Companies & Sectors
Piramal Enterprises enters into an agreement to acquire Ash Stevens Inc in USA
Piramal Enterprises Limited (PEL) announced that its wholly owned subsidiary in the US has entered into an agreement to acquire 100% stake in Ash Stevens Inc., a US based Contract Development and Manufacturing Organization (CDMO), in an all cash deal for a consideration of USD 42.95 million plus an earn-out consideration capped at $10 million, according to a release from PEL. Located in Riverview, Michigan, Ash Stevens has over 50 years of experience in contract manufacturing, and serves several biotech, mid-size pharma, and large pharmaceutical clients worldwide. 
 
With over 60,000 sq. ft. of facilities, eight chemical drug development and production laboratories, and six full-scale production areas, Ash Stevens has a reputation for scientific research and operational excellence. As one of the leaders in HPAPI (high potency active pharmaceutical ingredient) manufacture, Ash Stevens has a safety record of working with high potency anti-cancer agents and other highly potent therapeutics. 
 
“The acquisition of Ash Stevens fits well with our strategy to build an asset platform that offers value to our partners and collaborators. Currently, around 25% of the molecules in clinical development are potent. Our clients are looking for reliable partners that can assist them in advancing these programs forward,” said Vivek Sharma, CEO of Piramal Pharma Solutions.  He further adds, “North America is a key market that we can now service with our three local facilities - the Coldstream Labs in Kentucky for fill finish needs, the Torcan facility in Toronto for complex high value API’s and now, Ash Stevens in Michigan for HPAPIs. We can now fulfil client requirements for a single source of supply for both high potent APIs and drug products.”
 
The transaction is not subject to any regulatory approvals. No related party of PEL has any interest in Ash Stevens.
 

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Savings in LPG subsidy: Now, CAG says 92% claimed saving due to crude price drop
The claims by the Central government on so-called savings due to implementation of direct benefits transfer on liquid petroleum gas (LPG), or the PAHAL scheme have been debatable all this while. Now the country's auditor has exposed that very little savings can be attributed to overhauling the scheme. Most of the savings was due to a drop in oil prices. In a report, the Comptroller and Auditor General of India (CAG), said, 92% of the Rs23,316.21 crore the government saved in subsidy payout in 2015-16 occurred due to a drop in crude oil prices and both the government and oil marketing companies had overstated savings under the scheme.
 
"There was a significant reduction of Rs23,316.21 crore in the LPG subsidy payout due to a combined effect of a decrease in offtake of subsidised cylinders by consumers and lower subsidy rates arising from the sharp fall in crude oil prices during the first three quarters of 2015-16," the CAG said in its report.
 
The actual subsidy payout during April-December 2015 was Rs12,084.24 crore against Rs35,400.46 crore during the same period in 2014.
 
Moneylife had reported that Aadhaar and DBTL savings for FY2016 were less than 1% or Rs121 crore, excluding the costs of implementation, as against Finance Minister Arun Jaitley's claim of an estimated saving of Rs15,000 crore. The news report was based on a revelation by the International Institute for Sustainable Development (IISD) based on publicly available information. (Read: Ghost Savings in DBTL: 99% gap between Jaitley’s claims and actual savings)
 
Coming back to the CAG report, the auditor also pulled up the government and oil marketing companies (OMCs) for inconsistencies in the estimates for DBTL savings. The government estimates savings from PAHAL at Rs9,211 crore, while OMCs estimate it to be about Rs5,107.48 crore in 2015-16. 
 
"The difference came about because the Ministry of Petroleum and Natural Gas (MoPNG) assumed that blocked consumers, who were not eligible for subsidy, would have availed their entire quota of 12 cylinders against the national per capita average of 6.27 cylinders in 2014-15. Considering the national average offtake of 6.27 cylinders, the estimated savings in subsidy for the year 2015-16 would be Rs 4,813 crore," the report said.
 
According to CAG, based on an average of Rs169.45 per cylinder, and after considering the savings due to the 'Give It Up' scheme in which 6.72 million consumers gave up their subsidy voluntarily, the savings would reduce to Rs3,473 crore instead of Rs5,107.48 crore estimated by OMCs.
 
PAHAL was expected to weed out fake connections, address concerns over diversion of LPG cylinders for commercial use, decrease the subsidy outgo and generate savings for the government. The scheme was launched in November 2014 in 54 districts and was subsequently extended to the country's remaining 622 districts on January 2015.
 
In its report, IISD, which analysed the impact of Aadhaar integration into PAHAL and the savings, using publicly available information, and applying the same methodology as adopted to calculate additionality in FY2014-15, it is possible to provide an estimate of the fiscal impact of integrating Aadhaar within the DBTL programme in FY2015-16. 
 
It said, "Assuming an average enrolment cost of Rs120 per person, the marginal cost of enrolling just those customers with Aadhaar-seeded LPG connections as of 1 March 2016 (i.e., not including the costs of non-LPG linked enrolment, or any of the costs associated with implementing and operating the DBTL programme itself) was approximately Rs1,343 crore – 20 times greater than the fiscal saving from integration into DBTL in FY2015-16. An accurate cost-benefit appraisal would also include the direct and indirect costs imposed on beneficiaries."
 
"Putting aside the relative merits of Aadhaar as a public policy tool, our calculations indicate that, instead of resulting in significant savings, the net fiscal impact of integrating Aadhaar into DBTL in the current financial year was likely to be minimal, and that expectations of substantial net savings in subsidy expenditure from the introduction of the Aadhaar scheme may be misplaced," IISD had said.
 
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COMMENTS

Mahesh S Bhatt

4 months ago

Nita Ambani is now Y class security after Reliance Petroleum idea after Dr Rangarjan's changed rang of pricing Oil at International level of $ 8-$10 production costs was approved & Modi raised it to $5.62 after Deora/Thomas raised to $ 4.69 from $ 1.32 gas price of Anil & Mukesh war.

So Modinama is now making Modimama for public Jaitley anyway has not clue of Economics or Law.God Bless Mukeshbhai Mahesh

Anil Kumar

4 months ago

Great work - going behind the big figures / achievement tom-tommed by government.

SEBI’s informal guidance blurs distinction; covers discretionary portfolio manager within insider regulations
Market regulator Securities and Exchange Board of India (SEBI) in their order dated 4 February 2016 regarded ‘Facebook’ account as evidence to prove charges against an individual under the SEBI (Prohibition of Insider Trading) Regulations, 1992. SEBI continues interpreting this in a wider sense, now on the investment made by an insider through a discretionary portfolio manager (DPM) while the insider is in possession of any unpublished price sensitive information (UPSI) vide an informal guidance dated 25 July 2016 given to HDFC Bank Ltd
 
DPMs make investment in the securities market independent of their clients’ advice, i.e., the client does not have any influence or control over the investment decisions.
 
There exists two types of portfolio management services like discretionary and non-discretionary. The classification is based on the extent of control a client has over the investment made by the portfolio manager. There is absence of client’s control over the investing decisions in the case of the former and the presence of the same in the latter one. In the light of the same, the market participant investing through a DPMS is absolutely said to have no control or awareness of the investments that are made out of his funds by the DPMS. In such a case, the assumption and stand taken by SEBI that even a trade by DPMS for the insider’s account while in possession of UPSI will amount to insider trading, blurs the distinction.
 
The informal guidance infers that Regulation 4(1) of SEBI (Prohibition of Insider Trading) Regulations, 2015 (Regulations, 2015) which reads as follows, gets attracted even if the dealing in securities is through a DPM. Such a trade shall be assumed to be motivated by the awareness and knowledge of UPSI:
 
“No insider shall trade in securities that are listed or proposed to be listed on a stock exchange when in possession of unpublished price sensitive information:”
 
However, the possibility of such a motivation to the market participant is highly circumstantial, but generalizing the assumption to all cases will be a reason to worry for the DPMs. The investment made by DPM qualifies as one of the exonerating circumstance for insider trading. The portfolios managed by these DPMs are standard in most of the cases and are not specifically altered for an investor. Further, the investments made through DPMs are easily identifiable as they are mandatorily held in separate demat account with power of attorney in favor of the DPM.
 
Clause (ii) of proviso to Regulation 4 (1) provides for an exemption in case of non-individual insiders if the following conditions are met:
 
“(a) the individuals who were in possession of such unpublished price sensitive information were different from the individuals taking trading decisions and such decision-making individuals were not in possession of such unpublished price sensitive information when they took the decision to trade; and
 
(b) appropriate and adequate arrangements were in place to ensure that these regulations are not violated and no unpublished price sensitive information was communicated by the individuals possessing the information to the individuals taking trading decisions and there is no evidence of such arrangements having been breached.”
 
Such exemption should hold good in case of DPMs too. This was very well discussed in the NK Sodhi committee report, reproduced as under:
 
“Non-insider decision-maker for trades 
 
59. While trading to take advantage of the possession of UPSI should be outlawed, it is equally important to make provision for the ability to disconnect the two aspects of the matter i.e. the possession of UPSI and the decision to trade at a certain price. In any business group comprising multiple entities discharging multiple roles, if it is possible to ring-fence the persons who are in possession of UPSI from those who are responsible for the decision-making necessary for the trades, the rationale underlying the prohibition of insider trading would not be attracted. In situations where the person in possession of the UPSI is different from the person who takes the trading decisions and the two are segregated by effective arrangements, the purpose of the prohibition would not be attracted. Consequently, if it can be established that adequate arrangements were in place to ensure that the persons taking decisions on the trade are different from the persons having possession of the UPSI and there is no evidence of such arrangements breaking down, a valid defence ought to be available. Likewise, if the trades are made by a duly authorised person other than the insider without any reference to or prior knowledge of the insider although the trades may have been made on behalf of the insider, the defence ought to be available. This is the principle on which the concept of “blind trust” is adopted worldwide i.e. where a person is given complete authority to trade – say, a discretionary portfolio manager who is himself not in possession of UPSI. In such a fact situation, the Committee believes that a valid defence should be provided.”
 
The market regulator has specified that its views should not be construed as decision of the Board on the question. However, such informal guidance depicts the interpretation of the SEBI to some extent and accordingly influences the actions of the companies.
 
(Vignesh Iyer works at Vinod Kothari and Company)
 

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