11.05.2009

Politics & the Nation

• Satyam investors seek compensation -- approach consumer court in New Delhi
  
• INVESTORS have approached a consumer court in New Delhi against fraud-hit Satyam Computer Services, seeking compensation for the lost value of the company’s shares, taking inspiration from about six similar suits filed against the company by investors in the US. 
  
• Midas Touch Investors’ Association (MTIA) has approached the National Consumer Redressal Commission seeking compensation of Rs 4,987.50 crore (about $1 billion) for three lakh Satyam shareholders, who lost their money when Satyam shares crashed to Rs 11.50 in January this year from Rs 544 last May. 
  
• The petition has been filed under section 21 of the Consumer Protection Act, 1986, which deals with the unfair practice of promoting sale of goods (shares, in this case) through false representation and deficiency in service, as well as, claim for damages. 
  
• Neither the Companies Act nor the rules governing capital markets provide for compensating shareholders for loss — whether it’s the risk equity investors take or on account of fraud. 
  
• Let's wait and see the outcome of this case.  It would be interesting.
  
• MNP from September!
• Come September, cellphone users in some parts of the country, including the four metros Delhi, Mumbai, Kolkata and Chennai, will have the facility to switch operators even while retaining their existing number. 
  
• The department of telecom (DoT) has issued a notification in this regard saying, “mobile number portability (MNP) is to be implemented in Delhi, Mumbai, Maharashtra and Gujarat service areas of Zone 1 and Kolkata, Tamil Nadu, Chennai, Andhra and Karnataka of Zone 2 within six months of award of licence by September 20, 2009, and in the rest of the country by March 20, 2010.” 
  

Finance & Economy

• FCCBs may trip banks
• So reads today's headline in ET.  A connected concept in this regard is the CLN -- Credit Linked Note.
• It is an interesting and developing story.  Get a grip on this by reading this story in full.
• Why is that share buybacks from companies are attracting regulatory glare?
  
• Recently DLF (a realty major) bought back 76.4 lakh shares for Rs. 140.69 crore.  This was 39% more than the minimum 55 lakh shares and 65% lower than the maximum of 2.2 crore shares it has proposed to buy back.  This it did so, for a price which is far below than the upper limit it fixed for itself of Rs. 600.  The non-fulfiment of the buyback maximum is what has raised concerns of the regulator SEBI.  
  
• Buybacks influence the capital structure of the company and thereby stakeholder returns. A company having cash for which it has no use should return it to the shareholders. For, such cash would tend to destroy shareholder wealth, as it is unlikely to earn in excess of company’s cost of capital. The excess cash could be returned as dividends or through share buyback depending on which is more tax-efficient. A company can even borrow and use the funds to buy back shares, if it wants to change the debt-equity mix or it feels shares are trading well below their fair price. The point is that share buybacks are crucial decisions that have a bearing on stakeholder wealth. An ill-conceived buyback can actually give away cash when the company could have invested the money in expansion.
  
• Should top executive of companies be paid with stocks?
• This is an interesting debate that is gaining currency in view of the hefty pay packets drawn by senior executives in spite of the downturn seen by companies in their fortunes.  Even as humungous losses stare a company's face, its senior executives are seen as floating in wealth.
• Take a look at this debate that appeared in today's ET on the subject.  Worth a read.
• Banks may be allowed to sell policies of rival insurers
  
• THE insurance regulator is reviewing rules that restrict banks from selling policies of rival insurance companies. The proposed move, aimed at giving more choices to customers of banks, may upset the multi-crore distribution arrangements between banks and insurers and force them to review their strategies. Currently, a bank can sell insurance products of one life and one general insurance company. Only insurance brokers are allowed to sell policies of competing insurers. 
  
• BTW do you know the difference between an 'agent' and a 'broker' in financial industry parlance?
  
• We were pleasantly surprised to know that there is a difference.  An agent is one who sells the products of only one company, while a broker is one who sells the products of many companies.  An agent cannot sell similar products from two different and competing brands.
  

International

• Global Travel and Tourism Summit
  
• It is beinng organised under the patronage of Luiz Inácio Lula da Silva, president of Brazil, by the World Travel and Tourism Council (WTTC) from May15-16.
  
• Transforming economies and removing barriers towards global integration through travel and tourism are two of the main themes of the 9th Global Travel and Tourism Summit. 
  
• State of the US economy
  
• THE US economy is expected to begin growing in the second half of this year, while the jobless rate is expected to peak in the first quarter of 2010, according to a survey of top forecasters released on Sunday. 
  
• The economic downturn is expected to ease in the second quarter of this year after sharp declines in the fourth quarter of last year and the first quarter of this year, the survey said. Growth is forecast to resume in the third quarter. 
  
• The economy has lost 5.7 million jobs since payrolls started dropping in January of last year. 
  
• In defence of the offshoring model
  
• President Obama's reported negative statement about creating jobs in Bangalore continues to draw fire.
• Read this story.  It gives a spirited defence of the offshoring model.

Language lessons

• clobber: verb
• Strike violently and repeatedly; Beat thoroughly and conclusively in a competition or fight
  
• eg: She clobbered the man who tried to attack her.