CCI slams 11 cement firms with over 60 bln rupee fine

Eleven cement makers were slapped with $1.1 billion in fines on Thursday for price fixing, a record penalty from an increasingly assertive anti-trust regulator, the Competition Commission of India (CCI).
The CCI said the companies colluded to underuse their plant and create an artificial shortage of cement, the government said in a statement.

Analysts said the ruling, which was heavier than expected, reflected an increasingly tough approach by the three-year-old regulator and represented a coming of age for Asia's third-largest economy, hit by a spate of high-profile corruption cases in recent years.
UltraTech Cement (NSI:ULTRACEMCO), part of the diversified Aditya Birla Group, Holcim-controlled ACC (NSI:ACC.NS - News) (VTX:HOLN.VX - News) and Ambuja Cement (NSI:AMBUJACEM.NS - News), India Cements (NSI:INDIACEM.NS - News) and the Indian unit of France's Lafarge SA (PAR:LG.PA - News) were among those fined the equivalent of 50 percent of their net profit for the fiscal years ending in March 2010 and March 2011.
"As economies get bigger there is a greater need for competition laws to regulate corporates that have grown with those economies from either abusing their dominance or cornering markets through cartels," Samir Gandhi, partner at law firm AZB Partners, said ahead of the ruling.
Executives from the fined companies denied price fixing.
"We have not indulged in any cartelisation," said O. P. Puranmalka, who heads UltraTech's cement business, adding the company will challenge the order.
"We deny the charges of cartelisation, there is no question about it," N. Srinivasan, managing director of India Cements told Reuters.
"I don't think this order is based upon any proof that they have," said Srinivasan.
The ruling, handed down after markets closed, comes five years after a similar order against 44 companies by the CCI's predecessor.
In April, the CCI fined agrichemical companies United Phosphorous (UNPO.NS) and Excel Crop Care (EXCR.NS), among others, for colluding over a government tender.
It is also expected to rule next week on tyre companies including Apollo Tyres (NSI:APOLLOTYRE) and CEAT (CEAT.NS) over alleged price fixing, Ashok Chawla, the head of the CCI, said earlier this month.
Some industries in India such as telecoms see fierce price competition. Others, including fuel retailing and packaged foods, are governed by state-set prices.
"The CCI has demonstrated that it is willing to use its considerable fining powers, which has made companies take competition law compliance particularly seriously," said Gandhi.
For the full ruling, click http://www.cci.gov.in/May2011/OrderOfCommission/CaseNo29of2010MainOrder.pdf
MUSCULAR WATCHDOG
The watchdog could have imposed a maximum penalty of 10 percent of the average turnover of each company for the last three financial years.
"The act of these cement companies in limiting and controlling supplies in the market and determining prices through an anti-competitive agreement is not only detrimental to the cause of the consumers but also to the whole economy," the CCI said in the statement.
The companies were ordered to pay the fine within 90 days.
"We are already 'underperform' on the sector and are building in a 15 percent [net present value] discount in our calculation factoring CCI verdict," said Rakesh Arora, analyst at Macquarie Equities Research in Mumbai.
A spokesman for Ambuja Cement declined to comment on the ruling as it had not received a copy, while a spokesman for ACC could not be reached by Reuters.
The joint secretary of the Cement Manufacturers' Association, an industry body also fined in the ruling, declined to comment.
The CCI could face a slew of appeals.
"There are a lot of legal options available, they will keep on fighting," R. Prasad, a CCI member, told the ET Now television channel after the ruling. "It is for the betterment of the market that such orders are required," he added.
Last year the watchdog slapped a 6.3 billion rupees penalty on DLF Ltd (DLF.NS), India's biggest developer, for abusing its dominant position. The company is appealing the decision and the next hearing in the case is scheduled for June 27.

Indian airlines to cut domestic fares by 5-20 pct - govt

 Indian airlines have proposed slashing airfares in the highest fare bracket on domestic routes by between 5-20 percent, a government statement said on Monday.


"Whereas passenger traffic has seen a downward swing in May 2012 over the corresponding period of last month, the airfares have seen a disproportionate spurt," the statement said.
"Airlines have been directed to address the above issues in a time bound manner," the statement, issued after a meeting of the sector's regulator and chief executives of local airlines, said.

Offbeat tax saving avenues for the Indian tax payer

The importance of planning your savings and understanding tax components that you can utilise to maximize your income cannot be stressed upon enough. One of the best ways to plan your taxes is to start well in advance on this exercise; right in the beginning of the financial year and not wait till the end of the financial year, when there are bound to be constraints on the cash flow and a confusion over what investment route to choose.

It is critical to know all the possible ways one can save tax, to help plan your budget properly. The IT Act of 1961 is loaded with big dollops of taxpaying/tax saving information. Ways to save tax have always been an interesting consideration for tax payers all across the world, as tax saved is money saved. While some of the tax-saving avenues are well-treaded by the tax payers in the nation, there are some roads to tax saving which are lesser known. Two of them are explained below.

Save tax for your contributions to political parties/charitable organizations

In India, you can enjoy a tax deduction if you have contributions to make to a political party. The IT Act says that any amount of money that is donated to an acknowledged political party can be lawfully claimed for deduction, under Section 80GGC (For corporate it is 80 GGB). This deduction was launched very recently, April 2010, and the same applies to any contributions made to electoral trusts as well.

There is no upper limit set for the deduction amount, but it can exclusively be claimed only if the contribution goes into the party funds.

It is interesting to note here that deduction on donations does not come into play if you are donating money to an individual. It is only applicable if you are donating it to specific organizations.

For example, Section 80G of the IT Act says that if you are donating funds to a charitable organization, you are entitled to get a deduction of 50%-100% for that.  However, note that there exists a ceiling here — the percentage of deduction is restricted to 10% of the donor's (gross) total income. Also, only donations in cash are taken into consideration for the purpose and not donations in kind.

Needless to say that the amount of tax you can save is dependent on the amount that you contribute.

You would require a proof to claim this deduction and that's a stamped receipt of the amount donated, from the party or the organization to which you have made the contribution.

Save tax for disabilities

The Indian taxman has a heart of gold and it is seen nowhere better than this. Section 80 U of the IT Act says that if a taxpayer happens to suffer from any of the listed disabilities (see below), he is entitled to a tax deduction of INR 75,000.

If the tax payer has a disabled dependent (spouse/parents/children/siblings) to support, Sec 80DD allows him to claim the same.

Disability list includes low vision, blindness, hearing disability, leprosy, loco-motor impediment, mental illness and mental retardation.

Things to note

This deduction is obtainable only if the disability is 40% at least.

For severe impairments, 80% or above, the deductible amount becomes more — 1 Lakh.

The dependent must be fully dependent for upkeep on the taxpayer and must not be claiming deduction for it independently under Sec 80 U.

Proof required to claim this deduction will be a disability certificate from a CMO of a government aided hospital or a civil surgeon.

More of such special deduction news for income tax is available in IT Act, 1961. Check further to know more.

Diverse cities, same story: 'We're jobless!'

Waleed Ahmed el-Sayed, 31, who received a BA in social services from Assyiut University in 2004, sells juice in Tahrir square in Cairo May 4, 2012. Waleed has been working as a street vendor for almost seven years as he has not found a steady job since his graduation. Picture taken, May 4, 2012.


Jessica Mazza, a 28 year-old waitress, serves a customer at Novel cafe in Santa Monica, California April 24, 2012. Mazza studied for five years at Ball State University where she received a degree in painting and business management. She hoped to find a job as an artist but has been working in the cafe for just under a year. Picture taken, April 24, 2012. 

"I'm Jhunjhunwala", not India's Buffett

 India's best known stock investor, billionaire Rakesh Jhunjhunwala, doesn't much like the moniker of 'India's Warren Buffett'.

"It's not a fitting comparison. In terms of wealth and success and maturity, he's far, far ahead," says Jhunjhunwala in an interview at his office in a prime location in Mumbai overlooking the Arabian Sea.

Much like the famed Omaha investor, Jhunjhunwala has made a fortune from some savvy investments - Forbes magazine puts his net worth at $1.1 billion, ranking him 41st on India's rich list - but the similarities end there. Dressed simply in a white shirt and grey pants, he draws heavily on a cigarette, burps loudly, tells ribald jokes and peppers his interview with the cliches and one-liners that have become his stock-in-trade.

The 51-year-old has the brash confidence of a self-made man - he built his fortune from an early bet on Tata Tea - and of a risk-taking investor.

"I'm not a clone of anybody. I'm Rakesh Jhunjhunwala," he booms. "I've lived the world on my own terms. I do what I enjoy. I enjoy what I do."

Unlike Buffett, Jhunjhunwala has been an advocate of leverage, which he has often used in his career and perhaps best defines his big, bold bet investment philosophy.

"See, I'm a risk taker," he says. "If I feel very opinionated, I can really put the money on the table. I don't think too much deep research is needed. I don't go into analysis paralysis," he says. "All you need is common sense."

(Also know about Jhunjhunwala's top holdings, click http://in.reuters.com/article/idINL3E8HE3GS20120614)

VIRTUE OF RISK

"Trend is your friend," he quips, adding that at a time of intense global market volatility he is fully invested, yet cautious about adding too much risk. He has, however, extolled the virtue of risk and profited from being able to make big contrarian bets - as he did in the aftermath of the September 11, 2001 attacks in the United States.

Markets, he says, have priced in a Greek exit from the euro zone, but the bigger concerns are about other vulnerable single currency members, a United States that's "on steroids" and a "crisis of governance" in India. "When there's doom and gloom, don't forget there's darkness before dawn," he says.

Despite the concerns over weak governance, he's still a believer in the India story that has made him rich. "When a child is sick, the mother is concerned. It doesn't mean the child's going to die," he says.

In a country that reveres its gurus, Jhunjhunwala, with his large frame and small glasses, would be easy to parody - there is a fake blog that lampoons the investor's life - but thousands hang on his every market move.

"Many clients ask when we recommend stocks whether Rakesh has bought it, and what he's holding," said Chirag Shah, assistant vice president for dealing at broker Bonanza Portfolio. "People follow him like anything. Whenever they come to know that he's taken a stake in a stock, they try to invest in it."

For the record, he's bullish on retail, financial services, agriculture and software services, but he declines to elaborate.

A BUMPER CUPPA

Jhunjhunwala's passion for playing the market began as a teenager, prompted by his father, a government tax official, pointing out stocks that would react to the day's news.

He made his first big profit by borrowing what in 1986 was a sizeable sum to buy 5,000 shares in Tata Tea, confident that the markets had under-estimated the potential of a company looking to grow at a time of rising yield production. He trebled his money within months. "I was apprehensive, but if you don't have confidence, you shouldn't come to the stock market. You have to risk," he recalls.

Better, bigger investments followed, including a leveraged bet in the late 1980s on iron ore exporter Sesa Goa (NSI:SESAGOA.NS - News). He bought the stock at 60-65 rupees each and sold at 2,200 rupees.

His timing has been fortuitous. The Bombay Stock Exchange, Asia's oldest, introduced the benchmark Sensex in 1986 and markets developed swiftly after economic liberalisation five years later. "I'm the right person at the right place with the right attitude," he says. "If the Sensex had not gone up 100 times from when I started, I could not have been successful."

The index has dropped more than 9 percent in the past 16 weeks as India's economic growth stutters, prompting a warning from Standard & Poor's that its credit rating could be downgraded to junk status because of political inaction.

RARE BREED

Today, Jhunjhunwala presides over his investment firm Rare Enterprises, named using his and his wife's initials, which has a dozen or so employees whose sole job is to help him make his market bets. "This isn't a fund. I have no money other than my own and my wife's," he says. "She's my only client. I don't manage anybody's money except hers."

Jhunjhunwala's office has three monitor screens and an ashtray. There is a large conference table, statues of Ganesha, and framed copies of Jhunjhunwala's 10 Commandments for Investing and 10 Commandments for Trading.

Some of the commandments are slightly misspelt, but that wouldn't seem to matter to him. "Even if my wealth is 20 percent of what it is today, I'd smoke the same cigarette, drink the same whisky, drive the same car, have the same office, the same house, wear the same clothes, have the same wallet, eat the same food," he says. "Money is not anything which is going to affect me, or the way I live."

He says he will give away a quarter of his wealth.

Jhunjhunwala may not take the trappings of his work too seriously, but he is dedicated to trading, and portraits of well-known investors Peter Lynch and John Templeton hang in the company's offices. There is also a bound collection of his speeches covering his investment methodology, such as evaluating corporate price-to-earnings ratios - a hark-back to his studies in chartered accountancy. He also includes a prayer from the Dalai Lama, and an eclectic compilation of quotations from Shakespeare and Voltaire to George Soros and Buffett.

MIDAS TOUCH?

His financial disciples continue to be swayed by his track record. Shares in A2Z Maintenance and Engineering Services (NSI:A2ZMES.NS - News) jumped as much as 11 percent on May 23 after he and his wife disclosed buying 2.65 million shares of the company.

Do all his investments turn to gold? He's not saying. He does not report his holdings as a private investor, or dwell on past mistakes.

"People will only know of my good side, and not the mistakes I've made. I know what my mistakes have been, and what they've cost me financially. But I'm not bothered about that because I only look at the end results," he said.

Jhunjhunwala has no plans to leave his business to his three children or burning ambition to found a financial conglomerate, unlike other Indian billionaires such as Uday Kotak, who started small but went on to build Kotak Mahindra Bank (NSI:KOTAKBANK.NS - News).

"All I've known is trading and investing. I don't want to do anything else in life," says Jhunjhunwala. "I'll call it quits the day I die."

Fitch cuts India rating outlook to negative

Fitch Ratings cut its credit outlook for India to negative from stable, nearly two months after rival Standard & Poor's made a similar call, citing risks that India's growth outlook could deteriorate if policymaking and governance don't improve.

"A significant loosening of fiscal policy, which leads to an increase in the gross general government debt/GDP ratio, would result in a downgrade of India's sovereign ratings," Fitch said in a statement on Monday.

The agency estimated general government debt for India of 66 percent of GDP at the end of the most recent fiscal year, compared with a median of 39 percent for BBB-rated countries.

India's economy grew just 5.3 percent in the March quarter, the weakest in nine years, but earlier on Monday the central bank unexpectedly left interest rates on hold, sending bonds, stocks and the rupee lower.

The rupee weakened further to 56 per dollar from around 55.82 before the Fitch statement. Bond yields were range-bound, while stocks were already shut for the day.

"Against the backdrop of persistent inflation pressures and weak public finances, there is an even greater onus on effective government policies and reforms that would ensure India can navigate the turbulent global economic and financial environment and underpin confidence in the long-run growth potential of the Indian economy," Art Woo, a Fitch director, said in a statement.

Fitch maintained its BBB- rating, the lowest investment grade.

Fitch said it expects the Indian economy to grow just 6.5 percent in the fiscal year that ends in March, down from its earlier forecast of 7.5 percent, while it expects wholesale price index inflation to average 7.5 percent.

"India also faces structural challenges surrounding its investment climate in the form of corruption and inadequate economic reforms," it said.

A week ago, S&P said India could become the first of the BRIC economies, which also include Brazil, Russia and China, to lose its investment-grade status, prompting an angry response from the government.

RBI stuns, keeps rates steady as growth crumbles

The Reserve Bank of India (RBI) defied widespread calls on Monday to revive the flagging economy with cuts in interest rates and cash reserve minimums at banks, putting the onus on a fractious coalition government to pull the country out of crisis.

The RBI left its policy repo rate at 8 percent and the cash reserve ratio at 4.75 percent, saying a rate cut now could "exacerbate" the country's inflation, the highest among industrialised or BRIC nations.
Bonds, stocks and the rupee fell after the decision and economists scaled back their expectations for future rate cuts. Calls for action from the central bank, including from corporate India, had intensified after economic growth in the March quarter slumped to its weakest annual pace in nine years.
"India is in this deep crisis due to the lack of proper governance," said A. Mahendran, managing director at Godrej Consumer Products Ltd (GOCP.NS). "What happened today is extremely disappointing. We needed the central bank to act because of the current condition of the economy."
After cutting its policy rate by a sharper-than-expected 50 basis points in April, the RBI had been expected to leave rates unchanged in June.
But global and domestic economic conditions had deteriorated sharply since then. Many had expected the central bank to act because a politically hamstrung government is unable to drive reform to revive investment or curtail populist spending, fa ct ors that led Fitch Ratings on Monday to cut India's credit rating outlook to negative.
India's benchmark 10-year bond yield rose 9 b asis points from before the policy announcement to close at 8.43 percent.
The main BSE index erased gains before the decision to end 1.44 percent lower, missing out on a rally in Asian stocks after the election in Greece eased fears for a break up of the European currency bloc.
The rupee, which has slumped to a record low against the dollar as India's economic fortunes waned, tumbled to close at about 55.91 per dollar from around 55.35-55.40 before the rate decision.
"It is to the central bank's credit that it managed to stand up to the pressure from the government and businesses, and remains justifiably concerned about inflation," Rajeev Malik, an economist at CLSA in Singapore, said in a client note.
CRUMBLING BRIC
The RBI made clear it expects the government to do its bit to bring down inflation, which rose in May to 7.55 percent on the wholesale price index, the country's main gauge.
Many analysts argue that structural bottlenecks in the economy are the main reasons inflation in India is so high, so monetary policy can have little affect.
The RBI said on Monday that its "frontloaded" April rate cut "was based on the premise that the process of fiscal consolidation critical for inflation management would get under way, along with other supply-side initiatives."
Finance Minister Pranab Mukherjee had called for a rate cut and the chairman of State Bank of India (SBI.NS), the country's biggest lender, had sought a 1 percentage point cut in the cash reserve ratio.
"Unless the government takes steps on fiscal adjustment, the RBI is not prepared to cut rates. Based on this document, there's unlikely to be a rate cut in July," said A. Prasanna, economist at ICICI Securities Primary Dealership in Mumbai.
The government has failed to contain its fiscal deficit by enacting reforms or slashing costly subsidies on diesel.
Opposition from partners in the ruling coalition forced India to backtrack in December on a decision to open the retail sector to foreign supermarkets, which had been aimed at bringing investment into supply chains in a country where an estimated one-third of fresh produce is wasted.
INDIA'S CREDIT RISK
The slump in March quarter growth to 5.3 percent was far worse than expected and sparked calls for action to lift an economy that Standard & Poor's and Fitch Ratings have threatened to cut to junk credit status.
Both rate India BBB minus, the lowest investment grade.
"Against the backdrop of persistent inflation pressures and weak public finances, there is an even greater onus on effective government policies and reforms that would ensure India can navigate the turbulent global economic and financial environment and underpin confidence in the long-run growth potential of the Indian economy," said Art Woo, a director at Fitch.
Chief economic adviser Kaushik Basu said he had expected Fitch's action because there is a "herd mentality" among ratings agencies, while Mukherjee said Fitch "has ignored the recent positive trends in the Indian economy."
April industrial output figures last week suggested little pickup in growth heading into the current quarter.
Rahul Bajoria, regional economist at Barclays in Singapore, said he expects the RBI to cut interest rates by a total of 1 percentage point in the current fiscal year, possibly starting at the central bank's next review on July 31.
"The growth weakness is such that it does call for monetary easing," he said.
A Reuters poll after Monday's RBI decision showed economists had scaled back their rate cut expectations.
Economic policymaking was cast into further uncertainty on Friday when India's ruling Congress party named Mukherjee as its nominee for the largely ceremonial post of president, ending a protracted political drama that had exposed the weakness of the coalition government.
With no obvious successor, Prime Minister Manmohan Singh, 78, is expected to take charge of finance on an interim basis.
"We are very disappointed by the lack of action from any quarter. What is happening here is that you are getting the worst of both worlds, neither getting growth or inflation down," Rajiv Kumar, secretary general of the Federation of Indian Chambers of Commerce and Industry (FICCI) told Reuters.

Rajat Gupta's lawyers say others tipped Rajaratnam

Lawyers for Goldman Sachs's former director Rajat Gupta, on trial for inside trading, have suggested that leaks from the bank to convicted hedge fund billionaire Raj Rajaratnam came from other sources and not Gupta.

As Joseph Yanagisawa, who works in Goldman Sachs's technology unit, Wednesday testified about records of phone calls between Gupta's office and Chief Executive Officer Lloyd Blankfein's office, defence lawyer David Frankel confronted him with the logs of another executive.
The logs showed more than two dozen calls between phones associated with David Loeb, Goldman Sachs's head of Asia Equity Sales in New York, and Galleon Group co-founder Rajaratnam and others at Galleon.
These included calls from Loeb's phones to numbers associated with Rajaratnam and Galleon trader Adam Smith on dates when Gupta is alleged to have tipped Rajaratnam, bolstering a defence claim that it was Loeb or others who leaked data.
Prosecutors say that within seconds of hanging up from the board meeting on Sep 23, 2008, Gupta tipped Rajaratnam at around 3:55 p.m. about Berkshire Hathaway's $5 billion investment in Goldman Sachs.
Earlier, an Indian-American witness testified that Gupta stood to profit from investments he made in funds managed by Rajaratnam, but conceded she had "no information," whether Gupta actually profited or if he got back his $10 million investment.
Isvari Mahadeva, former Galleon portfolio manager said the fund firm's records showed Rajaratnam, Gupta and a third money manager, Ravi Trehan, formed Voyager Capital Partners in 2005, with Gupta contributing $5 million.
She said that in 2007 Gupta had an option to invest an additional $5 million that could reap 10 percent in additional profit.
"I was told he chose to exercise the option," said Mahadeva, who worked for Galleon for 12 years until Rajaratnam was arrested in October 2009.