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Bankers are a worried lot after the recent Supreme Court ruling cancelling allocation of over 200 coal blocks. At stake are loans of up to Rs 5 lakh crore to the power sector that could get impacted by unavailability of coal. The power companies now want the Reserve Bank of India (RBI) to ease restructuring norms so they can delay showing these loans as NPAs. The RBI is not in favour, though. “Our advice to banks has been to deal with the problem today. Don’t postpone it to tomorrow. Because tomorrow, it’s worse,” said governor Raghuram Rajan at the post-policy meeting with journalists. India Inc. has always prevailed upon the regulator to change accounting rules to hide ugly numbers in their financial statements. But ugly numbers are just an indication of the rot within. Hiding them will not make the rot go away. What is important is to get the assets back on track. Urging the government to find a way to compensate the losses is useful. Window dressing the accounts is not. — Abraham C. Mathews When Success Is Spelt With A ‘C’Will Maruti Suzuki be able to change perception among Indian car buyers as a maker of largely small cars with the launch of the Ciaz? If the past is anything to go by, the answer may not be too encouraging given the fact that the company did not see much success with its Baleno and SX4 sedans. But company officials are confident that they will be able to break this jinx with Ciaz. Priced at Rs 6.99 lakh to Rs 9.8 lakh (ex-showroom, Delhi), the Ciaz will compete with Honda City, Volkswagen Vento and Hyundai Verna. If the Ciaz does click with buyers, expect better and bigger offerings from Maruti in the coming years. If it does not, then Maruti will have to go to the drawing board all over again. — Sachin Dave Show Me The MoneyIn less than a month, Prime Minister Narendra Modi managed to get investment commitments to the tune of nearly $100 billion — $41 billion from the US, $34 billion from Japan and $20 billion from China. But the moot question is: How much of this commitment will translate into investment on the ground? Modi should know better, for as Gujarat chief minister, he saw such commitments being made year after year during the Vibrant Gujarat Summit, with very little investment materialising as a result. Perhaps, it is time to demystify the hype around investment commitments. Madhya Pradesh chief minister Shivraj Singh Chouhan’s decision to stop the practice of MoU/deal signing as part of the state’s Global Investors Summit 2014 is a step in this direction. — Joe C. Mathew The Devil And The Deep Seait’s not official yet, but a strike by banks is on the cards. The unions want 25 per cent, but the Indian Banks’ Association (IBA), the lobby group of banks, is ready for only 15 per cent. What’s lost in the din is that both the unions and the IBA do not think it fit to discuss productivity issues, lateral recruitments and corporate governance. Wages are negotiated in “isolation” for these key concerns. The just released report on “Capacity building in banks and non-banks” by G. Gopalakrishna, a former executive director at Reserve Bank of India (RBI), has made it clear that by 2020, more than three-fourths of staffers at levels of assistant general manager and above will retire. Four years ago, A.K. Khandelwal, former chairman and managing director of Bank of Baroda, had warned that “the pool of experienced executives cannot be replaced merely through promotions”. If bank unions win, IBA will put the blame on low productivity per employee due to “high wages”. If unions lose, IBA will argue the other way around! — Raghu Mohan Not To Be Taken Lightly Rating agency Standard & Poor’s (S&P) decision to upgrade its sovereign rating outlook for India from “negative” to “stable” should not make investors and the government complacent as the economy still remains vulnerable to shocks. The rating denotes a wait-and-watch approach towards the newly elected government as it implements policies to control inflation and fiscal deficit. Any failure on these fronts is likely to invite a rating downgrade. Sovereign rating outlook by the three global biggies — S&P, Moody’s and Fitch – shapes the investment decisions of global investors in a country. In 2012-13, when the rating agencies downgraded their outlook for Indian economy, there was a chorus of outrage and anger against them. However, the NDA government will do well to focus on the task ahead and ensure that the rating outlook improves from ‘stable’ to ‘positive’, which will make it easy for Indian companies to raise funds from foreign investors. — Neeraj Thakur Opposite ReactionA US Congress committee has asked 14 generic drug makers, including India’s Dr Reddy’s Laboratories, Sun Pharma and Zydus Pharmaceuticals, to explain why prices of some generic drugs have shot up by 4,000 per cent during the past year. The companies will have to furnish details about their sales revenues, profits, manufacturing expenses, etc., to support the financial and non-financial reasons behind this price increase. A key culprit is likely to be the US FDA, whose recent regulatory zeal has not only seen the cost of compliance rise manifold for drug makers but also led to a dramatic increase in the price of active ingredients in the recent past as well as a slowdown in approvals, thereby affecting competition. Regulation is needed, but too much of it can be a problem. — Joe C. Mathew (This story was published in BW | Businessworld Issue Dated 03-11-2014)
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The indictment of former Tamil Nadu chief minister J. Jayalalithaa and the cancellation of coal blocks by the Supreme Court has put the spotlight back on two lawyers — Prashant Bhushan and Subramanian Swamy. Known for their sustained campaigns against the wrongdoings of the high and mighty, the scam-busting duo are unlikely to rest on their laurels. Here’s a lowdown on some of their cases that continue to make headlines...Click here to view graphicCompiled by Abraham C. Mathews; Graphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 03-11-2014)
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