US court orders fresh proceedings into claims against Satyam

 
Nearly five years after India's biggest corporate scam broke out at erstwhile Satyam Computer, a US court has ordered fresh proceedings into charges that the Indian IT firm had fraudulently induced a company, Venture Global Engineering, into a partnership.

Satyam, whose founder and then Chairman B Ramalinga Raju, had admitted in January 2009 a long-running fraud at the company, was later acquired by Tech Mahindra and its entire business was integrated with the new owner earlier this year.

The latest ruling by a US Appeals Court follows an earlier direction issued by a Districts Court of Michigan, which had dismissed claims made by Venture Global Engineering (VGE) against Satyam with regard to a joint venture.

In its order dated September 13, the Appeals Court has reversed the judgement of the district court and has ordered further proceedings into the matter.

In its appeal, VGE and the Larry J Winget Living Trust alleged that Satyam Computer Services "induced" them to form a joint venture by "misrepresenting its financial stability and general suitability as a business partner."

Satyam had argued that VGE should have brought their claims during an arbitration in 2005. The arbitrator had ruled that all of VGE's ownership interest in the 50:50 JV - Satyam Venture Engineering Services (SVES) - be transferred to Satyam. VGE had complied with the order at that time.

After Raju confessed to a fraud in a letter to investors in 2009, VGE in December 2010 filed an 'instant action' case, alleging that Satyam was engaged in a massive fraud even before the joint venture started.

"We hold that because plaintiffs' (VGE and the Trust) complaint adequately alleges that Satyam wrongfully concealed the factual predicate to plaintiffs' claims, the defence of claim preclusion does not apply. Thus, the district court erred in granting defendants? (Satyam) motion to dismiss. We therefore reverse the judgement of the district court and remand for further proceedings," the US States Court of Appeals for Sixth Circuit ruled.

According to the court documents, Satyam had approached Venture Industries Australia, a company owned by the Trust, for a joint venture to provide auto industry engineering services.

Satyam told the Trust that it was an attractive business partner, with a strong brand and recognition as a leading global IT company, having a broad base of automotive customers.

It further said it was a publicly traded company and was audited, liquid, and financially stable.

The Trust later formed a separate legal entity, VGE, which eventually formed a JV in the year 2000 with Satyam. The relationship, however, soured in 2005 and the matter reached arbitration.

Samsung launches Galaxy Note 3 in India, priced at Rs 49,900

Samsung has launched the Galaxy Note 3 and the Galaxy Gear smartwatch in India. The products were announced a couple of weeks ago at the IFA, a trade show for consumer electronics and appliances held annually in Berlin.

While both devices will be available in stores nationwide from September 25, 100 stores in Bangalore, Mumbai and New Delhi will have them available for customers to experience starting September 18.

The Galaxy Note 3 is slightly larger, but lighter and slimmer than its predecessor. It features a 5.7 inch full HD Super AMOLED display (1920 x 1080 pixels) and is powered by a 1.9 GHz eight core processor with 3GB RAM. It runs Android 4.3 (Jelly Bean), and is heavily customised with Samsung's TouchWiz user interface. It has a 13 MP camera with features such as smart stabilisation and an LED flash. It comes with a new stylus, S Pen, that triggers features such as action memo, scrapbook, screen write, S finder and pen window. The Galaxy Note 3 weights 168 gm and has a 3200 mAh battery. It is priced at Rs 49,900.

Just a couple of months ago, Samsung introduced an exchange scheme for Galaxy Note II, under which selected smartphones could be exchanged for up to Rs 10,000 off on a new Samsung phone. Under this scheme, the Note II sold for Rs 27,500. But now, its price has been slashed, and it sells for Rs 27,000 without any scheme.

Vineet Taneja, Country Head, Samsung Mobile & IT, says: "The Galaxy Note 3 represents the next evolution of the Galaxy Note experience. At Samsung, our goal is not just to make great devices, but to empower consumers to truly experience, enjoy and fulfil their busy life with our devices, like the Note 3 and the Gear."

Samsung's new Galaxy Gear smartwatch, priced at Rs 22,990, connects to select Galaxy smartphones, and shows notifications and quick previews of incoming text messages, email, and the like.

Sony and few other companies have been selling smart watches for over a year.

Samsung also said it will bring the Galaxy Note 10.1, 2014 edition, to India in October.

NTPC plans over Rs 20,000 cr capex in FY14

National Thermal Power Corporation (NTPC) has planned a capital expenditure (capex) of over Rs 20,000 crore during the current financial year for its expansion.

The firm added 4,170 MW of capacity, including 1,000 MW through its joint venture projects, in 2012-13. The company's power generation capacity has reached 41,187 MW.

"We had a capex of Rs 19,926 crore during the previous financial year (2012-13) and plan to raise it to Rs 20,200 crore this fiscal (2013-14)," the PSU's Chairman and Managing Director, Arup Roy Choudhury, said while addressing the shareholders on Tuesday at the company's Annual General Meeting.

NTPC awarded contracts for work of 8,521 MW capacity projects, Choudhury said.

The CMD said the Cabinet Committee on Investment (CCI) has restored coal linkage to the company's proposed 1,980 MW North Karanpura power plant in Jharkhand.

The Coal Ministry in 2008 had withdrawn fuel linkages to the NTPC plant following a tiff with the power ministry over the location of the project. The government also withdrew the de-allocation of NTPC coal blocks in Jharkhand - Chatti-Bariatu, Kerandari and Chatti-Bariatu (South).

The government sold 9.5 per cent of its stake in the thermal power generating company last year. Following this disinvestment, the government shareholding in NTPC now stands at 75 per cent.

The offer for sale garnered over Rs 11,400 crore for the government.

Meanwhile, Prime Minister Manmohan Singh is scheduled to dedicate the PSU's Sipat thermal power project in Chhattisgarh to the nation on Thursday.

The 2,980 MW Sipat project has three units of 660 MW in stage I and 2 units of 500 MW in stage II, which are already operational.

YES Bank ties up $255 mn foreign currency loan

Private sector lender YES Bank has tied up a loan facility equivalent to $255 million in dual currency from international lenders.

The syndicated loan facility comprises $180 million and Euro 58 million, the bank said in a statement. The loans will be utilised for corporate purposes and for trade finance, it said.

The commitments, which have a maturity of 1 and 2 years, have come from 11 banks in eight countries across US, Europe, Middle East and Australia, it said.

YES Bank's statement said the recent move by the Reserve Bank of India (RBI) on offering a swap facility to banks for their foreign borrowings at 1 percentage point below the market rate will reduce the landed rupee cost of the loan and make it competitive as against rupee borrowings of the same maturity.

A clutch of banks, including the country's largest lender State Bank of India and international ones like ANZ Banking Group and HSBC, played the lead arrangers and book-runners for the transaction, the statement said.

YES Bank's scrip was trading 2.13 per cent up at Rs 297.90 a piece on BSE, whose 30-share benchmark Sensex was trading down 0.11 per cent in afternoon trade

More seats at the IITs: The Wages of Populism

The council of the Indian Institutes of Technology (IITs) has decided to increase student intake in the IITs by 60 per cent, according to a report in Mint, published Tuesday.

While no time frame for this increase in seats was cited in the report, the decision, if true, appears more populist than practical.

The minister in charge of technical education in the central government - in this case Union Human Resource Development Minister Pallam Raju - is part of the Council, and such statements of intent always vibe well before the general elections, due next year.

The 2008 decision to increase the number of IITs also had distinct political undertones. There are 16 IITs now, nine of which began in or after 2008. The new IITs were announced by the late Minister of Human Resource Development Arjun Singh on March 28, 2008. A year later, in the 2009 general elections, the Congress emerged as the single largest party and formed the second United Progressive Alliance government.

Why is such a dramatic increase in intake not practical? Business Today, in its May 12 edition, had noted that the IIT Brand has been broken and one of the key reasons for it was the sudden expansion in their number. (See http://businesstoday.intoday.in/story/brand-iit-losing-sheen/1/194169.html)

Many of the new IITs (the ones at Bhubaneshwar, Gandhinagar, Hyderabad, Jodhpur, Ropar, Patna, Indore and Mandi) don't have adequate physical infrastructure. Neither have they enough teachers. The teacher-student ratio even in the older IITs is trending at 1:16 while ideally it should be 1:10. Quality recruitments have not kept pace with the sudden expansion in the number of seats.

In 2007, IITs had 5,537 seats. This jumped 74 per cent to 9,647 by 2012, with most of the expansion happening in the reserved categories. All this has resulted in a dilution in the quality of education imparted.

The IITs should perhaps focus more on quality than quantity. India produces enough engineers but only a handful are employable. Surveys have shown that only one in four engineers graduating from colleges is fit to be employed. If the country has to get back its lost growth momentum, it needs many more skilled and productive engineers to build its bridges, roads, power plants and airplanes.

Gold import squeeze hits jewellers hard ahead of festive season

Finance Minister P. Chidambaram and his fellow wonks will be all smiles with plunging gold imports in the country, but the shortage of bullion ahead of the festival and wedding season could be a boomerang they had not accounted for.

Gold imports were just about 3.5 tonnes in August - about a tenth from year-ago period. This is against an average 40 tonnes of gold a month that the domestic jewellery business consumes, says C. Vinod Hayagriv, managing director at one of India's oldest jewelers, C. Krishniah Chetty & Sons in Bangalore.

Leading jewellery retailers are worried.

"There is a short supply of gold in the market, and we are managing hand-to-mouth," says Bhaskar Bhat, Managing Director at Titan Co. Ltd, which owns the Tanishq jewellery chain of more than 150 stores. "We are somehow managing, but I can say we have less of a problem compared to many others in the market."

"I think we are going to see a big shortage in about a fortnight's time as we get close to the festival season," says Harmesh Arora, spokesman at Bombay Bullion Association Ltd.

Festival season sales in India start typically around end-September just before the Durga Puja celebrations - beginning October 9 this year - and go on until after Diwali, falling on November 3 this year. Wedding season runs between October and early January.

What caused the sharp decline were a series of measures by the finance ministry and the Reserve Bank of India (RBI) to rein in gold imports, the second highest imported item in 2012-13 after crude oil and petroleum products.  One rule change had a condition imposed on jewellers or banks that they would have to export a fifth of their gold imports. The resultant confusion and absence of any clarification from the government side led to a sharp decline in imports.

In routine course, jewellers buy bullion from banks, which import and sell, but the export rule has crimped the supply from banks. "We are not able to import because we cannot pay upfront for gold, and take the exposure [to the dollar on exports]," says P.G. Jayakumar, CEO at Dhanlaxmi Bank.

Gold coin sales have almost come to an end after All India Gems & Jewellery Trade Federation, a grouping of jewellers, recently advised its members to suspend their sale.

"We are gradually closing down our gold coin business because we are not able to  import gold," says P.E. Mathai, CEO at Muthoot Precious Metals Corporation, citing the new regulations. "There is a shortage of gold in the market for those who follow ethical business practices."

Bullion Association's Arora says what has met part of the demand is people who bought gold at lower rates before selling back to jewellers taking advantage of the price rally. Twenty-four-karat gold is trading above Rs 31,000 for 10 grams. Part of the gold from Indian households is getting recycled easing the supply to some extent, but traders say this will taper after some time.

Jewellers, off the record, say bullion is available in the grey market at prices lower by Rs 250-300 per gram as they have been smuggled in but that is not an option for the large jewellers who source their gold only through legal channels.

According to data from industry body World Gold Council, which tracks gold imports by the calendar year, India imported 859.7 tonnes of gold in 2012. To be sure, gold imports in the past have been higher at 958.2 tonnes in 2010 and 969 tonnes in 2011. But what hurt the Indian economy in 2012 and first two quarters of calendar year 2013 was the double whammy of rising gold prices and an appreciating dollar.

India's current account deficit (CAD), or the difference in imports and exports net of remittances and transfers, stood at nearly $88 billion in 2012-13, or 4.8 per cent of gross domestic product, primarily because of surging gold imports by value. The government target for CAD, $78.2 billion in 2011-12, in 2013-14 is $70 billion.

Going by import numbers of August and September, the government may be on target to reduce gold imports, even if there isn't supporting evidence of demand tapering on the ground. In January-June of 2013, gold imports were 553.1 tonnes - averaging over 92 tonnes a month. In July and August, it fell sharply to an average of 23.75 tonnes a month. The trend of lower imports in August is expected to continue in September also, according to gold industry sources. They expect the government to ease rules in October if the CAD improves a little bit.

The World Gold Council predicts some stability in the days to come. "We hope to see the situation to ease during the festival season with the government issuing the necessary clarifications on gold imports," says P.R. Somasundaram its managing director, India.

BSE Sensex surges over 200 points as Sebi eases norms for FIIs

The BSE Sensex shot up by 293 points in opening trade on Monday, mainly on the back of a flurry of buying by funds and investors.

Brokers said sentiments turned buoyant after market regulator Securities and Exchange Board of India (Sebi) allowed foreign institutional investors (FIIs) to invest in government securities without any auction mechanism so as to boost foreign fund inflows into the capital markets.

They said rise in rupee also supported the upside in equities. The Indian currency gained 90 paise against dollar to 62.58 in early trade on Monday.

Amid a firming trend in the Asian region, the 30-share Sensex gained 293.30 points, or 1.49 per cent, to trade at 20,026.06, with banking, capital goods, PSUs and power sector stocks leading the rally.

The BSE benchmark had lost over 265 points in the previous two sessions.

The 50-share Nifty rose 81.95 points, or 1.40 per cent, to trade at 5,932.55.

In the Asian region, Hong Kong's Hang Seng index rose by 1.47 per cent in the opening trade, while Japan's Nikkei would remain closed on Monday.

The US Dow Jones Industrial Average ended 0.49 per cent higher on Friday.