Businesses Complain About Slow Arbitration Payout, Dispute Resolution
Upset over the enforcing of contractual obligations and delays in arbitration awards, Kolkata-headquartered infrastructure finance major Srei has decided to be extra cautious where the government or its agencies are a contracting party.
 
Having burnt its fingers over financing public-private partnership (PPP) projects, the private financial institution believes that banks are reluctant to fund projects because sanctity and validity of a contract is under severe challenge.
 
"The confidence in the infrastructure sector is at its lowest ebb today because there is significant delay in arbitration awards and long-drawn litigations," Srei Chairman and Managing Director Hemant Kanoria told IANS.
 
Srei is a leading infrastructure financing company with consolidated assets under management of Rs 49,913 crore as on December 31, 2018.
 
He said that the situation will not improve until there is a very clear cut demonstration by the government on enforcing contractual obligations and that there is no reneging on contracts on flimsy grounds.
 
"I think what is very important is that the sanctity of the contract needs to be kept. Second issue is that if there is an arbitration award given against the government, it must be honoured immediately," Kanoria said.
 
He stressed the need for establishing discipline in contracts, arbitration awards and certain processes for reviving private sector interest in infrastructure.
 
The issue clearly reflects in the company's books. In the quarter ending December, 2018, Srei Infrastructure Finance disbursed a total of Rs 3,800 crore, as compared to Rs 5,731 crore in the corresponding quarter of last year.
 
Even as pace of dispute resolution has improved and arbitration awards have been expedited, much remains desired to make the infrastructure sector investor-friendly. 
 
A Niti Aayog study earlier noted that India takes as much as 1,420 days and 39.6 per cent of the claim value for dispute resolution. The situation is only slightly better than Bangladesh, the report found.
 
"After the Vijay Kelkar committee report, reforms were initiated in the way arbitration awards have to be done. There has been definitely an increase in the pace of the arbitration awards. But there is enough scope to make things better for the contracting community," said Sandeep Upadhyay, MD and CEO, Centrum Infrastructure Advisory.
 
The three key infrastructure segments of highways, power and ports account for most of the arbitration proceedings between the private and the public sector. As a result, thousands of crores of rupees remain locked in litigations which, if freed-up, could be used to build new projects.
 
"Dispute resolution and contract enforcement should be quicker. It is in the interest of lenders, developers and all other stakeholders. Delay in payment of arbitration awards through endless litigation badly affects all the parties involved and eventually slows down infrastructure development." said L&T Infrastructure Development Projects CEO Shailesh Pathak.
 
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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Trump moves to ban foreign telecom equipment
US President Donald Trump has moved to ban American telecom firms from installing foreign-made equipment that could pose a threat to national security, White House officials said, stepping up a battle against China by effectively barring sales by Huawei, the countrys leading networking company.
 
On Wednesday, Trump issued an executive order instructing Commerce Secretary, Wilbur Ross, to ban transactions "posing an unacceptable risk" but did not single out any nation or company, The New York Times reported. 
 
The order came amid an escalating trade war between the US and China, with the two sides imposing hundreds of billions of dollars of tariffs. Trump has accused the Chinese government of unfair trade practices and announced increased tariffs on an additional $200 billion worth of Chinese goods that went into force on May 10.
 
The executive order was "agnostic", White House officials said in a call with reporters, declining to single out China as the focus. 
 
"This administration will do what it takes to keep America safe and prosperous and to protect America from foreign adversaries" targeting vulnerabilities in American communications infrastructure, White House press secretary, Sarah Huckabee Sanders, said in a statement.
 
But in a clear strike against Huawei, the Commerce Department separately announced on Wednesday that it had placed the company and its dozens of affiliates on a list of firms deemed a risk to national security. 
 
The listing will prevent it from buying American parts and technologies without seeking US government approval.
 
"This will prevent American technology from being used by foreign owned entities in ways that potentially undermine US national security or foreign policy interests," Ross said in a statement.
 
The Commerce Department will also write the rules for reviewing transactions that fall under the executive order's ban over the next 150 days, according to administration officials. 
 
The Department said it would work across the administration on the new rules, consulting with the Attorney General, Treasury secretary and other agency heads.
 
The order, which applies only to future transactions, however did not detail how the Department will define foreign adversaries and establish criteria to ban companies from selling equipment to the US, reports The New York Times. 
 
The executive action also did not address concerns by rural carriers that the order would hit them particularly hard. Some of them rely on equipment that already contains parts by Huawei and other Chinese companies.
 
The development comes as American officials have warned allies for months that the US would stop sharing intelligence if they use Huawei and other Chinese technology to build the core of their fifth-generation, or 5G, networks. 
 
The networks promise not only faster cellular service, but also the connection of billions of "Internet of Things" devices, such as autonomous cars, security cameras and industrial equipment, to a new Internet architecture.
 
Pentagon and American intelligence officials have warned that Chinese firms will be able to control the networks and have expressed concerns not only that secure messages could be intercepted or secretly diverted to China, but that the Chinese authorities could order Huawei to shut down the networks during any conflict, disrupting American infrastructure as diverse as gas pipelines and cellphone networks.
 
Huawei has denied those charges.
 
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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Tata Chemicals' consumer business to merge with TGBL
The boards of Tata Global Beverages Ltd (TGBL) and Tata Chemicals Ltd (TCL), at their respective meetings held on Wednesday, have approved the de-merger of the consumer products business of the latter into the former through a National Company Law Tribunal (NCLT) approved scheme of arrangement.
 
TGBL would be renamed Tata Consumer Products Ltd to reflect the new strategic direction of the company, while TCL would focus on innovative science-based chemistry solutions and products, a statement said.
 
Commenting on the announcement, Tata Sons Chairman N. Chandrasekaran said: "Tata Consumer Products consolidates our current presence in food and beverages in the fast-growing consumer sector. Through this combination, we have created a strong growth platform to meet the growing aspirations of Indian consumers."
 
Pursuant to the scheme, each shareholder of TCL will get 1.14 new equity shares of TGBL for every 1 equity share held in TCL, signifying that a shareholder holding 100 shares in TCL will receive 114 shares in TGBL.
 
The respective company boards have approved the share Entitlement Ratio based on the recommendations of independent valuers, the statement said.
 
It also said that the proposed transaction will create a focused consumer products company with a combined turnover and earning before interest, tax, depreciation and amortisation (EBITDA) of Rs 9,099 crore and Rs 1,154 crore, respectively, for the twelve-month period ended March 31, 2019, on a proforma basis.
 
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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COMMENTS

Vijesh Senan

5 days ago

Finally after lot of anticipation the consumer business is getting consolidated as Tata Consumer Products !.This going forward would warrant a rerating, Tata Starbucks is in top gear with aggressive expansion plans and there is a lot of momentum after so many years!

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