SC rejects SpiceJet’s appeal in dispute with Kalanithi Maran

The Delhi High Court asks the carrier to deposit Rs 579 core to its previous owner

New Delhi : The Supreme Court on Friday dismissed the appeals of budget carrier SpiceJet challenging the Delhi High Court verdict asking it to deposit Rs 579 crore in connection with a share transfer dispute with its previous owner Kalanithi Maran.

“We are rejecting (the appeals),” a bench comprising justices R F Nariman and S K Kaul said while upholding the July three judgement of the high court.

The appeals were filed in the apex court by the airline and its co-founder Ajay Singh.

A division bench of the high court had asked SpiceJet to deposit the money, saying, “there is nothing worthwhile” in the petitions to show its finances were precarious or that its cash position was so stretched that it could not comply with its single judge order asking it to deposit the amount.

However, the division bench had provided it some relief by allowing it to deposit the amount in two parts. It had said that part of the amount could be secured by a cash deposit of Rs 250 crore and the balance by a bank guarantee of Rs 329 crore.

SpiceJet and Singh had challenged before the division bench the July last year’s interim order passed by a single judge alleging that the court did not have the jurisdiction. The single judge’s order had come on a civil suit by Sun TV group’s chief Kalanithi Maran and his Kal Airways. In their suit, Maran and his airline company had sought issuance of stock warrants in SpiceJet to them as per a sale purchase agreement (SPA) of 2015 which had led to the transfer of ownership of the budget carrier to Ajay Singh.

Maran and Kal Airways had alleged before the single judge that despite giving Rs 579 crore to SpiceJet, the carrier had failed to issue them the warrants or allot tranche one and two of convertible redeemable preference shares and that the amount was not utilised for paying statutory dues for which they were also facing prosecution.

Apart from ordering that the amount be deposited in the court, the single judge had also asked Spicejet and Maran to appoint an “arbitral tribunal” to decide the share transfer dispute between them in a year.

The amount was to be deposited in five instalments with the first one in August 2016, the court had said. Market regulator SEBI had earlier expressed its inability before the high court to approve the board resolution passed by SpiceJet for issue of warrants in favour of Maran and his Kal Airways. The board resolution was passed on the court’s direction.

Under the SPA, Maran and Kal Airways had transferred their entire 350,428,758 equity shares (58.46 per cent stake) in the airline to Ajay Singh. According to the SPA, Maran and Kal were to receive the redeemable warrants in return for the amount they were to give to the airline towards operating costs and debt payment, Maran had said in his plea.

SpiceJet had earlier told the high court that the change of ownership was effected as a rehabilitative measure to address the liability of Rs 2,000 crore incurred by the airline when it was under the management of Maran. It had also claimed that every penny had been utilised towards operations and discharge of liabilities.

No health hazard from telecom towers: Govt quotes WHO

New Delhi : The Government on Friday quoted the World Health Organisation (WHO) in the Rajya Sabha to allay fears of radiation from the telecom towers and handsets.

The WHO has said: “The current evidence does not confirm the existence of any health consequences from exposure to low level electromagnetic fields.”

 The clarification came from Minister of State for Communication Manoj Sinha in a written reply to Goa’s Congress MP Shantaram Naik on the mobile connectivity problem in parts of Goa for want of enough telecom towers due to protests on the pretext of radiation hazards.

  He admitted that the telecom operators face resistance or delay in some cases in issue of the no-objection certificate (NOC) from the Gram Panchayat and protests by the local residents.   As on 30.04.2017, 1233 towers are functional in Goa supporting 5403 base transceiver stations (BTS) while 259 proposals are pending for erection of the new towers.  Asked about any new technology developed to replace the towers, the minister said as an alterantive 38 Cells on Wheels (COW) shared by multiple operators were allowed to enhance connectivity during BRICs event in Goa last October, only eight of which were dismantled after the summit.

The minister said the Goa government has already issued instructions to the village panchayats and administrative bodies to support the erection of these towers. He said 15 teams of senior doctors and officials were mobilised in September last year to address the concerns across 18 Gram Sabhas in South Goa.

GST created hiccups, noteban has disrupted wholesale channels: ITC

Kolkata : Diversified conglomerate ITC Limited on Saturday said that while demonetisation had “disrupted” the wholesale trade channels, implementation of GST had created some hiccups in transition, but becoming better every week.

 “There had been some hiccups after the implementation of GST, but is becoming better every week. The wholesale channel is taking time while the retail channel is less affected. But disruptions are far less lower than expected”, CEO of ITC Sanjiv Puri told after the company’s AGM here.

  Puri said that while GST was supposed to be revenue neutral, the dual tax rates on certain FMCG categories like atta had created some anomalies. “Taxation rates on unbranded and branded product categories like atta had led to creation of anomalies. There should have been a standard rate to promote the processed food industry which could have created more jobs”. he said.

Asked to comment on impact of different GST rates on the entire FMCG portfolio of ITC, Puri said “the impact had been more or less even. While taxes on soaps are low, it is high on shampoos”. On the whole, Puri said ITC’s overall FMCG portfolio had seen robust growth and grew faster than the industry, reports PTI.

ITC was building on segments in the FMCG space where not present now. Chairman of ITC Y C Deveshwar said “anomalies are there and not economically ideal”. The purpose of GST was not have multiple rates, adding that eventually it would become a single rat, he said.

“Our target is to reach a turnover of Rs one lakh crore by 2030. We will be looking towards to enter at all possible FMCG categories”, Deveshwar said. Expressing concern over the taxation on cigarettes, Puri said “It is a major cause for worry”.

There had been 202 per cent rise in tax which had led to smuggling  of cigarettes and shift towards other forms of tobacco consumption. Puri said that after the excise imposition in the budget, there had been successive bouts of taxation on the legal cigarette industry which comprise 11 per cent of total cigarette consumption. “68 per cent of cigarette sold escape regulatory oversight”, he said. “With increase in taxation, the legal cigarette industry is being put under pressure”, he said.

Infosys appoints D. Sundaram as Independent Director

Bangalore: Infosys on Saturday announced the appointment of D. Sundaram as an Independent Director of the Company, effective July 14, based on the recommendations of the Nomination and Remuneration Committee of the Board. Sundaram is currently the Vice Chairman and Managing Director of TVS Capital Funds Ltd.

He joined Unilever Group in 1975 and served in various leadership capacities in Unilever Group in a career spanning over 34 years, including Director of Finance and IT, and Vice Chairman of Hindustan Unilever Limited. Sundaram is a fellow of the Institute of Cost and Management Accountants, India and a Post Graduate in Management Studies.

Welcoming him to the Board, Chairman of the Infosys Board Seshasayee said, “We are delighted to welcome Mr. Sundaram to the Board of Infosys. He brings extensive experience in the field of finance and strategy execution. I am sure that the Board will immensely benefit from his expertise.”

GST rollout to be very smooth, assures FM

“We will be very  liberal in the first two months. For two months we have given a lot of laxity since we are getting into a new order,”Arun Jaitley/ Finance Minister.

New Delhi : Finance Minister Arun Jaitley on Friday held out the assurance of a “very smooth” transition into the Goods and Services Tax (GST) regime, promising that the administration will be very liberal and not implement it “very strictly” in the first two months.

Acknowledging that there will be some minor problems when a massive change takes place, he said that things will smoothen out in the times to come.

“I think the roll-out will be very smooth, as smooth as possible. All systems are in place. When massive change takes place there is an element of uncertainty of the unknown and when there is unknown there is fear. The whole process will change. There will be some minor problems…I think that will be a matter of days,” he said.

He was replying to a question at the Aaj Tak GST Conclave on how smooth he expected the transition into the new indirect tax regime. Asked if he would give a time-frame by when things will smoothen out, he said the process of registration is on. People will get attuned to the system, reports IANS.

“We will be very liberal in the first two months. For two months we have given a lot of laxity since we are getting into a new order,” he said.”There may be glitches because of lack of awareness. In any technology, glitches are possible. But glitches are rectifiable almost immediately,” Jaitley said. This is a formal launch, because the switch over will be from 12 midnight. It’s an idea of the government, he said when asked why the midnight hour was chosen for the launch. Jaitley said that the July 1 roll-out date was not his decision. It was the GST Council’s decision.

“Last year’s constitutional amendment was valid till September 15. After September 15, we would have been a tax-less society. The Constitution does not allow this. There would be anarchy if we postponed it by six months,” he said.

On the whole, he said, the new law will bring in the principle of equivalence and equity in the indirect tax regime.

“Indirect tax is regressive. For a product, rich or poor has to pay same tax. To bring equity in indirect tax, the product being used by common man is being taxed at lesser rate. Single slab tax not possible in India. It may be possible in a developed country,” he said.

“There is a need to bring equity in indirect taxation, otherwise rich and poor will be paying the same tax.” The Finance Minister said that the multiple tax slabs were chosen to keep a tab on inflation.

“Multiple tax rates necessary to check inflation. To prevent inflationary impact, 12, 18 per cent tax rate was necessary. At some later stage, they may be converged into 15 per cent.

“If you see the overall tax rate and the goods basket, the revenue will go up but the burden will come down,” he said.

New regime will end Inspector Raj, weed out blackmoney: Nitin Gadkari

New Delhi : The rollout of much-awaited GST regime will end ‘Inspector Raj’, weed out black money from the system and end corruption, Union Minister Nitin Gadkari said today.

“The implementation of Goods and Services Tax (GST) will hugely benefit the country’s economy by weeding out black money and introducing transparency,” Road Transport, Highways and Shipping Minister Gadkari said today.     Addressing the India Today Midnight Conclave – Tryst with Tax, Gadkari said it will end the prevalent ‘Inspector Raj’ and red-tapism, and bolster economic growth.   GST will increase revenue of the state governments and the Centre, and had petrol and diesel included in it, states would have benefitted tremendously, he said.

“Overall, the GST will benefit the economy. Flow of black money will be stifled. Seventeen taxes and 22 other cess will be abolished after the GST comes into effect,” Gadkari said. Gadkari said, of course, there will be teething trouble in GST launch, but the government is ready to tackle the challenges. He said even the US President Donald Trump has praised GST. “To say that GST is being hurried upon is absolutely wrong. The process started long back. The Congress governments in the past have also been part of it,” he said in reply to a query. He said, “Congress is opposing the midnight GST launch event at Parliament just for the sake of it. They are just doing politics”. Asserting that the lower middle class will not be affected by the GST on packed food products, he said, “We are working for the benefit of the people. We need to take some harsh steps. There will be some hiccups initially, but they will be sorted out”. “I don’t claim people will not face trouble, but things will improve in two-three months of GST launch. Some hard steps are needed to be taken but it will ultimately have a positive impact,” Gadkari said.

Fin Min for extending RBI’s deadline on Basel III norms

As per the directives, banks have to maintain a minimum common equity ratio of 8 per cent and total capital ratio of 11.5 per cent by March 2019.

New Delhi : The finance ministry has made a case for pushing back the Reserve Bank’s deadline for implementing Basel III banking norms in view of higher capital requirement to deal with bad loans which have reached unacceptable levels.

In a recent meeting with RBI, senior officials from the ministry pitched for deferring the implementation beyond March 2019, saying it will help banks meet the capital needs and increase credit flow to productive sectors along with balance sheet clean-up.

These global capital to risk norms, called Basel III capital regulation, are being implemented in phased manner by Reserve Bank of India since April 1, 2013. They are to be fully implemented as on March 31, 2019.

As per the norms, banks have to maintain a minimum common equity ratio of 8 per cent and total capital ratio of 11.5 per cent by March 2019.

Most of the 21 state-owned banks are already above the average prescribed by RBI but there are 6 PSU banks including IDBI Bank, Bank of Maharashtra and Central Bank of India, which have been put under prompt corrective action (PCA) requiring course correction and higher capital to come out of poor financial health.

However, provisioning levels for the Indian banking sector have risen sharply over the last few quarters in response to rising bad loans, with the RBI’s asset quality review initiated in December 2015 pushing the bottomline of several public sector banks (PSBs) into the red.

Their toxic loans rose by over Rs 1 lakh crore to Rs 6.06 lakh crore during April-December of 2016-17, the bulk of which came from power, steel, road infrastructure and textile sectors.

Gross NPAs of PSBs nearly doubled to Rs 5.02 lakh crore at the end of March 2016, from Rs 2.67 lakh crore at the end of March 2015. Finance Minister Arun Jaitley has announced capital infusion of Rs 10,000 crore for PSBs in the current fiscal in line with the Indradhanush scheme.

This will be over the Rs 70,000 crore that banks will get as capital support from the government. Of this, the government has already infused Rs 50,000 crore in the past two fiscals and the remaining will be pumped in by the end of 2018-19.

As per the scheme, PSBs need to raise Rs 1.10 lakh crore from markets, including follow-on public offer, to meet Basel III requirements, which kick in from March 2019.

Discussions are ongoing with RBI and the ministry made the point of deferring Basel III norms given the circumstances, sources said.

The question is what works the best for Indian banks taking into consideration financial stability, NPA resolution and provisioning requirement, sources said.

“The RBI team is very receptive and there is professional respect. We may not agree. Where RBI has power to take a call they will decide,” an official said.

RBI had already extended the deadline from March 2018 to March 2019 in 2014 after getting representation from various quarters.

Note ban has and may result in a slowdown: SBI report

Country’s largest lender, the State Bank of India,  assesses the long-term impact of demonetisation on the economy and on the banking sector.

New Delhi : Country’s largest lender the State Bank of India (SBI) has expressed apprehensions that demonetisation may continue to result in slowing down of the economy, and adversely affect its business.

The government had discontinued Rs 500 and Rs 1,000 banknotes from November 9, 2016 and issued new Rs 500 and Rs 2,000 currency notes in exchange for the discontinued ones.

The long-term impact of this move on the Indian economy and the banking sector is uncertain, SBI told institutional investors prior to its Rs 15,000 crore share sale through private placement.

The effects of India’s recent demonetisation decision are uncertain, which may adversely affect the bank’s business, results of operations and financial condition, the bank said in the Preliminary Placement Document to investors while flagging the ‘risk factors’.

“The demonetisation has and may continue to result in a slowing down of the Indian economy, which may adversely affect the Bank’s business,” it said. The document, SBI had said contains forward-looking statements that involve risks and uncertainties. Further, the financial performance may differ from “such forward-looking” statements as a result of certain factors, reports PTI.

Post-demonetisation, there has been a surge in the CASA deposits of banks. As per a RBI report, the sharp increase in the share of CASA deposits in aggregate deposits by 4.10 per cent to 39.30 per cent (as of February 17, 2017) resulted in a reduction in the cost of aggregate deposits, and banks have correspondingly lowered their term deposit rates.

 As a result, the bank may face increased competition from commercial banks and other lending institutions, it said while highlighting the risks associated with demonetisation.

SBI said increased competition may have an adverse effect on the net interest margin and other income and if the bank is unable to compete successfully, its profitability may decline.

“The move could also result in an increase in compliance costs and higher incidents of fraud. Any one or more of these events, if and when they occur, could have a material effect on the bank’s business, results of operations, financial conditions as well as reputation,” the document said. Post merger of five associate banks and Bharatiya Mahila Bank effective April 1, SBI catapulted into one of the top 50 global banks (up from 55th position in 2016). Its balance sheet size is Rs 33 lakh crore and has 24,017 branches and 59,263 ATMs servicing over 42 crore customers.

RBI keeps key rate unchanged, cuts SLR, lowers GDP projection

The risk of fiscal slippages, which, by and large, can entail inflationary spillovers, has risen with the announcements of large farm loan waivers, says the Central Bank

New Delhi : The Reserve Bank on Wednesday left lending rates unchanged citing risks to inflation due to spurt in farm loan waivers by states but raised lending capacity of banks to support economic growth.

The government has been pressing for a cut in interest rates to increase private investment and had sought a meeting with the members of the Monetary Policy Committee, but RBI Governor Urjit Patel said that all of them declined to meet.

Senior officials of the Finance Ministry were scheduled to meet MPC members on June 1 and 2 but all six members decided against the meeting.

Headed by Patel, MPC for the fourth straight time kept the repo rate unchanged, at which it lends to the banks, at 6.25 per cent. The reverse repo, at which RBI borrows, will be 6 per cent.

“The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth,” RBI said in its second bi-monthly monetary policy review for 2017-18. Five members were in favour of the monetary policy decision of maintaining the status quo, while Ravindra H Dholakia was not, it said.

 The central bank has however slashed the Statutory Liquidity Ratio (SLR) or the percentage of deposits that banks have to park in government securities, by 0.5 per cent to 20 per cent. The move is expected to raise buoyancy in the loans market as banks would have slightly higher funds for lending.

“The current state of the economy underscores the need to revive private investment, restore banking sector health and remove infrastructural bottlenecks. Monetary policy can play a more effective role only when these factors are in place,” it said.

RBI raised concerns over the possibility of fiscal slippages due to the farm loan waivers. “The risk of fiscal slippages, which, by and large, can entail inflationary spillovers, has risen with the announcements of large farm loan waivers,” it said. On the Gross Domestic project (GDP), the central bank lowered economic growth projection to 7.3 per cent for the current fiscal from 7.4 per cent earlier.  The headline inflation has come down to 3 per cent for in April 2017, while demonetisation continues to impact GDP growth which dipped to 6.1 per cent in the last quarter of the last fiscal. There is also greater clarity on the rainfall, with the IMD predicting for a normal monsoons this season which can help the food inflation situation.

 The BSE benchmark Sensex slipped into negative territory for a brief period after the RBI kept key policy rates unchanged today, but re-entered the green zone towards the fag-end of the session. It closed with a gain of 80.72 points at 31,271.28.

SBI Q4 profit doubles to Rs 2,815 cr as NPA situation eases

 Net profit of country’s largest lender State Bank of India (SBI) more than doubled to Rs 2,814.82 crore for the March quarter as its net NPAs or bad loans narrowed to 3.7 per cent of total advances.

The state-owned bank had in contrast registered standalone net profit of Rs 1,263.81 crore in the fourth quarter of the previous fiscal, 2015-16.

The standalone net profit of the bank in 2016-17 increased by 5.36 per cent to Rs 10,484 crore from Rs 9,951 crore in the previous financial year.

However, for the year ended March 2017, SBI’s consolidated net profit declined by about 98 per cent to Rs 241.23 crore from Rs 12,224.59 crore at the end of 2015-16 as the banks provisioning for the entire year had increased significantly.

Gross Non Performing Assets for SBI Group increased to 9.04 per cent from 6.40 per cent while net NPAs rose to 5.15 per cent as against 3.73 per cent at the end of March 2016.

On standalone basis, gross NPAs rose from 6.5 per cent to 6.9 per cent for the quarter ended March.

Net NPAs declined however from 3.81 per cent to 3.71 per cent during the same period.

According to SBI statement, ‘loan loss provisions’ were lowered to Rs 10,993 crore during the fourth quarter of last fiscal as against Rs 12,139 crore in the year-ago period.

It further said that in absolute terms the gross NPAs increased to Rs 1,12,343 crore on March 2017 from Rs 98,173 crore in the same period last year.

The operating profit of the bank for the fourth quarter increased by 12.93 per cent, from Rs 14,192 crore in the year-ago period, to Rs 16,026 crore.

Net interest income increased by 17.33 per cent from Rs 15,401 crore in the last quarter of 2015-16 to Rs 18,071 crore for the fourth quarter of last fiscal.

Total interest income increased by 10.36 per cent from Rs 42,942 crore in the fourth quarter of 2015-16 to Rs 47,393 crore in same period of 2016-17.

Net Interest Margin (Domestic) declined by 0.16 per cent to 3.11 per cent as on March 2017 from 3.27 per cent at the end of previous fiscal.

The fourth quarter result does not take into account acquisition of its five associates State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Patiala, and State Bank of Hyderabad and Bharatiya Mahila Bank (BMB) as the merger came into effect from April 1.

SBI stock was trading nearly 2 per cent up at Rs 308.70 on BSE shortly before close of the session.

31 Total