Companies & Sectors
Suresh Prabhu-led advisory panel suggests opening up of coal sector
The report of the advisory panel called for expediting reforms in the distribution sector with targeted actions including privatisation or PPP (public private partnership) in distribution
 
Suresh Prabhu-led Advisory Group for Integrated Development of Power, Coal and Renewable Energy said in a report it submitted to the government that opening up of the coal sector and upgradation of state-run Coal India and its subsidiaries are vital for scaling up domestic production of the dry fuel.
 
The final report of the Advisory Group for Integrated Development of Power, Coal, and Renewable Energy for suggesting measures for enhancement of coal production in the short, medium and long term was presented to Power and Coal Minister Piyush Goyal.
 
The report calls for improvements in Coal India and its subsidiaries, including Central Mine Planning and Design Institute Limited (CMPDI).
 
The Advisory Group's report has emphasised on the need for opening up the coal sector to supplement the domestic production of Coal India and a few other companies.
 
Various options should be explored to develop railway infrastructure from coal mines to main railway system, including through a joint venture company on infrastructure by CIL, it said.
 
The report also called for expediting reforms in the distribution sector with targeted actions including privatisation or PPP (public private partnership) in distribution.
 
The government has already announced plans to augment CIL's production to an annual 1 billion tonnes by 2019. CIL accounts for about 80% of India's total coal production.

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SEBI targets illegal fund-raising by real estate companies

The firms against whom SEBI passed orders, were found to be engaged in fund-raising activity that was classified as Collective Investment Scheme, but did not have required clearances from the regulator

 

In the month of December itself, the Securities and Exchange Board of India took action against 26 entities for illegal money pooling activities. This was followed by a recent set of orders from SEBI, barring 260 entities for suspected tax evasion and money laundering. 
 
In the first set of cases, there seems to have been a clear focus on companies engaged in the real estate business or raising funds under the aegis of infrastructure projects or real estate projects. Some of the companies barred by SEBI were Garima Real Estate & Allied Limited (“GREAL”), Raghav Capital & Infrastructures Limited (“RCIL”), M/s Vee Realties India Limited (“VRIL”) & Arise Bhoomi Developers Limited (“ABDL”). SEBI ordered these companies “not to collect any fresh money from investors, not to launch any new schemes and has injuncted the companies from alienating or disposing any properties and assets and funds raised from public,” Securities Law Newswire reported.
 
The real estate industry is known to be among the biggest movers of unaccounted for cash and when fund-raising takes place under the radar or in an unregulated manner, there is a lot of scope for fraud or the ballooning of ponzi schemes.
 
“In India, this sector despite being of key importance has always faced financial crunches. To cover up finance needs, various new methodologies are adapted and tested by the Real Estate sector to meet the business requirements. Of late, this sector has evidenced a large number of investment schemes floated by real estate companies for accessing public money and offering returns to the investors either in cash or kind (i.e. by paying an adjustable amount or offering share in the land/ project),” the report said. 
 
These orders by the SEBI have been made possible since the passage of the new Securities Laws Amendments Act. With this law, the government enhanced the powers of SEBI to take action against illegal money-pooling activities involving Rs100 crore or more. 
 
“For example, if the "applicant"/investor is investing in "One time Installment plan" for an amount of Rs12,500/- for a plot size 25 yards, he/she will get the Income/return in the form of "adjusted amount" amounting to Rs25,000/- after 5 years and 11 months. The "adjusted amount" will further increase with the passage of time and Rs87,500/- will be given to the investor at the completion of 15 years,” the report added.

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Indian market trends
The Sensex fell 5% and the Nifty fell 4% during the fortnight ended 18th December. ML Micro-cap Index and ML Mid-cap Index also fell 5% each, while ML Large-cap Index fell 4%. ML Mega-cap Index dipped 3%.
 

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