Citizens' Issues
Mystic Kullu Valley lures foreigners to murky drug trade

The lure of drugs and quick bucks also attracts foreigners to the largely unexplored areas of Himachal Pradesh where they have become part of unorganised drug cultivation

 

The inaccessible valleys and lofty mountains in the western Himalayas are happy hunting grounds for the cultivation of cannabis and opium, police records show. They are the country's biggest drug-producing areas with a considerable quantity finding its way to Europe.
 
The lure of drugs and quick bucks also attracts foreigners to the largely unexplored areas of Himachal Pradesh where they have become part of unorganised drug cultivation.
 
Police records show that there are 50,000 acres of cannabis under cultivation in the Kullu Valley alone.
In the past five years, 70 foreigners, mainly Britons, Israelis, Dutch, Germans, Japanese and Italians, have been arrested under the Narcotic Drugs and Psychotropic Substances (NDPS) Act.
 
Two foreigners, one Dutch and another Briton, were arrested on May 10 near Manali town for possessing the MDA synthetic drug.
 
Former Himachal Pradesh police chief I.D. Bhandari said "the biggest challenge" is the isolated, inaccessible pockets in Kullu, Mandi, Chamba, Shimla and Sirmaur districts, where there are vast tracts of opium and cannabis cultivation.
 
"The lure of cheap and quality cannabis draws hordes of foreigners. For the poor locals, it's the most lucrative crop. Despite the efforts of the government to curb its cultivation, more areas are coming under it every year," Bhandari told IANS.
 
According to him, 25 percent of Indian and foreign undertrials and convicts lodged in the state's jails are involved in narco crimes.
 
The Magic Valley in the upper reaches of Malana, some 50 km from Kullu town, is known for cultivating 'Malana Cream', a prized hashish that is a purified resinous extract of cannabis, in the West.
 
Bhandari, who retired last April, said a massive crop of cannabis was destroyed by the police in the Magic Valley in 2010.
 
"Without the help of the local people, it's not possible to completely eradicate it," he added.
 
The involvement of foreigners in the drug trade in the Kullu-Manali area is nothing new. Some never return - they either disappear or marry local women, an official of the Narcotics Control Bureau (NCB) said.
 
"The police and law-enforcing agencies are not in a position to arrest such foreigners because of manpower shortage," the official told IANS on condition of anonymity as he is not authorised to speak to the media.
 
Former NCB superintendent O.P. Sharma, who was posted in the state's drug-producing areas, told IANS: "The international drug mafia is providing high-yield variety cannabis seeds imported from Holland and Russia to the local farmers. Most of the cannabis derivatives are smuggled out to countries like Israel, Italy, Holland and other European countries."
 
Politicians see an economic boom in legalising cannabis cultivation as thousands of families depend on it. They are, however, against cannabis derivatives.
 
BJP Member of Parliament Virender Kashyap said legalised cultivation of opium is the best option to check its misuse.
 
"There is a huge demand for opium in the pharmaceutical industry. If our farmers are able to meet the market demand, what is wrong in it? " Kashyap asked while speaking to IANS, adding that he's against the making of hashish and its smuggling.
 
According to him, some states like Rajasthan and Madhya Pradesh have allowed selective cultivation of opium, which has greatly helped to strengthen the rural economy.
 
Echoing similar views, four-time MP Maheshwar Singh, a BJP rebel who is now Himachal Lokhit Party legislator from Kullu, said cannabis has been grown in the valley for ages.
 
"The extract of cannabis is the staple diet in every household. Thousands of villagers whose livelihood relies on cannabis farming will bloom with its legalisation," Maheshwar Singh told IANS.
 

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India's Q1 gold demand up 15 percent: WGC

The demand for gold in the first quarter of 2014 was 167.1 tonnes

 

The demand for gold in India for the first quarter (January-March) of 2015 was at 191.7 tonnes, up by 15 percent as compared to the corresponding period of 2014, World Gold Council (WGC) said in a report on Thursday.
 
The demand for gold in the first quarter of 2014 was 167.1 tonnes.
 
"India's gold demand during the first quarter of 2015 was up 15 percent compared to the corresponding quarter last year, though it is still below the 5-year average," said Somasundaram P.R., managing director, India, World Gold Council.
 
He attributed the growth to the muted demand in the same period last year due to crippling gold import policies coupled with weak economic sentiment and trade uncertainty at the time of the general elections.
 
"In contrast, following the partial removal of the import curbs (with the exception of a duty reduction) and the budget announcements introducing new gold products, the environment for gold has been encouraging in the past few months, resulting in buying behaviour slowly returning to normalcy," he added.
 
India's first quarter 2015 gold demand value was Rs.46,730.6 crore, a gain of nine percent in comparison with corresponding period a year ago when it was Rs.42,898.6 crore.
 
Total jewellery demand in India for first quarter of 2015 was up by 22 percent at 150.8 tonnes as compared to 123.5 tonnes in Q1 of 2014. 
 
Somasundaram said there are a number of factors that will shape a positive environment for gold this year. Like an upward revision of GDP growth, the government's approach to bringing gold into the mainstream economy and ensuring that gold becomes a fungible asset akin to any financial asset.
 
Also the country's natural affinity with gold as a savings asset will support it becoming embedded in the financial sector and finally the modernisation of the jewellery trade, he said.
 
"Notwithstanding the unseasonal rains in the early part of the calendar year which will impact the rural economy, full year demand expectations are in the range of 900-1,000 tonnes," he added.
 

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The Onerous Rules of Insider Trading
Every listed company and market intermediary must have a code of conduct to regulate, monitor and report trading by its employees and connected persons. Every other person who may handle unpublished price sensitive information are also required to frame a Code of Conduct
 
Market regulator Securities and Exchange Board of India (SEBI) intends to cover any person in possession or reasonably expected to be in possession of Unpublished Price Sensitive Information (UPSI) to formulate a Code of Conduct (CoC) to ensure that there is no price discovery of securities and trading before an UPSI is made generally available. The Compliance Officer as well as market intermediaries and other persons, who regularly participate in the affairs of the Company, have to ensure that the CoC is in place and is duly implemented.
 
The market regulator rolled out SEBI (Prohibition of Insider Trading) Regulations, 2015 (Regulations, 2015) on 15 January 2015 which will come into force on 120th date of its publication in Official Gazette i.e. 15 May 2015. Regulations 2015 are based on the submission of report of High Level Committee set up under the Chairmanship of NK Sodhi, former Chief Justice of High Courts of Kerala and Karnataka and former Presiding Officer of the Securities Appellate Tribunal on 7 December 2013.
 
Insider trading means trading in securities of a company by its directors, employees or other insiders based on UPSI. Such dealings by insiders erode the investors' confidence in the integrity of the management and are unhealthy for the capital markets. Regulations 2015 inter-alia mandates every listed company and every market intermediary registered with SEBI to formulate a CoC [Regulation 9] to regulate, monitor and report trading by its employees and other connected persons. Additionally, every other person who is required to handle UPSI in the course of business operations is also required to frame a Code of Conduct.
 
Regulations 2015 also casts responsibility on the Board of listed companies to ensure timely, uniform and adequate disclosure of UPSI to the investor community by the Company to enable them to take informed investment decisions with regard to the Company's Securities. In view of the same, every company, whose securities are listed on a stock exchange, are required to formulate a Code of Practices and Procedures for Fair Disclosure (CoFD) [Regulation 8] for fair disclosure of events and occurrences that could impact price discovery in the market for its securities.
 

The present Circular:

 
SEBI vide CIR/ISD/01/2015 dated 11 May 2015 issued a circular (Circular) thereby specifying the formats in which the initial and continuous disclosures, as stipulated under Regulation 7 of Regulations, 2015 shall be made. In addition to requiring the Stock Exchanges to have systems in place for ensuring implementation of the Circular, the Circular requires the listed companies to confirm following to the Stock Exchanges:
 
a) The Company has formulated CoFD and published the same on its official website. Regulation 8 (2) of Regulations, 2015 mandates prompt intimation to the Stock Exchange of every amendment made in CoFD
 
b) The Company has formulated CoC.
 
c) The Company is dealing with only such market intermediary / every other person, who is required to handle UPSI, who have formulated a code of conduct as per the requirements of the Regulations.
 

Meaning of Market Intermediary and Other Person:

 
The definition of insider under Regulations 2015 includes a connected person, which inter alia includes a market intermediary, and any person who is possession or having access to UPSI.
 
As per Regulation 2(g) of SEBI (Intermediaries) Regulations, 2008, “intermediary” means a person mentioned in clauses (b) and (ba) of sub-section (2) of section 11 and sub-section (1) and (1A) of section 12 of the Act and includes an asset management company in relation to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, a clearing member of a clearing corporation or clearing house and a trading member of a derivative segment  of a stock exchange but does not include foreign institutional investor, foreign venture capital investor, mutual fund, collective investment scheme and venture capital fund.
 
As per Section 11(2) (b) and 11(2)(ba) of the SEBI Act, 1992, intermediary includes stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers, depositories, participants, custodians of securities, foreign institutional investors, credit rating agencies and such other intermediaries who may be associated with securities markets in any manner; 
 
However, there is no readymade definition of other persons, which the Company could refer to ascertain whether the requirement of the Circular is being met. They are to be identified by the Company considering the extent of dealings with them by the Company and their ability to access UPSI. These may include:
 
a) Employees of holding company (whether immediate or ultimate) who by virtue of his or her position approves key decision, functions of the Company, or has an access to UPSI relating to the Company;
b) Any strategic shareholder whose affirmative vote or sanction is pre-requisite for key actions of the Company;
c) Professionals, consultants, advocates, auditors whom the Company may consult prior to deciding the corporate action or occurrence or who play an active role in formulating systems or processes.
 

Suggestive Action points to comply with aforesaid requirement

 
The Compliance Officer shall ensure the following:
  1. Identify such Market Intermediary and every other person who is required to handle UPSI of the Company; 
  2. Send a mail to each of such identified person enclosing a suggested format of confirmation that such identified person has formulated CoC as per the Regulation 2015; 
  3. Allow such identified person time frame of 14 days from the date of mail  to confirm that they have formulated the CoC; 
  4. In case of no response, send a reminder mail after the expiry of 7 days from the date of original mail;
  5. If no confirmation is received after the expiry of 21 days from the date of original mail, the Company shall stop sharing UPSI with such identified person.
(Both Vinita Nair and Aman Nijhawan are practising Company Secretaries at Vinod Kothari & Co)

 

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COMMENTS

manoharlalsharma

2 years ago

Rules r made for GENTLE MAN but not for CRINKLES the business to break the RULES.

R Balakrishnan

2 years ago

THe biggest insider traders are the promoters, merchant bankers, auditors and one or two key employees. Across companies. Most of them operate through perverse accounts. SEBI is perhaps the most pathetic 'regulator' India has ever had and UK SInha must rank amongst the worst in the world. Pathetic rent seekers who jump in to SEBI from government posts.

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