21.10.2009

Politics & the Nation

• Two ministers bite the dust
• Just a day after the position of these two ministers on some crucial issues is known to the public, they were made to retract their positions. The ministers in question are Jairam Ramesh and Kapil Sibal.
• Take a look at these two reports. On Jairam Ramesh. On Kapil Sibal.

Finance & Economy

• Govt. mulling offer of shares at a discount to lure back investors?
• The government is reportedly planning to give small investors a 5% discount when it sells shares in three state-owned companies, hoping to lure individual investors who have shown lukewarm interest in two previous public issues by government firms.
• Retail investors in the follow-on public offers of Rural Electrification Corporation (REC) and NTPC and the initial public offer of Satluj Jal Vidyut Nigam (SJVNL) due in the coming weeks will likely be allotted shares at a discount.
• All companies must reserve 35% of the share issue for retail investors, 15% for high net worth individuals and the rest for institutional investors.
• This is not the first time that such discounts are offered to retail investors.
• In 2004, the government had given a 5% discount to retail investors when it sold shares in ONGC, Gas Authority of India, IPCL, Dredging Corporation and IBP.
• In 2007, ICICI Bank sold shares to small investors at a 5% discount, becoming the first private company to do so. Retail investors were given a similar discount by Reliance Power during its initial share offering last year.
• Why should you avoid being an independent director on the boards of companies?
• Look at the troubles and travails of one such indedendent director; a famous one at that: Mr. Nimesh Kampani. He made a name for himself in corporate India.
• The police had instituted cases against the KS Raju-promoted Nagarjuna Finance in December last year for its inability to repay public deposits worth Rs 100 crore collected in 1997-98. Hyderabad police had arrested Mr Raju, the chairman of Nagarjuna Finance, and PK Madhav, CEO of Maytas Infrastructure and member of the Nagarjuna board, in December last year. Both were later released on bail.
• The police had also filed a criminal case against Mr Kampani. He was an independent director on the board of this company for about year between 1998-99. He had no connection with the company ever since. The police actions has been widely linked in media coverage to Mr Kampani’s role in arranging funding for Eenadu, a local media group. This was allegedly objected to by the Andhra Pradesh administration. It has also raised question about the culpability of independent directors in case of offences committed by a company.
• In spite of his plea that he was in no way involved with the alleged defaults or offences committed by Nagarjuna Finance the AP police were on the lookout for him and, both the Supreme Court and the Andhra Pradesh High Court had rejected Mr Kampani’s petition for an anticipatory bail. In his petitions, Mr Kampani had opposed custodial interrogation.
• Mr Kampani’s travails has shocked India Inc. Bankers and industry captains earlier told ET that Mr Kampani was wrongly targeted by the AP police as he had resigned from Nagarjuna Finance 10 years ago. Independent directors, analysts argue, have become wary about sitting on the boards of companies after Mr Kampani’s troubles.
• When we made a mention about lead indicators sometime back, many among you were confused and some even at a total loss as to how the weight of ships could possibly indicate something about the state of the global economy.
• Thinking that we have bitten more than what we can chew and with a view to not to compound the matters further, then we decided to let the issue die a slow death. In any case that would have made an excellent snippet of info in an MBA class or MA Economics class.
• But now there is a leading indicator making its appearance on Indian economics firmament. Take a look. It will be interesting to watch it progress over the next few years.
• IT majors find government business a tall order
• As India's top tech firms TCS, Infosys and Wipro intensify efforts to address the lucrative government outsourcing market, they realise that project delays, frequent changes in leadership and increased public scrutiny make it tougher to execute public sector projects.
• Indian public sector enterprises, such as India Post and Indian Railways, along with other government agencies, are expected to spend nearly $2 billion over the next 12 months on outsourcing of different processes and software services.
• However, potential project delays like in the case of TCS-Indian passport services are among concerns looming large, even as Indian tech firms continue to remain bullish about the $2-billion Indian government IT-outsourcing market this year.
• GST to rope in even small manufacturers into the tax net
• A host of small-scale producers could come in the tax net under the proposed goods and services tax (GST) as the draft being examined by states seeks to impose the new levy on units with a minimum annual turnover of Rs 10 lakh.
• At present, all taxes and levies have separate threshold levels—Rs 1.5 crore for excise levy, Rs 10 lakh for service tax and individual state limits for valueadded tax (VAT), such as Rs 2 lakh in Karnataka and Haryana to Rs 50 lakh in Punjab. GST will replace all these taxes, with a likely uniform exemption limit of Rs 10 lakh.
• The low threshold limit for GST will bring more goods producers and service providers under the tax net and, conversely, a wider base will help keep the rate lower and make it more efficient.
• In spite of a relatively non-benign CPI based inflation, why is there no case for tightening monetary policy?
• For the faint hearted the question may look very esoteric. But a read of this article makes the issue very clear. An excerpt which answers our query:
• It is true that consumer price index remains uncomfortably high. But disaggregated data does show that it is dearer food prices — along with higher, imported crude oil costs — that’s keeping the increase in the CPI much too buoyant and in the double digits. The point is that the inflationary trend remains very much supply-induced. Note that producer-price inflation, the increase in the wholesale price index, remains rather subdued — barely in the 1% range y-o-y. It indicates that the general increase in prices is not really demand-driven. In a demand-led price-rise scenario, there can be a fit case for monetary tightening. But when it’s rigidities in supply that’s driving up prices, tighter monetary policy may not so much bring down prices as decelerate overall growth.

Personality: Kenneth Feinberg

• He is the pay czar appointed by the Obama administration to oversee the compensation of employees at companies receiving billions in federal assistance. According to news reports, Feinberg has broad discretion to determine the salaries and bonuses of the five most senior executives and 20 most highly paid employees at each of these companies.

Language lessons

• on the same page: slang
• When you’re on the same page as someone, you have an equal level of understanding about a situation. You have similar ideas about what needs to be accomplished.
• When working with a group of people, it is important for everyone to be on the same page. Everyone should know what needs to get done and when it needs to get done. If people aren’t on the same page, problems arise.