26.04.2011

Politics & the Nation
  • Kanimozhi booked by CBI in the 2G spectrum case
    • The Central Bureau of Investigation (CBI) on Monday accused Kanimozhi, the daughter of Tamil Nadu Chief Minister Karunanidhi, and Sharad Kumar—both shareholders in broadcaster Kalaignar TV—of conspiring with former telecom minister A Raja to obtain a bribe from entities linked to DB Realty, whose telecom arm (Swan Telecom) is alleged to have received airwaves at below market prices during Raja’s tenure.
    • All the accused have, in the past, asserted that it was a normal business transaction. They have claimed that DB Group was looking to buy a stake in Kalaignar, but the deal fell through because of valuation differences. But the CBI has refused to accept this account. The chargesheet claims those charged could not produce any agreement or contract to substantiate their claim that the money was meant to acquire an equity stake. The agency also alleges the 'loan' was extended without any collateral. Securities were created only after the CBI registered an FIR.
    • Further evidence of the irregular nature of the transaction stems from the fact that DB Realty and Dynamix Realty had borrowed from IL&FS Financial Services at interest rates ranging from 13.5% to 16%. But the loan to Kalaignar TV was at an interest rate of 10%, a fact the agency claims buttresses its case that the transaction was tainted.
    • The money was repaid by Kalaignar between December 2010, just after Raja was questioned by the CBI for the first time, and February 2011, around the time Raja was arrested.
    • Kanimozhi and Sharad Kumar have been charged under sections of the Indian Penal Code (IPC) and Prevention of Corruption Act, or PCA, pertaining to criminal conspiracy to obtain illegal gratification. Raja, in this case, has been booked for allegedly obtaining illegal gratification.
    • The promoters of DB Realty, Kusegaon and Cineyug have been charged under a section of the PCA relating to abetting the act of obtaining illegal gratification.
  • Suresh Kalmadi is put behind bars
    • On Monday afternoon, the long arm of the law finally caught up with Pune Congress MP Suresh Kalmadi, who was arrested by the CBI for conspiring to award the contract for timing, scoring and result (TSR) system for the 2010 Commonwealth Games to a Switzerland-based company, Swiss Timing Ltd-Omega, at an inflated cost of Rs. 141 crore, causing a loss of some 95 crore to the exchequer.
    • For Kalmadi, who had earlier this year been sacked from the chairmanship of the Commonwealth Games Organising Committee (OC), the political fallout of the development was immediate. Anxious to limit its political cost, the Congress acted with alacrity and suspended him from the party. He had earlier been removed from the post of secretary of the Congress parliamentary party. There are reports that the former Games OC chairman may be stripped of the chairmanship of the Indian Olympic Association too.
    • The charge against Kalmadi and his accomplices in the OC is that they had awarded the contract to the Swiss company in a pre-meditated and calculated manner, brushing aside the claims of a competitor, MSL-Spain. The Spanish company, which had quoted a price of about Rs. 46 crore for installing the TSR project at various venues, had provided the system to the 16th edition of the Asian Games held in the Chinese city of Guangzhou last year.
    • The Swiss company, keen on bagging the contract, had enlisted the services of Faridabad-based company, Gem International, to win over the OC bigwigs. The CBI has collected evidence suggesting that AK Madan, the promoter of Gem International, was the main conduit between Kalmadi and the Swiss firm.
    • The Swiss company, it is learnt, paid Rs. 23 crore as an initial payment to Gem International for the services rendered by it. It was to pay an additional Rs. 7-8 crore to the Faridabad-based firm, but the filing of the case in the TSR scam put paid to the move.
Finance & Economy
  • What is the agitation about Endosulphan?
    • Endosluphan is is an insecticide belonging to the class of compounds called organochlorines. India is one of the largest global producers of endosulfan. It is the supplier of 70% of the world’s endosulfan needs — a market valued at $300 million (Rs. 1,340 crore). Out of the 9,000 tonnes India produces every year, half is bought by the country’s 75 million farmers, making it the world’s largest consumer of endosulfan as well.
    • But endosluphan is reportedly very toxic and causes lot of collateral damage.  Some of the ill effects attributed to endosulphan include disease and birth defects, among humans and animals. The toxicity caused by it is stated to result in cancer, allergies and hypersensitivity, damage to the central and peripheral nervous systems, reproductive disorders and disruption of the immune system.
    • Though more than 80 countries have banned endosulfan our country has not yet banned endosulphan. It is not approved to be used in rice fields in several other countries. The use is severely restricted in others.
    • Now the agitation in Kerala against the use of endosulphan is gaining momentum.  But the Centre had stated that it is not in favour any ban on the insecticide.  
    • Let's wait for more press to roll out.  Then we can think for ourselves to take a stand.
  • SEBI asks CCI to adopt its buyout norms
    • Taking note of conflicts in takeover laws, capital markets watchdog Sebi has sought alignment of norms set by the competition regulator with its own regulations.
    • It has written to the corporate affairs ministry and Competition Commission of India, or CCI, to address the issue and prevent chaos.
    • The Sebi takeover norms for listed companies make it mandatory for an acquirer, who has triggered an open offer under Sebi rules, to inform the regulator within four days the timeline of the offer.  Under the rules prescribed by the CCI, the acquirer has up to 30 days to announce the details of the offer.  
    • The regulator has also flagged the need for reconciling the time given to the acquirer to make an open offer.  Under the competition law, the commission can take up to 210 days to clear an acquisition, which would mean that open offer can happen only after the clearance.  Sebi’s regulations give an acquirer 55 days to complete the open offer once it is announced.
    • In absence of an asset transaction thresholds every asset - current assets or fixed asset - that is acquired after 1 June 2011, would have to be notified to the Competition Commission and it could also include issue of bonus, rights shares or even stock or stock-in trade.
    • The CCI norms also require every deal to be intimated to it even if controlling stake is not being acquired.
  • The new IIP to has some of the same old problems that beset the old IIP
    • The new index for industrial production, or IIP, that is expected to be launched soon has not enthused economists as they expect it to have one major flaw of the old index, month-on-month volatility.
    • The source of this volatility is largely from the capital goods segment, a flaw that the new index has not addressed.
    • The reason lies in the way the index has been formulated -- it takes into consideration the end product manufactured by companies, including those products that have a manufacturing cycle extending to a quarter or more.
    • This results in sharp spikes in months in which manufactured products reach the factory gate while equally sharp dip in other months.
    • These spikes and dips are not necessarily consistent with the investment or demand patterns in the economy making it difficult for analysts to exclusively rely on factory output numbers given by the IIP.
    • The current IIP series is based on data received from 3,900 sources. The new series will get information from around 4,800 sources and the coverage will expand to 300 items from a current 213 items. The base of the index will be revised from the current 1993-94 to 2004-05.
  • Investors to get emails as India Inc is set on a green drive
    • The government has asked corporates to communicate with their shareholders electronically in order to cut down on the use of paper. The move is part of the latest ‘green initiative’ by the ministry, but could also help companies cut costs by obviating the need for paper-based communication.
    • Under the Information Technology Act, 2000 service of documents in electronic mode is considered valid delivery. The ministry of corporate affairs has directed all companies to maintain a formal register of valid e-mails of all its shareholders where key communication like notices of company meetings can be sent. Currently, companies are required to communicate with their shareholders through the postal route.
    • The trigger for the move came from a decision of the country’s postal department has decided to discontinue their postal facility under ‘certificate of posting’ route, which allowed companies to send out bulk mails.
Language Lessons
  • adumbrate: Verb
    • Describe roughly or briefly or give the main points or summary of; Give to understand
    • eg: For instance, back in the 1950s, it was purposefully adumbrated that we were drawing up five-year plans so that...

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