With a networth of $21 billion, Mukesh Ambani has retained his title as India’s wealthiest for the sixth year in a row, while the country’s 100 richest persons saw their collective wealth grow by a modest 3 per cent in a year.
NRI steel tycoon Lakshmi Mittal ($16 billion) also continues to hold the second position, while Sun Pharma’s Dilip Shanghvi has jumped to third place with a 50 per cent surge in his wealth to $13.9 billion, pushing IT czar Azim Premji to fourth place ($13.8 billion).
According to the US-based business magazine Forbes’ annual list of India’s 100 richest, released today, their total wealth grew by a modest 3 per cent from a year ago to $259 billion.
“Growth in wealth was lacklustre due to India’s stumbling economy, which has been hit by inflation and a falling rupee,” Forbes said.
Amid the sluggishness, Reliance Industries chief Mukesh Ambani and ArcelorMittal’s Lakshmi Mittal saw no change in their respective networths, but pharmaceutical industry titan Shanghi managed to buck the trend with a surge of $4.7 billion in his wealth to $13.9 billion.
Premji’s wealth also rose by $1.6 billion, but he could not retain his third slot.
Pallonji Mistry, patriarch of construction giant Shapoorji Pallonji Group, which is the biggest shareholder in Tata Sons, has moved down one place to fifth rank with a networth of $12.5 billion. His younger son Cyrus Mistry last year succeeded Ratan Tata as new Tata group head.
NRI businessmen the Hinduja brothers have moved up to sixth place ($9 billion), from their ninth position last year.
Shiv Nadar ($8.6 billion) has moved into the top-ten at seventh place, while Sunil Mittal has also returned to this league at 10th place ($6.6 billion). On the other hand, Essar group’s Ruia brothers and Jindal group’s Savitri Jindal have moved out from the group.
Government Approves Thirteen Proposals of Foreign Direct Investment (FDI) Amounting to About Rs. 1258.53 Crore
Based on the recommendations of Foreign Investment Promotion Board (FIPB) in its meeting held on September 19, 2013, Government has approved thirteen (13) proposals of Foreign Direct Investment (FDI) amounting to Rs. 1258.53 crore approximately.
In addition, one proposal viz., M/s Axis Bank Ltd. Ahmedabad, amounting to Rs. 6265.76 crore has been recommended for consideration of Cabinet Committee on Economic Affairs (CCEA).
Details of proposals in the Foreign Investment Promotion Board (FIPB) Meeting held on 19.9.2013.
Following thirteen (13) proposals have been approved:
Sl. No.
Name of theapplicant
Particulars of the proposal
FDI/NRI inflows
(Rs. in crore)
1
M/s IndianRotocraft Pvt. Ltd.
Amendment in the approved activities of the previous FC approval letter to replace the helicopter model as AW 119Kx, the upgraded model, in place of AW 119Ke, the discontinued model.
Nil
2
M/s BF ElbitAdvanced Systems Pvt. Ltd., Pune
Induction of foreign equity in defence sector.
37.44
(US $ 6 million)
3
M/s Camson Bio Technologies Ltd., Karnataka
Issue of warrants to a foreign collaborator in the business of agricultural biotechnology.
32.18
4
M/s SD Bio Standard DignosticsLtd
Infusion of additional FDI in an existing foreign owned pharma company.
27.5
5
M/s ShanthaBiotechnics Pvt. Ltd.
An existing foreign investor in a brownfield pharma company to buy out the shares held by NRIs and Indian residents and to infuse fresh equity investment.
755.00
6
M/s EmpaysPayment System India Pvt. Ltd., Mumbai
To set-up a Multi- Bank Payment System using the Instant Mobile Transfer System (IMT).
27.50
7
M/s EquitasHoldings Pvt. Ltd.
A holding-cum-investment company in microfinance sector to increase FDI by issuance of equity shares and new foreign investors.
222.80
8
M/s Jaguar-Max Security Solutions Pvt. Ltd., New Delhi
Induction of foreign investment to carry out the business of Private Security Services company.
0.11
9
M/s Stork Titanium Pvt. Ltd., New Delhi
Induction of foreign investment to carry out the business of manufacturing, trading and dealing in titanium products.
156.00
(US $ 25 Million)
10
M/s StyrolutionSouth East Asia Pte. Ltd., Singapore
NR to NR transfer of shares within a group company by way of a block deal on the special trading window of BSE Ltd., /NSE Limited.
Nil
11
M/s HCL Technologies Ltd., New Delhi
Induction of direct foreign investment in its own total paid-up equity share capital and consequent indirect foreign investment in its wholly owned subsidiary.
Nil
12
M/s Cable & Wireless Pvt. Ltd.
Overseas group restructuring in telecom Sector Company without change in approved FDI/cap/investor.
Nil
13
M/s Multi Screen Media Pvt. Ltd.
To increase the foreign equity participation for production of television programmes in Indian anddownlinking certain TV channels.
Conversion of an existing Indian Company into a LLP and additional FDI infusion.
2
M/s SQS India InfosystemsPvt. Ltd., Pune
Post-facto approval for swap of shares to carry out the business of Software Testing Services.
The following one (1) proposals have been advised to access automatic route.
SlNo
Name of the applicant
Particulars of the proposal
1
M/s OctaniaAerostructure Group Pvt. Ltd., New Delhi
To issue equity shares to a foreign investor in lieu of technology transfer/knowhow to set up an aerospace machining and treatments company.
The following one (1) proposal has been advised that FIPB approval is not required:
Sl. No
Name of the applicant
Particulars of the proposal
1
M/s Advanta Pvt. Ltd.
Post-facto approval for induction of foreign investment into the company to carry out the business of Research, Production and marketing of hybrid seeds.
The following one (1) proposal has been recommended to advise the applicant that the proposal is not within the purview of FIPB:
Sl. No
Name of the applicant
Particulars of the proposal
1
M/s ArturaPharmaceuticals Pvt. Ltd., Tamil Nadu
Post-facto approval for delay of 6 months and 2 days in receiving part of the consideration for the issue of equity shares in an existing pharma company.
Decisions in the following five (5) proposals have been kept in abeyance
Sl. No
Name of the applicant
Particulars of the proposal
1
M/s Brampton Pvt. Ltd.
Clarification regarding limit on percentage of shareholding to be held either by Indian partner or foreign partner for forming the joint venture company.
2
M/s Acebright (India)Pharma Pvt. Ltd., Karnataka
A foreign owned Indian pharma company to receive additional foreign investment by way of fresh issue and transfer. Post-facto approval is also sought for an earlier transfer.
3
M/s Manipal Technologies Ltd., Karnataka
Induction of foreign investment in order to invest in the subsidiary to enter into cards payment system management and processing services for all kinds of alternate delivery channels including ATM.
4
M/s AU Housing Finance Limited, Jaipur
An Indian Housing Finance Company proposes to increase direct and indirect foreign investment upto 95%, without meeting the minimum capitalization norm of USD 50 million.
5
M/s AerriantaInternational CPT, Ireland
To set up a 50:50 JV company to engage in running duty free shops at Mumbai airport.
The following one (1) proposal has been recommended for the consideration of CCEA, as the investment involved in the proposal is above Rs. 1200 crore.
1
M/s Axis Bank Limited,Ahmedabad
A private bank proposes to increase the foreign equity from the existing 49% to 62%.
Rounding out the top five after Singapore were Hong Kong, New Zealand, the US and Denmark, unchanged from a year ago. Photo: AP .Bloomberg : MInt : Ben Schenkel :Tue, Oct 29 2013. 09 10 AM
Malaysia vaults to sixth from 12th a year ago; China slides five spots to 96th, while the UK drops to 10th from 7th
Washington: Malaysia advanced for the first time into a top 10 ranking of nations the World Bank deems friendliest to businesses as Singapore led the annual competitiveness scorecard for an eighth straight year.
Malaysia vaulted to sixth from 12th a year ago after easing procedures for registering a company, applying for a construction permit and getting electricity, the bank said in its 2014 Doing Business report. Rounding out the top five after Singapore were Hong Kong, New Zealand, the US and Denmark, unchanged from a year ago. China slid five spots to 96th, while the UK dropped to 10th from seventh.
Governments play a crucial role in supporting a dynamic ecosystem for firms, the Washington-based lender said in the report. Without good rules that are evenly enforced, entrepreneurs have a harder time starting and growing the small and medium-size firms that are the engines of growth and job creation for most economies around the world.
World Bank president Jim Yong Kim pledged in June to improve the report, which he called an important catalyst in driving reforms around the world. Non-profit groups such as Oxfam have criticized it and India, which slid two spots to 134th, has questioned its methodology.
The study, in its 11th year, covered a record 189 economies, assessing them on measures such as the costliness of commercial regulations and the strength of public institutions. Nations are ranked based on indicators such as the time required to start a business, file tax returns and export or import goods.
Ukraine’s rise
The report counted 238 policy improvements, an increase of 18% from the previous year and the second-highest total since the financial crisis. Ukraine, rising to 112th after coming in 137th a year ago, was identified as the country that made the greatest progress with reforms, having simplified measures in areas such as customs, bankruptcy and a value-added tax.
Greece, whose insolvency helped trigger the European debt crisis, rose in the ranking to 72nd from 78th, while Spain, beset with a 26% unemployment rate, slipped to 52nd from 44th, according to the report.
Some emerging economies gained in the report, with Russia jumping to 92nd from 112th a year ago and being named among the most improved. Brazil rose to 116th from 130th, according to the report.
The publication has taken criticism for its ranking methodology. An outside review initiated by the World Bank last October found that the listing may create perverse incentives for governments seeking to perform better.
Kim’s support
Starting with next year’s report, responsibility for carrying out the research will move from the International Finance Corp., the World Bank unit that lends to the private sector, to the office of the chief economist, according to the bank.
“I am committed to the ’Doing Business’ report, and rankings have been part of its success,” Kim said in June, addressing the review panel’s conclusions.
The study’s criteria differ from those used in the World Economic Forum’s global competitiveness index, which accounts for macroeconomic stability and the level of public debt. The Geneva-based forum last month gave its top score to Switzerland, which was No. 29 in the World Bank’s latest report.
“We anticipate there will be a number of significant changes in the report’s methodology next year,” Augusto Lopez- Claros, a global indicators and analysis director at the World Bank, said in a conference call from Washington. “One probable change will be evaluating several cities per country rather than focusing on the city with the greatest business activity,” he said.
“The World Bank decided this year to test the conventional wisdom that doing well favours smaller governments,” Lopez- Claros said, because they are seen as having fewer cumbersome regulations. The report showed that governments with higher spending relative to gross domestic product tended to perform better on the indicators.
Chad is the worst place to do business, switching positions with Central African Republic, which ranked second-to-last, according to the World Bank
Since world-over money management is considered a profession, entry barriers are low
The current debate in the Indian mutual fund industry is around the net worth issue with one view wanting this raised from the current Rs.10 crore and the other wanting it to stay where it is.
I think we need to look at this debate through the lens of whether we consider money management as a profession or a business.
If it is a profession, then a professional does what is good for the client as the well-being of the former depends upon the well-being of the latter.
However, if it is a business then one is concerned about making business sense of the venture undertaken. More than the client’s interest, it is the business interest that dominates. I believe that money management is a profession but in India with high entry barriers and restrictive regulations, it has turned into a business. Result: marketing teams, distributors, multiple schemes and the race for assets under management.
World-over, money management is considered a profession. Hence the entry barriers are low so that right investment professionals can enter the field. In the US, one requires just $100,000 to set up an asset management company (AMC), in the UK and the European Union it is €125,000 and in Singapore it is Singapore $250,000. Surprisingly Japan has no such minimum criteria. So with just Rs.3 crore, one can be a global asset manager. While in India, where we already have a high entry barrier of Rs.10 crore, we are trying to make it even higher.
Those advocating higher net worth have two arguments. First, high net worth will ensure only serious and committed entities and second, penetration will be achieved as those with high net worth will be able to open branches.
An AMC is a pass-through vehicle which does not use balance sheet; prima facie there is no need for capital requirement. What is required is intellectual capital: passion for investing, knowledge of stock markets, experience in the capital markets, investment style and philosophy and core investment beliefs.
Large capital does not bring seriousness which is evident from some cases in the past. Moreover, the required capital may bring wastage and cost escalation in terms of salaries, commissions and make the entire industry a high cost one which may not bode well for end investors. As of today, there is no embargo on maximum capital and hence entities that want to pursue business strategy with large capital are allowed. It will become very hard for any new entity to set up an AMC with such requirements as it will take a long time to get the desired return on equity and business will be unviable. So a very few will remain who have clearly demonstrated their ability to create cartels.
While Rs.100 crore may be peanuts for large conglomerates, Rs.10 crore may be significant for professionals; so skin in the game is a function of relative situation and not an absolute number. The real skin in the game is when sponsors, fund managers and directors invest in the scheme aligning their interests with that of investors. Some of the well capitalized fund houses and their associates have well publicized integrity issues and punitive actions that have been taken by the Securities and Exchange Board of India. Thus higher capital is no guarantee of integrity. There are enough empirical evidence that larger a balance sheet neither is a guarantee for seriousness nor for integrity. With high net worth, we are giving wrong signals to investors about an illusion of a safety net. If any thing goes wrong with investments, the high net worth will take care of the losses.
Penetration by opening new branches is an idea whose time has gone. In an era of Internet, physical presence is less significant. There are third-party execution platforms such as registrars and stock exchanges which ensure that even though the fund house does not have presence, investors have smooth execution capabilities across the entire country. Excessive emphasis and economic incentive for selling in remote areas actually makes investors from these areas exposed to predatory mis-selling and ultimately they loose faith in such instruments. E-commerce in India is highly successful and should be embraced with an open mind rather than insisting on physical infrastructure.
A financial product is very different from a banking product. Such products require financial professionals with passion and expertise to educate and convince clients of the benefits of the investment process. Investor education is a process and would be achieved by proactive investment professionals. The US has more than 600 AMCs whereas India has just 50.
We have enough checks and balances in place to ensure that investors are protected from professional misdemeanours. Besides, safeguarding one’s reputation is of paramount importance for professionals as, often, this intangible asset is the only one they possess. Hence I intuitively feel that they are likely to exercise much greater care compared with a conglomerate for whom this is only one of many activities. Why not reduce the capital requirement or do away with it all together? After all, if entry barriers have to be imposed, let them be intellectual rather than monetary.
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