NEW DELHI l WEDNESDAY l APRIL 24 l 2013 VOL XXXIX NO 46 18PAGES I Rs 4.00 READ TO LEAD P 2 E C O N O M Y SLOWDOWN BOTTOMING OUT, FY14 GROWTH LIKELY TO BE 6.4%, SAYS PMEAC CHAIRMAN RANGARAJAN P 4 Luxury carmakers chase the young, female & frugal P U B L I S H E D F R O M : A H M E DA B A D, B A N G A LO R E , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D, KO C H I , KO L K ATA , LU C K N OW, M U M B A I , P U N E In the news INDICES BSE Sensex Closing Up/down 19,179.36 ▲ 9.53 S&P CNX Nifty 5,836.90 ▲ 2.50 RBI: No evidence of money laundering THE RBI has found no evidence that suggests money laundering by banks in its investigation, following the allegations by cobrapost.com, deputy governor KC Chakrabarty said on Tuesday. He said that RBI would relook at the KYC norms and, if needed, would take corrective measures. ■ Page 8 RESULT COUNTER HDFC Bank net up 30% on growth in core income HDFC Bank on Tuesday reported a 30.1% jump in net profit to R1,889.8 crore in the fourth quarter of the last fiscal on the back of good growth in core income. The net profit stood at R1,453.08 crore in the same period of FY12. For the entire fiscal ended March, the bank’s consolidated net profit grew 30.9% over FY12 to R6,869.6 crore. ■ Page 8 Gold rises R200 per 10 gm in Delhi, falls abroad BULLION 27,600 27,600 Gold, R/10grams 16 17 18 20 22 23 GOLD prices in Delhi rose for a fourth straight day despite a 0.3% drop in the overseas market in intraday trade. Pure gold on Tuesday gained R200 at R26,765 per 10 gm, although silver lost R800 at R45,000 per kg. China PMI points to tepid Q2 recovery GROWTH in China’s vast factory sector dipped in April as new export orders shrank, a preliminary survey of factory managers showed on Tuesday, suggesting the world’s second-largest economy still faces formidable global headwinds into the second quarter. ■ Page 12 ■ Factory output slows in US, shrinks in Germany, Page 12 EDIT P6 Uncomfortable truth about CAD Sajjid Z Chinoy Exclusive! The great unravelling Bank supervisors are quietly forcing a deglobalisation of finance ■ P12 facebook.com/TheFinancialExpress FinancialExpress/Apps fe Bureau New Delhi, April 23 A parliamentary standingcommittee on Tuesday termed captive coal allocations between 1993 and 2010 as “unauthorised, illegal and most non-transparent”, giving weight to the Opposition’s demand for the scalp of Prime Minister Manmohan Singh over coalgate and law minister Ashwani Kumar for alleged vetting of the CBI’s status report on a probe into a related issue before the same was seen by the Supreme Court. An unfazed UPA dismissed the demand for the prime minister’s resignation outright, endangering the smooth conduct of business in the second half of the Budget session. The issue of undue benefit flowing to private companies due to allocation of coal blocks without auction was first flagged by the Comptroller & Auditor General. In a report tabled in Parliament last August, the CAG had said allocation of 57 captive coal blocks to a clutchof privatecompanies between 2004 and 2009 resultedintheirwindfallgain of R1.86 lakh crore. UPA’s OUTRIGHT REJECTION OF THE DEMAND FOR PM’S EXIT CASTS A CLOUD OVER THE BUDGET SESSION “Most non-transparent procedure was adopted from 1993 to 2010 for allocation and supply of coal blocks. The natural resources and state largesse were distributed to few (entities) for their own benefit without following any transparent system... Was total abuse of power by the government,” the standing committee on coal and steel said in the report tabled in Parliament on Tuesday . Noting that “the government cannot give largesse on its arbitrary discretion or its sweet will”, it said the allocations were illegal and amounted to huge losses to thestateexchequer,virtually endorsing the CAG report, except for the windfall gain estimate. Congress president Sonia Gandhi dismissed the demand for Singh’s resignation. “Let them ask,” was her terse response when reporters sought her comments on the BJP’s demand. Thefuroreoverthestanding committee report led to the adjournment of the Lok Sabha to Thursday The Up. per House too saw noisy scenes over the issue. The meeting of the core group was convened immediately after both Houses were adjourned over the issue for half anhourinthemorning. Themeeting,whichwasalso attended by parliamentary affairs minister Kamal Nath,discussedthestrategy for the way ahead. The House panel sought scrapping allocation of all those blocks where production is yet to begin. So far, some 195 blocks with 44 billion tonnes of geological reserveshavebeenallocatedto public and private sector companiesthroughthenomination route. Of these, only 30havestartedproduction. Addressing a press conference later, panel chairman Trinamool Congress MP Kalyan Banerjee sought scrapping of all mines where production is yet to start, besides investigating the role of officials involved in the allotment process. Senior CPI leader and Lok Sabha MP Gurudas Dasgupta supported the BJP’s demand for Singh’s resignation, saying, “The Prime Minister is guilty of dereliction of duty on a number of counts.” Singh held coal portfolio for a major part of the time when the allocation of coal blocks was made. ■ Continued on Page 2 200 April twitter.com/FinancialXpress fe Bureau New Delhi, April 23 T 45,000 000 BERNANKE TO MISS JACKSON HOLE MEET FOR FIRST TIME, HINTING AT POSSIBLE DEPARTURE AT TERM END Reliance Jio, Bharti ink pact for cable network HE BJP’s demand for Prime Minister Manmohan Singh’s resignation over coal block allocations and a host of other issues on Tuesday stalled Parliament proceedings, leading to the abrupt adjournment of the Lok Sabha without transacting any business. Proceedings were also disrupted with the Samajwadi Party slamming the government over Chinese incursions. The BJP also sought the sacking of law minister Ashwani Kumar, alleging his interference in the preparation of the CBI report to the Supreme Court on the coal scam, while the DMK sought the resignation of PC Chacko as the chairman of the Joint Parliamentary Committee looking into the 2G spectrum allocation scam. 48,0 48,000 B U S I N E S S UPA hauled over coals on captive mine blocks Uproar over coalgate issue stalls Parliament 800 R/kg /kg 15 FinancialExpress.com Last 7 Days Silver, P 18 C O R P O R A T E S Sebi to ban Saradha from raising money ■ Mkt regulator pitches for change in Sebi Act, enabling it to cover chit funds, similar schemes Santosh Tiwari New Delhi, April 23 T HE Securities and Exchange Board of India (Sebi) will pass an order banning the West Bengal-based Saradha Group from raising any more money from the market. Meanwhile, the market regulator has also approached the central government seeking suitable changes to the Sebi Act, enabling it to handle chit funds and similar schemes, currently out of Section 11 AA of the Act that deals with collective investment schemes (CIS). “There are certain lacunae in the Sebi Act. It has to be strengthened. Sebi has sent a proposal to the government to amend the Act,” a senior Sebi official told FE. He added that the finance ministry had also written to all state governments, including West Bengal, to take strict action against chit funds. The official said the regulator had decided to act tough with chit fund defaulters and had passed similar orders earlier banning four companies from raising money. UK Sinha, Sebi chairman These include Sumangal, Rose Valley and MPS Greenery, two of which had taken recourse to the legal route to escape following the Sebi order and were still raising money from the market. “One company has taken an injunction from the district court but the high court has passed strictures that the lower court cannot come in the way of the Sebi order. We will approach high courts to ensure that orders banning the defaulting companies from raising money are followed,” said the official. The collapse of the Saradha Group has led to protests across the West Bengal and the state government is now planning an ordinance to rein in chit funds. Although no official figures are available on how much money the group collected, unofficial estimates put it at about R20,000 crore. West Bengal chief minister Mamata Banerjee on Monday lobbed the ball into the Centre’s court, saying chit fund monitoring was done by the Centre and the state had little knowledge about such companies. ■ Saradha Group chairman Sudipto Sen was detained in Jammu and Kashmir, according to Bidhannagar (West Bengal) police commissioner Rajeev Kumar ■ See Edit: Cheat funds, P6 CACP answer to CAG’s ire on MGNREGA: Invest more in agriculture fe Bureau New Delhi, April 23: Seven years after MGNREGA came into being, the CAG report tabled on Tuesday in Parliament paints a dismal picture of the UPA’s flagship rural employment guarantee programme. According to the CAG, while employment generation fell from 54 days per household in FY10 to 43 days in FY12, states that account for 46% of the rural poor — Bihar, Maharashtra and UP — utilised only a fifth of the funds made available. In 14 states and one Union Territory, just 30% of the planned works were completed. A forthcoming study by the Commission for Agricultural Costs and prices (CACP) has innovative solutions to the problems mentioned in the CAG report, as well as to the oft-repeated claim that MGNREGA is driving rural wages beyond control. During FY07 to FY12, nominal farm wages rose by 17.55% per year — real wages rose by 6.8% per year — the highest since economic reforms began in 1991. ■ Continued on Page 2 ■ CAG slams govt for laps- es in MGNREGA, Page 2 ■ See Edit: From CAG to CACP, Page 6 ■ Airtel undersea cables to carry Reliance Jio data M UKESH Ambani’s Reliance Jio Infocomm on Monday surprised the market by sealinganinternationaldataconnectivity deal with the Sunil Mittal-led Bharti Airtel, sending out a signal that the billionaire’s return to telecomwouldbemorecollaborative and less disruptive. Since Ambani’s 2002-03 telecom foray was marked by a fierce rivalry with Mittal’s Bharti, the pact — in which Reliance will use Bharti’s undersea i2i submarine cable networks to provide data connectivity across Asia Pacific — is seen as significant. Coming close on the heels of Reliance Jio signing a similar pact for inter-city data trafficwithAnilAmbani’sReliance Communications, the latest move signals that collaborationwillnotberestricted to the family The market . will now tune into the towersharing pacts Reliance Jio is expected to sign next — whether it would be only with RCom or extend to others as well. Reliance Jio officials have maintained that the company’s model would be “asset-light”, based on a range of partnerships where buying equity is ruled out. Such concerns led the RComscripfallasmuch5.46% after the announcement, to finally close down 3.28% at R94.50 on BSE. Bharti closed down 0.43% at R299.45 while RILclosedup1.74%atR803.50. “Reliance Jio Infocomm willusethededicatedcapacity on Bharti’s i2i submarine cable that connects India and A file photograph of Bharti Group chairman Sunil Mittal with Reliance Industries chairman Mukesh Ambani Singapore to extend its networktocustomersintheAsiaPacific region,” the companies said in a joint statement, without revealing any commercialterms. The i2i cable connects India to Singapore and is wholly owned by Bharti. Its landing points are at Chennai in India and Tuas in Singapore. Reliance Jio will utilise a dedicated fibre pair on i2i. The high-speedlinkwillenableReliance Jio to extend its network and service reach to customers across the Asia-Pacific. It will connect Reliance Jio directly to the world’s major business hubs Airtel to acquire Warid Uganda B HARTI Airtel on Tuesday said it had entered into a definitive agreement with the UAE-based Warid Group to acquire Warid Telecom Uganda, strengthening its footprint in Africa. ■ Page 4 and internet service providers, helping the operator meet bandwidth demand and provide ultra-fast data speeds to customers. The statement said the two companies will consider other “mutual areas of cooperationanddevelopmenttoleverage their respective assets”. Reliance Jio is the only operator to have spectrum in all 22 circles to provide broadband wireless access (BWA) services.Interestingly ,Bharti Airtel also has spectrum to provide similar services in eightcirclesandhaslaunched servicesinfour.Relianceisyet to start its services. “The tie-up with Bharti means Reliance is open to players other than RCom as well, which decreases the probability of further deals between Reliance Communications and Reliance Industries,” said G Chokkalingam, executive director and chief investment officer, Centrum Wealth Management. ■ Continued on Page 2
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