SAT to hear Reliance Industries’ appeal against SEBI

In May 2012, SEBI tightened the regulations for settlement through consent framework, as a result of which many cases including those related to insider trading, cannot be settled through this mechanism

Mumbai: The Securities Appellate Tribunal (SAT) will hear Reliance Industries’ appeal against SEBI (Securities and Exchange Board of India) in a case related to rejection of a settlement plea filed by the corporate major with the market regulator, reports PTI.


Reliance Industries (RIL) had sought to settle certain investigations into alleged violation of insider trading norms in sale of shares of its erstwhile subsidiary Reliance Petroleum, but the application to settle the matter under SEBI’s consent framework was rejected by the regulator.


While there were no official word on the contents of the appeal, sources said that RIL has challenged SEBI’s decision to reject its application and also the changes made by SEBI in the regulations governing settlement of cases through consent mechanism—especially for cases already under consideration.


Under SEBI’s consent mechanism, companies can seek to settle cases with the market regulator after payment of certain charges and disgorgement of any ill-gotten gains.


In May 2012, SEBI tightened the regulations for settlement through consent framework, as a result of which many cases including those related to insider trading, cannot be settled through this mechanism.


RIL’s appeal against SEBI (Securities and Exchange Board of India) was earlier scheduled to be heard by SAT for admission purpose on 4th January, but the Tribunal adjourned the hearing to 11th January.


SEBI on 3rd January made public a list of 149 consent applications, including 16 from various entities related to RIL group, which it had found unsuitable for settlement through consent process.


These include applications of RIL itself, as also various group companies and that of RIL chairman Mukesh Ambani’s close aide Manoj Modi.


As per SEBI, these 149 consent applications were rejected as they were not found to be in consonance with the revised guidelines. SEBI said that proceedings in these cases will continue in accordance with law.


These include 13 applications from various entities in a case involving alleged violation of SEBI regulations for “Prohibition of Fraudulent and Unfair Trade Practices” in a matter of RIL’s erstwhile subsidiary Reliance Petroleum.


Besides, there are three applications related to alleged violation of “Prohibition of Insider Trading Regulations” in the matter of another erstwhile RIL group company—Indian Petrochemicals Corporation (IPCL)—which used to be a government-owned company and was later acquired by Mukesh Ambani-led group as part of a disinvestment exercise.


Both the companies, Reliance Petroleum and IPCL, used to be separately listed entities, but were later acquired by RIL and got delisted from the stock exchanges. The merger process for RPL was completed in 2009.


Loss-making discoms a drag on states’ finances: RBI

Pitching for periodic tariff revisions, the Reserve Bank of India said losses of discoms have also raised “serious concerns” for banks and financial institutions

New Delhi: The RBI (Reserve Bank of India) said that the loss-making power distribution companies (discoms) continue to impact financials of states and cautioned against their restructured debt liabilities turning into non-performing assets for the state governments, reports PTI


Pitching for periodic tariff revisions, the central bank said losses of discoms have also raised “serious concerns” for banks and financial institutions.


Faced with mounting debts of state-owned discoms, whose overall losses stood at Rs1.9 lakh crore till March 2011, the Union power ministry has come up with a debt rejig scheme, where one of the conditions is that 50% of short term liabilities are taken over by respective state governments.


“Strict enforceability of conditions associated with the restructuring package has to be ensured so that ... financial stability in the economy is not threatened by the restructured loans turning into non-performing assets,” the RBI said.


In its annual report “State Finances: A Study of Budgets of 2012-13” just released, RBI said financial losses of state power discoms continue to act as a “drag on finances of states”.


RBI said non-revision of tariffs, subsidy arrears, high cost of buying short-term power and high distribution losses are among key reasons for financial ill health of discoms.


“As the discoms have largely availed of short-term borrowings from banks and financial institutions to cover cash losses, it has raised serious concern not only for the discoms but also for the banks/ financial institutions that have lent to them,” the apex bank said.


State governments support discoms through various direct and indirect channels. These include subsidies and grants in lieu of subsidised power provided to certain categories such as agricultural and domestic consumers.


The central bank emphasised that turnaround plan for discoms can be successful only if certain conditions such as “elimination of the gap between average revenue realised and average cost of supply as early as possible through periodic tariff revisions” are in place.


Late last year, the power ministry had notified financial restructuring scheme for discoms that includes converting 50% of their short-term debt into bonds backed by states.


“The restructuring/ re-scheduling of loan is to be accompanied by concrete and measurable action by the discoms/ states to improve the operational performance of the distribution utilities,” the ministry had said.


Besides, the government is working on a State Electricity Distribution Responsibility bill, which would have stringent norms to ensure good performance of discoms.


The RBI said the restructuring scheme, if implemented in the right spirit, “may get rid of one of the most daunting problems of state finances by turning state discoms into financially viable units.”


Expect 8% growth in two-three years, Plan panel

“HSBC probably got it wrong... I do not expect a further deceleration of GDP growth,” said Planning Commission deputy chairman Montek Singh Ahluwalia

New Delhi: Expecting a better economic growth rate in the second half of current fiscal, Planning Commission deputy chairman Montek Singh Ahluwalia said GDP expansion is likely to improve to 8% in the next two to three years from below 6% at the moment, reports PTI.


“India is growing just below 6% at the moment and the government hopes to take it to 8% over a two-to-three year period which is not an unreasonable expectation,” he said in an interview to the private news channel CNBC-TV18.


Terming HSBC's projection at 5.2% for the current fiscal as incorrect, Mr Ahluwalia said the second half is likely to be better than the first half.


HSBC has recently lowered India’s growth forecast for 2012-13 to 5.2% from 5.7% projected earlier, and for the next fiscal to 6.2% from 6.9%.


“HSBC probably got it wrong... I do not expect a further deceleration of GDP growth. In the first half of the year, GDP growth was around 5.4%. My expectation is that in the second half of the year, when the data comes in GDP growth will be higher than 5.4%. HSBC forecast is excessively pessimistic,” he said.


On likelihood of increase in diesel prices, he said, “I am not speculating on what government might do in the next week or two. That is something the ministry of petroleum has to decide ... Some graduated adjustment is necessary but exactly when and by how much, is really left to the discretion of the oil ministry.”


The 12th Plan document, he added, had made it clear that it was essential to align domestic fuel prices with global prices as the under-recovery on petroleum was very large.


As regards the widening Current Account Deficit (CAD), Mr Ahluwalia said it should be brought down to about 3% in the next few years and 2% by 2016-17, the last year of the 12th Plan.


According to latest figures, CAD, which is difference between exports and imports after taking into account remittances and other payments, was 5.4% in July-September quarter of 2012-13.


The government, he hoped, would take steps to deal with the situation in the forthcoming budget as “it is not unwilling to take difficult decisions. The government has already taken several of them.”


Regretting that the National Highways Authority of India (NHAI) has not been able to award projects according to the plan, Mr Ahluwalia said the commission is looking at ways to speed up the process.


“... it is quite clear that the manner in which the clearances are issued needs to be streamlined and transparent. So, the Planning Commission is in consultation with the environment ministry, and the Cabinet Committee on Investment (CCI) needs to holistically study the problem and address it,” he said.


He further said that the government has notified the formation of the CCI and hoped that ministries would soon come up with proposals to expedite implementation of mega projects which are stuck up for some reason or the other.


The commission, Mr Ahluwalia said, would be submitting its report on lack of fuel linkages to the prime minister within a week or 10 days.


“If the review reveals that some of these bottlenecks could be resolved by the CCI, I will send a note to the committee. I am very confident that over the next month or so, the Cabinet Committee will actually have on its agenda a long list of proposals to resolve certain problems,” he said.


With regard to coal shortages being faced by power plants, he said, the pace of setting up generation plants has suddenly caused a huge demand on coal which Coal India (CIL) has not been able to meet. The solution lies in importing coal and that is possible, but imported coal is much more expensive, he added.


The whole issue, he said, was linked to energy pricing and the markets are not ready to absorb those imports at higher prices.


“The solution to that is price pooling and that proposal is under consideration. I am not sure why it has been delayed, may be there are different points of view but that's one of the issues that the CCI could take a call on,” he added.


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