HC asks ONGC to pay royalty dues worth Rs 5,000-6,000 crore to Gujarat govt

 
Gujarat High Court has directed Oil and Natural Gas Corporation (ONGC) to pay dues worth Rs 5,000 crore to Rs 6,000 crore to the state government towards differences in royalty of crude the PSU has extracted since 2008.

A division bench headed by Chief Justice Bhaskar Bhattacharya and Justice JB Pardiwala on Saturday directed ONGC to pay differences in royalty of crude within two months and also pay royalty, henceforth, to state government at market rate.

According to the Oil Field Act, ONGC is required to pay 20 per cent royalty of the market value of crude oil it extracts from oil blocks to the state government.

ONGC used to pay such royalty to the Gujarat government but, in 2004, the Union government asked it to provide crude to Indian Oil Corporation (IOC) as burden-sharing mechanism, at a discounted rate because IOC was offering subsidies on diesel, kerosene and Liquefied Petroleum Gas (LPG) to consumers, resulting in huge losses to the latter.

Since ONGC started providing crude to IOC at a discounted rate, it started paying royalty to the state government at post-discount rate, resulting in drastic reduction in royalty to Gujarat.

The state also complained to the Centre in this regard.

In 2011, the state government filed a petition before the High Court, stating that it should be paid royalty at market rate and the difference in royalty payment since 2008 at pre-discount rate (in comparison to market rate) was computed at Rs 5,000 crore to 6,000 crore.

State government counsel Aspi Kapadia informed the court that ONGC, at times, provided crude to IOC at a huge discount of 96 per cent, which resulted in huge downfall in royalty payment to the state. The state, he argued, must be paid royalty at market price.

Directing ONGC to make payment of differences of royalty to the state within two months, the court also asked it to pay royalty, in future, at market rate.

Azim Premji may hike stake in JM Financial

 
As JM Financial awaits RBI view on its bank licence plea, market is abuzz with talks of billionaire Azim Premji buying additional five per cent stake in the company that has also roped in former Citibank chief Vikram Pandit as a key investor for its banking pursuit.

Premji, Chairman and founder of leading IT firm Wipro, currently holds 2.9 per cent stake as part of his individual investment portfolio in Nimesh Kampani-led JM Financial, one of the 25 aspirants eyeing banking foray.

While spokespersons for JM Financial as also for Premji did not reply to queries in this regard, market sources said that the company may allot fresh shares amounting to up to five per cent additional stake to the IT czar.

While there was no official confirmation, sources said that the shares can be allotted at a significant premium to the current share price. JM Financial shares closed 5.1 per cent up at Rs 28.85 apiece on Friday.

Premji Invest, the family investment arm of Premji, holds shares in a number of companies as financial investments and some of them have been liquidated in the past.

The stake sale to Premji would also help JM Financial bring down its promoter shareholding, which eventually needs to be lowered to 51 per cent to comply with public holding regulations related to setting up of a new bank.

An integrated financial services entity, Kampani-controlled JM Financial has interests in investment banking, institutional equity sales and portfolio management, among others.

Under the Reserve Bank of India (RBI) guidelines, promoter group would be permitted to set up a bank only through a wholly-owned Non-Operative Financial Holding Company (NOFHC).

'NSEL, board violated rules; failed to act against defaulters'

 
The corporate affairs ministry has found that the beleaguered National Spot Exchange (NSEL) and its Board not only violated multiple regulations but did not take action against repeated defaults which resulted in Rs  5,600- crore scam at the bourse.

According to PTI, the Registrar of Companies (RoC), Mumbai, has concluded that NSEL breached as many as 15 provisions of the Companies Act, including those related to corporate governance, sources said. The spot commodity exchange never declared any member as defaulter despite repeated instances of defaults, which is also one of the main reasons for the present crisis, sources added. Many of the defaulters were also allowed to trade and increase their exposure.

NSEL, part of Jignesh Shah-led Financial Technologies Group (FTIL), is grappling with the crisis after it suspended trade on July 31 on government direction. It has already seen major fallouts with rejig of Boards at the exchange as well as at some other Group companies.

Besides finding corporate governance failures, including lack of transparency, integrity and compliance, sources said that the bourse did not have as many as nine committees. These panels are required under regulations.

Among others, the exchange did not set up vigilance, dispute resolution, trading, clearing and arbitration panels. There have meetings and it has been found that the Board did not discuss the exchange's compliance with various rules such as those related to admission of new members, sources said.

Flagging various concerns, the inspection found that the exchange did not have a mechanism for verification of physical stock at the warehouses. As per the findings, many NSEL directors, including Shah and Joseph Massey, were holding common directorship in Group companies of FTIL and they cannot claim to be not aware about happenings at the exchange.

The inspection of books was ordered under Section 209 A of the Companies Act.

Non-executive chairman ShankarlaI Guru and two non- executive directors Ramanathan Devarajan and B D Pawar have also quit from NSEL Board.

GDP growth likely edged up to 4.6% last quarter

New Delhi: India's economic growth likely picked up slightly in the July-September quarter as improved manufacturing activity steered it from a four-year low in the previous three months, a Reuters poll showed on Tuesday.

Any improvement would be welcome news for the government as a string of opinion polls forecast a poor performance for the ruling party in general elections which must be held by next May.

Economic growth virtually halved in two years to 5 percent in the last fiscal year - the lowest level in a decade - and most economists surveyed by Reuters last month expect 2013/14 to be worse.

The consensus of 40 economists showed gross domestic product expanded 4.6 percent year-on-year in the last quarter, better than the 4.4 percent in the previous three months, which was the lowest since the global financial crisis.

"It is only a marginal improvement with much of the support from a slight recovery in manufacturing sector," said Upasna Bhardwaj, an economist at ING Vysya Bank.

A moderate recovery in Indian factories and exports were probably the main drivers for an increase in overall growth in the quarter through September. Annual industrial output picked up 2 percent in September, driven by an uptick in export and domestic orders.

Stronger global demand for India's exports also led to an increase in production, with exports growing 11.15 percent annually in September.

Also, a good monsoon should have boosted rural income and perked up flagging consumer demand.

However, a dearth of investment lies at the heart of India's economic malaise.

Little improvement is expected ahead of the general election, with investors doubting whether Prime Minister Manmohan Singh's minority government can force through any bold actions between now and then.

Radhika Rao, an economist at DBS in Singapore, said euphoria surrounding Singh's earlier reform plans had eased after they failed to materialise.

"It is not surprising that the private sector keeps expansion plans on ice," Rao added.

With wholesale price inflation moving back above the Reserve Bank of India's perceived comfort level of 5 percent and consumer inflation quickening to more than 10 percent, there is little expectation the central bank will act to ease policy boost growth.

In face, new RBI chief Raghuram Rajan has hiked interest rates twice in as many months since September, tackling rising prices head on.

Indian rupee up 6 paise against US dollar, at 62.44

 
The Indian rupee appreciated by six paise to 62.44 against the US dollar in early trade at the Interbank Foreign Exchange market on selling of the US currency by exporters.

The rupee had gained 37 paise to end at 62.50 on Monday after global crude oil prices dropped following a nuclear deal between Iran and world powers.

Forex dealers said strength in other currencies against the Greenback overseas, after fresh figures showed pending US home sales slowed for the fifth straight month in October, also supported the rupee. They said, however, a lower opening in the domestic equity market capped the gains on Tuesday.

Meanwhile, the BSE Sensex fell by 66.06 points, or 0.32 per cent, to 20,539.02 in early trade on Tuesday.