Indian Current Affairs: 25.05.2008

After almost four months of discussions, Bharti Airtel called off merger talks with South Africa’s MTN on Friday night, accusing it of deviating from agreed terms and of trying to push a structure which would have resulted in the Indian company becoming a subsidiary of MTN. The South African company also wanted majority shares of Bharti Airtel held by the Bharti family and Singtel in exchange for a controlling stake in MTN. This too was unacceptable to the Indian company.
The collapse of the merger talks means that the largest takeover attempt by an Indian company has ended in failure.
Sources say India’s 74% FDI sectoral cap turned out to be significant obstacle in the negotiations. It is learnt that Bharti executives had sounded off government officials about the possibility of waiving off the 74% cap for this transaction but did not get a favourable response.
Bharti would have required anywhere between $40 billion to $50 billion for a 100% acquisition. While questions have been raised about Bharti’s ability to raise the funds required to fund the acquisition or the cash-cum-stock merger, the company has said it arranged letters of credit to the tune of $60 billion from banks in the US and Europe. At the same time, Bharti also clarified that it would not engage in a bidding war for MTN.

For the first time, three Indian cities have joined the elite list of top 10 retail locations in Asia. Leading the pack, Delhi’s Khan Market has emerged as the fourth most expensive retail high streets across the Asian market, while Mumbai’s Linking Road and Chandigarh’s Sector 17 market occupy the eighth and ninth position, respectively.
Overall, Hong Kong’s Causeway Bay is the most expensive retail street in Asia, with Rs 65,000 per sq ft. It is followed by Tokyo’s Ginza at Rs 38,000 per sq ft and Gangnam Station in Seoul at Rs 22,000. The ranking compares only the most expensive high streets in each of the Asian cities.
Prime high streets in India provide better revenue for retailers and will continue to be viewed favourably despite the rapid growth in mall development across cities.
The other markets in the top 10 expensive retail markets are Singapore’s Orchard Street, Beijing and Shangai in China and Jakarta in Indonesia.

THE CRICKET economy is booming. While there are billions of dollars involved in endorsements, telecast rights, and publishing, it’s the betting money which accounts for over 30-35% of total cricket economy.

Reportedly there are more than 12 million SMB units in India, accounting for 40% of industrial output and over a third of exports and it is these companies that are taking the country’s economic prowess to new highs.
Research has shown that, faced with limited budgets, SMBs opt to invest in point solutions that solve immediate needs but are often not fully integrated or compatible with wider systems, resulting in lower long-term productivity.

As part of its Gen-next e-governance initiative, the government is developing a system which will provide early warning signals on corporate frauds. The system will look for possible trends of fraudulent practices using company data filed with the ministry of corporate affairs. According to estimates, India is losing a whopping $40 bn per year because of corporate frauds, which is more than 4% of the country’s gross domestic product. The early warning system, which is going to be mechanised in nature, will help the ministry to detect frauds at early stages
The frauds include those committed for the company, and those against the company such as embezzlement of funds and payroll frauds which, in turn, affect the bottomline of a company. The proposed early fraud detection system would check the books of accounts to find out whether any company is resorting to fraudulent practices which will adversely affect interest of shareholders, creditors, employees and others. At present, various government agencies including intelligence bureau under the ministry of home affairs, and Central economic intelligence bureau and financial intelligence unit, both under the finance ministry, detect frauds in financial sector.
What are the various types of frauds that are indulged in by companies?

The following is an illustrative list cited in this article:
Change in financial period
Side agreements to the sale transactions
Payroll fraud
Increase in the number of employees to whom the salary is paid but no comparable increase in the production
Difference in the size of the payroll before and after the outsourcing of the payroll starts

IF THE government doesn’t wake up soon, more and more Indians will continue to suffer from sleepless nights. Even as most countries are taking stringent measures to impose restrictions on night time flights amongst other noise control methods, the ministry of civil aviation is yet to arise from the deep slumber.
In fact, it is totally taking an opposite route and has insisted on making major airports operational for 24 hours. The government has also asked the western countries not to restrict Indian carriers from operating flights during night citing that it is unfair to airlines and travellers from the developing world!
Sample this: At LaGuardia and Teterboro airports in US there is a voluntary ban on flights between midnight and 6 am, while there is a $250 fee for violating the noise limit at JFK. In Germany, at Schoenefeld airport, no take-offs or landings are permitted on the north runway between 10 pm and 6 am. While at Heathrow Airport, over the whole of the night period (11pm to 7 am) the nosiest types of aircraft cannot be scheduled to operate. But back in the Delhi and Mumbai airports, flights operate 24x7.
It appears that the ministry and aviation players are more gung-ho about how to make the country an aviation hub and not giving any thought to environmental issues and the countless sleepless nights it will impart to million of citizens.

Only two Mauritian citizens are directors in most of 26,000 companies registered in the island nation and made investments in India!
It’s estimated that India loses a revenue of at least Rs 1,000 crore per year because of the Indo-Mauritius treaty.
Though India also has a similar agreement with Sangapore, no business house can misuse the treaty as tax exemption is meant only for bona fide businesses.

The Government of India is planning to substantially cut down on the number of foreign nationals that can be employed in Indian schools which have affiliations with different foreign national boards.
From a 50% ceiling on foreign nationals, it is now proposed to allow such schools to hire maximum 20% of their total number of teachers from foreign countries. Any number beyond this will be allowed on proper justification on a case to case basis.
Over the past few years, there have been a considerable growth in the number of schools affiliated to the foreign boards in India, particularly those affiliated to International Baccalaureate Organisation (IBO) and Cambridge International Examination (CIE). The number of schools affiliated to IBO has grown from two in 1998 to 33 in 2006. The number of schools affiliated to CIE stood at 148 in 2006. This has forced the government to come up with a clear policy regarding these schools.

Indian Current Affairs