Regulations
Ranbaxy's original promoters fined Rs.2,500 crore on Daiichi sale
New Delhi : The original promoters of home grown pharma major Ranbaxy Laboratories, that has since changed hands twice, have been slapped with a fine of Rs.2,562.78 crore by a Singapore arbitration court for allegedly misrepresenting facts during the stake sale to Daiichi Sankyo.
 
RHC Holdings, which has as directors industrialist brothers Malvinder Mohan Singh and Shivinder Mohan Singh and figures among the parties that were taken to the arbitration court, said legal opinion was being sought to go on appeal.
 
"All the parties to the arbitration are bound by confidentiality obligations as part of the arbitration proceedings," RHC Holdings said in a letter to BSE, adding the disclosure was being made as per the statutory requirements of India's markets watchdog.
 
Daiichi Sankyo, which had acquired Ranbaxy from the original promoters in 2008, faced a lot of heat in the US over misrepresentation of manufacturing processes at the Indian plants. In 2014, it decided to sell the Indian company Sun Pharma in a deal valued then at $3.2 billion.
 
A 35 percent stake in Ranbaxy had been bought by Daiichi for $4.2 billion.
 
The Singapore court was moved after Daiichi had decided in 2013 to pursue legal options.
 
"Daiichi Sankyo continues to support Ranbaxy in its efforts to address and correct the conduct of the past which led to the investigations by the US Department of Justice and the US Food and Drug Administration," the company had said in a statement.
 
"Daiichi Sankyo believes that certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning US DOJ and US FDA investigations," the company added and declined further comment.
 
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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girish kumar a m

1 year ago

t

Nifty may rally a bit, especially, if it closes above 7,756
We had mentioned in Wednesday’s closing report that Nifty has to close above 7,757 for the downtrend to end. The major indices of the Indian stock markets rallied after three successive days of losses to close with gains of 0.04%-0.64% on Thursday over Wednesday’s close. It was a day of thin trading and the rally was significant in the Sensex shares. The trends of the major indices in the course of Thursday’s trading are given in the table below:
 
 
Value buying, along with expectations that key economic legislation will get parliamentary approval, buoyed the Indian equity markets on Thursday after three consecutive sessions of losses. Besides, forecast of healthy monsoon rains from international weather forecasters and higher crude oil prices cheered investors. However, the gains were capped due to negative global markets and caution ahead of the release of US non-farm payrolls data. In addition, disappointing fourth quarter (Q4) results dented sentiments. The BSE market breadth was tilted in favour of the bears -- with 1,321 declines and 1,232 advances.
 
The steel industry accounts for the largest proportion of the banks' non-performing assets (NPAs), Finance Minister Arun Jaitley told the Lok Sabha on Thursday. "The biggest contributor in the NPAs is steel sector. Because if our companies will not be able to sell their steel, it is obvious that they will not be able to repay bank loan and the interest upon it," Jaitley said. Weakened by the dumping into India of Chinese steel at below cost-level prices, the sector has in turn affected the banks' balance sheets, he said. "When the business cycles are weak in some sectors during global headwinds, then not only the sector goes weak, but it affects the banks' balance sheets. It is called twin balance sheet problem," Jaitley said. Some loans which have turned bad might have been given on a wrong basis, and such cases will be investigated, the minister said. "(Out of) the current NPAs ... there are some which have been given on a wrong basis. It will be investigated into ... I do not want to go into the details of who was responsible for the same," he said. Jaitley said the government was committed to bringing the banks out of the financial crisis and the NPA issue can be resolved only if the bad assets are reflected properly on the balance sheets, and not kept hidden. In this context, the Bank Nifty ended flat with a gain of 0.04% on Thursday.
 
Global credit rating agency Moody's Investors Service on Thursday said that it has published its approach to rating Indian residential mortgage-backed securities (RMBS), by slightly tweaking its existing approach. In a statement, the agency said it would use the Moody's Individual Loan Analysis (MILAN) frame for rating Indian RMBS. "The MILAN approach is used for Moody's residential mortgage collateral analysis and represents a key element of Moody's loan and portfolio level evaluation of RMBS," Moody's said. This is important for real estate companies and home loan companies which are listed in the stock markets. The government has also passed the Real Estate Bill recently in Parliament. With higher quality regulation in the real estate sector, bold investors may enter the stock market in these sectors. HDFC shares closed at Rs1,163.85, up 2.90% on the BSE.
 
Bicycle manufacturer Hero Cycles on Wednesday formally inaugurated its newly acquired strategic manufacturing facility in Sri Lanka. Hero Cycles had recently acquired majority stake in BSH Ventures -- an export oriented bicycle manufacturer in Sri Lanka -- with the aim to boost the company's production capacity. Further, the bicycle maker plans to develop its Sri Lanka based facility as the manufacturing base for its high-end exports to the European market. Besides, the company also unveiled its new brand Hero Sprint Pro, expanding its fitness and lifestyle segment with 21 new products in the category that directly appeal to active youth and fitness enthusiasts. The manufacturing plant at BSH Ventures will be the manufacturing base for Hero Sprint Pro line of products, the company stated. "We are very pleased to start a new manufacturing base in Sri Lanka as we work to expand our presence globally," said Pankaj Munjal, chairman and managing director, Hero Cycles. Hero MotoCorp shares closed at Rs2,893.95, down 0.13% on the BSE on Thursday.
 
US stocks traded lower on Wednesday as Wall Street assessed a batch of generally downbeat economic reports. US private sector employment increased 156,000 jobs in April from March, well below market consensus of 193,000, the April ADP National Employment Report said on Wednesday. The ADP figure is watched closely as a pre-indicator for the highly-anticipated nonfarm payrolls report due out Friday. Meanwhile, US nonfarm business sector labour productivity decreased at 1% annual rate during the first quarter of 2016, according to the Department of Labour.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 

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Universal Banks: RBI issues draft guidelines for ‘on tap’ licensing
The Reserve Bank of India (RBI) on Thursday released on its website, “Draft Guidelines for ‘on tap’ Licensing of Universal Banks in the Private Sector” for comments from the public. As per the new guidelines, individuals or professionals who are residents and have 10 years of experience in banking and finance can become promoters of universal banks. While excluding large industrial entities from starting own universal bank, the central bank allowed them to invest up to 10% in these banks. The universal bank is mandated to have a minimum paid up capital of Rs500 crore and later a minimum net worth of Rs500 crore at all times.

Here are the key features of RBI's new guidelines on universal bank licensing...
 
(I) Eligible Promoters
 
i. Existing non-banking financial companies (NBFCs) that are ‘controlled by residents’ and have a successful track record for at least 10 years.
ii. Individuals / professionals who are ‘residents’ and have 10 years of experience in banking and finance.
iii. Entities / groups in the private sector that are ‘owned and controlled by residents’ [as defined in FEMA Regulations, as amended from time to time] and have a successful track record for at least 10 years, provided that if such entity / group has total assets of ₹50 billion or more, the non-financial business of the group does not account for 40 per cent or more in terms of total assets / in terms of gross income. 
 
 
(II) ‘Fit and Proper’ criteria
 
Promoter/ promoting entity/ promoter group should have a past record of sound financials, credentials, integrity and have a minimum 10 years of successful track record. 
 
(III) Corporate structure
 
The requirement of Non-Operative Financial Holding Company (NOFHC) is not mandatory for individual promoters or standalone promoting/converting entities who/ which do not have other group entities. Individual promoters/ promoting entities/ converting entities that have other group entities, shall set up the bank only through an NOFHC. The NOFHC shall be owned by the promoter/ promoter group to the extent of not less than 51 per cent of the total paid-up equity capital of the NOFHC. Specialised activities would be permitted to be conducted from a separate entity proposed to be held under the NOFHC subject to prior approval from the Reserve Bank and subject to being ensured that similar activities are not conducted through the bank.
 
(IV) Minimum capital requirement
 
The initial minimum paid-up voting equity capital for a bank shall be Rs500 crore. Thereafter, the bank shall have a minimum net worth of Rs500 crore at all times.
 
The promoter/s and the promoter group/NOFHC, as the case may be, shall hold a minimum of 40 per cent of the paid-up voting equity capital of the bank which shall be locked-in for a period of five years from the date of commencement of business of the bank. The promoter group shareholding shall be brought down to 15 per cent within a period of 12 years from the date of commencement of business of the bank.
 
(V) Foreign shareholding in the bank
 
The foreign shareholding in the bank would be as per the existing foreign direct investment (FDI) policy subject to the minimum promoter shareholding requirement indicated in paragraph (IV) above. At present, the aggregate foreign investment limit is 74 per cent.
 
(VI) Corporate governance prudential and exposure norms
 
The bank shall comply with the provisions of Banking Regulations Act, 1949 and the existing guidelines on prudential norms as applicable to scheduled commercial banks. The bank is precluded from having any exposure to its promoters, major shareholders who have shareholding to the extent of 10 per cent or more of paid-up equity shares in the bank, the relatives of the promoters as also the entities in which they have significant influence or control.
 
(VII) Business plan for the bank
 
The business plan submitted by the applicant should be realistic and viable and address how the bank proposes to achieve financial inclusion.
 
(VIII) Other conditions
 
The bank shall get its shares listed on the stock exchanges within six years of the commencement of business by the bank.
 
The bank shall open at least 25 per cent of its branches in unbanked rural centres (population up to 9,999 as per the latest census). The bank shall comply with the priority sector lending targets and sub-targets as applicable to the existing domestic scheduled commercial banks. The board of the bank should have a majority of independent directors.
 
(IX) Procedure for application
 
•The licensing window will be open on-tap, and the applications in the prescribed form along with requisite information could be submitted to the Reserve Bank at any point of time. 
 
•The applications will be referred to a Standing External Advisory Committee (SEAC) to be set up by the Reserve Bank. 
 
•The Committee will submit its recommendations to the Reserve Bank for consideration. 
 
•The decision to issue an in-principle approval for setting up of a bank will be taken by the Reserve Bank. 
 
•The validity of the in-principle approval issued by the Reserve Bank will be 18 months from the date of granting in-principle approval and would thereafter lapse automatically. 
 
•The Reserve Bank’s decision in this regard will be final. 
 
• In order to ensure transparency, the names of the applicants for bank licences and the names of applicants that are found suitable for grant of in-principle approval will be placed on the Reserve Bank’s website periodically. 
 
 
Suggestions and comments on the draft guidelines should have to be sent before 30 June 2016 to the Chief General Manager, Reserve Bank of India, Department of Banking Regulation, Central Office, 13h floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai-400001. Suggestions and comments can also be emailed to the Reserve Bank on [email protected]

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