05.08.2008

• We have one more acronym to handle now; it is FVCI
• It is for Foreign Venture Capital Investments. RBI wants to restrict their playground.
• With increasing concerns of foreign capital driving up real estate prices, RBI has recommended that foreign venture capital investments (FVCIs) be restricted to nine sectors (investment in other sectors being treated as foreign direct investment). It has suggested that capital market regulator SEBI set up a screening mechanism for all pending and future FVCI proposals.
• How do venture capital investments score over FDI?
• Foreign investment in the form of venture capital is accorded special concessions not available to normal foreign direct investment (FDI). These include:
• exemption from entry and exit pricing norms that otherwise apply to foreign investors;
• exemption from the SEBI takeover code for sale of shares by FVCIs to company insiders after listing;
• exemption from the one-year lock-in period for sale after an initial public offering (IPO) of shares purchased prior to the IPO; and
• exemption from sectoral FDI caps for investments in domestic venture capital funds.
• The Union Budget 2007-08 identified only these sectors as eligible for the benefit of tax pass-through: biotech, IT, nanotechnology, seed research, R&D to create new chemical entities in pharma, dairying, poultry, biofuels and hotel-cum-convention centres with more than 3,000 seats.
• What is tax pass-through?
• The income generated by the venture fund will be taxed not from the venture fund but at the time when it is passed on to those who have invested in the venture fund.
• The life of a jobber and how technology affects him
• A jobber is one who lives on arbitrage. Essentially the difference between prices of the same commodity/stock traded on different exchanges or different market segments of the same exchange as in spot and futures.
• In June this year, the NSE said it would now allow “decision support tools/ algorithms, wherein the orders may be placed for execution for two or more securities/contracts as the case may be in capital market and/or futures & options segment simultaneously.” In layman terms, it is the green signal for ‘program trading’ or ‘algorithmic trading’ or ‘algo’ by institutional investors in the Indian market. This is expected to commence from September.
• This is what is likely to hit the jobbers most, because this takes away any manual intervention needed to identify arbitrage opportunities. It is a program which does the job in split seconds and places orders on the system.
• In addition to jobber, even the sales traders – the people who keep keying in the orders into the exchange system are also likely to be affected.
• How coal hungry are our power utilities? Get a glimpse.
• The demand for coal by the 11th Five-Year Plan was estimated at 720 million tonnes and CIL’s (Coal India Limited) output would be only 521 million tonnes.
• NTPC plans to add 22,430 mw capacity during the 11th Plan, of which 13,170 mw will be coal-based.
• Therefore it has tied up with SAIL, Coal India, Rashtriya Ispat Nigam and National Mineral Development Corp and floated an SPV to import coal from global sources. The SPV is named ICVL – International Coal Ventures Ltd., and is having a war chest of $3 bn to acquire coal mines.
• Once in a way somebody needs serious warnings such as these:
• “WTO needs to be transformed from being an instrument of corporate monopoly over seed and food to being a regulator of corporations to prevent such monopolies. If members can metamorphose the multilateral body to regulate agribusiness it will have relevance for the future. Otherwise it will be quietly buried as a bad ten-year experiment, while bilaterals take over.”
• That is Dr. Vandana Shiva, the redoubtable environmental activist cautioning countries.
• You would have heard about phrases like ‘interest subventions’ or other subventions.
• Take a look at the exact meaning of these subventions in today’s first principle column in ET. It is here.
• Look at how short term interest rates are ruling globally in the current year:
• In this graphic.
• If you want to understand ‘carry trade’ this graphic aids you easily. Borrow in Japan and invest in India where the interest rates are high. The only thing that makes carry trade a bit complicated for the novice: the exchange rates.
• Obituary: Alexander Solzhenytsyn
• Solzhenitsyn, who won the Nobel Prize for Literature (1970), but was exiled from his homeland because of his work, died of heart failure Sunday at age 89, his son, Stepan Solzhenitsyn, said on Monday.
• When Alexander Solzhenitsyn’s “One Day in the Life of Ivan Denisovich” appeared in the thick monthly literary magazine Novy Mir back in November of 1962, taboos were shattered. Buried secrets were unearthed. And the Soviet Union was shaken to its foundations.
• He is known for his greatest work, The Gulag Archipelago. It was based on the seven years he spent as a prisoner, and was the first real expose of the gulag — a word derived from the Russian Glavnoe Upravelenie Lagerei, or Main Camp Administration.