandekar: If you think of the market as a pyramid there are clusters which are willing to, able to and wanting to pay Rs 500-1,000. You will be able to capture those clusters.

Q: At Rs 500 ARPU, who makes the money?

Pitale: What has happened is out of the three categories of players, the local cable operators (LCOs) were retaining a large chunk of the subscription revenue. The multiple-system operators (MSOs) were getting 15-20 percent share of the same, which had to be shared with the broadcaster and the broadcaster community is also paying carriage, so it was a very difficult situation.

The LCO as a community was making a lot of money, but it was fragmented, it was shared between some 60,000-80,000 cable operators. There were leakages because the entertainment tax, service tax impact of the same was not necessarily captured over there.

What will happen is that from a fragmented ownership of consumers, we move towards a more consolidated ownership of consumers. It has already happened in DTH: 40-45 million whatever is the number on DTH is really captured between six players.

On the cable side, post phase I and phase II, we are already seeing that the large MSOs at least have a clear presence in subscribers which run into 5 million, 6 million, 7 million and so on.

There is a challenge that they have not yet completed the last issue on KYC, but the moment that happens, we will have consolidated ownership of the cable business. We already have consolidated ownership of the DTH business.

The LCO as a segment is still important because it is required for fulfillment as last mile access in fulfillment. It does not disappear. It gets its share of the space.

Today from Rs 200 that the consumer pays, the MSO plus the broadcaster probably gets about Rs 70-80 out of it and the LCO community retains Rs 120.

From Rs 200 going to Rs 500, you could get into a situation that the LCO could still retain a 40-45 percent and that community also benefits and the balance certainly benefits as a chain -- both the broadcaster and the MSOs.

Khandekar: Maybe three-four-five years later, just the sheer 100 percent transparency will help.

Like with theatres, it is not as if the numbers of screens went up drastically, we have increased by about 2,000 screens or something in the country, but the 100 percent transparency in billing and collection resulted in a couple of billion dollars impact on revenue.

We are talking about Rs 8,000-10,000 crore coming in only because that Rs 200 is coming back into the system, because it was not coming back, it was leaking out.

Q: In this new food chain that you talk about, both the content guys win? Isn't that way you place your bets?

Khandekar: Absolutely. Across the board, if you look at TAM data on what is happening in digital homes, regional content is taking off in North India. Tamil and Telugu content in Delhi, for example, is shooting through the roof, English content is shooting through the roof in metros.

You have day-date release for shows like Castle, Sherlock etc. These shows would not have come to India for a year otherwise.

Q: In a very interesting column, you said billionaires love newspapers. It applies to the West, but explain yourself.

Khandekar: Billionaires have always subsidised newspapers. News is one of the toughest businesses to make money in. It is impossible to make money on news unless you are bundling it with entertainment, advertising. And the dis-aggregation that online has done, you are seeing the impact of that in the west.

Q: But there is a difference between what is happening in the west and what is happening in India. In India, print media is still growing.

Khandekar: It is growing hugely. There are three reasons. One, penetration is humongously low in India.

We are talking about 340-350 million people reading newspapers in a country with 70 percent literacy. So if you have a potential market of 700 million people, even if 500 million can actually read, others can just sign their name, you have an upside of 100-150 million.

Two, aspirationally, newspapers carry huge value in India which we keep forgetting. You go to Kanpur, Lucknow. These are not small towns. They are big towns, but newspaper is the written word, it holds for India. It is completely different to what it holds for completely literate for centuries in the western world.

Thirdly, I think language newspapers is the big story in India frankly as far as growth goes.

Q: Doesn't the smart phone and tablet put those great franchises that we have at risk?

Khandekar: Of course, it puts it at risk, but right now video is driving smartphone and tablet usage, not newspaper readership. If I look at Indian Readership Survey (IRS) and Audit Bureau of Circulation (ABC) numbers, you look at any trend, I would say they should start preparing for it.

English newspapers are already seeing it. Last IRS, we have not seen one 1 percent growth for English newspapers. So you are looking at trouble coming up very quickly and I have been saying this year after year, start putting your blueprints in play. Even Punit Goenka [of Zee, which partly owns DNA] said this recently: in online, you will do 10 things, one might work, not work, but just start the process.

Q: In direct-to-home (DTH) vs cable: who wins in that race?

Pitale: I do not think there is going to be an either-or winner in this. Both the DTH players and the large MSOs will grow. The challenge that the large MSOs face is that getting the KYCs right, getting the gross billings right, getting the billings done by themselves rather than LCOs.

Q: When will that happen? When will the billing start happening from cable operator?

Pitale: Right now, the billings are still being done. The bill is sent by an MSO to the LCO and the LCO supposedly distributes it. Clearly that is not the endgame. People are working towards it with varying degrees of success, but we are in midst of that change.

Q: Is it possible that internet cuts the legs of DTH and cable?

Khandekar: On the point about newspapers, this applies equally. I have been voraciously following online in the last few years, and it is going through the roof. 220-230 million people are online across devices in India right now, and it's a huge number.

But monetisation is pathetic so far because cost-per impressions (CPI) are terrible in India as well as the world over.

For a reader who reads the New York Times online, there is a 1:14 difference in what the advertiser pays. The physical advertiser will pay Rs 14 to reach you, but will pay Rs 1 to reach you if you are online.

A lot of people are moving online, but revenues are not moving online. That is the problem.

Q: Does internet poses the risk to the basic broadcasting model of watching television?

Khandekar: Not at all, you can straddle it. I think Indian broadcasters and foreign broadcasters in India have been very proactive -- far better than newspapers -- on quickly seeing the challenges and moving on.

Everybody is on YouTube. 59 million people in India were watching video in September last year. It is a huge number.

But what will it be a proportion of TV audience? It is less than 10 percent of proportion of people watching TV but the fact is it is a significant number. But you will never get the same revenues that just one show on Star Plus gets.

Pitale: The other point on that is bandwidth. For better and better quality content and more HD channels, you need fat pipes. Which means that you have to put in the investment. With 3G networks still being rolled out and 4G yet to happen, the cost of that, to set up an extensive network to carry such large fat pipes will be very different, and we will need a lot more telecom towers and high density.

So the whole cost economics will come into play and therefore it is not that the traditional DTH-cable is going to get impacted so quickly because it has got a big lead. I think things will change over a period of time, but the traditional DTH cable will have a very long way to go in this space.

Q: You are an investment banker. I know your clients ask you: where do I make money? So if you are going to tell them over the next three-five years one or two bright spots where you think a lot of money would be made, what names would you name?

Pitale: The whole distribution chain is just waiting to unleash big value creation. DTH players as a whole, cable and large players as a whole.

Even within cables, the guys who are implementing it beautifully are the guys who will really make the money.

Most of the names you can see around the place today. All the key MSOs, key DTH guys should do very well and they should really thrive in this particular space.

The DTH guys will keep getting the benefit of ARPU increases in a big way, the cable guys will get the benefit of customer ownership as well as the monetisation through broadband and so on. The ARPU is growing in any case.

Q: So the basic names: DEN, Hathway Cable, Siti Cable?

Pitale: Within all of this, one should look at individual managements and take bets around the same. But I would say that the segment really is waiting to happen.

Q: Who wins in the content race? Is it the general entertainment channels (GECs) or the niche channels?

Khandekar: 70 percent of India's TV audience is shared by five networks. They have got niche channels, GECs, they are in every genre possible and then you have smaller networks.

So you will have a Discovery or a Times Television, which are smaller networks, but you have Star, Zee , Sony, Sun and  Network18 and between them, they have 70 percent of the audience.

Except for Zee and Network 18, nobody is listed. I think there is a lot of value left there waiting to be unlocked. I had also heard about Star and Sony long back that they want to raise money, but I do not think that happened.

These guys played the game right: they launched the news channels two years before digitisation took off.

Q: How about the pathetic news broadcasters?

Khandekar: They are not so pathetic. The problem with news broadcasting is that there may be like 10 serious channels and the rest is all junk.

Q: And advertising price is too small.

Khandekar: You have 135 news channels for a Rs 1,800-2,000 crore business. It is the largest number of news channels anywhere in the world. Today, I saw a poster of some real estate guy launching another news channel and I thought why are they doing this?

They have spoiled the market for the guys who want to make money.

Q: Do you think with the digitisation that might change, because no one pays for it, no one will watch it?

Khandekar: More than digitisation, you had asked me something about trends in 2000, I think media ownership is going to be a big issue, especially on news, not on entertainment.

Q: Corporates will own media houses?

Khandekar: Corporates already own media houses.

Q: It is an acceptable practice in the West. Would it come here too?

Khandekar: It is perfectly fine as long as everything is transparent. The only thing is news media ownership is the one where there are reasons for concern and every time I speak to Telecom Regulatory Authority of India (TRAI) I suggest norms which insist on transparency.

Who owns you? What is your shareholding? What is your revenue? What are your losses? Where is your money coming from? Where is it going? What happened to Tehelka was the owner was involved in something, but the financial inclusion would have happened one day or the other, because that company had lost Rs 40 crore in three years. Some investor has spent that money.

Look at all these news channels. 40-50 percent of news channels in this country are owned by politicians and real estate owners.

Pitale: Commoditised business as news, but as digitisation happens it is easy to get data points to say who is really doing better. The other benefit is carriage -- which has been a big cost element for news -- starts to come down.

Clearly, they get the benefit of the same and this digital data tells who is better than the other. It will ensure that at least the leaders will get their fair due.

Q: Will the ad rates go up sometime, because they are really at the bottom of the basement for the news channel?

Pitale: Yes, it should. The leaders will get the benefits. The three-four-five brands will get the benefit.

Khandekar: Definitely they should?

Q: Exciting space to be in media, because the stocks are under-owned, under-loved, under-appreciated?

Khandekar: Lot of them have not yet come into the market. I would say the best stocks have not yet come into the market.

Pitale: It is a good time for people to look at this space from all angles. As I said, the whole industry has been playing advertising

Today, you can play advertising-plus-subscription. And subscription is traditionally more than advertising.

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Sunanda: Has she paid the price of being a celebrity?

Moneycontrol Bureau

She had come suddenly, she dissappered suddenly. Sunanda Pushakar (junior HRD minister Shashi Tharoor's wife of three-and-a-half years) was found dead in a hotel room on Friday night. Sunanda had checked into Hotel Leela Room No 345 due to renovation work at her home.

Also Read: Sunanda Pushkar found dead in Delhi's Leela Hotel

The incident came as shock because barely 12 hours before both Sunanda and Shashi has issued a joint statement saying all was well in their relationship.

The initial autopsy report, conducted by AIIMS, said it to be 'unnatural sudden death'. Though the report said there were no traces of posion in her blood, injury marks were discovered on her body. The full autopsy details are expected in two days, said AIIMS.

According to Times of India, Sunanda has complained of poor health and depression. She was diagnosed with Lupus and stomach TB for which she was being treated.

Sunanda Pushakar was in the news following an ugly online spat with Pakistani Journalist Mehr Tarar. On January 15, various intimate messages started getting posted on Tharoor's verified twitter account. Those were the supposed messages sent to Tharoor by Tarar declaring her love for him. Tharoor went into damage control mode saying his twitter account has been hacked and he is deactivating it to sort out the issue.

All hell broke loose when his wife Sunanda said that it was she who had posted the messages to show how Tarar is having an affair and 'stalking' her husband. This followed a volley of allegations and counter-allegations to the extent that Sunanda called Tarar an ISI agent.

She even refreshed the controversy surrounding the IPL Kochi team.

Sunanda came into limelight during the 2010 Indian Premiere League. Then a 'good friend' of Tharoor, Sunanda was the co-owner of Rendezvous Sports World, the consortium that bought the Kochi team. It was said that Tharoor had used her as a shield for collecting Rs 70 crore and helping the Kochi owners get their IPL team, Kochi Tuskers.

Following the controversy, Sunanda finally gave up her stake and Tharoor resigned as junior minister of external affairs. Nevertheless, the duo got married in August 2010.

Sunanda told Economic Times that she made a mistake by keeping quiet on her husband's role in the franchise deal. "I took upon myself the crimes of this man during the IPL," she said. However, she later retracted on her comment. She also told NDTV the Congress had asked her not to comment on the IPL scandal.

BJP PM-candidate Narendra Modi at a recent rally had taken a potshot at Tharoor and Sunanda referring to the IPL fiasco. He called Sunanda Tharoor's 'Rs 50-crore' wife. To which Tharoor tweeted, defending his wife, "My wife is worth a lot more than your imaginary 50 crores. She is priceless. But you need2be able2love some1 2understand that."

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Buy, sell or hold: How to trade Wipro post Q3 earnings?

Wipro   met street expectations in third quarter (October-December) with the IT services revenues growing 2.6 percent sequentially to Rs 10,327 crore. Consolidated profit after tax of the company climbed 4.27 percent sequentially to Rs 2,014.7 crore and revenues grew 3 percent to Rs 11,327.4 crore for the quarter ended December 2013.

In dollar terms, IT services revenue rose 2.9 percent quarter-on-quarter (6.4 percent on yearly basis) to USD 1,678.4 million that was in-line with company's guidance (USD 1660-1690 million) and analysts' forecast (USD 1677 million).

How to trade it now?

Credit Suisse maintains outperform on the stock with a revised target of Rs 650 from Rs 600.  It says that revenue growth will need to significantly accelerate for major relative outperformance. "Revenue growth is now in the middle of peer range and margin trajectory improve along with tailwinds for the sector will continue to help the stock," it adds.

Goldman Sachs retains sell with a target of Rs 400 implying 28 percent downside. The brokerage expects Wipro to continue to lag peers due to weak Application Development and Maintenance (ADM) business, high competition in Infrastructure management services and lack of traction in other growth verticals despite multi-year restructuring.

Citi has a buy rating on the stock with a target of Rs 650.  It anticipates upgrades on the stock as the street factors in the higher margin levels. "The business is turning around and improving demand should further help – Wipro remains one of our top picks in the sector," Citi says.

CLSA feels that true test of Wipro's revenue turnaround will come in the seasonally strong June quarter where it has faltered over the past 3 years, and  re-rating will likely have to wait till then.

However, Macquarie retains neutral rating on the stock  and thinks any share price gain is capped. "We change our target multiple to 15x (vs 14x earlier) to arrive at our revised target price of Rs 570 (vs Rs 490 earlier)," it says.

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Sensex will reach 24000 in FY15: Deutsche AMC

At the India Investment Conference held by the India chapter of the CFA Institute, Sunil Singhania, CIO – Equity of Reliance Mutual Fund, moderated a session comprising Enam's Manish Chokhani and Deutsche AMC's Abhay Laijawala.

Also read: Sensex will reach 24000 in FY15: Deutsche AMC

Singhania: How do you make many in this macro environment?

Chokhani: You could own stocks [for the long term]. I think that is the short point: that one has to be focused on businesses and what they will earn rather than who will buy, when they will buy, why will they buy it? Or who will form the government?

25 years ago, when I had done my MBA, I produced a report on India and I do not kid you, if I just reproduce that report today with updated numbers, it is the same macro problems, the same current account mess, the same fiscal mess, nothing has changed.

We have had reforms. We have had some 16 governments or some such number, it does not go up. The bullish thing is always a micro in India.

Singhania: One thing has changed, you had no money when you were optimist, you have more money when you are pessimist.

Chokhani: Narayana Murthy said that at 18 you should be a communist and at 40 you should be a conservative.

Singhania: On the earnings part, you recently updated your Sensex target to 24,000. What is your earnings growth expectation? We are seeing after 4-5 quarters earnings again trending into double digits. Now the pessimist can argue that it is one or two stocks or one or two sectors, the optimist might say that you are again back to that teen kind of earnings growth. What is your earnings expectation for the next two years and what is the genesis of this target being upgraded to 24000?

Laijawala: Our expectation is 10 percent for FY14 and the team is looking at 14-15 percent growth for FY15. For FY15, we are expecting a more broader earnings recovery. In FY14 it is obviously far more focused on few sectors which everyone knows about.

So that is what the markets are going to look at. A very, very important point is that markets tend to re-rate when earnings reach an inflection point. This is going to be the factor that investors are going to watch out for and this drives our expectation for a 24000 target for this year -- that that moment is going to approach in FY15.

Timing is very difficult. Is it the election? Is it various other variables? While everyone thinks it is the election we think there is far more happening in the economy than just the election. The election may probably decide the pace of change or the delta of change, but there are many other variables which are falling in place for India, which investors should not ignore and therefore that will decide that inflection point.

Singhania: What is your view on tapering? Everyone is concerned about tapering. We had done a study sometimes back on these new terms which get coined and which create havoc in the minds of investors, we had fiscal cliff, we had tapering and we had so many other things. We did a Google analysis of the search trends and we found out that these trends last for two months, they hit the peak and after two months people forget and the economists then coin new terms. This tapering has been going on for the last six months. The day tapering was announced all equity markets went up including the US. So what is your in-house expectation of the pace of tapering?

Laijawala: At Deutsche, we believe that the tapering will be done by the end of the year. There are fears that the taper could be more accelerated should the US economy move at a faster pace than anticipated. The bigger concern that is beginning to emerge now is an earlier-than-anticipated move by the Fed on the rate cycle. So while the consensus expectations for this year are for the rate cycle change in 2015, what if the US economic recovery is even stronger than the estimate and the pace of the acceleration is stronger the current expectations of a normalisation of monetary policy?

The other point that investors must watch out for is the short-term rates in the US. I think the environment or the trajectory of short-term rates in the US will have a very important impact on market sentiment. Because yes, you can see equity prices move up during times of economic recovery when bond yields are rising, but when short end rates tend to move up, that is when nervousness comes into equity markets.

Singhania: On the tapering front you did mention about the risk of equity flows impacting yields, currency everything. We have this new governor who has been very articulate about his policies as far as managing the forex is concerned and we have this huge flow which came in from FCNR and we have this huge buffer. What do you think will be the impact of a major taper and an aggressive taper, both on the currency as well as the debt market in India?

Mehta: As far as debt market from foreign flows is concerned, it is really not there.

Singhania: But first trend is we have seen USD 2 billion come in, right?

Mehta: When we say foreign money on debt market there are two types of investors: one is traders and H1, and one is the real money guys. If you step back a little bit in May, we almost reached a peak of USD 41 billion on the debt side.

In that how much is the real money guys, real money guys will not be even USD 4-5 billion, which are there today also. They are still there. It is the arbitrage guy and arbitrage guy has no view on country, no view on currency, no view on anything, they are pure arbitrage guys. They are logged in into currency and they are running a carry game of 1 or 2 percent. So it is a completely forward game. If the forwards are lower and you are able to make 1 or 2 percent carry they will always come in.

What happened in May, the forwards went up, you thought you would make 1-1.5 percent carry, your forwards went up by almost 2 percent. So it made sense for you to unwind that position. So from a currency point of view it just helps the sentiment, but it is currency-neutral because he is unwinding his hedge too.

So all these guys, whether they come or go has no meaning. It is the real money guy, who actually comes in will impact because these are the guys who will come unhedged just like equities. In equities 90 percent of the guys are unhedged.

So when the real money guys come in and they are coming unhedged, that will have impact on currency. A lot of real-money accounts are not even set up to invest in India. We had a problem of withholding tax. A great timing to solve that problem was along with Fed taper that we announced the withholding tax rationalisation and people started looking into it, we have one more chance.

People are in the process of setting it up, so that is why I am not too worried about taper. It will just have a headline impact. Once they are set up and actually in the debt market we are in the situation where we were in 1996 in equities. Real money guys have not just invested in India. So they will have to come at some point of time, but the biggest challenge still remains the flow which comes on the equity which will really impact the currency.

So now if we look at FCNR (B), a lot of money is again the FII money, the same bank money as same as FCNR (B) because you have India exposure and stuff like that, but it is again giving you sentimental-wise comfort because three years forward they have already sold it to the same banks.

So you have temporary buffer, but when you have outflows coming in and if there is negativity there is chance of not getting the right government and that could impact the sentiment.

That is the worry you have. Even the right government may take time to change things and all that, but at least there will be bridge inflows coming in because of positive sentiment, positive momentum.

Singhania: So it can have some volatility.

Mehta: Absolutely.

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RBI On Call Put Options

Published on Sat, Jan 18,2014 | 18:34, Updated at Sat, Jan 18 at 18:37Source : CNBC-TV18 |   Watch Video :

The RBI has prescribed a new pricing regime applicable to foreign investor exits using Call & Put options. And while it's not our case that equity should get assured returns, a dual pricing regime is confusing and in some cases unfair.

For instance, in the case of listed equity

- A non-resident has to buy from a resident at not less than preferential allotment price, sell to the resident at not more than preferential allotment price and in the case of selling to a resident using an option – sell at market price in the case of unlisted equity

- A non-resident has to buy from a resident at not less than DCF based valuation, sell to a resident at not more than DCF based valuation and in the case of selling to a resident using an option – Sell at not more than price arrived on basis of roe in latest audited balance sheet

Interestingly for investment in preference shares and debentures, the entry pricing is specified but the exit pricing can be as per any internationally accepted pricing methodology

CNBC-TV18's Menaka Doshi spoke to RBI Executive Director G Padmanabhan on RBI's Circular on Call and Put options

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Idea Cellular wins Storyboard Brand Campaign 2013

Jan 18, 2014, 05.41 PM IST

Here is a look at the winners of Storyboard Brand Campaign 2013.

Tags  Storyboard, Storyboard Brand Campaign 2013, Idea Cellular

Like this story, share it with millions of investors on M3

Idea Cellular wins Storyboard Brand Campaign 2013

Here is a look at the winners of Storyboard Brand Campaign 2013.

Like this story, share it with millions of investors on M3

Idea Cellular wins Storyboard Brand Campaign 2013

Here is a look at the winners of Storyboard Brand Campaign 2013.

Share  .  Email  .  Print  .  A+A-

Here is a look at the winners of Storyboard Brand Campaign 2013.

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Bandwidth of risk is widening for EMs: Andrew Sheng

Andrew Sheng has been policy maker in three Asian countries. He was the former Chairman, Securities & Futures Commission, Hong Kong, and worked with Bank Negara Malaysia. He is currently advisor to the China Banking Regulatory Commission.

Also Read: What bank branches can't provide, alternate players can: Mor

He says for emerging markets the bandwidth of risk is now widening because the advanced markets, as they begin to recover and then restore back more and more interest rates, emerging markets will face capital flows back to the rich countries.

He also talks about the state of the Chinese economy and the benefits that may emerge for other emerging economies.

Below is the verbatim transcript of Andrew Sheng's interview on CNBC-TV18

Q: Many believe US, European Union and Japan will largely continue with currency printing and easy money policy in 2014. What will this mean for emerging markets like us in 2014?

A: There are many uncertainties that one cannot completely prevent, because we live in a very complex world of huge inter-dependencies, very complex feedbacks, then make policy judgement in an era of turbulence and huge uncertainty. My favourite phrase is that for emerging markets the bandwidth of risk is now widening because the advanced markets, as they begin to recover and then restore back more and more interest rates emerging markets will face capital flows back to the rich countries and therefore we must be prepared. This means that not only will the long-term U-curve of the advance country interest rates - U-curves will begin to steepen, it has been very flat for a long time, but also the risk spreads for the emerging markets will rise. That has several implications.

Number one, if you overshoot on interest rate issue your growth will slow down and if you keep interest rates too low there will be very large capital outflows with consequent implications on your asset prices. So financial stability, monetary stability, inflation, growth, employment could all be hit by this phase of tapering. The good news of course is that advance country central banks have become much more responsible. They are aware of the implications and they will phase it in a staggered manner or an acceptable manner. I think emerging markets will have a little bit of breathing space to adapt to this new environment. There are many other issues that we cannot predict. For example, territorial complex, technology shifts, diplomatic incidences - all these and maybe civil unrest could disrupt the game, so to be able to predict this is not easy.

Q: There is fear that China could hard land because of rising bad loans or non-performing loans (NPL). There is a fear that monetary and fiscal stimulus given after Lehman led to ghost cities and highways leading to nowhere and all those loans turning bad?

A: Markets are driven by greed and fear and it is the fear of risks that will enable individuals, banks, regulators, corporates to take more caution and deal with it. There is no doubt in my mind that China has fiscal space, foreign exchange space and the policy space to deal with it. It is a very, very large economy. It can take minor stresses to the system much better than many small very open economies. The capital account of China is still not open. The reserves are over USD 3 trillion. There is relatively little foreign debt so far, but domestic debt is rising.

One must also need to understand that even though domestic debt is rising, the counterpart of it is investments of course on an unprecedented scale, but the asset is there and so therefore the question is managing liquidity, managing cash flow, balancing the maturity risk and of course weeding out the weaker players. So in the short-term, yes in absolute terms probably NPLs will rise, in relative terms it would still be manageable.

Q: What's your assessment of Chinese growth in 2014 and 2015? Wouldn't growth slowdown because an appreciating yuan will hurt exports?

A: I do not like to predict the future, because the future is very difficult to predict. Second point is that my own assessment of what is happening is that of course the investment levels will not be as large as before because there is adjustment on the monetary policy side and some control on the credit side, but domestic consumption is beginning to move and there are several reasons for this. It is partly due to the improvement in the changes in the one child policy, urbanisation is still continuing, introduction of e-commerce. There are many minor factors that on their own you would not notice, but cumulatively Chinese domestic consumption is becoming more and more important as an engine of growth.

Q: How exactly do you see the Yuan in 2014? Does it continue to remain stable to appreciating?

A: I think the policy of the People's Bank is to maintain flexibility in its management. I think they want a stable currency, but they would also be interested in allowing market forces to determine the band of fluctuation. When that is going to be widened no one knows, but I think that is the general direction of policy. The issue that one needs to be very clear about is has the exchange rate broadly reached its equilibrium level. I think nobody can say this with precision, but broadly speaking as you can see the way imports and exports are behaving a more equilibrium level is about there.

Q: Indian businessmen tell us that with wage inflation in China and an appreciating currency, they will be able to snatch some markets from China. Your thoughts?

A: Rightly so. The minimum wages have begun to rise. It is part of the 5th Plan. You cannot have domestic consumption rising unless you have wages rising. So rising wages is very good for the domestic consumption area and domestic consumption rise will be very good for imports and so commodity exporters of China will find this very, very useful. On the other hand the rise in the Real Effective Exchange Rate (REER) of China as the wages rise, its export competitiveness is reduced to some extent and that gives export space to countries like India and that is good news for all exporters in this regard.

However, one should also realise that as the wages increase it also forces a productivity adjustment by the exporters and by domestic corporations. So to some extent the increase in wages will be compensated by productivity gains. The total-factor productivity (TFP) will definitely increase also. How it is going to be played out is going to be difficult to see, but I agree with you there will be lots of opportunities for other emerging markets, particularly since the exchange rates are much more flexible.

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Delhi, North and East India reels under cold day conditions

Delhi is under cold day conditions as the weather remained grey and damp on Friday. Intermittent light rain throughout the day did not allow the temperature to rise beyond 12.9°C. Even on Saturday, Delhiites witnessed shallow fog in early morning hours and the day is likely to remain cloudy and gloomy. Cold day conditions will prevail as maximum will not rise above 15°C. The biting cold winter in Delhi effects restaurateurs as the customers' count dwindles. Street Vendors are also severely affected during winters.

Cold day conditions will continue to prevail in parts of Punjab, Haryana, Uttar Pradesh, Bihar and north Madhya Pradesh in view of rain. Cold and moist north westerly winds sweeping across Northwest India and extending to eastern parts will add to the misery of people.

Shallow fog and rain did not allow temperature to rise in several parts of Uttar Pradesh. Here's a list of places where cold day conditions prevailed and temperatures maintained below 16°C -

Name of State Name of Places Maximum temp. on Friday(in °C) Uttar Pradesh Aligarh 13.4 Uttar Pradesh Jhansi 15.2 Uttar Pradesh Kanpur 15.2 Uttar Pradesh Meerut 15.3 Uttar Pradesh Agra 15.5 Uttar Pradesh Lucknow 15.9 Uttar Pradesh Allahabad 16.1 Weather in Bihar

In Bihar, cold day conditions have been improving since Thursday as the fog dissipated. Day temperature in Patna plunged from 14.8°C on Wednesday to 22.5°C yesterday. Below is a list of temperatures several parts of Bihar.

Name of State Name of Places Maximum temp. on Friday (in °C) Maximum temp. on Thursday (in °C) Maximum temp. on Wednesday (in °C) Maximum temp. on Tuesday (in °C) °C below normal Bihar Patna 22.5 21 14.8 14.5 8 Bihar Purnia 23.8 17 15.9 15.5 8 Bihar Gaya 23.3 21 15.1 15.9 8 Bihar Bhagalpur 17.6 21 15.2 16.2 9 However, this respite in Bihar seems temporary as cold north westerly winds from the northern plains will bring down maximums after 48 hours. The state will once again come under the grip of severe winter in India.

By: Skymetweather.com

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China to speed up yuan convertibility under capital account

China today said it will step up efforts to make its currency, the renminbi or yuan, convertible under the capital account this year. Accelerating yuan convertibility is one of the major tasks for forex authorities, China's forex regulator State Administration of Foreign Exchange said in a statement after a meeting of key officials.

The officials should facilitate international trade and investment denominated and settled in yuan, guard against impacts of cross-border capital movement and prevent systemic and regional risks, state-run Xinhua news agency reported. The yuan is currently only convertible under the current account, while its capital account convertibility is controlled by the state.

The government has on many occasions stressed the need to realise full convertibility to help the currency's internationalisation to reduce dependence on the US dollar. While pushing bilateral trade with many counties to be done in yuan, China has permitted convertibility of the currency under capital account at the new Shanghai Foreign Trade Zone, regarded a test bed for new reforms launched by the government to revitalise the slowing down economy.

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Video report: Problems the Indian textile industry faces

Jan 11, 2014, 05.43 PM IST

India is the world's largest producer of jute. It ranks second in cotton, cotton yarn, silk and cellulosic fibers. At one level this abundant supply of raw materials gives India the competitive advantage but the fundamental problem is price volatility.

Tags  Textile Conclave, cotton, silk, crude oil

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Video report: Problems the Indian textile industry faces

India is the world's largest producer of jute. It ranks second in cotton, cotton yarn, silk and cellulosic fibers. At one level this abundant supply of raw materials gives India the competitive advantage but the fundamental problem is price volatility.

Like this story, share it with millions of investors on M3

Video report: Problems the Indian textile industry faces

India is the world's largest producer of jute. It ranks second in cotton, cotton yarn, silk and cellulosic fibers. At one level this abundant supply of raw materials gives India the competitive advantage but the fundamental problem is price volatility.

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India is the world's largest producer of jute. It ranks second in cotton, cotton yarn, silk and cellulosic fibers. At one level this abundant supply of raw materials gives India the competitive advantage but the fundamental problem is price volatility.

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Hoardings against AAP leaders in Amethi ahead of rally

Hoardings against AAP leaders, including Delhi Chief Minister Arvind Kejriwal, have sprouted across Amethi ahead of the party's 'Jan Vishwas' rally on Sunday, prompting it to demand additional security.

Also Read: Raje's austerity measures to give competition to AAP govt

Posters and hoardings have been put up by Rashtriya Rashtravadi Party at several places accusing the top three leaders of Aam Admi Party -- Kejriwal, Manish Sisodia and Kumar Vishwas -- of being "anti-national".

Local district convenor of AAP Hanuman Singh along with 20 others on Saturday met district magistrate Jagatraj Tewari to demand additional security for the rally at the Ramlila Ground which would be addressed byVishwas, expected to contest on the seat against Congress sitting MP, Rahul Gandhi.

In its memorandum, AAP expressed its apprehension that some political parties might try to disrupt the rally and violate peace and order.

On contacting Rashtriya Rashtravadi Party chief Prakash Chandra, he alleged that the body of AAP worker Santosh Koli in Noida was wrapped in the Indian tri-colour on August 7 last year which amounts to showing disrespect to the national flag. He added that a petition against it has also been filed in the Lucknow bench of Allahabad High Court.

Chandra said that his party would oppose all those responsible for such an "anti-national" act and indicated that Sunday's rally would also be opposed.

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UB’s Unsecured Creditors: Happy Hours!

Published on Sat, Jan 11,2014 | 17:49, Updated at Sat, Jan 11 at 17:54Source : Moneycontrol.com |   Watch Video :

Last month, a Division Bench of the Karnataka High Court dealt an almost fatal blow to the 2.1 billion dollar USL-Diageo deal. The High Court disallowed the sale of USL shares by UB Holding given that winding up petitions had been filed against UB Holdings by some of its unsecured creditors. the company will most likely appeal this order in the supreme court but today, we are not here to weigh UB's chances on appeal or Diageo's legal options instead we are going to focus on  what this order means for asset sales where winding up is underway. Payaswini Upadhyay reports on the top 3 takeaways

First the story so far! In April last year, 10 unsecured creditors of UB Holdings filed a winding up petition against the company. While this petition and 4 similar others were pending, UB Holdings approached the Karnataka HC seeking permission to sell the shares it held in United Spirits to Diageo. The single judge allowed the sale and told the company to pay its secured creditors from the proceeds and also deposit 250 crore rupees with the court. The unsecured creditors of UBHL appealed the single judge order before a division bench. Last month, the division bench overturned the single judge order and held that the sale of USL's shares by UBHL to Diageo is void. 

In doing so, the division bench has laid down 3 important precedents for situations where assets sales are undertaken while a winding up petition is underway. The first precedent – that a court does not have any jurisdiction over such an asset sale, even if it is to offer interim relief, if a winding up petition has been filed but not yet admitted.

Also read: Call/Put Options Pricing: Hazy Future?

Section 536(2) of the Companies Act, 1956 envisages compulsory winding up by the Court and lays down that transfer of shares after the commencement of winding up is void. Case law has understood that to mean – that courts have discretionary power to allow such an asset sale if it's in the ordinary course of business. The Single Judge had used this discretion to permit the sale of shares by UB. On appeal, the division bench deliberated on whether a court can allow sale of shares even before a winding up petition is admitted. It answered the question in the negative saying if the court allows a company to do so, it can adversely affect creditors who may not even be aware of petitions made for alienation of property.

Shishir Mehta
Partner, Khaitan & Co.
"I think what the court has done in this case is it has clearly demarcated and deconstructed Sec 536(2). It has made a distinction between the first preliminary stage where the court is approached to admit a petition into winding up as opposed to actually admitting it. The court has held that there is a clear distinction contemplated under the Section whereby if the court has been approached to admit a company into winding up but the court has still not determined whether there is merit in that preliminary petition to actually admit it, then its clear that the court does not have the right to then interfere into the operation of the company or give consent to a transaction proposed by the company."

In fact the Karnataka High Court division bench went one step further to examine whether a court has any jurisdiction whatsoever, even in offering interim relief, if a winding up petition has been filed but not admitted. Sec 443 of the Companies Act lays down the power of a court on hearing a winding up petition. It allows the court to dismiss the petition, adjourn it, give interim relief etc.
The Division Bench interpreted that to mean the powers of the court to do kick in only after a winding up petition is admitted and duly advertised.

Vyapak Desai
Partner, Nishith Desai
"As in case of Sec 536(2), the jurisprudence as it stands to always talked about passing of interim orders anytime during the pendency of winding up petition. This order goes ahead and also interprets Sec 443 to say that the power to pass any such interim order only comes to the court after the pass an order on admission of winding up petition. The question now arises is till the time you admit a winding up petition, will a court now have the power to pass any interim order or only in relation to Sec 536(2) – I think the way 443 is interpreted in this judgment, it has much wider implications because somebody can use this to say that you cannot pass any interim order till the time the petition is admitted which would lead to circumstances where you want certain urgent relief pending the admission of the petition, you may not be able to do so."
 
Case law suggests that a court may permit an asset sale in the ordinary course of business even if a winding up petition has been filed but not admitted. The second key takeaway from this order is that the Division bench has made it clear that a strategic sale of shares is not equal to ordinary course of business.

When examining UB Holding's request to permit the sale of USL shares - the single judge bench of the Karnataka High Court accepted the company's argument that this sale was in the ordinary course of business. But the division bench disagreed.
H Jayesh
Founding Partner, Juris Corp
"There is a Bombay High Court judgment- way back in 1931- which says what is in the ordinary course of business prior to the winding up petition being filed and what is in the ordinary course of business after a winding up petition has been filed. Once the winding up petition is filed, all the bets are off because the jurisprudence which applies is different. Why I am giving that analogy is therefore what a pledgee should be doing under normal circumstances should be different from what a pledgee should be doing once the winding up petition has been filed. That equally applies to a mortgagee of any property who has self help rights which anyway they can go sell on their own and appropriate."

The third important key takeaway relates to the valuation adopted by UB for the sale of its stake in USL which was then approved by the Single Judge.

The Division Bench observed that Diageo had bought USL's shares from 4 group companies of UB Holding and that the transaction was done to acquire control. It held that the Single Judge order was incorrect in concluding that the price on the Stock Exchange was a reasonable price. It also noted that simply because SEBI, RBI and the CCI had approved the price, it didn't necessarily mean that it was in fact the actual fair value. The Division Bench concluded that the Single Judge should have appointed an approved valuer and heard the creditors affected by the sale before approving the price of the shares. 

Vyapak Desai
Partner, Nishith Desai
"While doing a transaction, one would tend to believe that if one authority has accepted a price to be a fair market price – one can have a different view but that doesn't mean this view is wrong. But here again parties will have to go into the aspects in further detail and look at the circumstances rather than rely upon formulae given in SEBI pricing or RBI pricing to say that if its fair as per SEBI, it is fair as per Companies Act- that may not be true."
 
H Jayesh
Founding Partner, Juris Corp
"Valuation should be such that it done from each entity's perspective. So if you are a promoter trying to sell of a stake held in two or three different entities, don't just do a single valuation of your stake. Here the borrower held 14% - what is the value of that in isolation should also have been considered. That apart, how much transparency can you can you bring in and sale valuation is also a function of that. I think that can make a significant difference."

The Court had no jurisdiction to allow the sale; the transaction was not bonafide and so the sale of shares stands void! Where does that leave Diageo? Well, experts say since Diageo bought the shares while the winding up petition was pending, some of the equitable reliefs may not be able available to it. Diageo's peril's aside, this order by the division bench is right up there on the series of judgments that have upheld the rights of unsecured creditors in the last couple of years! 

In Mumbai, Payaswini Upadhyay

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Call/Put Options Pricing: Hazy Future?

Friday: 10.30 pm, Saturday: 11.30 am

Sunday: 9:30am & 11.00pm

Published on Sat, Jan 11,2014 | 17:40, Updated at Sat, Jan 11 at 17:42Source : Moneycontrol.com |   Watch Video :

The year has changed and so has RBI. At least its position on Call & Put options has changed. Well partially! 3 months after SEBI cleared Call & Put options by amending the SCRA, RBI has also made way for their inclusion. The FEMA notification says 'shares or convertible debentures containing an optionality clause but without any option/right to exit at an assured price shall be reckoned as eligible instruments to be issued to a person resident outside India by an Indian company…'.

But hold the celebrations, because RBI being RBI has also imposed conditions. The notification is prospective - that was expected! No assured price exits – that too was expected!! Exit pricing will be de-linked from DCF – that too was expected!!! 'The Firm' broke that story way back in October. But that exit pricing would be linked to return on equity? That was not expected. So now we have two sets of pricing norms when it comes to the sale of shares by a foreign investor to Indian entity. How will this work? To answer that I have with me EY's Amrish Shah and Ashwath Rau of Amarchand Mangaldas.

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Video: Tata Crucible Business Quiz 2013 Kolkata finals

Jan 11, 2014, 05.45 PM IST

The campus edition of Tata Crucible goes to three nations, the corporate edition to 24 cities. Watch the video to find out more.

Tags  Tata Crucible, Kolkata, business quiz

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Video: Tata Crucible Business Quiz 2013 Kolkata finals

The campus edition of Tata Crucible goes to three nations, the corporate edition to 24 cities. Watch the video to find out more.

Like this story, share it with millions of investors on M3

Video: Tata Crucible Business Quiz 2013 Kolkata finals

The campus edition of Tata Crucible goes to three nations, the corporate edition to 24 cities. Watch the video to find out more.

Share  .  Email  .  Print  .  A+A-

The campus edition of Tata Crucible goes to three nations, the corporate edition to 24 cities. Watch the video to find out more.

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Video: Tata Crucible Corporate Quiz travels to Lucknow

Jan 11, 2014, 05.46 PM IST

The Tata Crucible Corporate Quiz celebrates a decade of sharing knowledge and bringing together intellectual India on one common platform called Tata Crucible.

Tags  Tata Crucible Corporate Quiz 2013, Quiz, Lucknow, knowledge

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Video: Tata Crucible Corporate Quiz travels to Lucknow

The Tata Crucible Corporate Quiz celebrates a decade of sharing knowledge and bringing together intellectual India on one common platform called Tata Crucible.

Like this story, share it with millions of investors on M3

Video: Tata Crucible Corporate Quiz travels to Lucknow

The Tata Crucible Corporate Quiz celebrates a decade of sharing knowledge and bringing together intellectual India on one common platform called Tata Crucible.

Share  .  Email  .  Print  .  A+A-

The Tata Crucible Corporate Quiz celebrates a decade of sharing knowledge and bringing together intellectual India on one common platform called Tata Crucible.

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Innovation made us strong in India; optimistic on '14: Rado

Innovation was the key to Rado's success in India in the past 50 years, believes Matthias Breschan, CEO, Rado. "We have to make sure that we also continue to innovate in order to stay strong for the coming 50 years," he adds.

He says the luxury watch brands that are suffering today were doing rather well quite a few years ago. But they increased their prices without having altered the substance, the value that is inside the product.

Also Read: Luxury brands step up battle for travelling shoppers

He doesn't see the need to move Rado upstairs because it is positioned between Tissot and Omega. "We have a strong brand in each price segment, so our objective is clearly that we always try to bring best value for the price segment that we are strong in," Breschan told CNBC-TV18.

According to him, 2012 was a historic record year. He does not see why 2013 will not be another record year. He is also very optimistic about 2014.

Below is the verbatim transcript of Matthias Breschan's interview on CNBC-TV18

Q: I want to understand from you if you talk about Rado's global expansion plans and global expansion strategy, what are your plans in India going forward in terms of expansion, in terms of growth, what are you looking at right now?

A: What made us very strong in the past 50 years in India was that Rado was permanently innovating. We have to make sure that we also continue to innovate in order to stay strong for the coming 50 years.

Q: In terms of the consumer market as a whole in India, the consumer story has been growing despite challenges that are present in the Indian market, despite the slowdown that we have been seeing. Specifically talking about the luxury watch segment, it takes around 50 percent of the overall luxury product market as a whole. Do you see that segment growing in India?

A: The brands that are suffering today are those that were accelerating several years back when some brands increased prices drastically without having changed the substance, the value of the product and of course you can always reposition your brand back. You need to make sure that if you change the price, you need to change at the same time the substance, the value that is inside the product. If you only change the price and tell people from one day to the other that now you are good because the product is more expensive is somewhat cheating the consumer and those brands that stay disciplined, try to bring in best substance, value for money, even when the market is getting more difficult they turn out to be very successful.

Of course the Swatch Group, we have a big advantage because we have a leading brand in each of the price segment. We have no need to move Rado upstairs because Rado is positioned right between Tissot and Omega. We have a strong brand in each price segment, so our objective is clearly that we always try to bring best value for the price segment that we are strong in.

Q: Last two years have been fairly challenging for the consumer market, as well to an extent people are rethinking there are inflationary pressures, people are rethinking large scale purchases. Why it is still happening? I want to understand from you last two years how did you segment and position your pricing accordingly to meet those challenges?

A: I must say for Rado as well as for the Swatch Group, 2012 was a historic record year and there is no reason that 2013 will not be another record year and we also stay very optimistic for 2014. I think the reason for this success is first of all because the Swatch Group is present in all different price segments. Brands like Rado that were traditionally always very strong in the price segment of 1,000-4,000 Swiss franc always try to improve the substance, offer that we have in this price segment, but never changed or moved out of the segment that Rado was traditionally stronger in.

Q: In 2013-2014 you will continue with the current pricing strategy, but given the fact that there had been some challenges, any major changes or any major repositioning of your strategy that you may look at?

A: Of course. The strong depreciation of rupee hurts us like everybody else, but there is nothing we can change about this.

Q: Any kind of change in your pricing strategy? You will continue to have products across the globe, across price segments; that is what you are looking at?

A: Exactly. No changes.

Q: How different is the Indian consumer from the global consumer?

A: The Indian consumer definitely became very knowledgeable and demanding in the past 10-15 years in terms of watches, because of course not only the perception of watches changed a lot, the watches are not simply a tool anymore to tell the time, but it became an accessory that says something about your personality, your lifestyle, your preferences, your values and the consumer is more and more educated also about technical aspects in terms of materials on one side and movements on the other. That had changed the whole perception at the market in the past 10 years and that helps us to develop Rado so well in India.

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