SC adjourns hearing on Vodafone tax case to 15th Nov

New Delhi: The Supreme Court today adjourned hearing in the tax case against Vodafone to 15th November after the telecom company sought time to go through the Rs11,218 crore tax notice sent by the income tax (I-T) department, reports PTI.

Vodafone submitted before the court that it received the tax department order late Friday and hence needed time to pore over it.

Considering the telecom giant's argument, a bench comprising Chief Justice SH Kapadia and Justices KS Radhakrishnan and Swatanter Kumar adjourned the matter to 15th November. The bench also directed Vodafone to file replies of the I-T department's direction fixing their liability.

Senior advocate Harish Salve, appearing for Vodafone, said that they have received the I-T department's order fixing the liability of Rs11,218 crore but did not get enough time to reply.

Meanwhile, the bench also said that the Vodafone's recent case filed by it at the Bombay High Court against the I-T department, holding them as Hutchison Telecommunication International Ltd's agent for the transaction would continue.

On Friday, the I-T department had issued an order raising a tax demand of Rs11,217.95 crore on Vodafone International holdings BV treating it as an assessee in default for failure to deduct tax as required before making a payment of $11,076 million (about Rs55,000 crore) to Hutchison Telecommunication International Ltd.

Following the stake transfer in 2007, Hutchison Essar was renamed Vodafone Essar.

Vodafone has since claimed that no tax is payable by the company and the Indian tax authorities have no right to seek tax as the transaction was executed outside the country.


Life insurers should be in biz for 10 years to launch IPOs: IRDA

New Delhi: The Insurance Regulatory and Development Authority (IRDA) is not in favour of allowing initial public offers (IPOs) by life insurers who have been in business for less than ten years, a condition holding up the IPO guidelines for the sector, reports PTI.

Companies who have been operational for less than ten years, but want to come out with IPOs, have been lobbying hard against this rider, but have not succeeded in their efforts so far. Industry sources said that this is among the key issues delaying the IPO guidelines.

"Insurers can come out with IPO only after completion of 10 years of operations," a senior official with Insurance Regulatory and Development Authority (IRDA) told PTI.

As per the Insurance Act, promoters having a 26% stake can offload equity after 10 years of operation.

However, the legislation empowers the government to reduce the mandatory waiting period before tapping the capital market.

Many companies want the norm to be relaxed so that this capital intensive sector can tap primary market to meet fund requirements. However, their plans have been on hold in absence of the IPO guidelines for life insurers.

Several private sector insurers, including Reliance Life and HDFC Standard Life, have already shown interest in tapping the capital market to augment their resource base.

Though HDFC Standard Life has completed 10 years of operations, Reliance Life does not meet this criteria.

Recently, IRDA chairman J Hari Narayan said that guidelines for life insurance companies to tap the capital market for funds were awaiting the Securities and Exchange Board of India (SEBI) nod and would be out soon.

"IPO guidelines for insurance companies will be out soon.

It has been approved by the Joint Committee of SEBI and has to be approved by the SEBI (board)," Mr Hari Narayan had said.

Last month, the regulator had said that the proposed IPO guidelines for non-life insurance firms were also in the process of finalisation.

The guideline for IPOs of life insurance companies are said to have been approved by SCADA, a body constituted by SEBI, and is awaiting final nod from the market regulator.

Currently, most of the 22 private life insurers and 17 non-life players have foreign partners. The Insurance Act caps foreign direct investment at 26%.

According to sources, another reason behind the delay in the IPO norms is profit track-record of insurance companies.

The present IPO guidelines of SEBI requires a three years track-record of profit for a company to float a public issue.

However, most of the insurance companies are yet to reach the break-even point and thus are not eligible for coming out with an IPO under the present norms.


Earnings analysis (Q2FY11): Ashok Leyland; Canara Bank; Hind Zinc; ACC; Ambuja Cements; TCS

Ashok Leyland margins surprise positively; lower realisation and higher costs severely dent Ambuja’s profitability; ACC margins are at historical lows; TCS delivers best volume growth in 21 quarters; Canara Bank asset quality steady; Hindustan Zinc’s realisations better than expected


Net sales: Rs27.14 billion (expected range Rs24.89 billion-Rs28.35 billion)
Net profit: Rs1.67 billion (expected range Rs1.34 billion-Rs2.09 billion)


  •  Net sales at the higher end of the expected range; net profits somewhere in between.
  •  EBITDA margins were much higher than expected, driven by lower raw material and labour costs.
  • Interest costs were higher (but these tend to spike in this quarter driven by higher working capital requirements).
  •  Brokers have upped their volume estimates for the year.


NII: Rs20.03 billion (expected range Rs17.06 billion-Rs18.2 billion)
Net profit: Rs10.08 billion (expected range Rs6.38 billion-Rs10.36 billion)


  • NII exceeded even the higher end of expectations. Net profit at the higher end.
  •  Lending yields were higher q-o-q and better than expected - this helped offset treasury gains.
  • Treasury income fell. Fee income registered some growth (in line).
  • Cost of deposits was stable.
  • Loan growth was 22%, a little on the higher side of expectations; infrastructure 63%, housing 42% growth.
  •  Net NPLs increased a bit q-o-q.


Net sales: Rs22.01 billion (expected range Rs19.93 billion-Rs22.34 billion)
Net profit: Rs9.5 billion (expected range Rs8.64 billion-Rs10.24 billion)


  • Both profit and sales at the higher end of expectations.
  •  Zinc realisations were higher, both q-o-q and y-o-y, positive considering zinc prices fell 2% q-o-q.
  • Even volumes were up both y-o-y and q-o-q; growth was expected to be flattish q-o-q.
  • However, cost of production increased significantly too - net cost of production for zinc increased by 21% y-o-y to $977/ tonne - the company said this was because of higher power and fuel costs and higher stripping costs at its mines.
  • Updates: Its 100ktpa lead smelter at Dariba (Rajasthan) is likely to be commissioned by the end of December (which means there is a quarter's delay). After this, Hindustan Zinc will become the world's largest integrated lead-zinc producer with a total capacity of 1,064ktpa. Mine development at the Sindesar Khrud Mine is on schedule. The mill at this mine will also start by the end of December. Its silver refining capacity will touch 500 tonnes by March 2014 (company estimates) and since the refining costs are negligible, realisations will mostly flow straight to its earnings (it had produced about 140 tonnes of silver in FY10).


Net sales: Rs16.37 billion (expected range Rs16.60 billion-Rs18.32 billion)
Net profit: Rs1 billion (expected range Rs1.72 billion-Rs2.64 billion)


  •  Both net sales and profit lower than even the lower end of expectations.
  • Margins are at historical lows.
  •  Volumes were slightly higher than expected but realisations dropped higher than expected.
  • Raw material costs were much higher than expected which the management says is because of higher costs for slag and fly ash; power and fuel costs were stable.
  • Market share decline continued - now at 10%.
  • Some volume benefits from its 2.8mtpa Karnataka plant may flow through in the December quarter.
  •  Prices have declined across all markets but the decline in north and central India has hit ACC the most.
  •  Analysts expect some seasonal uptick in the December quarter.


Net sales: Rs15.64 billion (expected rangeRs15.50 billion-Rs16.27 billion)
Net profit: Rs1.52 billion (expected rangeRs1.60 billion-Rs2.77 billion)


  • Revenues were at the lower end of the expected range while profits were even below the lower range.
  •  Realisation and profitability per tonne was sharply down - realisations were much weaker than even the lowest estimates; this was mainly because of a sharp fall in prices in the west where it sells 40% of its output.
  • Power & fuel costs were up due to higher imported coal costs and higher manufacturing of clinker.
  • Volume growth was in line with expectations with year-to-date growth at 7% and this quarter's growth at 5% y-o-y.
  •  A transport strike at its Suli and Rauri plants in Himachal Pradesh will dent volumes in the December quarter.


Net sales: Rs92.86 billion (expected range Rs87.44 billion-Rs89.04 billion)
Net sales: $2 billion (expected range $1.88 billion-$1.93 billion)
Net profit: Rs21.07 billion (expected range Rs19.52 billion-Rs25.90 billion)


  • Massive outperformance at the net sales level driven by 11% volume growth (the highest in 21 quarters) - energy & utilities grew more than 40%; Europe revenues were up 20%.
  •  Net profit showed healthy growth.
  • Its EBITDA margin is now almost level with Infosys.
  • Management said they have a good deal pipeline; clients are investing in cost reduction; client budgets (preliminary) are encouraging.
  •  FY11 hiring guidance raised to 50,000 from 40,000.
  • Utilisation was up 300bps to 78%.
  •  Attrition remains the lowest in the industry.

(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security. Some of the opinions expressed in this article are the author's own and may not necessarily represent those of Moneylife).


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)