Browse Category: Economics

Doklam standoff resolution: India’s greatest diplomatic victory in decades

The end of the Doklam expansion is one of India’s most spectacular diplomatic victories for decades and, like any real victory, does not need to shout rooftops. From start to finish, the execution of India’s strategy here has been flawless and has achieved what India has always wanted – Status Quo Ante – and a much needed counter of the salami tactics in China.

The scope of victory is understood only when we realize how much a personal defeat for Xi Jinping is actually. Xi, clearly identified as the brain of this Gambit of Bhutan, had made a series of assumptions, which turned out to be erroneous. The first was the belief that India could be punished for its MIND-LIE OBJECTIVE by hiding Bhutan away from India.

The logic was that if Bhutan was hurried enough, it had to open direct talks with China through the embassy and thus open to OBOR. Opinion in Beijing seems uniform with respect to the genesis of this particular confrontation: in fact, Xi put personal immersion into the national interest. The net result of the personalization policy was one of the biggest setbacks China has found in recent memory.

Unambiguously, Chinese actions have simply added to the stature of India as a mature and responsible power of the status quo. What had become clear from day one was that China’s options were limited. On the one hand, if China used force, it would set a precedent by which other countries could also respond to the occupation of Chinese lands, not forgetting to destroy several fundamental principles of nuclear deterrence.

On the other hand, if China did not use force, it would be seen as weak – encouraging other neighbors to land on land and sea. Inadvertently, China has imposed itself on a dilemma “Doing and being doomed, not-do-and-be-doomed.” Knowing this well, India has chosen to give China a way out, even if it could have confused the land in dispute in perpetuity – just like China did. It is not a sign of weakness, it is a sign of confidence.

What exactly happened here is that India has not only found the best way to deal with China, but has also created a model for other countries to follow. China, on land, expects other countries to feel passive and not shoot. What India’s actions have shown is that China has very few options, if other countries choose to crouch on Chinese (or disputed) lands. This is now at the heart of Xi Jinping’s troubles in Beijing.

As his purge of opponents intensifies, to counter his visible mismanagement of the economy, opposition to him within the party also intensifies. Beijing was full of rumors of severe criticism that faced within the party accordingly. In addition, Global Times, with its raucous rhetoric, instead of serving as a force multiplier, worsened its situation in the politburo, preventing it from covering its error.

Normally, all Xi Jinping would have to do was tell GT to reduce it. In this situation, he could not, since such a directive would be chosen by his opponents as a sign of weakness. For Xi, even the stars conspired against him. It was particularly painful for him to welcome the BRICS summit Prime Minister Narendra Modi on Sunday with Indian troops allegedly squatting on Chinese soil – an ironic repetition when his troops squatted on our floor while Xi was held in Ahmedabad.

There was also no possibility of reprogramming the XIX Congress of the Communist Party of China, where it should be criticized harshly, albeit privately. This not only about Doklam, where his personal bump led trigger a Chinese blaze to the earth decade, but also of what is considered his poor personal management of the nuclear issue and missile And the deployment of a preventable missile shield that directly threatens Chinese security.

HC halts 2nd Vodafone arbitration in Rs 11,000-cr tax demand against India

The Delhi High Court on Tuesday restricted the Vodafone Group’s arbitration proceedings against India under a treaty with the UK in connection with a tax claim of Rs 11,000 crore against the company in connection with its Hutchinson Telecom loan $ 11 billion.

Manmohan J. prevented Vodafone or its subsidiaries from proceeding with arbitration under the Bilateral Investment Protection Agreement between India and the United Kingdom (BIPA) as the contracted telecommunications group Similar proceedings on the same issue under the India-Netherlands BIPA .

“In the present case, there is a duplication of parts and problems.” In fact, the reparation requested by the defendants under BIPA India-UK and by Vodafone International Holdings BV (VIHBV), the defendants’ subsidiary ( group Vodafone) under BIPA India-Netherlands are virtually identical.

“At first glance, this Court would be unfair, unjust and unfair to allow the defendants to pursue foreign arbitration,” the court said in an interim order.

He also notified Vodafone and requested its response by October 26 at the central government’s request for a permanent injunction against major telecommunications to proceed with arbitration under the India-UK BIPA.

In its provisional order, the court was also originally “India is the natural forum for the dispute of the claim of the defendants (Vodafone and its subsidiaries) against the applicant (center).”

The court noted that the government considered that the acquisition of 11 billion Hutchinson Telecommunications International Limited (HTIL) at Hutchinson Essar Limited (HEL) by Vodafone was sentenced to a tax deduction at source (TDS) under the Tax Law the rent.

As Vodafone did not deduct the tax at the source, the government had raised Rs 11,000 crore request which was subsequently overturned by the Supreme Court on January 20, 2012, declared the Supreme Court.

Subsequently, the government made a retrospective amendment to the Income Tax Law that reassigned the responsibilities to Vodafone, the order of the High Court was noted.

Affected by the imposition of the tax, HIVBV invoked the arbitration clause under BIPA between India and the Netherlands by a dispute notice on April 17, 2012 and a notice of arbitration of April 17, 2014, Order of 10 pages.

While proceedings under the India-Netherlands BIPA were pending, Vodafone began arbitration under the India-UK BIPA on January 24 of this year.

Due to the second arbitration, the government, represented by Deputy Attorney General Sanjay Jain said that the two claims are based on the same cause of action and call for the same relief, but from two different courts constituted accordingly. investment against the host State itself.

ASG, assisted by the permanent central government lawyer, Sanjeev Narula, argued before that court that the arbitration procedure under the BIPA India in the United Kingdom was an abuse of the judicial process.

The government lawyer argued that disputes that include tax returns by a host state are beyond the scope of arbitration under the bilateral investment treaty, because taxation is a sovereign function and can not be agitated before a court Constitutional law of the host State.

They also argued that laws passed by Parliament can not be tried by an arbitral tribunal and are not the responsibility of BIPA or any other international treaty.

Vishal Sikka’s wife Vandana quits Infosys Foundation

Former CEO of Infosys (CEO) and MD (CEO) Vandana Sikka, wife of Vishal Sikka, left the service arm of the IT services company Infosys Foundation. She was the president of Infosys Foundation in the United States.

“Today, I am writing this email to inform you that I have decided to move from my role as President of the Infosys USA Foundation. But, as we know, a person’s passions are not bound by entities that shelter us temporarily “Mrs Sikka said in her resignation email that she also shared on the blog platform, Medium.

Mrs. Sikka, whom Vishal Sikka calls “my companion, my compass, my anchor”, has served the Infosys Foundation for two and a half years. Vandana Sikka holds a masters degree in computer science and was about to set up a boot when the Infosys board invited her to join the philanthropic efforts of the IT giant in the United States.

“We have reviewed the CSR (corporate social responsibility) needs of America, have seen technology and innovation happen in California, and recognize the urgent need for computer education in the publication accessible to every student in the core curriculum framework, “said Sikka. said in an earlier interview with TOI after following the mission.

In a surprising move, which shook the company, Vishal Sikka left Infosys earlier this month. Counsel for Infosys and Sikka both cited Murthy’s constant quarrels and allegations as a reason for the drastic decision. In a conference call by an investor, publishing his resignation Sikka said:

“There has been a continuous beating of these allegations … absolutely disgusting and every day you wake up and there is news or the other.” He became more and more malicious and personal. Murthy said: “I have not commented on the work of Sikka, my problem concerns governance at Infosys, I believe that the fault lies with the board.”

Since then, the Infosys board has seen an important rejig with four members leaving, including Vishal Sikka. Ravi Venkatesan has also resigned from the position of Co-Chair of the Board of Directors. However, he continues to be an independent director.

In the meantime, former CEO Nandan Nilekani was brought back as a non-executive chairman of the company last week, in order to divert the company from the crisis in which it is located, even if the search for a new CEO continues ….

Rethink your strategy

STRATEGY

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One in three public companies likely won’t be around in five years, and the spread between the highest- and low­est-performing companies has never been greater, according to new research from the Boston Consulting Group (BCG). Identifying effective corporate strategy is more important than ever before, and this is the central theme of the latest BCG book, Your Strategy Needs a Strategy. Authored by BCG senior partners Martin Reeves, Knut Haanaes, and Janmejaya Sinha, the book explores the different environments that busi­nesses currently face, identifying and matching the right stra­tegic approach to a given situation. Their framework is called

the “strategy palette”. “The book explains a simple framework that we call the strategy palette, which divides planning into four styles. Firms can chose any of these styles, according to predictability of their business environment and how much power they have to change it. Leaders play a key role in this by making sure that the strategy is vibrant, dynamic and in tune with the changing environment. With a clear under­standing of the strategic styles available and the conditions under which each is appropriate, companies can make the best out of the opportunities available to them at hand,” said Dr Janmejaya Sinha, chairman, BCG Asia Pacific.          ♦

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The                   Discovery

Channel completes 20 years in India. “Dis­covery Channel has had a life changing impact on millions of viewers in India. The tremendous affection that it enjoys in India contin­ues to fuel our passion to relentlessly push the boundaries of factual enter­tainment and uncover the finest stories from across the world. On this occa­sion of completing 20 great years in India, on behalf of the entire team, I would like to express our gratitude to the viewers and clients who have expressed their admiration through this remarkable 20-year jour­ney,” said Rahul Johri, EVP & GM – South Asia,


Honest account

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The dramatic build-up to the overnight nationalisation of 14 banks in a single legislative sweep sets the stage for No Regrets. In this book, bureau­crat extraordi­naire D.N. Ghosh offers an eyewit­ness account of perhaps the most important event in India’s banking history post-Inde­pendence, baring the manoeuvr- ings behind the enabling ordi­nance and the pickle over fair compensation for the dispos­sessed bank owners. Years later, Ghosh enters the portals of the State Bank of India as its chair­man, at a time when the stir­rings of change have just begun to be felt in the Indian economy. Anticipating the future, he goes for a paradigm shift: to rid profit of its dirty word tag and place it at the core of the bank’s operating
strategy. Gradually, he takes SBI into the capital markets, estab­lishes its credit standing glob­ally, launches India’s first mutual fund and, above all, cajoles the trade unions into accepting full com­puterisation. Post­retirement, Ghosh steps into the cor­porate world. The could-have-been- academic tills the soil for certain reputable manage­ment institutes to bloom and grow even as he sets up the credit rating agency, ICRA. Full of untold stories, No Regrets is an honest-to-goodness account of a glorious career spanning over six decades and covering some epochal events whose reverber­ations continue to be felt in the corridors of bureaucracy, bank­ing and business to this day. The book was launched in Mumbai by Arundhati Bhattacharya, chair­man, SBI, and Deepak Parekh, chairman, HDFC.

Fear reigns

 

 

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The events on 24 August are unlikely to be forgotten in a hurry. Even before the mar­kets opened for trading there was a sense of foreboding. China had devalued its currency and the mar­kets were going for a free fall. And despite the distance between the epi­centre, Shanghai on the east coast of China and Mumbai on the West coast of India being more than 5,000 km, the resounding crash on Shangai impacted the Indian stock markets – as it did in markets across the globe. Opening at 26730, the market went on a free fall as panic bred on panic

Sensex

28500

 

 

with Fils continuing to press sales in a market unable to absorb the pres­sure. Fils effected a little over ?5,100 crore. But for the spirited action of the Dlls, which decided to play bull, and bought shares worth nearly ?2,750 crore, the market would have tanked even more. Something which the government could ill-afford as it was desperately seeking support from investors and institutions to ensure that its first major disinvest­ment of the year, Indian Oil, sailed through.

Besides the free fall, investors were unnerved by the rupee which

Metal Index

9000

 

 

also shed value in unison to reach a low of 66.50 to a dollar. Fears of US interest reversal policy in September also struck the investors. Such was the frenzy that even the attempts made by the government to talk up the market did not manage to stem the fear.

While the IOC issue did get sub­scribed, thanks to Life Insurance Corporation, bailing it out once again, subscribing to nearly 86 per cent of the 24 lakh shares offered at the price of ?387. However, unlike in the global meltdown witnessed ear­lier in 2010, there were not many bulk deals across the board. On NSE, Credit Suisse (Singapore), sold 72 lakh shares of Gujarat Pipavav Port at ?173.06 a share to Kotak Mahindr^. It followed a further sale of another 40.89 lakh shares on 26 August when the markets had staged a recovery, at ?188. Morgan Stanley) Mauritius) sold 86.17 lakh shares of Federal Bank at ?60.28. Merrill Lynch sold around 15.71 lakh shares of Indian Cement at ?72.61 in the aftermath session. Citi group global also sold chunks of Indiabull Real Estate.

Only slight recovery

With Thursday being the F&o set­tlement day, markets staged a smart recovery with the Sensex gaining over 500 points followed by a small recovery on the last day of the settle­ment, on 28 August. The Sensex nev­ertheless remained in the red, losing 4 per cent over the month. Even as China was unwinding and grappling with the problems of reforming from a command and direct economy to a market led one, the slowing down in its economy also impacted several sectors across the world. The chief being metals where China is the big­gest consumer and in many cases also a big producer. Steel was the worst hit with SAIL dipping below ?50 and Tata Steel losing more than 12 per cent in a session, just managing to stay above the ?200 mark, and JSW Steel dipped by 5 per cent. Hindalco which was already reeling from the global over­supply dropped to a low of 77 while ONGC in the face of the falling crude prices made a 51 week low of ?208. Several commodity prices dipped to
a 16 years low with export-led econ­omies dependent on mineral exports like Brazil, Australia and Indonesia dipping more sharply.

The severity of the fall in the metals was reflected in the 14 per cent drop in the BSE metals index, as against a 4 per cent fall in BSE. While the market did stage a recov­ery towards the end of the fortnight, fear continues to stalk the markets. And not many Bravehearts are will­ing to step in the blood to go bargain hunting. Barclays in its emerging markets weekly report Keep your seat- belt fastened, says that any rebound will be difficult to sustain in the short run.

The US government’s decision to defer the rate hike, did see global mar­kets recover to some extent. But one view is that this could well be a dead cat bounce with the pain in the mar­kets, by no means, over. One could, if it is true, see lower tops and lower bot­toms being formed over the next few weeks if not more. The RBI’s policy in September, when governor Raghuram Rajan is expected to lower the inter­est rates could provide a temporary reprieve and change sentiments. But the effect is unlikely to last.

Ultimately while hopes can buoy sentiments it is the corporate perfor­mance which will be the real game changer. And going by the results for the first quarter the trend does not seem too favourable. Care Rat­ings in its study on the corporate performance for the first quarter has observed that this is the third con­secutive quarter to have shown lower

 

52 wk hi: 7989 (31/7/15)/ low: 7561 (27/8/14) Change: 8.4% Marketcap: 50,786 crore

 

Amtek Auto

200_ ^ Share price    Turnover 8000

(7)                                (7 lakh)

52 wk hi: 7266 (12/9/14) / low: 746 (25/8/15) Change: -67% Marketcap: 1,180 crore

 

sales and negative growth in PAT. Banking sector continues to remain buffeted by NPAs and higher provi­sions have seen its PAT decline by 7.4 per cent. The sector continues to be bogged by NPAs. The gross NPA ratio has increased from 3.97 per cent last June to 4.63 per cent in June 2016.

Some hope remains

However, even during the cri­sis month of August, private sector banks are being bought by discern­ing investors. Induslnd Bank which saw its price rise by 8.4 per cent over the month, was successful in raising ?5,081 crore through a preferential cum QIP issue made at a price of over ?850. The bank which has a higher exposure to car loans is expected to gain, in case RBI lowers interest rates in September. Other compa­nies which saw a rise over a month include Amar Raja Batteries, DLF and

Tube Investments

 

52 wk hi: 7439 (10/8/15) / low: 7275 (28/8/14) Change: 6% Marketcap: 7,429 crore

 

TRF

500 4 Share price     Turnover 1000

400 (7) (7 lakh) 750
300 500
200 250
100 0

27 Jul – 27 Aug 2015

52 wk hi: 7491 (16/7/15) / low: 7185 (26/8/15) Change: -46.3% Marketcap: 228 crore

 

 

Great Eastern Shipping.

There were certain shares which were moving southwards even before the crash. TRF, a Tata group company engaged in material handling equip­ment, saw its share prices tank to a 52 weeks low of 7185 in the last week of August from a 52 weeks high of 7491 reached a month ago. Investors were a little apprehensive after the company postponed the board meeting four times in a row for considering the annual accounts. As of now the meet­ing is to be held on 31 August.

Amtek Auto saw its share prices dip to a third of its price of 7150 a month ago after it was dropped from F&o in August. The promoters admitted that there was a temporary mismatch of funds, promised to infuse 775 crore. An EGM held on 24 August also autho­rised the board to issue shares to pro­moters besides permitting it to make a fresh issue of securities.

Good news on the corporate front included Tube Investments securing a brand licensing rights agreement with Ridley bikes of Belgium. Besides India, the company will also be able to market the premium cycles in Sri Lanka, Bangladesh, Nepal, Bhutan and Myanmar for 33 years. The com­pany’s shares have notched a gain of 720 to 7401 in the last one month.

Where every crisis does throw up opportunities to buy for long term investors, one should be patient to buy in instalments – especially as the bottom is unknown.

♦ DAKSESH PARIKH [email protected]