Mittal predicts 21% jump in steel prices

 Source:Moneylife ,April 02, 2010 03:02 PM
ArcelorMittal’s CEO forecasts a drastic increase in prices for benchmark hot-rolled coil

Lakshmi Mittal, chief executive officer of ArcelorMittal, the world's biggest steelmaker, has stoked a row over how global prices are set by telling consumers that raw material costs may push steel rates up by 21%.

"The cost of producing steel is going to go up and will be passed on to customers," Mr Mittal said in an interview, reports PTI.

Benchmark European hot-rolled coil prices will rise by $150 a metric tonne in the second quarter, he said. Steelmakers are passing on costs after Vale SA, the largest iron-ore producer, scrapped a four-decade system of annual price-setting and boosted prices for Japanese steelmakers as much as 90%.
Carmakers, the biggest users of steel, are crying foul.

The European Automobile Manufacturers' Association, which represents companies, including Volkswagen AG, PSA Peugeot Citroen and Fiat SpA, said that members want EU regulators to “tackle distortive developments” caused by the changes from mining companies.

“The necessity to increase prices is generating the ire of customers and a bitter battle is raging,” said Christian Georges, an analyst at Olivetree Securities who has tracked industry and resources for 15 years.
Mr Mittal's forecast for benchmark hot-rolled coil would mark a 21% jump from levels now of about $700 a tonne, based on Metal Bulletin data. The coiled steel is used by firms from Toyota Motor Corp, the world’s biggest carmaker, to Royal Philips Electronics NV, the largest lighting company.

Eurofer, a group representing steelmakers in Europe, accused the biggest iron ore suppliers of “illicit coordination of prices” and said it had notified the regulatory arm of the European Commission about possible anti-competitive practices. It said that a shift to shorter contracts for iron ore at higher rates may boost costs for their customers by as much as a third.

“Steel producers will have to pass these rises on to the consumers,” Eurofer director-general Gordon Moffat said in a phone interview. “It's going to create a great deal more volatility in prices.”

SBI chairman wants a reply to all email complaints within 48 hours

Source :Money life:April 05, 2010 12:50 PM

The new set of instructions from the bank authorities will lead to a big improvement in the way SBI handles its customers..

State Bank of India's (SBI) chairman OP Bhatt is seeking fast and prompt action— 
at least a reply—to email complaints filed by the Bank’s customers. 

According to an email reply (copied to Moneylife), a deputy general manager (DGM) of SBI has said: “Please note that our Chairman desires that all the email complaints, forwarded from the Corporate Centre have to be replied to the Department within 48 hrs.”

In the past, when Moneylife has forwarded complaints to the SBI chairman's office, we were pleased to receive an immediate reply from the chairman's secretariat to the effect that the complaint would be looked into.

However, there has been complete silence thereafter. These complaints simply went into limbo and nothing was heard from SBI again. Hopefully, these new set of instructions from the top will lead to a big improvement in the way the bank treats its customers.

The DGM was replying to a complaint filed by Moneylife's Veeresh Malik regarding the garbage created by SBI's Defence Colony branch in New Delhi. Earlier, the branch manager told Mr Malik that the Bank only maintains the area in front of the branch and had given a contract to collect the waste from the bank on a daily basis.

Mr Malik replied saying that there is no difference between the front and side of the branch since customers have to walk through the side area to reach the front area. Also, the main signage for the bank branch overlooks the evolved garbage dump, he added.

The branch manager had also said, “We have requested the RWA, Defence Colony to make necessary arrangements so that this area will be well maintained and clean."

Mr Malik again wrote to the Bank authorities. He said, "SBI Defence Colony Branch is located within the DDA Moolchand Shopping Complex.

To write to the Defence Colony RWA is like asking the neighbours to clean (up the mess due to) the result of your lack of attention to hygiene.

The generator is on public land, with the exhaust pointing straight towards our home. Handing over garbage collection to a sub-contractor does not eliminate the responsibility of the SBI Defence Colony Branch.

These issues are not addressed. Instead, an attempt to pass the buck seems to have been made, by stating that 'a letter has been written to the RWA'."

To this, a reply came from the DGM asking the SBI officials to reply in detail and instruct the branch manager to initiate immediate measures to rectify the position.

SEBI cuts time between issue closure and listing to 12 days

Source: Moneylife:April 06, 2010 07:39 PM

Market regulator Securities and Exchange Board of India (SEBI) has said that it proposes to reduce the time between public issue closure and listing to 12 days from the existing (up to) 22 days. This will be applicable to public issues opening on or after 1 May 2010, SEBI said in a release.

The market regulator said that the new process would require syndicate members to capture all data relevant for the purposes of finalising the basis of allotment while uploading bid data in the electronic bidding system of the stock exchanges. To ensure that the data so captured is accurate, syndicate members would be permitted an additional day to modify some of the data fields entered by them in the electronic bidding system, it said.
The registrar to the issue is required to validate the bids and finalise the basis of allotment only on the basis of the final electronic bid file provided by the stock exchanges, SEBI said.

The market regulator said that the lead managers and their agents would be responsible for the accuracy of data entry and for resolving investor grievances. Further, the application supported by blocked amount (ASBA) process would also undergo suitable modification to make it consistent with these timelines, SEBI added.

'To curb fake currency, go Indian'

Source:fe :Agencies: Thursday, Apr 01, 2010 at 1532 hrs IST





New Delhi: The Finance Ministry should encourage local manufacturing of currency paper to check counterfeits and exempt its production from excise duty, a high level committee has said.

In a report submitted to Finance Minister Pranab Mukherjee on Wednesday, the committee has recommended that the Directorate of Currency be set up to oversee research and development to add security features in currency notes.

It has called for a National R&D centre under the proposed Directorate for conducting research in areas like raw material, security features and machinery required for the production of Indian bank notes and other security sensitive items.

The nine-member committee, headed by former bureaucrat Shilabhadra Banerjee, also suggested setting up of a national-level coordinating agency for investigating the menace of fake currency notes.

According to an official statement, the committee has suggested that emphasis be laid on indigenisation of bank note paper production, security inks and coin plating.

The committee has recommended exempting currency paper manufactured in India from excise duty and suggested waiving of customs duty on imported machinery for producing bank note paper and printing.

It has also called for launching a multimedia awareness campaign by RBI to educate and help people distinguish between genuine and fake notes.

The statement said, "The Finance Minister appreciated the work done by the Committee and emphasised the early implementation of the recommendations by the Ministry."

It said the committee was constituted to review the acquisition procedure of the security features for currency notes and suggest a roadmap for progressive indigenisation of various inputs including high end machinery and security features.

Recently, Finance Minister Pranab Mukherjee had said in Mysore, "I am keenly awaiting the recommendations of this committee, after which, I plan to develop a roadmap for indigenisation (of currency paper production), in consultation with the RBI."

Salary a/cs to get 25% more interest’

Source:fe: Agencies :Monday, Apr 05, 2010 at 1528 hrs IST




 
New Delhi: Salary account holders could see their interest income rise by up to 25 per cent on the back of a new RBI rule from this month, under which banks will compute 3.5 per cent savings interest on daily basis instead of taking the lowest deposit during a month, Crisil Ratings said on Monday.

Crisil said the new method of interest computation will increase the effective interest rate on savings balances, particularly for salary account holders.

"It is estimated that for a salary account holder with a minimum savings balance between 1-2 times of the monthly salary, the increase in interest income will be between 10 and 25 per cent," it said.

The new computation method has taken effect from April 1, 2010. Earlier, banks gave interest of 3.5 per cent on savings accounts on the basis of the least deposit in an account between the 10th and the last day of each month.

The interest is credited in the account twice a year, in March and September.

As for impact on banks, Crisil said the cost of deposit for them will increase by 10-20 basis points (100 bps = 1 per cent), depending on the share and pattern of the current and savings accounts (CASA).

"This will not materially impact their profitability or lead to any significant change in the share of low-cost deposits, that is CASA in the banking system," it added.

Crisil said, however, that the impact is expected to be higher for banks that have a dominant share of salary accounts with highly fluctuating balances.

At the end of February, all the commercial banks had a total deposit of over Rs 44 lakh crore, including savings, current and fixed deposits. The country's largest lender State Bank of India has over 1.56 crore savings bank account holders.

Crisil said the average CASA levels in the domestic banking system stood at 33 per cent, with savings deposits accounting for 22 per cent as of March 2009.

But it added, "The share of savings deposits is estimated to have increased to 25 per cent as on December 2009, which would translate into an increase of 2-4 per cent in CASA levels by March 31, 2020."

While announcing the annual monetary policy for 2009-10 unveiled last April, the Reserve Bank had said, "payment of interest on savings accounts by scheduled commercial banks would be calculated on a daily product basis with effect from April 1, 2010."

Credit Suisse gets in-principle nod to establish Mumbai branch

Source:fe: Agencies :Monday, Mar 29, 2010 at 1213 hrs IST


Mumbai: Credit Suisse said that it has received an in-principle approval to establish a bank branch in Mumbai, enabling it to substantially expand the range of services it offers in the Indian market.

Once established, the Mumbai bank branch will be able to accept deposits and use its balance-sheet to provide financing to clients, complementing the capabilities of Credit Suisse's non-bank financial company in India, a press release issued here stated.

The license will also permit the bank to deal in Indian Government securities, other domestic fixed income products and foreign exchange, the release said.

"This is a key pillar of our Asia-Pacific strategy of developing our onshore presence in major markets throughout the region," Credit Suisse Asia-Pacific's CEO, Kai Nargolwala, said.

"We believe that having a local banking presence will enable us to build stronger relationships with our clients and meet more of their needs. Credit Suisse views India as a key strategic growth market for the bank globally," he said.

"We will be able to provide a much broader range of solutions to our domestic and international clients, facilitating the flow of capital and investment into India," its India Chief Executive Officer, Mihir Doshi, said.
=

Centre lost 26k cr due to Raja: CAG

Audit body says minister ignored advice, stuck to old price policy

Source: ET,Rohini Singh NEW DELHI ,April 7,2010

THE Comptroller and Auditor General (CAG) has accused telecom minister A Raja of causing a loss of over Rs 26,000 crore to the government by disregarding the advice of many experts and persisting with a faulty and outdated policy for issuing new telecom licences. 
 
    Raja, who has survived several calls for his removal over charges of corruption, ‘single-handedly’ decided to continue with the policy that cost the government Rs 26,685 crore in revenue, CAG has said in its annual report. ET has access to the report’s contents. 
 
    The explosive charge couldn’t have come at a worse moment for Mr Raja, and is likely to strengthen the hands of his many detractors. Opposition parties have been baying for his blood and the Central Bureau of Investigation has been making progress in its investigation into the charges of corruption at the Department of Telecom (DoT). 

    The CBI, in an FIR filed in November last year, accused certain DoT officials and executives of some private telecom companies of collusion in a bid to get new licences. The agency said the licences were sold without competitive bidding at a nominal rate based on prices fixed in 2001, resulting in a loss of Rs 22,000 crore to the government. In its report, CAG has lent credence to some of CBI’s charges. 

    Mr Raja could not be reached for comments despite repeated attempts

    A senior DoT official clarified that “government decisions are taken based on merit than on immediate pecuniary considerations such as interest, profit/loss, etc”. DoT also said that processing of licences is time-consuming as it involves various approvals and security clearances. CAG has sought responses from DoT on its observations. 

    CAG, a constitutional authority, audits all government departments and PSUs every year. Its reports are placed before Parliament. However, it is up to the government to take appropriate action on the findings.
    CAG’s audit of DoT relates to the issue of new pan-India licences in 2008 at Rs 1,651 crore, a price fixed in 2001 when mobile subscriber base was 45 million and industry valuations were poor. Nine companies were issued licences in a process that was controversial from the very beginning.
    DoT advanced the cut-off date suddenly and then incorporated a first-come, first-served clause which some of the bidders got to know of in advance.
    Some months later, Swan Telecom and Unitech, two of the winners, sold a large stake in their operations to overseas companies at stupendous valuations. 2G licences under ED lens
THIS triggered a furore. The audit said many experts, including the telecom secretary, had suggested to DoT that the award of new licences needed to be re-examined since the entry fee had not been revised from 2001. The 2001 fee was based on criteria that did not exist in 2008. The industry had grown bigger, richer and the subscriber base had soared to over 300 million from 45 million.
    “...It is evident from the above facts that despite the increase in number of applications and need to review the procedure, the decision to continue with the existing procedures as well as terms and conditions for the issue of UAS licences was taken by the minister of communications and IT single-handedly,” CAG has said.
    CAG has also said the telecom policy clearly stipulated that allocation of radio spectrum and grant of wireless licence was subject to availability.
    However, in case the licensee was not allocated spectrum due to non-availability, it could roll out services using wireline technology. This implied that the applications could be processed even if spectrum was not available.
    “Hence, the decision to not process the applications due to non-availability of spectrum was in contravention of the policy guidelines for issue of licence and also resulted in loss of Rs 26,685 crore to the government on account of entry fee,” the audit said.
    The CAG report would make the CBI’s case stronger, said an official of the investigative agency on condition of anonymity. 

    The Enforcement Directorate, too, has registered a case against two firms that were awarded licences through this process, once again highlighting the controversial nature of business dealings in the telecom industry. 
 
    The audit report has also pointed out that DoT did not process applications within the stipulated time of 30 days from the submission of applications and the previous telecom secretary misrepresented this fact to the Central Vigilance Commission in his letter dated March 30, 2009.

ICAI scanner on books of listed cos

Source: TFE,Sunday, Apr 04, 2010 at 0034 hrs IST Ronojoy Banerjee

 
New Delhi: The Institute of Chartered Accountants of India (ICAI) has decided to review financial statements of 150 listed companies across bourses as part of its policy to tighten accounting standards in the country after the Rs 8,000-crore Satyam scandal. Any anomaly discovered would be forwarded to the ministry of corporate affairs (MCA) and market regulator Sebi for appropriate action.

According to ICAI president Amarjit Chopra, the probe would be conducted by the Financial Reporting Review Board (FRRB). The board, set up in 2002-03, has members ranging from Comptroller and Auditor General of India officials to senior members of ICAI. “Since we do not have the powers to take action against companies (involved in fudging accounts) we will pass on the information to the MCA and Sebi,” Chopra told FE.

The accounting regulator would rely on tip-offs from industry sources and media reports to select the companies for the probe. Though Chopra did not share the names of the companies to be brought under scanner, he hinted that some big corporate brands could be probed as well. “We will pick up companies from the BSE and NSE… say the top 30 from each… mostly we rely on media reports,” he added.

Currently, ICAI is not empowered to order for the books of companies. “Our probe would start once the companies file the financial statements, which is available in public domain,” Chopra clarified.

In fact, the institute would write to the government proposing amendments to the Chartered Accountants Act, 1949. “Our proposals would be based on the recommendations made by the high-powered committee report (submitted to the government last year),” Chopra said.

The general council of the institute is slated to meet in the first week of May after which the proposals would be sent to the government. “We will seek more teeth for the FRRB… our proposal would be sent to the government before May 15,” Chopra said.

As reported by FE earlier, the government is mulling the option of giving more teeth to the accounting regulator to create more transparency for foreign audit firms practising in India. The MCA is expected to moot amendments to the Act later this year.

Apart from the probe initiated by ICAI, the corporate affairs ministry has set up a special software-based system called the Early Warning System. The EWS is expected to throw up any unnatural development based on the scrutiny of...
 quarterly results of the companies, public announcements, filing with exchanges and media reports among others.

Top 4 multinational accounting firms flouting laws: ICAI

Source :HT Correspondent, Hindustan Times,New Delhi, April 05, 2010

       
   
   
       

Top multinational accounting firms (MAFs) — PriceWaterhouseCoopers, KPMG, Ernst & Young and Deloitte Touche Tohmatsu —have flouted norms to provide services in India, a report by an Institute of Chartered Accountants of India (ICAI) committee has said.

“It has been noticed that MAFs (multinational accounting firms), entered through automatic/FIPB route for rendering consultancy services, are transgressing the permission so granted and are rendering taxation services, auditing, accounting and book keeping services and legal services,” said the committee set up to probe the alleged doctoring of accounts in the Satyam Computer Services scam.

The committee is headed by former ICAI president Uttam Prakash Agarwal.

The report, a copy of which is available with HT, said these international accounting firms are operating in India through domestic affiliates.

The Indian affiliate of PricewaterhouseCoopers, which was the auditor for Satyam Computer Services, include Price Waterhouse firms and Lovelock and Lewes. Deloitte Touche Tohmatsu has tie-ups with CC Chokshi, AF Ferguson, Fraser and Ross and SB Billimoria. KPMG has association with BSR firms and Ernst & Young has a tie-up with SR Batliboi entities.

India does not allow foreign direct investment (FDI) in accounting, auditing and book keeping services, taxation and legal services. It has also so far not made any commitment for opening of such services under the World Trade Organisation.

“These entities (the four multinational accounting firms) are not only providing services through their own establishment in India, but also through service providers in India, particularly for those services like auditing, which cannot be rendered by them under the laws of the country,” the report said.

These entities are providing assurance, management and related services circumventing the provisions of the Chartered Accountants Act, 1949 and other relevant regulations, it said.

The committee has also asked ICAI, the sector’s regulator, to maintain a mandatory record for registering international network and affiliations of Indian chartered accountancy firms.

SLB mechanism fails to take off

Source:fc: Kumar Shankar Roy Apr 06 2010 , Kolkata

The securities lending and borrowing (SLB) mechanism is yet to catch the fancy of the Indian market with no trades on 86 per cent of the 475 trading days since its launch on April 21, 2008, a study by SMC Capitals, a New Delhi-based merchant bank, revealed.

SLB mechanism allows investors to sell shares that they think are overvalued without owning them, or short selling. They do so by borrowing shares for a period by paying a charge and sell them in the market. These investors bet that they would be able to buy back shares at a lower rate and return them to the lender in time. Shares allowed in the SLB mechanism have to be a part of the futures and options (F&O) segment. NSE website lists around 190 stocks with derivatives.

After starting the SLB mechanism with seven-day contracts, Sebi revised the tenure to one month in October 2008 and 12 months in January 2010. However, the response to long-term contracts has been weak with monthly aggregate trade failing to cross Rs 1 lakh since January, data show. The highest trade of Rs 2.25 lakh was recorded in April 2009 with the help of 32 transactions.

"Unless the SLB mechanism adopts some practical initiatives, it will remain a non-starter. Margin requirements, better integration and solutions aimed at market participants are the needs of the hour. Once a mechanism is in place, continuous monitoring has to be done so as to see that the mechanism carries out its intended function," said Jagannadham Thunuguntla, equity head at SMC Capitals.

At present, clearing houses of exchanges act as authorised intermediaries of SLB transactions.

"The net needs to be widened for having authorised intermediaries. These could be large custodians. Plus, now SLB transactions can only be made in securities already trading in the F&O segment. Why should a borrower use the SLB route for keeping settlement obligations if he can utilise the single stock futures in the F&O market to cover his trades,” head of an equity brokerage asked.

In nearly two years of existence, the SLB market has seen only 136 trades with total value of Rs 8.03 lakh.

"Something or other is seriously missing with most new innovative products launched in the recent past. For instance, all markets such as SLB mechanism, interest rate futures and mutual fund trading platform are at a stand-still," said Thunuguntla.