Government says it is ready with CCI norms for M&As

Although the government has operationalised several provisions of the Competition Act, it is yet to notify Sections 5 and 6, which mandate companies to seek the CCI's go-ahead

The Indian government on Monday said that it is ready with the regulations to give teeth to the competition watchdog Competition Commission of India (CCI) for examining mergers and acquisitions (M&As) and would notify it once the Commission develops expertise in tackling such cases.

"A lot of capacity-building is still required (in the CCI). If we notify it (merger norms) today, you know we are not ready because after we notify it a lot of people will come, it will become a very major problem. We must be ready in terms of capacity—staff, expertise and other areas," corporate affairs minister Salman Khurshid told PTI.

Although the government has operationalised several provisions of the Competition Act, it is yet to notify Sections 5 and 6, which mandate companies to seek the CCI's go-ahead.

The ministry of corporate affairs has held extensive deliberations with industry and other stakeholders on the sections relating to takeovers and issues like the time period for vetting M&As.

Mr Khurshid said that all the issues raised by the industry have been addressed and now it was time to strengthen the CCI.

"I think every issue that industry has raised, we have addressed them satisfactorily. They have turned back with a reasonable look of satisfaction," he said.

After notification of the sections, all mergers which would increase the combined assets of the merging entities to more than Rs1,000 crore or raise the turnover to Rs3,000 crore, would require the CCI's approval.

Sources had earlier said that the CCI would hire about 180 personnel for various posts, including that of an adviser.

The CCI, currently employs about 50 professionals with several persons on deputation from various government departments for one year only.

In May last year, the government notified Sections 3 and 4 of the CCI Act, empowering the Commission to take up cases pertaining to anti-competitive agreements and abuse of dominance.

The Commission has become fully functional early this year with the appointment of chairman Dhanendra Kumar and other members. It draws its powers from the Competition Act, passed by Parliament in 2002.
 

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PE-VC space may see big-ticket deals this year, say experts

Sectors likely to attract maximum number of PE-VC transactions are clean-tech, consumer products & services, microfinance, mobile VAS & consumer Internet, aerospace, defence and the rural & healthcare space

Big-ticket deals in the private equity (PE) and venture capital (VC) space are likely to make a comeback this year as the downturn has made valuations more realistic and economic conditions are showing signs of stability, believe experts.

"There is definitely an upturn in terms of the quality of deals in the recent past. Besides, the slowdown has brought more sanity and clarity in the investing scenario with valuations of companies (the) world over plummeting last year due to an adverse impact on their fund-raising plans," Reliance Venture Asset Management chief executive Harshal J Shah told PTI.

Echoing a similar view, VCCEdge research director Rohit Madan said, "There was an aura of uncertainty which is now lifting. It was more about sustenance than expansion. As economic conditions stabilise and credit markets return, funds are coming back to the table and looking at new deals."

According to VCCEdge, the financial research platform of VCCircle.Com, private equity investments in India in the first two months of this year stood at $465 million. Meanwhile, the total number of VC investments announced during February this year stood at three amounting to $11 million as against eight deals worth $31.10 million in the year-ago period.

Elaborating further, Mr Shah said that the market was seeing a lot of good and valuable deals coming at the 'right valuations'.

Besides, the quality of deals improved because the downturn has made valuations more realistic and has resulted in manageable expectations among entrepreneurs and investors in terms of executing business plans, he added.

"I see a lot more conservative but realistic valuations and a greater deal flow in 2010 as compared to 2009," Mr Shah said.

VCCEdge's Mr Madan believes that though there will definitely be some big-ticket deals in the coming months, it is unlikely that they will match up to 2007 or even 2008 levels.

The sectors that are likely to attract maximum number of PE-VC transactions are—clean-tech, consumer products & services, microfinance, mobile VAS & consumer Internet, aerospace, defence, rural and healthcare space.

However, SMC Capitals equity head Jagannadham Thunuguntla said, "The deal volume may remain lacklustre in the near future, as valuations have stretched on the back of strong capital market rally and PE investors are unable to match up to that speed."
 

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S Tel meets telecom minister A Raja on security issues

Officials from telecom company S Tel, which has been asked to stop services due to national security concerns, have met telecom minister A Raja to resolve the issue

Officials from telecom company S Tel, which has been asked to stop services due to national security concerns, on Monday met telecom minister A Raja to resolve the issue, reports PTI.

S Tel, which offers mobile services in three circles of Himachal Pradesh, Bihar and Orissa, was asked to stop operations last week as it is yet to get security clearance from the Intelligence Bureau (IB).

The IB nod is a must for any telecom firm to start services, senior officials in the Department of Telecom said, adding that the matter was likely to be resolved soon as there was no other concern except pending security clearance.

However, when contacted, S Tel said that services to its existing customers were still functional and the company was hopeful that the matter would be resolved soon.

The company has licences for three more circles of Jharkhand, Jammu & Kashmir and Assam, but is yet to start services there.

Bahrain Telecommunications Company (Batelco), which has 42.7% stake in S Tel, has entered into a partnership with Islamic investment bank Global Banking Corporation (GBC), which has acquired 11% stake in S Tel for $50 million. GBC’s buying 11% in S Tel will indirectly raise Batelco's stake in S Stel by 6.3%.
 

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