Companies & Sectors
Debt levels should be seen in context of business growth: Mistry
Tata Sons' Chairman Cyrus P Mistry has said that debt levels of some of the group companies should be seen in the context of business growth, increasing cash from operations, and capital projects underway which will lead to future growth.
 
Mistry said this during an interview with Tata Group's online platform -- tata.com. The interview was published on Tuesday. 
 
When asked about the significant debt levels of some of the group companies, Mistry replied: "This has to be seen in the context of business growth, increasing cash from operations, and capital projects underway which will lead to future growth."
 
"As the group has been growing significantly in the past, the total capital employed has also grown. Proportionately, there has been increase in debt."
 
According to the Tata Sons' Chairman, over the last three years, the gross debt across the group has increased by about two per cent per annum in US dollar terms, while cash and equivalents have grown at over 10 per cent, leading to a reduction of 3.3% in net debt in the same period. 
 
"This excludes our financial services businesses, where debt is integral to the product offering and, hence, their model is different from other businesses," Mistry elaborated.
 
"As of March 2016, the group had a net debt of about $24.5 billion. Capex has been on average $9 billion in each of the last three years. In the financial year 2016, cash from operations reached $9 billion a year and exceeded the capex."
 
Mistry further said: "At the group level, therefore, the aggregate debt is not something I feel concerned about."
 
"In fact, such aggregations at the group level could mislead, as the companies which have high cash generation, capex and debt are not all necessarily the same, and resources of different companies are not fungible with one another, as they are distinct legal entities with different shareholders."
 
"Of course, for a more meaningful discussion, these numbers would require to be viewed at each company's level."
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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SBI's bond issue to set pricing benchmark for others
Credit rating agency Moody's Investors Service on Wednesday said the State Bank of India's (SBI) issuance of additional tier 1 (AT1), Basel III compliance securities would set the pricing benchmark for other issuers.
 
Moody's said the SBI's issue price would also provide Indian banks with an alternative funding option.
 
"We expect more Indian banks will look to raise capital via this route to overcome some of the limitations of the domestic bond market," Alka Anbarasu, Vice President and senior analyst was quoted as saying in a statement.
 
"In particular, most Basel III securities issued by the banks domestically have been privately placed, thereby offering limited liquidity for investors," she added.
 
On Wednesday Moody's assigned a B1 (hyb) rating to to the perpetual non-cumulative capital securities issued by SBI, Dubai International Financial Centre (DIFC) branch. 
 
The terms and conditions of the capital securities incorporate Basel III-compliant non-viability language in accordance with Reserve Bank of India (RBI) guidelines, and will qualify as AT1 capital securities.
 
The securities are issued under SBI's $10 billion Medium Term Note (MTN) programme, via the bank's DIFC branch.
 
According to Moody's the other recent measures like capital infusion by the Indian government and issue of securities will boost SBI's loss absorbing capacity and help in managing its bad loans.
 
The credit rating agency said it does not consider the securities as high trigger capital securities.
 
"This is because even though the trigger threshold is above the Basel recommended level, Indian AT1 securities will not absorb losses prior to the trigger events as defined by the RBI. Their loss absorption is at the point of non-viability and not in advance of a bank failure," Moody's said.
 
This contrasts Moody's interpretation high trigger capital securities are designed to absorb losses prior to a bank-wide failure.
 
Moody's also said that with SBI's majority stakes owned by the Indian government, it does not assume that the AT1 securities -- which are designed to absorb losses -- will receive extraordinary government support.
 
India adopted the use of AT1 securities on April 1, 2013. Since then Indian banks have issued about Rs 106 billion ($1.6 trillion) of Basel III-compliant AT1 securities in the domestic market.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Oklahoma’s Top Court: Companies Can’t Set Own Rules for Injured Workers

This story was co-published with NPR.

 

A national campaign to rewrite state laws and allow businesses to decide how to care for their injured workers suffered a significant setback Tuesday when the Oklahoma Supreme Court ruled that Oklahoma's version of the law is unconstitutional.

 

The 2013 legislation gave Oklahoma employers the ability to "opt out" of the state workers' compensation system and write their own plans, setting the terms for what injuries were covered, which doctors workers could see, how workers were compensated and how disputes were handled. The statute was backed by the oil and gas industry and retailer Hobby Lobby.

 

Buoyed by the success in Oklahoma, proponents took the idea nationwide as a coalition led by Walmart, Lowe's and several of the largest retail, trucking and health care companies sought to pass similar laws across the country. Bills and draft proposals have been floated in Tennessee, South Carolina, Georgia, Mississippi, West Virginia, Wisconsin and Illinois.

 

Last year, an investigation by ProPublica and NPR found that the plans typically had lower benefits and more restrictions than workers' comp. The story was part of a series on how states have been dismantling workers' comp, which was designed a century ago to protect businesses from lawsuits while providing medical care and lost wages to workers who had been hurt on the job.

 

Tuesday's decision is the latest in a series of state Supreme Court rulings that have struck down several business-driven workers' comp laws featured in the ProPublica and NPR investigation.

 

The Florida Supreme Court struck down laws that placed strict caps on attorney fees and limited workers to two years of temporary disability pay regardless of whether they were able to return to work. Two-year caps have also been passed in California, North Dakota, Oklahoma, West Virginia and Texas.

 

In addition, the top Oklahoma court in April overturned a provision that drastically cut compensation for workers who suffered permanently disabling injuries. Florida, New York and Tennessee have also significantly reduced benefits for such injuries in the past 13 years, but those provisions are still in place.

 

The stories also prompted two groups — one of academics and one of workers' comp regulators — to schedule separate forums later this month to discuss the various changes that have occurred and ways to improve workers' comp.

 

Oklahoma's ruling leaves Texas as the only state that lets employers opt out of workers' comp insurance.

 

Bob Burke, a longtime workers' comp attorney who has filed several successful challenges to Oklahoma's new law, called opt out "the biggest attack on the American worker" since he started practicing law.

 

Had the Supreme Court not acted, the Oklahoma opt-out law "would have deprived injured workers out of necessary surgeries and weekly benefits," he said in an email. "Opt out also would have allowed companies to shift the cost of paying for work-related injuries to Medicare, Medicaid and Social Security."

 

Bill Minick, a Dallas lawyer whose company PartnerSource wrote most of the Oklahoma opt-out plans and about half of those in Texas, said in a statement that the ruling was specific to "Oklahoma's unique constitution." He vowed that his company and other supporters would continue their efforts to promote the alternative plans in other states.

 

"We believe it's critical to provide better care and benefits for injured workers, decrease the number of disputed claims and significantly decrease insurance premiums and claim costs for all employers," he said.

 

The Oklahoma case involved an employee at Dillard's department store who injured her neck and shoulder while lifting shoeboxes in 2014. Dillard's, which had opted out of workers' comp and created its own benefit plan, initially paid for her medical care. But the company later denied her claims, insisting that any further damage and surgeries she might need were due to a preexisting degenerative condition and not her injury at work.

 

In a 7–2 ruling, the justices found that such opt-out plans were unconstitutional because they treated one group of injured workers differently from all other injured workers in the state. In a concurring opinion, Justices Noma Gurich and Tom Colbert noted that while most Oklahoma workers have 30 days to report an injury and can request a hearing before a judge, Dillard's employees had to report injuries by the end of the workday and could only appeal in writing to a committee made up of people picked by the company.

 

The court sent the case back to the state's workers' comp commission to determine whether the injury was work-related and what benefits, if any, the woman should receive.

 

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

 

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