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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

New US healthcare Act to hit Indian IT’s profitability
Law extends increased visa fee regime for skilled workers by a year

Washington/New Delhi, December 23
A new US healthcare law related to 9/11 attacks may erode the profitability of Indian IT companies, among others, as it seeks to raise funds by continuing an increased visa fee regime for skilled workers.

President asks bankers to stick to high standards of probity
Mumbai, December 23
President Pratibha Patil unveiling a postage stamp on Central Bank of India on the occasion of the bank’s 100th foundation day in Mumbai on Thursday.
The arrest of its director, Maninder Singh Johar, in the loans-for-bribes scam overshadowed the centenary celebrations of the Central Bank of India, where President Pratibha Patil asked bankers to stick to high standards of probity.
President Pratibha Patil unveiling a postage stamp on Central Bank of India on the occasion of the bank’s 100th foundation day in Mumbai on Thursday. — PTI



EARLIER STORIES



Banks against corporates’ entry into banking: RBI
Mumbai, December 23
Banks have advised the Reserve Bank against allowing industrial houses to enter banking space, even as industry associations, NBFCs and MFIs have been in favour of corporates’ entry into banking.

BMW launches Rs 29.9 lakh ‘X1’ SUV
President BMW India Andreas Schaaf poses with BMW X1 in New Delhi on Thursday. The car is priced between Rs 22 lakh and Rs 29.9 lakh. New Delhi, December 23
To strengthen its leadership position in the Indian luxury car market, BMW India today launched a new sports utility vehicle, ‘X1’ with a price tag of up to Rs 29.9 lakh (ex-showroom Delhi). The company has also increased production at its Chennai plant to 8,000 units annually this month from 5,400 units earlier on a single shift in order to meet increasing demand.

President BMW India Andreas Schaaf poses with BMW X1 in New Delhi on Thursday. The car is priced between Rs 22 lakh and Rs 29.9 lakh. — AFP

Competition Commission writes to aviation ministry
Regulator wants to know whether the recent airfare surge was due to collusion among airlines
New Delhi, December 23
In the wake of a surge in airfares charged by most domestic airlines, the Competition Commission of India (CCI) has written a letter to the Civil Aviation Ministry to ascertain whether carriers acted in unison to hike ticket prices.

Reliance MediaWorks inks pact with Russian World Studios
Mumbai, December 23
Anil Ambani group company, Reliance MediaWorks, said that it has inked a Memorandum of Understanding (MoU) with Russian World Studios (RWS) and Obyadinennaya Gosudarstvennaya Kinokollektsia (OGK).

Sebi bars Pyramid Saimira promoters for inflating profits
Mumbai, December 23
Market regulator Sebi has barred Pyramid Saimira promoter P S Saminathan from share trading and being a director in any listed company for 10 years after the company was found inflating its profits during 2007-08.





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New US healthcare Act to hit Indian IT’s profitability
Law extends increased visa fee regime for skilled workers by a year

Washington/New Delhi, December 23
A new US healthcare law related to 9/11 attacks may erode the profitability of Indian IT companies, among others, as it seeks to raise funds by continuing an increased visa fee regime for skilled workers.

India slammed the move as ‘retrograde’ and the Indian IT industry said it was disappointing that the US is levying taxes only on overseas companies to meet many of its internal funding needs.

The James Zadroga 9/11 Health and Compensation Act of 2010 seeks to create a $4.3-billion fund to provide free medical treatment to those suffering from illnesses contracted while clearing the debris at the Ground Zero in the aftermath of the 9/11 terror attack.

The bill passed last night will require an estimated budget of $4.3-billion over a 5-year period will primarily be funded by taxing goods and services sourced from contractors in countries like India, China and Thailand, which are outside the purview of WTO’s agreement on government procurement.

It will also be funded by continuation of an increased fee on certain categories of H-1B and L1 visas - that would mainly impact Indian IT companies - and the continuation of a fee on some travellers to this country. The US had hiked the visa fee in August this year to fund border security and was to be valid till 2014. It will now be in force till 2015.

The previous hike was expected to cost the Indian IT industry an additional $200 million a year in visa fee. Several Indian IT firms avail H-1B and L-1 visas annually to fly their software engineers to the US for working at their clients’ locations.

In a letter to US Trade Representative Ron Kirk, Commerce and Industry Minister Anand Sharma said: “Passing of such a legislation would to my mind be a retrograde step for greater trade engagement.”

“US lawmakers seem to have developed a new practice of unfairly taxing foreign companies to pay for domestic issues,” industry IT industry body Nasscom said.

Commerce Minister Sharma said the issue of visa fee has caused considerable concern and apprehension to the Indian industry. He said the new law ‘will send a negative signal to Indian investors who have remained firmly committed to partnering American companies and have supported jobs even at the peak of economic crisis’. 

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President asks bankers to stick to high standards of probity
Tribune News Service

Mumbai, December 23
The arrest of its director, Maninder Singh Johar, in the loans-for-bribes scam overshadowed the centenary celebrations of the Central Bank of India, where President Pratibha Patil asked bankers to stick to high standards of probity. Johar was among the senior executives of various financial institutions to be arrested by the CBI recently, for allegedly granting loans to borrowers in lieu of bribes.

Some recent odd aberrations, Patil said, should be a lesson for all banks which should check their procedural and monitoring mechanisms.

“All procedures and due diligence, consistent with approved guidelines must be adhered to while approving loans by competent authorities,” she added.

The President went on to added that incidents similar to these should not occur again. She went on to say that banks should build transparent and accountable systems that prevent financial improprieties.

Patil lauded the Indian banking system for the minor impact suffered on account of the global financial crisis. She, however, said lessons from the crisis should never be forgotten.

Patil went on to lament that Indians continued to be under-banked. “Only 45 per cent of Indians have bank accounts," Patil said.

The President went on to note that there was just one bank branch for 16,000 people. “No doubt the banking system in the country has grown, but it has enormous possibilities of expansion considering that it is still to reach the unbanked areas,” she concluded.

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Banks against corporates’ entry into banking: RBI

Mumbai, December 23
Banks have advised the Reserve Bank against allowing industrial houses to enter banking space, even as industry associations, NBFCs and MFIs have been in favour of corporates’ entry into banking.

“Banks were not in favour of the proposal due to the unsavoury past experience in India and abroad and that large capital buffer that would be available to the banks sponsored by industrial/business houses would create an uneven playing field with the existing banks," the RBI said. RBI also said those who argue against entry of industrial houses to promote banks said any such move will aggravate the already skewed concentration of wealth and political influence, besides creating an uneven playing-field with existing players.

Industry associations and NBFC and MFI sectors have been generally in favour of permitting industrial houses to promote new banks.

The arguments in favour are based on the premise that talent of industrial and business houses, which have the entrepreneurial and managerial talent in running asset management companies, mutual funds and insurance companies and have successfully penetrated into rural India, could be gainfully harnessed in the banking sector.

They further said financial inclusion requires higher scale of operations which the industries would be able to bring by deploying large capital.

Those against granting such licenses fear that there would be ‘connected lending’ by combining banking and commerce. — PTI

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BMW launches Rs 29.9 lakh ‘X1’ SUV

New Delhi, December 23
To strengthen its leadership position in the Indian luxury car market, BMW India today launched a new sports utility vehicle, ‘X1’ with a price tag of up to Rs 29.9 lakh (ex-showroom Delhi). The company has also increased production at its Chennai plant to 8,000 units annually this month from 5,400 units earlier on a single shift in order to meet increasing demand.

The company said it expects the X1 to be its biggest volumes driver in India.

“Already we have 1,000 orders for the BMW X1 and we are sold out for the first quarter of the next year. We expect the X1 to be the biggest volume model for BMW in India,” BMW India President Andreas Schaaf told reporters here. The vehicle will be available in both petrol and diesel variants.

While the petrol option will be available for Rs 22 lakh (ex-showroom, all-India), the diesel variant will have two options priced at Rs 23.9 lakh and Rs 29.9 lakh (ex- showroom, all-India), respectively, the company said. — PTI

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Competition Commission writes to aviation ministry
Regulator wants to know whether the recent airfare surge was due to collusion among airlines

New Delhi, December 23
In the wake of a surge in airfares charged by most domestic airlines, the Competition Commission of India (CCI) has written a letter to the Civil Aviation Ministry to ascertain whether carriers acted in unison to hike ticket prices.

“We have not taken a prima facie view on the issue as yet and neither have we started any investigation. Had we taken a prima facie view, we would have launched investigation ourselves,” CCI sources said, affirming that a letter has been written to the ministry seeking facts on the matter.

“Our suspicion arose on the basis of media reports and the statements issued by the Civil Aviation Minister (Praful Patel) on the matter,” a source said.

“The Civil Aviation Ministry is yet to respond,” they said, adding that the anti-trust watchdog has sought information on airfares since June this year to ascertain whether the airlines acted as a cartel to hike airfares.

Last year too, the competition regulator had sent notices to airlines whether they were acting together to raise or lower airfares. The airlines had then replied in the negative.

The recently-set up Civil Aviation Economic Advisory Council (CAEAC) created this working group to suggest measures to protect consumer interests, including ensuring transparency in airfares.

The group, which would submit its initial report by December 30, would examine the existing system of passenger fare structuring by all scheduled domestic airlines and the manner in which the passenger fares are disclosed to the travelling public.It would also recommend improvements in the system of monitoring of airfares by DGCA, after studying the international best practices.

At its first meeting earlier this month, the CAEAC, set up by the Ministry, had created the working group to take a closer look at the issues concerning fixing of airfares.

The issue had assumed significance after the overall airfare levels, particularly the spot or last-minute fares, had shot up several folds even when the demand for air travel was not high.

For the past several years, airfares have become ‘dynamic’ and their levels depend on the market demand. — PTI

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Reliance MediaWorks inks pact with Russian World Studios

Mumbai, December 23
Anil Ambani group company, Reliance MediaWorks, said that it has inked a Memorandum of Understanding (MoU) with Russian World Studios (RWS) and Obyadinennaya Gosudarstvennaya Kinokollektsia (OGK).

The MoU was signed during the India visit of Russian President Dmitry Medvedev, a press release issued here today stated.

Russian World Studios is one of the largest private film companies in the Russian market and has produced several projects, both for TV and the big screen. It also owns two studios which are spread across 22,000 sq m.

RWS is a part of JSFC 'Sistema', a large diversified financial corporation in Russia and the CIS serving more than 100-million customers across varied industries such as telecommunications, high technology, fuel-energy complex and petrochemistry, radar and space, banking, real estate, retail, mass media, tourism and healthcare.

OGK is Russia's federal state unitary enterprise that preserves and manages the Russian film archives.

RWS and Reliance MediaWorks have associated to outsource work related to film restoration, image processing and enhancement and HD conversion from Russia to the Indian company’s facilities in Mumbai and Burbank in California, the release said. — PTI

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Sebi bars Pyramid Saimira promoters for inflating profits

Mumbai, December 23
Market regulator Sebi has barred Pyramid Saimira promoter P S Saminathan from share trading and being a director in any listed company for 10 years after the company was found inflating its profits during 2007-08.

This is probably the first case of inflating profits and revenues that has come to fore after disgracing Satyam Computer accounting scam came to the fore in January 2009. The magnitude of the wrong-doing in Pyramid Saimira Theatre Ltd (PSTL, however, may not as big as in the Satyam case.

"I hereby restrain P S Saminathan from buying, selling or dealing in securities in any manner whatsoever or accessing the securities market, directly or indirectly, and from being a director in any listed company for a period of ten years from the date of this order," Sebi said in an order.

Sebi also restrained Uma Saminathan, co-promoter and wife of P S Saminathan, from any dealing in the securities market and from being a director of any listed company for a period of five years. When contacted, Saminathan told PTI that he has not seen the order and would comment only after going through it.

The market regulator said PSTL inflated profits and revenues through fictitious entries in its accounts, disclosed the same in quarterly and annual results for financial year 2007-08 and thereby misled the public on their investment decisions. — PTI

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