Business standard news updates 4-12-2012

FIPB to clear pharma FDI till Act is changed

BS REPORTER New Delhi, 3 December Foreign investment proposals in pharma companies will go to the Foreign Investment Promotion Board ( FIPB) for approval till the Competition Commission of India Act is amended. This means that the status quo has been maintained for brownfield pharma projects. “Every proposal for foreign investment in existing Indian pharmaceutical companies will go to FIPB till the time the Competition Act is amended,” a source said. The decision was taken at a meeting called by Prime Minister Manmohan Singh today to formalise norms for pharma foreign direct investment ( FDI) policy, according to sources. Finance Minister P Chidambaram, Commerce and Industry Minister Anand Sharma and Health Minister Ghulam Nabi Azad, among others, were present at the high- level meeting, they said. Today’s meeting was called to decide on two important issues in the pharma FDI policy - the limit to which foreign companies will be allowed to acquire shares in a domestic company and the role of Competition Commission of India ( CCI) in mergers and acquisitions. While the finance ministry wants only those cases involving FDI beyond 49 per cent in units to be considered by FIPB, commerce ministry favours all foreign investments in pharma units to be approved by FIPB. The issue was taken up by the government after the acquisition of big Indian companies — including Ranbaxy, Shanta Biotech and Piramal Health Care’s health unit - by foreign companies. The domestic industry is apprehensive that the entry of foreign players in the Indian market may impact the availability of generic medicines as the overseas companies would focus on costly patented medicines.

Coming soon: Get refund on travel expenses while repairing your car

SOMASROY CHAKRABORTY Kolkata, 3 December Soon you can claim reimbursement from your insurer on your travel- related expenses if your car is getting repaired. Bharti AXA General Insurance, the joint venture between Indias Bharti Enterprises and Frances AXA, plans to introduce a new product that promises to reimburse the policyholders travel expenses when the car is in repair shop. The product is likely to be named Garage Cash and the insurance company has already sought the regulators approval. “I dont think a similar product is currently offered by any insurance company. It is different from the traditional motor insurance that takes care of the repairing expenses. This product will allow customers to claim the money they spend on travel while their car is in a garage,” Manish Kishore Mishra, zonal vice president – east at Bharti AXA General Insurance, told Business Standard. He added the company was yet to work out the pricing of the product. "Those details will be chalked out once we get the necessary approvals," said Mishra. The company is currently awaiting regulatory approval for about eight insurance products including cover for involuntary unemployment. A policyholder can claim reimbursement for his monthly expenses such as house rent, loan installments, credit card bills, and childrens school fees if he loses his job. The insurance company will reimburse these expenses for a specific period, for three or six months. “It does not mean that we are encouraging people to lose their job," Amarnath Ananthanarayanan, CEO and managing director of Bharti AXA General Insurance, said with a smile. "The idea is to allow the individual focus on his search for a new job without worrying about monthly expenses," he added. Bharti AXA General Insurance currently has 58 products catering to the needs of urban, semi- urban and rural population. The company has sold over 2 million policies and settled more than 3 million claims since its inception in August 2008. So far in 2012, motor insurance has the largest ( 68 per cent) share in its total business, followed by health and personal accident ( 21 per cent) and commercial lines ( 11 per cent). In terms of geography, the western region accounts for most of its business with 35 per cent share. The company has tie- ups for cash settlements with over 3,800 hospitals and 2,000 car garages across India. CASH FROM CAR |The product is likely to be named Garage Cash |Bharti AXA General Insurance has already sought the regulators approval to launch the product |The pricing of the product is yet to be worked out |The company is currently awaiting regulatory approval for about eight insurance products, including cover for involuntary unemployment A Ananthanarayanan, CEO and managing director of Bharti AXA General Insurance

Filings to set up MSMEs grow19% in 2011- 12 BS REPORTER Chennai, 3 December The micro, small and medium enterprise ( MSME) sector reported a growth of 19.06 per cent in 2011- 12, in terms of Entrepreneurs’ Memoranda (EMs), filed at the allIndia level. The number of EMs filed in 2011- 12 was 282,496, compared to 237,263 in 2010- 11 and 213,894 in 2009- 10. Growth in 2011- 12 was almost twice the rate posted in 201011 ( 10.93 per cent) and 200910 ( 10.78 per cent), according to a written reply by K H Muniyappa, minister of state for MSME, to a question in the Lok Sabha. The prime minister’s task force had made 85 recommendations, of which 77 were accepted and eight were dropped or delinked by the steering group. Of these 77 recommendations, action on 39 has been completed and action on the remaining 38 is in progress. The ministry has been implementing various schemes for the development of MSMEs in the areas of credit, infrastructure and technology upgradation. It has also notified the Public Procurement Policy, to improve market access. The credit linked capital subsidy scheme for technology upgradation of MSMEs provides for a capital subsidy of 15 per cent of value of plant and machinery on loans of up to ₹ 1 crore. The scheme is implemented through 11 nodal banks and agencies. Sebi slaps ₹ 50,000 fine on Concurrent Infrastructure PRESS TRUST OF INDIA Mumbai, 3 December Market regulator Sebi has imposed a penalty of Rs 50,000 on erstwhile Concurrent ( India) Infrastructure for making incorrect disclosures related to the shareholding of promoters. “... Impose a penalty of Rs 50,000 on the noticee, Concurrent ( India) Infrastructure Ltd, ( now known as Shriniwas Power &Infrastructure Ltd),” Securities and Exchange Board of India ( Sebi) said in its order dated November 30. The regulator said it had noted that the company filed incorrect and misleading information with the BSE related to the shareholding of two promoters — K Nirmala and K Nirupama for quarter ended March 2011. Regarding the shareholding of the Nirmala, Sebi said out of 736,000 Concurrent (India) Infrastructure Ltd (CIIL) shares pledged by the entity, two lakh CIIL shares was invoked on February 4, 2011. Upon invocation, Sebi said Nirmala stake declined to 2.64 million shares or 6.15 per cent. However, the shareholding pattern showed that Nirmala held 2.84 million scrips or 6.58 per cent holding in the company. Similarly, in case of Nirupama, a total of 1.7 million CIIL shares was invoked on March 17, 2011 and March 18, 2011, subsequent to which her holding had fallen to 1.24 million shares or 2.98 per cent. All IPO disclosures are legally binding on companies: Sebi PRESS TRUST OF INDIA New Delhi, 3 December A listed company is legally bound to abide by the commitments made in its public offer documents, even if they do not fall under mandatory requirements, and post Initial Public Offer ( IPO) are claimed to have been made inadvertently, Sebi has said. Noting that disclosures made in the IPO prospectus are significant from the point of view of investor protection, Sebi has said “ a company would be legally bound to comply with the matters stated in the prospectus, based on which it has raised money from the public.” “A prospectus is a document with legal validity and the company is legally bound to abide by the disclosures made therein,” the capital markets regulator has said. The views have been expressed by Sebi in an “ interpretive letter” sought by a company, which had demanded exemption from certain disclosure made in its IPO document and had said the same was made “ inadvertently”, and was not a mandatory requirement under the Sebi regulations. The company, Rushil Decor Ltd, had sought the interpretive letter under Sebis informal guidance scheme with regard to a disclosure made in its IPO document about the lock- in of shares. In its IPO prospectus, the company had made a disclosure that its entire pre- issue equity share capital other than the minimum promoters’ contribution, which is locked in for a period of three years, shall be locked in for a period of one year from the date of commencement of commercial production or date of allotment in the public issue, whichever is later. In its application to Sebi, it said this disclosure linked the lock- in period with commencement of commercial production and “ the same was done inadvertently and is not in line with Sebi ( Issue of Capital and Disclosure Requirements) Regulations, 2009 and intends to rectify the same”. The company had sought Sebi’s “ Opinion/ interpretation on whether shares, other than minimum promoters contribution of 20 per cent, can be released for transfer on the expiry of one year from the date of allotment”. Pursuant to the IPO process, the company had allotted shares on July 2, previous year. Sebi, however, said that “the matter pertains to lock- in of pre- issue share capital, which is considered significant from the point of view of investor protection. "Considering the above, a relaxation from additional lock- in requirements prescribed by the company through disclosures in prospectus will not be in compliance with the law." As per Sebi norms, the promoters minimum contribution needs to locked- in for three years from start of commercial production or the date of allotment, whichever is later. The pre- issue shares held by non- promoters also need to be locked in for a one- year period from the IPO allotment date but need not be linked to commercial production. "In the given case, the company has specified in the prospectus that the entire preissue share capital of the company, other than minimum promoters contribution, shall be locked- in for a period of one year from the date of commencement of commercial production or date of allotment, whichever is later, akin to the lock- in clause applicable to minimum promoters contribution," Sebi said. "The said disclosure does not prima- facie violate any of the requirement of Sebi ( Issue of Capital and Disclosure Requirements) Regulations and prescribes a stricter requirement than that provided under the said regulations. Regulator says disclosures are significant from investor protection point of view