India Business Journal Magazine April 2015

 

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India Business Journal Online Magazine April 2015

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CONTENTS YOUR GATEWAY TO INDIA INC. APRIL 2015, Rs 35 EDITOR AMIT BRAHMABHATT ASSISTANT EDITOR SHRIVATSA JOSHI ADVERTISING MANAGER WILLIAM RUMAO GRAPHIC DESIGNER RENUKA SAWANT ADVISORY PANEL SHASHIKANT PATEL JITENDRA SANGHVI REGISTERED OFFICE 102, RAJASTHAN TECHNICAL CENTRE, PATANWALA ESTATE, GHATKOPAR (W), MUMBAI 400 086. INDIA PHONE: 6703 0250/6703 0251 FAX: +91 22 6703 0251 EMAIL: mail@ibj.in BUREAU CHIEFS AHMEDABAD: B D RAWAL CHENNAI: G JACINTH DELHI: RANJANA ARORA KOLKATA: DIPANKAR SEN COVER STORY LEG-UP FOR LED The government's ambitious energy conservation initiative is set to brighten up prospects for the LED lighting industry. 26 Spotlight ..........36 Clean Profits: FMCG companies are aligning their top hygiene brands with the Clean India Campaign. Face To Face ..........38 "We are At The Forefront Of Product Development": Tilokchand Kothari, CMD, Visagar Polytex Corporate Feature ..........40 Cupid's Comeback: The Nashikbased contraceptivemaker is back with a bang with a focus on its female condom and highermargin markets. Focus ..........42 Sweeping Changes: New tweaks proposed in EPF and EPS schemes would make the retirement fund relevant to ground realities. Management Mantra ..........44 Lead From The Front: Nithin Kamath, Founder & CEO, Zerodha Global Wrap-Up ..........46 A quick round-up of news and current affairs across the world Readers' Lounge ..........48 Catch up with new book launches - The Modi Effect - Restart - Green Signals Viewpoint New insurance Act News Round-Up A brief on news, tie-ups, appointments and awards ..........4 ...........6 Land Acquisition Bill ..........12 A Visionary Law: The new land acquisition Bill seeks to create jobs for the youth, provide relief for the weaker sections of society and trigger the country's economic development, writes Kalraj Mishra. Corporate Reports New Dynamics: Viraj Profiles' SRM plant and inland container depot are set to be a game-changer for the world's second-largest stainless steel long products manufacturer. .........14 Big Splurge: Tata Motors' Rs 7,500crore rights issue proceeds will fund new commercial and passenger vehicle launches and put the auto giant back into the fast lane. .........18 On A U-Turn: SsangYong, the Mahindra Group's South Korean arm, is banking on Tivoli to rev up its turnaround strategy. ..........20 Taxation ..........22 An Unkind Claim: Tax department's over Rs 10,000-crore demand from Cairn Energy for an eight-year-old transaction flies in the face of the NDA government's supposedly investor-friendly credentials. Straight Talk ..........24 "Not Healthy To Bunch Stocks To The Year-end": Aradhana Johri, Secretary, Department of Disinvestment 3 APRIL 2015 Printed and published by Amit Brahmabhatt for Issues Analysis and Research Pvt Ltd and published from 102, Rajasthan Technical Centre, Patanwala Estate, Ghatkopar (W), Mumbai 400 086 and printed at Graphtone (India) Pvt. Ltd., A1/319, Shah & Nahar Indl. Estate, Lower Parel, Mumbai 400 013 Processed at Graphtone (India) Editor: Amit Brahmabhatt Volume X, No 10 Issue date April 1-30, 2015 Released on April 1, 2015 EDITORIAL ASSOCIATE Press Trust of India MARKETING ASSOCIATE Star Talk ..........50 Forecast by Bejan Daruwalla Knowledge Zone ..........52 - Ashu Suyash, MD-designate, CRISIL - Public Debt Management Agency - Spiritual Corner: Worries Hot Seat ..........54 Doris Goh, Chief Marketing Officer, Alila Hotels and Resorts INDIA BUSINESS JOURNAL Milage ads & events SUBSCRIPTION RATES India Rs 420/- for 1 year (12 issues) Overseas Rs 1,860/- or US$32 for 1 year (12 issues) Add Rs 50/- for outstation cheques www.indiabusinessjournalonline.com

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VIEWPOINT Insuring A Bright Future, Finally T Within days of passage of the vital Bill by the Parliament, there is a buzz in the insurance sector. It took more than six years for the vital insurance Bill to get enacted. Both the BJP and the Congress have opposed the Bill when in Opposition and tried to push it when in government. It only reflects a lack of genuine bipartisanship even on issues where there is no real divergence of opinion. 4 APRIL 2015 he Parliament finally passed the Insurance Laws (Amendment) Bill, 2015, last month, brightening the prospects of the capital-starved sector. The vital legislation raises the overseas investment limit in domestic insurance companies from 26 to 49 per cent. The enactment of the Bill also raises the foreign investment limit in the pension sector. The positive spinoff of the amendments to the insurance law into the pension sector is because foreign investment ceiling in the pension sector was linked to that in the insurance sector when the Pension Fund Regulatory and Development Authority Bill was enacted in 2013. Besides facilitating a higher cap, the new insurance law will also give more powers to the insurance regulator, the Insurance Regulatory and Development Authority of India, in deciding on commissions and imposing higher penalties on companies for any irregularities. The law also proposes to hold insurance companies responsible for any wrongdoing by their agents. It also allows foreign reinsurance companies to set up wholly-owned branches in the country. Analysts point out that the 49 per cent composite cap, comprising both FDI and FII, will allow foreign partners in insurance joint ventures to raise their stakes and new foreign companies to enter India. It will also allow cash-strapped domestic promoters to dilute their stake in favour of private equity and other investors. For some of the more established players, it also opens up possibilities for initial public offers as well as capital for acquisitions, which will allow consolidation in the industry. Within days of passage of the vital Bill in both houses of the Parliament, there is a buzz in the insurance sector. Many foreign joint venture partners Britain's Standard Life (HDFC Life), Mitsui Sumitomo of Japan (Max Life), UKbased Bupa (Max Bupa Heath Insurance) and Australia's IAG Group (SBI General Insurance) - are keen on raising their respective stakes in Indian companies to 49 per cent. Besides, the UK's Llyod's and other top global reinsurers, such as Munich Re, Swiss Re, Hannover Re and SCOR have evinced interest in starting operations in India. The increase in the overseas investment limit is a much-needed reform primarily because insurance is a highly capital-intensive sector. Insurance companies, needless to say, require huge capital to expand their business and also adequately provide for all claims against policies issued. Such large-scale capital infusion can come only from specialist foreign insurers. The industry has been struggling with foreign equity limited to 26 per cent and most domestic promoters in existing joint ventures not in a position to invest the requisite additional capital. One indicator of the inability to grow is the first-year premium of life insurers. It was Rs 73,777 crore in 2014, below Rs 84,726 crore in 2013 and Rs 86,698 crore in 2012. The dismal first-year premium numbers of life insurers do reflect in the country's poor insurance penetration at a mere 3.9 per cent of the country's GDP as against the global insurance penetration average of over 6 per cent. It took more than six years for the vital insurance Bill to get enacted. Both the BJP and the Congress have opposed the Bill when in Opposition and tried to push it when in government. It only reflects a lack of genuine bipartisanship even on issues where there is no real divergence of opinion. Finally, good sense seems to have prevailed. Will this bonhomie extend to other vital reforms? The prevalent mood does not inspire that possibility. INDIA BUSINESS JOURNAL

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NEWS ROUND-UP MISCELLANEOUS Government, RBI in monetary policy pact The Centre and the RBI have signed an agreement, under which the central bank will prioritise controlling price rise above other objectives of the monetary policy interest rate and foreign exchange rate. The agreement has formalised a policy the central bank had been following since last January. The RBI is committed to bringing inflation below 6 per cent by January 2016. Under the agreement, the central bank will be deemed to have missed its target if consumer inflation remains above the 6 per cent level for three consecutive quarters during 2015-16 or if it remains below 2 per cent for three consecutive quarters during 2016-17. 90 with a total wealth of $294 billion. In comparison, the US has 536 billionaires, followed by 213 from China and 103 from Germany. Over 50% of big projects facing cost overruns More than half of the big infrastructure projects related to road transport and highways, power and railways are into cost and time overrun, according to a government submission. The Ministry of Statistics and Programme Implementation is monitoring 710 projects, including 510 projects of road transport and highways, power and railways sector. Of these 510 projects, 100 are showing time overruns and 175 are showing cost overruns with respect to their original project implementation schedules. Spectrum bonanza for govt, burden for others The government raised a record Rs 1,10,000 crore from sale of mobile phone airwaves in its latest telecom spectrum auction after 19 days of fierce bidding. The auction amount, topping Rs 1.06,000 crore the government had raised in 2010, is a third higher than what it expected to raise. Victorious bidders need to pay a quarter to a third of the winning price initially and the rest by 2027. Spectrum revenue is vital for the government to plug its fiscal deficit. Experts have warned that aggressive bidding as a result of piecemeal quantum of spectrum available for auction is set to raise telecom tariffs. for 2015. US tops the charts followed by China and Germany. However, there are only five Indians figuring among the 100 wealthiest across the world. Registering a significant jump over the last year when there were 56 billionaires with a collective net worth of $191.5 billion, the number of Indian billionaires has increased to India ranks fourth in global billionaires' list India is home to the fourthlargest number of billionaires across the world, according to the latest Forbes rich list CAD for Q3 of 2014-15 slips to 1.6% The country's Current Account Deficit (CAD) eased to 1.6 per cent of the Gross Domestic Product (GDP) APPOINTMENTS Kerala finance minister K M Mani has been appointed as chairman of the Empowered Committee of State Finance Ministers working on the Goods and Services Tax. Shashank Priya, a former Central Excise and Service Tax commissioner, has been named Goods and Services Tax commissioner. Tata Group EmeritusChairman Ratan Tata has been appointed as chairman of the Kaya Kalp Council, which will advise on business reengineering of the Indian Railway. 6 APRIL 2015 INDIA BUSINESS JOURNAL

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Verbatim... MISCELLANEOUS during the third quarter (Q3) of the current financial year, compared with 2 per cent in the previous quarter. However, the CAD number doubled from the figure recorded a year earlier. The CAD hit $8.2 billion between October and December 2014 against $10.1 billion in the previous quarter despite a widening merchandise trade deficit caused by slowing exports and rising imports. The CAD in the third quarter of the 2013-14 was to the tune of $4.2 billion, or 0.9 per cent of the GDP. output. The new coal law will also have an enabling provision for game-changing commercial mining of the fuel by the private sector. The MMDR Bill also provides for district mineral foundations for rehabilitation and welfare of project-affected people and 50-year leases. “Perhaps at some time, India has to take a decision to distinguish between those who can afford to pay and those who cannot (for LPG).” Narendra Modi PRIME MINISTER Indian Railway, LIC in funding agreement Indian Railways has signed an MoU with LIC to raise Rs 1,50,000 crore over the next five years beginning this April. The investment by LIC, to be made through Rs 30,000 crore of bonds issued annually by rail entities such as Indian Railway Finance Corporation, would be channelled by the railways in capacity augmentation projects. The bonds will come with a fiveyear moratorium on interest and loan repayment. LIC's funding is a part of Railway Minister Suresh Prabhu's strategy to finance a part of the total Plan Budget of Rs 1,00,011 crore through extra-Budgetary resources. "India is a bright spot on a cloudy global horizon and has the potential to double the size of its economy by 2019 compared to 2009." Christine Lagarde MANAGING DIRECTOR, IMF Over 450 cos fail to meet woman director norm As many as 451 listed companies listed on the National Stock Exchange (NSE) are still to meet a deadline to appoint at least one woman director on their board by end of this month to meet the Corporate Governance Code introduced by the SEBI about a year ago. Data compiled by Prime Database shows that many large-cap companies and PSUs are still to appoint at lease one woman director on their boards. At least 27 PSUs are yet to meet this guideline as also large-cap companies, like L&T, Hero MotoCorp and all the three listed Adani Group entities. "The future is bright for JLR. But we should not run before we can walk." Ratan Tata CHAIRMAN-EMERITUS, TATA GROUP SEBI norms out for global finance centres The SEBI recently announced guidelines for International Finance Services Centres, the first of which will be the Gujarat International Finance Tec-City (GIFT). These economic zones will compete with financial hubs, like Singapore and Dubai. The guidelines allow foreign firms to raise capital within the economic zone via depository receipts and debt securities and require stock exchanges to do business with a relatively low level of capital. The regulator also allowed an easier pricing formula for banks converting debt to equity of companies in distress. Coal, mine Bills get Parliament's approval The NDA government last month pulled off a legislative breakthrough by securing Parliamentary passage of the Coal Mines (Special Provision) Bill, 2015, and Mines and Minerals (Development and Regulation) (MMDR) Amendment Bill, 2015. The enactments together usher in an era of transparent e-auction of diverse mineral blocks, potentially giving a boost to the country's faltering mining INDIA BUSINESS JOURNAL "I find it very shameful that in this country, most of the listed companies can't find even one woman who is competent enough to be on their board." U K Sinha CHAIRMAN, SEBI "Big-bang reforms in robust democracies such as India with so many veto centres are the exception rather than the rule." Arvind Subramanian CHIEF ECONOMIC ADVISOR APRIL 2015 7

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NEWS ROUND-UP CORPORATE Sun Pharmaceutical to buy GSK's opiate biz Sun Pharmaceutical, the country's largest drug-maker by sales, has agreed to buy GlaxoSmithKline's (GSK) opiate business in Australia to strengthen its pain management portfolio. The Mumbai-based company has not disclosed the financial details of the deal. GSK's opiate business consists of analgesics made from raw materials found in opium poppy plants and includes two manufacturing sites in Tasmania and Victoria. The transaction, subject to requisite regulatory and other approvals, is expected to close by this August. The acquisition is a part of Sun Pharmaceutical's strategy of building its portfolio of opiates and accessing strong capabilities in the segment. McNally till 2012. He was instrumental in making the Williamson Magor Group the largest bulk tea producer in the country. Videocon to enter e-commerce, m-banking Videocon Telecom plans to foray into e-commerce and mobile banking businesses. The telecom service provider recently clarified that it did need additional spectrum licences for expansion. The company has a pan-India licence for internet services, while it has also got licensed spectrum in seven service areas to provide mobile services. Under a new business venture, Videocon Telecom has already started providing services, including bulk messaging solutions, virtual mobile number solution, virtual PBX, audiovideo conferencing and fibre to homes. The business lines will include Videocon's foray into security solutions, e-surveillance and Android Waaree Energies' Surat plant in Gujarat Ola acquires TaxiForSure for Rs 1,240 cr Mobile app cab service Ola (formerly known as Olacabs) has acquired rival TaxiForSure for Rs 1,240 crore. The acquisition is likely to pose stiff competition to other mobile app-based cab providers, like Uber and Meru. With this deal, Ola, founded in January 2011 by IIT Bombay alumni Bhavish Aggarwal and Ankit Bhati, has further deepened its footprint with TaxiForSure's operator-led model. TaxiForSure, founded in June 2011 by IIM Ahmedabad graduates Raghunandan G and Aprameya Radhakrishna, has 1,700 employees and operates over 15,000 vehicles in 47 cities. Ola and TaxiForSure will continue to operate as separate entities. In the biggest acquisition in the defence sector, RInfra has pipped a number of other suitors, including the Hero Group and Mahindra & Mahindra (M&M). RInfra will buy 18 per cent stake in the company at Rs 63 per share and make an open offer for an additional 26 per cent at Rs 66 per share. The company will buy an additional 7.1 per cent from promoters if the open offer fails. Engineering. A fighter by nature, Mr Khaitan was involved in developmental matters of Eveready and Managers paid 11.7 times more than workers The pay gap between senior managers and lower-level workers has surged worldwide, according to a survey by global management consultancy Hay Group. Among the BRIC countries, India has seen a maximum jump in differences in pay scales from 2008 to 2014 from 7.7 to 11.7 times, the survey adds. China too has seen an increase in the gap from 11.8 times in 2008 to 12.7 times in 2014. On the other hand, the gap in salaries in Russia has come down from 8.7 to 8.4 times, while in Brazil it has slightly moved up from 7.3 to 7.4 times. TIE-UPS Natco Pharma has signed a licensing agreement with US-based Gilead Sciences to manufacture and sell generic versions of Sovaldi and combination therapies using the active ingredient in the medicine in 91 developing countries. Bharti Airtel is collaborating with China Mobile for growing fourth-generation mobile data services. Mahindra Two Wheelers and Paytm have entered into a partnership for online retailing of Mahindra Centuro motorcycles and Mahindra Rodeo UZO range of scooters. Industrialist Deepak Khaitan passes away Renowned industrialist Deepak Khaitan, 59, the vice-chairman of the Rs 5,000-crore Williamson Magor Group, passed away in Kolkata last month. Mr Khaitan, the eldest son of group patriarch Brij Mohan Khaitan, was on the board of every group company -Eveready Industries, McLeod Russel, McNally Bharat Engineering and Kilburn Cholamandalam Investment and Finance Company has tied up with Cognizant to digitise its vehicle finance business operations, from loan origination through recovery, to reduce costs, improve business agility and deliver an integrated customer experience. Asian Paints has signed up with the Andhra Pradesh government for setting up a greenfield plant near Visakhapatnam. Auto component suppliers Anand India and FederalMogul Powertrain have entered into an agreement to convert the sealing and piston ring businesses of Anand into joint venture RInfra beats Hero, M&M to clinch Pipavav Billionaire Anil Ambani-led Reliance Infrastructure (RInfra) is buying Pipavav Defence and Offshore Engineering for Rs 819 crore. 8 APRIL 2015 INDIA BUSINESS JOURNAL

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CORPORATE and iOS platform-based applications. Murdoch's News Corp to buy VCCircle Rupert Murdoch-led News Corp has signed a definitive agreement to acquire media firm VCCircle Network for an undisclosed sum. Terms of the acquisition, which is expected to close soon, were not disclosed. This is the third investment by News Corp in India. Previously, it had invested in financial advisory start-up firm BigDecisions.com and realty portal PropTiger.com. VCCircle Network is owned by Mosaic Media Ventures and has about 100 employees across India, with its headquarters in Noida, Uttar Pradesh. seven months. He had invested in online marketplace Snapdeal last August, followed by jewellery etailer Bluestone, online furniture store Urban Ladder and auto classifieds portal CarDekho. MNCs' Indian arms get tax relief from court The Delhi High Court recently provided a major relief to domestic arms of multinational companies (MNCs) and restrained the Income Tax Department from taxing them. The court asked the tax department to desist from treating MNC subsidiaries' advertising, marketing and sales promotion (AMP) expenses in the country as those for brandbuilding for parents abroad and attributing extra taxable income. The ruling will immediately benefit Sony India, Canon India, LG Electronics, Haier Appliances, Reebok India and Casio India, among others, and have a bearing in all related cases in the present and future as well. RBI blocks Tata's plan to buy DoCoMo's stake The RBI has rejected Tata Sons' proposal to buy NTT DoCoMo's stake in Tata Teleservices for about Rs 7,250 crore as it is not in conformity with the FEMA regulations. Last November, Tata Sons had applied to the RBI to purchase DoCoMo's 26.5 per cent stake at Rs 58.04 per share, totalling about Rs 7,250 crore, half the price which the Japanese company had paid in 2009. According to the 2009 agreement with the Tatas, NTT was to get the higher of either half of the original investment (Rs 58.04 per share) or a fair value (Rs 23.34 per share). the capital market for three years. Jog Singh and A S Lamba, the two members of the SAT, were of the view that the regulation had been computing services to customers in India applied to the DLF case by the whole-time member in disregard of the due procedure. However, Justice J P Devdhar, the lone dissenting member of the tribunal, upheld the SEBI's conclusions that DLF had concealed material information, misled investors and violated Prohibition of Fraudulent and Unfair Trade Practices. SAT sets aside SEBI's order against DLF The Securities Appellate Tribunal (SAT) last month quashed a SEBI order that had barred real estate major DLF and six top executives from accessing operations - Federal-Mogul Anand Sealings India and Anand I-Power. Snapdeal has partnered with IndiVillage, an entity that runs a rural BPO, to allow sellers on its platform to outsource their imaging, tagging, transcription and content development requirements from IndiVillage. Realty company Vatika Group has tied up with multiplex operator PVR to open and operate 26 screens in its three townships in Gurgaon, Jaipur and Ambala at an estimated investment of about Rs 300 crore. Bharti Airtel has partnered with Amazon Web Services to offer the latter's cloud APPOINTMENTS Bengaluru-based Zenith Software, a global IT solutions and services company, has appointed Anoop Singh Sengar as its president and deputy CEO. Suresh Krishna was recently named the chairman of TV Sundram Iyengar and Sons, the holding company of the TVS Group. Colin MacDonald, the former deputy managing director of Renault Nissan Automotive India, has taken over as the carmaker's managing director. Ford plans to triple exports from India Ford India is looking at increasing exports from the country by three times over the next five years. The company exports about 70,000 cars annually. The decision follows close on the heels of the Indian subsidiary of the US automobile giant getting its $1-billion (about Rs 6,500 crore) plant in Sanand, Gujarat on stream last month. The Sanand plant has an installed capacity of 2.4 lakh vehicles and 2.7 lakh engines annually. Ford India's Chennai and Sanand facilities will have a total installed capacity of 4.4 lakh vehicles and 6.1 lakh engines every year. APRIL 2015 Ratan Tata backs Paytm with money, advice Tata Sons Chairman-Emeritus Ratan Tata has now thrown his weight behind mobile payments and commerce platform Paytm, continuing his tryst with the country's burgeoning consumer internet segment. The 76-year-old businessman recently made an undisclosed investment in the company and will take up an advisory role there. With his latest investment in Paytm, Mr Tata has now made five investments in homegrown consumer internet companies in the last INDIA BUSINESS JOURNAL 9

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NEWS ROUND-UP FINANCE Easy norms for affordable home loans The RBI eased norms for home loans up to Rs 10 lakh in a move to provide a boost to affordable housing. The revised norms allow banks to include Stamp Duty, registration and other documentation charges to the cost of a unit for calculating the loan-to-value ratio in case of home loans up to Rs 10 lakh. These charges form around 15 per cent of the cost of a house and place a burden on borrowers. The RBI has also allowed banks to disburse loans according to payment stages in cases of projects sponsored by government and statutory authorities. reach of the insurance sector. Among the BRICS countries, insurance penetration of South Africa is 15.4 per cent, China 3 per cent; Brazil 4 per cent and Russia 1.3 per cent. State-run banks corner lion's share of NPAs Nonperforming assets (NPAs) of banks touched a whopping Rs 3,00,611 crore as of December 2014 due to sluggishness in growth. Of the total NPAs, Rs 2,62,402 crore belonged to nationalised banks, and private sector banks clocked Rs 38,209 in NPAs. Total gross advances of nationalised banks as in December 2014 was Rs 46,49,843 crore while total advances of private sector banks was at Rs 16,77,875 crore. Key reasons for increase in NPAs are stalled projects, sluggishness in domestic growth in the last few years and slowdown in the global economy. India lags world in insurance penetration Insurance penetration in the country is at 3.9 per cent way below the world average of 6.3 per cent. Insurance penetration, measured as the ratio of premium to Gross Domestic Product, was 3.1 percent for life insurance and 0.8 percent for general LIC keen on buying 40-year govt bonds Life insurance Corporation of India (LIC) is keen on buying 40-year bonds which the government is set to issue this year. "This is a very positive move from the government that long-duration papers will be issued. Definitely, there will be good demand for such paper, especially from life insurers, and I am sure that LIC will take advantage of this," LIC Chairman S K Roy said recently. Last month, the Finance Ministry had said that it would be issuing 40-year bonds in the new financial year, making it the longesttenure bond sale from the government so far. insurance sectors last year. The level of insurance penetration depends on a large number of factors, like executive director of Bank of Baroda. Prior to his elevation, he was general manager of the bank and heading the North Gujarat zone. The government has appointed R P Marathe, a former general manager of Bank of Baroda, as an executive director of Bank of India. Kishore Piraji Kharat has assumed charge as executive director of Union Bank of India. Harideesh Kumar B, a former general manager of Vijaya Bank, has taken over as executive director of Canara Bank. level of economic development of the country, extent of savings in financial instruments and size and Senior financial services professional R M Vishakha has been named managing director and CEO of IndiaFirst Life Insurance Company. Selective capitalisation may hit small banks: S&P Standard & Poor's (S&P) has lauded the government's move to capitalise State-run banks selectively. Welcoming the step, the global rating agency has cautioned that it may impact the growth of smaller lenders who have been left out. "In our view, incentivising efficiency is a good long-term strategy. However, in the short term, it does accentuate capital constraints for some public sector banks," said S&P. Last month, the government announced a Rs 6,990-crore capital infusion wherein nine better-performing lenders, like State Bank of India, Bank of Baroda, Canara Bank and Punjab National Bank, were given priority in capital allocation over others. TIE-UPS The RBI has signed a $400-million, currencyswap agreement with the Central Bank of Sri Lanka for three years that will allow the island nation to draw the amount in dollars or euros in multiple tranches. AWARDS Bank of Baroda has been conferred with three awards at the IBA Banking Technology Awards 201415 at a function held recently in Mumbai. The bank was adjudged first in Best Financial Inclusion Initiative, first runner-up in Best Use of Technology in Training, Human Resources and e-Learning Initiatives and first runner-up in Best Use of Data. APPOINTMENTS Ranjan Dhawan, the senior-most executive director of Bank of Baroda, has been given the additional charge of the bank's MD and CEO. K V Rama Moorthy recently assumed charge as 10 APRIL 2014 INDIA BUSINESS JOURNAL

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PUBLIC SECTOR Coal India may cross 1-bt output by 2020 With the production of thermal coal on the rise, the government is hopeful that State-owned Coal India will surpass its 1billion tone (bt) excavation target by 2020. Power and Coal Minister Piyush Goyal said recently: “I am hopeful that Coal India would exceed targets set for it by 2020.” Even as the minister is optimistic of Coal India achieving its target by 2020, the PSU is likely to miss the production target of 507 million tonnes (mt) for the current financial year by 10 mt on account of various delays in operationalising mines. country's crude oil import bill has skyrocketed from $112.1 billion in FY11 to $155.7 billion in FY14. Top OVL executives have added that the company is in discussion with several entities overseas but did not divulge details. GIC Re set to issue nuclear safety bonds General Insurance Corporation of India (GIC Re) has floated expression of interest to engage professional institutions to work out solutions to issue nuclear safety bonds. GIC Re, the country's lone reinsurance company, has proposed to issue Nuclear Safety Bonds to garner a part of insurance capacity required for the proposed Indian Nuclear Insurance Pool. Nuclear risks are of low frequency but of high severity nature, and worldwide such risks are covered by pooling arrangements. The government's nuclear insurance pool is aimed at getting many companies to pool in resources to insure nuclear reactors. 'ONGC most profitable, BSNL worst performer' Oil explorer ONGC was the country's most profitable PSU in 2013-14, while telecom major BSNL was the worst performer, according to the Economic Survey GAIL junks Paradip LNG terminal plan GAIL India has dropped plans to set up a Rs 3,108-crore floating LNG import terminal in Paradip, Odisha. The nation's largest natural gas distributor was looking for a strategic partner for the 4-mtpa floating LNG terminal off the Paradip coast. But with a partnership with Royal Dutch Shell and GDF Suez of France coming through for a similar project off Kakinada, Andhra Pradesh, the Paradip project has been axed. Besides the Kakinada project, Petronet LNG, a company in which GAIL has 12.5 per cent stake, is setting up another 5-mtpa facility in Gangavaram, Andhra Pradesh. 2014-15. The pre-Budget survey has noted that net profit of 163 profit-making Central public sector enterprises (CPSEs) in 201314 was Rs 1,49,164 crore, while the net loss of 71 lossmaking CPSEs was Rs 20,055 crore. ONGC, Coal India, NTPC, IOCL and NMDC were the top five profit-making CPSEs, whereas BSNL, Air India, Hindustan Photofilms Manufacturing, Hindustan Cables and State Trading Corporation of India were the top five loss-making CPSEs in 2013-14. ONGC could fetch Rs 13,217 crore, while a 10 per cent sale in NMDC could generate Rs 5,038 crore. The government could get Rs 3,129 crore from a 5 per cent share sale in BHEL and Rs 1,190 crore from a 10 per cent stake sale in National Aluminium Company, the minister said without elaborating on the timing of the share sale. AWARDS NMDC has been bestowed with the National Safety Award (Mines) for 2011 for its Bailadila Iron Ore Mine for the longest accident-free period. NMDC Chairman and Managing Director Narendra Kothari received the award from President Pranab Mukherjee at the National Safety Awards (Mines) ceremony in New Delhi last month. Central, State PSUs allotted 38 coal mines The government has allotted 38 coal blocks to Central and State PSUs, including power majors NTPC, Damodar Valley Corporation and steel giant SAIL. The move comes on the heels of the auction of 33 coal blocks to private companies with the government garnering over Rs 2,00,000 crore. While the Centre had originally earmarked 43 mines for PSUs, due to poor response for some mines, the list was later pruned to 38 blocks. The mines include both operational and ready-tooperate blocks. All the blocks allotted are for the power sector, barring one given to SAIL. APRIL 2014 OVL eyes buys in Africa, Latin America ONGC Videsh (OVL), which is celebrating its golden jubilee, is looking for acquisitions in Latin America and Africa. The overseas subsidiary of ONGC is shortly expected to commence the process of finalising acquisition of prolific assets overseas that are in producing state. OVL's buyout plan comes amid the government's move to cut down India's ballooning crude oil import bill and move towards energy security. The TIE-UPS Sahaj e-Village has entered into an agreement with Indian Oil for selling 5-kg, free-trade LPG Indane cylinders through its common service centres. INDIA BUSINESS JOURNAL 4 PSU stake sale to fetch govt over Rs 22,500 cr The government expects to mop up about Rs 22,574 crore from stake sale in four Staterun companies, including ONGC and NMDC, according to Minister of State for Finance Jayant Sinha. Mr Sinha has added that a 5 per cent stake sale in 11

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LAND ACQUISITION BILL A Visionary Law The new land acquisition Bill seeks to create jobs for the youth, provide relief for the weaker sections of society and trigger the country's economic development, writes KALRAJ MISHRA. he new land acquisition Bill, petitions, different courts had given GUEST COLUMN 2015 (The Right to Fair Com different verdicts in different cases of pensation and Transparency in land acquisition. Land Acquisition, Rehabilitation and There was no provision for obtainResettlement (Amendment) Bill, 2015), ing consent of farmers initially because is a result of a long struggle by farmacquisition was being done on the preers and other organisation. The law, in text of public interest. But the term pubits earlier form was against farmers lic interest was also not defined propand forcefully evicted them from erly. As such, projects relating to hostheir land. pitals, roads, schools, dams, canals A few people and organisations still and other types of irrigation were believe that the new Bill is against the treated as public interest. But projects interest of farmers. However, it is not relating to industrial corridors and intrue, and it is essential to know the dustrial development were treated developments in the land acquisition The author is a veteran BJP leader differently. Act since it was adopted in 1894. and Union MSME minister. Widespread misuse In 1894, the British government in The situation changed with the beginIndia passed a law which empowered the government to ning of the era of economic reforms and globalisation. occupy natural resources and land in the country. Conse- Declaration of 10,000 acres as cantonment area for the quently, the government was empowered to acquire land Army was treated as a project in public interest. Similarly, in the name of public interest, and this practice continued acquisition of 6,300 acres for the Delhi airport to ensure even after independence. Initially, there was no rule about development of infrastructure was also treated as a matter compensating farmers for acquiring their land. Later on, a of public interest. provision was enacted for compensation, but there was Prior to 2013, the land acquisition Act was quite conno clarity on the compensation amount. Many land owntroversial as farmers' lands were acquired forcibly. A large ers had moved court against acquisition of their land for number of farmers were displaced, but no action was initiBhakra Nangal, Tehri and other projects. Hearing these ated to rehabilitate them. After independence, nearly 6 crore people have been displaced from their houses and agricultural lands, but they were paid very meagre amount as compensation. In the colonial era, the British exploited farmers by displacing them from their land simply to exploit land and mineral resources of the country. After independence, in the Pandit Nehru era, the public sector was treated as the only way for development. But in this model of development, farmers were least benefited. With the dawn of economic reforms, the private sector became equally important. During this period, the earlier Land Acquisition Act, 1894, was frequently used, and a large area of land was acquired for establishing special economic zones. The new Bill makes land available for infrastructure to boost the Amid the problem of large-scale displacement of farmers, a new draft law was prepared in 1999 by vital manufacturing sector and create more jobs. 12 APRIL 2015 INDIA BUSINESS JOURNAL T

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the NDA government led by Atal Bihari Vajpayee, wherein suggestions from different organisations were included and welfare of all the sections of society was kept in mind. But a few Cabinet colleagues opposed the draft law on the point of consent of farmers. They were of the view that development projects could not be implemented if farmers refused to give consent. Therefore, the draft law of 1999 remained as a draft. National interest The land acquisition Act of 2013 was prepared after long discussions and considerations. The Act mandated consent of 80 per cent of land owners in case of private projects and 70 per cent in case of government projects before acquisition of their land. Besides, a handsome amount of compensation was assured to farmers. The BJP fully supported the land acquisition Act of 2013 as the main opposition party. The question now arises as to why the Act of 2013 was modified. The Congress government during its rule from 1947 to 2012 used the land acquisition Act to exploit farmers and the poor. But to project itself as a farmer-friendly party that is sympathetic to the poor, it complicated the Act and made it impossible to acquire land under the provisions of the Act of 2013. During the UPA regime, Anand Sharma, the then commerce minister, had written a letter to the then prime minister on May 22, 2012, stating that the land Bill of 2013 would adversely affect construction, industrialisation and urbanisation. He had also pointed out that the cost of land would get out of reach and its acquisition would be impossible. Further, 32 chief ministers, including a few from the Congress-ruled States had asked for some changes in the Act of 2013. Then why is there so much of opposition to the land acquisition Bill, 2015? In fact, there is a lot of falsehood behind this opposition. In the present economic condition, it is not possible for the government to roll back the issue of development. The land Act of 2013 of the UPA government had exempted 13 Acts related to vital national infrastructure from the 2013 law. Now, the government, led by Narendra Modi, has brought these 13 Acts into the ambit of the new Act. Consequently, poor farmers will get compensation for their lands acquired under these 13 Acts. The government has also included nine amendments in the new Bill to honour the sentiments of Honorable Members of Parliament (see box). The changes brought about in the new Act reflect the feelings of most of the chief ministers. Besides, these amendments will trigger the country's development by making available necessary infrastructure. In fact, it is a positive step for development. The government's Vision 2022 envisages houses and toilets for all Indians, apart from envisioning more schools and technical centres for INDIA BUSINESS JOURNAL Amendments In New Bill After independence, misuse of old land acquisition law resulted in displacement of nearly 6 crore people from their houses and farm lands. One person of the affected family will be provided government job. One km of area on both the sides of a road and a railway track will be acquired for industrial corridor and will be developed by a government agency. Land will not be acquired for development of social infrastructure. Land will not be acquired for private schools and private hospitals. Land acquisition will be done only for government institutes and corporations. Compensation amount will be deposited in a single account of a beneficiary. Officials violating the law will be prosecuted in the court of law. Farmers will have the right to file complaints, if any, in there respective districts. Only barren land will be acquired. skilling India. With the Bill of 2015, the government will be in a position to make land available for translating Vision 2022 into reality. The new Bill is a result of the development vision of Mr Modi, which will create jobs for the youth and provide relief for the poor, farmers, Dalits and tribals. APRIL 2015 13

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CORPORATE REPORT AMIT BRAHMABHATT uge containers are piled up all over the place. Forklifts and reach stackers are moving the containers to and from trucks parked nearby. Large warehouses all around house many more containers, some empty and some others packed with goods. The Customs clearance officials nearby are swiftly checking documents of shipments. The place could very well be a busy part of a thriving port. However, the nearest port - Jawaharlal Nehru Port Trust (JNPT), India's busiest port H New Dynamics Viraj Profiles' new SRM plant and its recently-opened inland container depot are set to be a game-changer for the world's second-largest stainless steel long products manufacturer. - is about 150 km from this place. This buzzing place is Vaishno Container Terminal, the inland container depot (ICD) in Tarapur, Maharashtra. The sprawling ICD which started operation last August is already a beehive of activity. Spread over 11 acres, the depot, with a warehousing space of 33,000 sq ft, has a capacity to handle up to 5,000 teu (twenty-foot equivalent unit) of containers per month. A part of Vaishno Logistics, the logistics division of $1.5-billion (over Rs 9,300 crore) Viraj Profiles, the ICD is changing the business dynamics of the world's second-largest and India's largest manufacturer of stainless steel long products. Besides, a number of other industries in the vast hinterland north of Mumbai too stand to gain from the container facility. "The Vaishno Container Terminal provides a one-stop shop in logistics and delivers operational excellence to manufacturing units in and around the area," points out Viraj Profiles Chairman and Managing Director (CMD) Neeraj Raja Kochhar. Mr Kochhar, the brain behind the ICD, is satisfied that Viraj, his stainless steel behemoth, is reaping rich returns from the new container facility. The Tarapur ICD makes immense business sense for the Mumbai-headquartered stainless steel manufacturer, with exports contributing about 95 per cent to its total revenue. The container depot, close to Viraj's manufacturing plants in Tarapur, has enabled the company to ship its wide range of products quickly -without facing usual hassles of a congested port - to more than 1,300 customers in over 90 countries spread across six continents. The depot is well connected by both road and rail to JNPT near Mumbai. Moreover, Viraj's own fleet of trucks facilitates easy movement of shipments from its factories via its ICD to Vaishno Logistic Yard the container freight station (CFS) owned by the company about 15 km away from the congested port - and from there to the company's vast overseas markets through the port. Early days In fact, Viraj Profiles has its logistics worked out to the last detail, thanks to Mr Kochhar's logistical background. Long before the Viraj CMD Viraj At A Glance Viraj's fully-automatic SRM plant in Tarapur Origin 1990 ........................................................... Business Stainless steel ........................................................... Major products Flanges, bright bars, sections, profiles, fasteners, wires and wire rods ........................................................... Plants 7 in Tarapur ........................................................... Annual capacity 5,28,000 tonnes ........................................................... Employees + 9,000 ........................................................... User industries Automobile, shipping, defence, construction and petrochemicals ........................................................... Clients 1,300+ ........................................................... Global presence 90+ countries FY14 revenue Rs 9,300+ crore 14 APRIL 2015 ........................................................... INDIA BUSINESS JOURNAL

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entered the stainless steel industry, he had made his mark in the logistics sector. But in 1990, Mr Kochhar turned his focus to steel and started a small melting shop in Tarapur. It was a humble beginning for Viraj Profiles, which over the next two decades transformed into a stainless steel giant. Mr Kochhar had always been nursing his global ambitions of tapping the lucrative international steel markets. In 1992, Viraj took a first step in realising its promoter's dream by commissioning a small induction furnace to manufacture utensil-grade steel for the domestic market. Three years later, the company went on a big diversification spree by entering new product categories and enhancing its production capacity. It began manufacturing stainless steel and established divisions for bright bars, flanges - it is today the world's largest producer of stainless steel flanges - and forging. In the same year, that is, in 1995, Mr Kochhar's dream came true as Viraj entered the Neeraj and Renu Kochhar: Moulding a success story global market by exporting bright bars. Since then, almost every year, Viraj added a new product to its stainless steel range, including sections and profiles, fasteners, wires and wire rods. By the turn of the millennium, Mr Kochhar was joined by his wife, Renu Kochhar. Ms Kochhar - a BA The company's diverse range of products in different grades, sizes, categories and lengths has made it a trusted brand worldwide. graduate from Delhi University, who had also pursued a short-term management course from Harvard University - joined Viraj Profiles in 2001 as a director and went on to become its managing director. Her insights into manufacturing and marketing turned Viraj into a robust stainless steel company. The company's seven manufacturing units, including the latest section rolling mill (SRM) that went on stream in 2013, have been catering to sectors as varied as automobile, shipping, defence, construction and petrochemicals, among others. Viraj boasts of installing a first-of-its-kind, fully-automatic, SRM plant in the country on an industrial scale. The new facility, with an annual capacity of 1,80,000 tonnes per annum (tpa), is able to manufacture more than 700 different shapes and designs of angles, flats and bars. "With automatic labelling and packaging facility, the SRM plant enables quick dispatch processes," adds Mr Kochhar. Excellent show In a little over two decades, the Kochhars have transformed Viraj Profiles from a single-plant, utensil-grade steel producer to a multi-plant, multiproduct stainless steel company. Starting operation with 150 people and 1,000 tpa capacity, the stainless APRIL 2015 INDIA BUSINESS JOURNAL 15

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