Gold ticked lower on Monday (14 July) as Asian share markets gained strength, but the metal stayed close to a four-month high hit last week on safe-haven demand from escalating tensions in the Middle East and Ukraine.Spot gold fell 0.2 per cent to $1,334.89 an ounce by 0301 GMT after posting its sixth straight weekly gain last week.The metal had hit $1,345, its highest since March, on Thursday (10 July) after worries about the financial stability of Portugal's largest listed bank Banco Espirito Santo hammered equities and stoked fears of an European banking crisis."The Portugal fears have subsided as markets don't think it is going to be another widespread crisis," said one trader in Tokyo."However, the safe-haven demand for gold is still there due to the tensions in the Middle East. Portugal was only one reason for safe-haven bids, the geopolitical situation has not changed," the trader said.Israel appeared to hold off on a threatened escalation of its week-old Gaza Strip barrage on Monday despite balking at Western calls for a ceasefire with an equally defiant Hamas.On Sunday, the Israeli military had warned residents of the northern border town of Beit Lahiya to leave or risk their lives when, after nightfall, it planned to intensify air strikes against suspected Palestinian rocket sites among civilian homes.Elsewhere, Russia threatened Ukraine on Sunday with "irreversible consequences" after a man was killed by a shell fired across the border from Ukraine, an incident Moscow described in warlike terms as aggression that must be met with a response.Gold is seen as an alternative investment to riskier assets at times of geopolitical and financial uncertainties.Data from the Commodity Futures Trading Commission showed that hedge funds and money managers increased their bullish bets on gold and silver futures and options in the week to July 8, underscoring the metal's safe-haven appeal.For this week, markets are eyeing Federal Reserve Chair Janet Yellen's congressional testimony for clues about the U.S. economy and the timing of expected U.S. central bank interest rate hikes.Investors are also eyeing physical buying in Asia, which has been subdued due to the recent price gains."There isn't much demand from India, China or anywhere in Southeast Asia for the last few weeks," said a dealer in Singapore. "Unless prices drop sharply in a short period of time, I don't think we can expect any price support from the physical markets."(Reuters)
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The rupee is steady at 59.93/94 compared to Friday's close, as the stock market trades flat on back of foreign investor sales, even as Asian currencies trade mixed against the dollar.Overseas investors sold Indian shares worth 7.23 billion rupees ($120.60 million) on Friday (11 July), provisional exchange data shows.The rupee is seen moving in a 59.70 to 60.50 range during the session.The Nifty was trading up 0.1 per cent. The local sharemarket will provide cues on the direction of foreign fund flows.(Reuters)
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Congress Vice President Rahul Gandhi on Wednesday (5 March) said whether he becomes the Prime Minister or not is immaterial but what matters is that all Indians, including women and youth, feel it is their country. The Congress leader was interacting with tribal youth at an engineering college at Shirpur in Maharashtra, as he began his two-day Maharashtra tour. Responding to best wishes from a youth for becoming the Prime Minister, Rahul said, "My becoming or not becoming PM does not matter. What is most important is that everyone here, specially women and youth in country feel that this is their own country." Asking youth to enter mainstream politics, the Congress leader said there should not be even one youth who says he is afraid in his own country. "I want to see MLAs, MLCs and MPs from amongst you in the next 10 years, maybe even a Prime Minister also," he said. Comparing Mahatma Gandhi and Hitler, Rahul said the German dictator shouted as he lacked confidence. But did Gandhiji ever shout? That was because he was confident." "Like Mahatma Gandhi, humbleness while speaking is a sign of extreme self-confidence. Confidence should not be seen as aggression," he said. "There is no need for saying things aggressively. You can say it with love. Many people will be with you," he said. "If anyone, be it Rahul Gandhi or Prithviraj Chavan, says he knows better than you, he is telling a lie," he said. "My request to you, specially tribal youth, is to join mainstream politics," Rahul said. "My message to the country's youth is that the talent and capability the youth here have is not there anywhere else," the Congress leader said. On the progress the country has made since Independence, Rahul pointed out that today there were several rich people in India. "Around 50 to 70 years ago there was not even a single rich person here. The only rich were maharajas and British," he said. "My vision is of fearless Indian in India, that is the kind of country I want to build," Rahul said. "India is the most talented nation in the world. Use that talent and be humble in your approach and respect each other," he said. "Change how the world perceives you. It will start believing in you when you start believing in yourselves...You are not less than anyone, be self confident," Rahul said. "Cultural history of India should never be forgotten, take pride in your history, it never goes out of fashion," he said. Defending FDI in retail, he said it will prevent wastage of agricultural produce and cold storage chains will be developed. Representation of tribals is key to their empowerment, Rahul said. "I want your voice to be heard at state and national level," the Congress leader said. Tribal youths should join the political system, and change how the system perceives tribals, he urged. Rahul, at whose behest Congress is selecting 16 candidates from across the country through the "primary" system, said, "People must have a say in candidate selection." In the afternoon, he will address a public rally at Aurangabad, after which he will interact with people on the Dhule-Shirpur road. Tomorrow, the Congress leader will interact with fishermen at Versova, after which he will address a public rally at Sonale village on Bhiwandi bypass in Thane district. (PTI)
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Alibaba’s initial public offering (IPO) has become the biggest ever, at $25 billion. This, after the company’s bankers exercised an option to boost the deal size by 15 per cent. The underwriters bought an additional 48 million American depository shares from the company at the IPO price of $68 each, according to a statement from Alibaba. Including the “greenshoe option”, Alibaba was able to surpass the current IPO record held by Agricultural Bank of China — $22.1 billion in 2010. “Expectations for this company are sky high,” said Li Muzhi, a Hong Kong-based analyst, and added, “The market seems to be using Alibaba as a proxy for the macroeconomy and consumer economy.” Faking ItChina uncovered $10 billion in fraudulent trade nationwide as part of an investigation that started in April last year. The probe also uncovered many irregularities in the port of Qingdao, the country’s currency regulator said. Companies “faked, forged and illegally re-used” documents for exports and imports, Wu Ruilin, deputy head of the State Administration of Foreign Exchange’s inspection department, said. The trades “increased pressure from hot money inflows and provided an illegal channel for criminals to move funds”, Wu said, adding that those involved would be punished. Brewing A DealStarbucks will buy the remaining 60.5 per cent share of Starbucks Coffee Japan that it does not own in a two-step deal valued at $913.5 million. Starbucks Japan has operated as a joint venture between Starbucks and its partner Sazaby League since 1995. Sazaby approached the world’s biggest coffee chain about selling its stake in Starbucks Japan, Starbucks said. Diet FizzThe three largest soda companies, Coca-Cola, PepsiCo and Dr Pepper Snapple, promised to reduce calories in sugary drinks by 20 per cent over the next decade, an unprecedented effort by the beverage industry to fight obesity in the US, and a tacit recognition of consumers’ increasing aversion for high-calorie soft drinks. The firms will expand the presence of low- and zero-calorie drinks and sell them in smaller portions, and also provide calorie counts and promote calorie awareness where the beverages are sold, the American Beverage Association said. Breach Of TrustThe European Union’s (EU) anti-trust commissioner, Joaquín Almunia, said Google could face a fine of up to $6 billion if it failed to come up with a better proposal to settle a four-year antitrust probe. A hard-fought deal announced in February, initially backed by Almunia, collapsed following a wave of criticism from senior European politicians and powerful publishing houses. The commissioner has admitted that a final decision on the case will now fall to his successor, former Danish economy minister Margrethe Vestager, who will assume the post in November, when the current commission’s five-year term ends. Big Bang EntryGermany’s Siemens has agreed to buy US oilfield equipment maker Dresser-Rand Group for $7.6 billion in cash, paying a relatively rich price to belatedly beef up its presence in the US shale oil and gas industry. The acquisition, which ranks among the biggest in the history of the industrial group, will strengthen Siemens’ position in the US, its weakest region, and bring it nearer catching up with rival General Electric. Siemens’ oil and gas revenue will increase to around $11 billion, including the acquisition of Rolls-Royce’s energy gas turbine and compressor business, announced in May, from less than $7 billion before the two deals. Faulty MembersTesco cut its profit forecast by $408.5 million for the third time this year and suspended four members of its staff after finding fault in its accounts, another blow to the reputation of UK’s biggest grocer. It called in new accountants to investigate the error. A profit warning overstated expected first-half profit by 23 per cent. The error, caused by an early booking of revenue and delayed recognition of costs, was discovered during preparations for its forthcoming interim results. New LineGeneral Motors’ premium Cadillac brand will adopt a new naming scheme to compete with overseas luxury rivals as the company’s new leader Johan de Nysschen continues to overhaul the unit. The first of those new products will be christened the Cadillac CT6, a flagship sedan due late next year and aimed at high-end models such as BMW’s 7-series, Mercedes’ S-class, Audi A8 and the Jaguar XJ, GM said. To be built at GM’s Detroit-Hamtramck plant, the CT6 will debut as a 2016 model, slotted above Cadillac’s XTS and CTS sedans. Expected to be priced above $50,000, the CT6 will be a new offering rather than a replacement for an existing model. The rear-wheel-drive sedan will use a new vehicle architecture that is known internally as Omega. It will employ advanced driver-assistance technologies. Aerial DeliveryDeutsche Post DHL will use a drone to deliver medication to a German island in the North Sea, marking the first routine drone delivery to customers, and another step in the rapid advancement of the technology. DHL said, as part of a month-long feasibility project, it will start using unmanned aircraft to carry medicine from the harbour town of Norddeich, Germany, to the small island of Juist. Each day, depending on the weather, the drone will fly autonomously on a pre-programmed seven-and-a-half-mile route, the first routine mission in Europe in which a drone will operate beyond the pilot’s eyesight, DHL said. Cutting The CordPhilips, which started life making light bulbs 123 years ago, is splitting its lighting business in a step aimed at expanding its higher-margin healthcare and consumer divisions. Putting the lighting business in a separate company is part of a wider strategy that began with Philips moving out of less profitable consumer electronics and into fast-growing healthcare markets, largely in emerging Asian markets. The decision to split into two marks a definitive break from its origins in the southern Dutch town of Eindhoven, where Gerard Philips and his father Frederick founded one of the earliest makers of incandescent light bulbs in 1891. (This story was published in BW | Businessworld Issue Dated 20-10-2014)
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India's inflation probably eased marginally in June after the new government curbed farm exports, but a growing risk that drought will shrivel summer crops could encourage the Reserve Bank of India to keep interest rates on hold.Prime Minister Narendra Modi, elected in May amid anger over rising prices, has ordered a crackdown on hoarding to hold down food prices and set limits on the export of staples, such as onions and potatoes.Presenting his first budget on Thursday, Finance Minister Arun Jaitley vowed to keep the fiscal deficit at 4.1 percent of gross domestic product in this fiscal year, while allocating more funds to ease inflationary pressures."The monsoon this year appears more unpredictable," he told lawmakers, adding that the government would take all steps necessary.Consumer price inflation probably eased to 7.95 percent last month, down from 8.28 percent in May, while wholesale price inflation eased to 5.80 percent, the Reuters poll of economists found.The government will release the data on wholesale prices on Monday around 12:00 p.m. Consumer price data is due at 5:30 p.m.Modi faces his first challenge as soaring prices for basic food items, such as milk and potatoes, lifted retail food inflation to 9.4 percent in May, driving wholesale inflation to a five-month high of 6.01 percent.The government is banking on stocks of food such as rice, wheat and sugar from recent bumper harvests, but has few ways to cap prices of fruits and vegetables that drive food inflation."The measures may prove to be inadequate in light of the supply-demand dynamics associated with perishable products, absence of adequate cold storages and inefficiencies in the domestic supply chain," said Aditi Nayar, an economist at ICRA, the Indian arm of rating agency Moody's.Retail inflation has eased to about 8 percent, after staying in near double-digit figures for the past two years, the highest among the BRICS group of emerging economies - Brazil, Russia, India, China and South Africa.Economic growth has been stuck below 5 percent for two years - the longest slowdown in more than a quarter of a century. The economy is expected to grow slightly above 5 percent in this fiscal year to March 2015.In 2009 benchmark New York futures swept to a 30-year high after the worst drought in nearly four decades forced India, the world's top sugar consumer, to buy large quantities of the sweetener from top producer Brazil.The farm sector accounts for around 14 percent of India's nearly $2 trillion economy, and two-thirds of its population of 1.2 billion live in rural areas.Weak investments and industrial performance have hurt economic growth, but figures on Friday showing that industrial output grew 4.7 per cent in May on the year bettered expectations for a rise of 3.8 per cent.Output gained just 0.1 per cent in the fiscal year that ended in March.Relief Far Away?Weak rainfall since a delayed start to the monsoon season could push up food prices - further delaying a decision by the Reserve Bank of India to cut interest rates and ease the flow of credit to the economy."We believe a rate easing cycle is unlikely to commence before the second half of the current fiscal, keeping interest costs elevated for the productive sectors," said Nayar of ICRA.Reserve Bank of India Governor Raghuram Rajan held benchmark interest rates at 8 percent in the June policy meeting. He has raised rates three times since taking charge last September. The next policy review is due on Aug. 2.On Thursday, Rajan said the central bank was "determined" to make sure consumer inflation follows a "glide path" lower.An RBI panel has recommended bringing down consumer price index (CPI) inflation to around 8 per cent by the end of January 2015 and to 6 percent by the end of the following year.(Reuters)
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The Vote on Account offers little or no room for financial jugglery. But P. Chidambaram managed to pull off a few tricks nonethelessCompiled by Joe C. Mathew Graphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 24-03-2014)
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Financial reporting in India got an unexpected push from the finance Minister Arun Jaitley in Budget 2014, with his announcement that IFRS will be implemented from 2016-17. The International Financial Reporting Standards, a harmonised set of accounting rules followed by most of the world, were all but ready a few years ago. But staunch opposition from a few top corporates meant the project was shelved, many fearing that it would never see the light of day. Foreign investors, among others, have been asking for its implementation so that accounts of Indian companies are prepared under the same rules as their global peers. But the announcement is only a beginning. For IFRS to become reality, much needs to be done in the next couple of years. Failing that, it may meet the same fate it did the last time round in 2011. For that, the apex accounting body, the Institute of Chartered Accountants of India, and the Ministry of Corporate Affairs will have to work in tandem to sort out the deficiencies.The ICAI has been preparing for IFRS for at least seven years now, says K Raghu, President of the Institute. Corporates also have had ample IFRS training for its accountants back in the days when it was considered imminent. So skills updation for those who matter need not be a big challenge. The challenge will be to ensure the rules for implementation are laid out clearly.First, there needs to be clarity on taxation. Taxation was one of the major reasons why industry resisted the last time round, says Amarjit Chopra, a former president of the ICAI. Indian companies file their returns based on the profit in their books of account, which is then adjusted to comply with tax rules on deductions and exemptions. IFRS, with its focus on conservatism leading to earlier write-downs, may have the effect of dramatically altering the initial profit that is so used. If profits are less than what the tax department expects, they will make disagree with the accounting. If it is higher, they will lap up the extra revenue.To address this, the government had come out with a set of tax accounting standards, with guidelines for most disputable areas. There are still many issues that need to be sorted out. The government must work on bringing clarity to these.Secondly, there is the interplay with corporate law. The Companies Act has rules regarding issues such as what can be paid out as dividend. If IFRS implementation drastically reduces profits, it will also mean that companies will not be able to pay shareholders like they would have earlier. Jamil Khatri, Global Head of Accounting Advisory Services at KPMG explains how Europe found a way around (the impact on distributable profits). In the EU, he says, since IFRS was mandated only for consolidated financial statements, the impact on distributable profits that are based on standalone legal entity financial statements, was managed. Certain other countries, he added, modified their company law to allow companies to pay dividends after adjusting for the effect of the major changes due to IFRS. Finally, the standards themselves will have to be relooked. India has not adopted IFRS as is. India has framed a set of accounting rules, known as Ind AS, which are compliant with the IFRS. Since then, some of the original IFRS standards, prominently the one on how to recognise revenue, has undergone a change. Indian authorities will have to make a corresponding change in Ind AS for convergence to be meaningful.Then there is the question of who it will have to apply to. ICAI president Raghu says the cost of complying may be prohibitive for small and medium enterprises. So the Institute will most likely come out with a set of easier to implement guidelines for these enterprises.IFRS can be an important step in India’s bid to attract foreign investment. And with the government now openly backing it, the implementation seems nearer than ever. But these niggles need to be taken care off.
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Sahara group chief Subrata Roy surrendered two days after the Supreme Court issued a non-bailable warrant against him for failing to show up in court. He will stay in police custody till 4 March. Roy was summoned in a case relating to Sahara’s non-compliance with the SC’s judgment, directing two group firms to deposit Rs 24,000 crore with markets regulator, the Securities and Exchange Board of India. His request to be exempted from personal appearance was rejected.Gender BenderHonda Motors appointed a woman board member, Hideko Kunii, 66, a professor at the Shibaura Institute of Technology, to the all-male roster for the first time in its 65-year history. She will also be the first woman director at a big Japanese carmaker; neither Toyota nor Nissan has ever chosen a woman for their top boards. Kunii will be the second director from outside Honda to serve on its board.Sticky WicketIndian batting legend and Rajya Sabha member Sachin Tendulkar, it appears, had no ideas when it came to development projects for suburban Mumbai. Entitled to Rs 5 crore a year under the Member of Parliament Local Area Development Scheme (MPLADS) since 2012, Tendulkar failed to put the funds to use in his chosen area. While the funds for last year have already lapsed, those for current fiscal face the same fate.On ‘The Italian Job’Italy’s youngest-ever prime minister Matteo Renzi, 39, and his young 16-member cabinet were sworn in amid widespread scepticism that the team does not have the political maturity to tackle the country’s formidable challenges. In the lower house, Renzi got 378 votes in favour and 220 against, while in the Senate he won by 169 to 139, a thinner-than-expected result. A former mayor of Florence, the centre-left leader has already pledged tax cuts and investments worth over €100 billion.In A New RingFormer World Boxing Council heavyweight boxing champion and Ukraine opposition leader Vitaly Klitschko, 42, will run for the presidential elections in May 2014. For the 6-foot-7 father of three, this isn’t the first foray into politics; he made a bid to become the mayor of Kiev in 2005 — the first of three failed runs for the post. Klitschko represents the group of Ukrainians who seek closer ties with the West and a relationship with the European Union. In a New Ring Former World Boxing Council heavyweight boxing champion and Ukraine opposition leader Vitaly Klitschko, 42, will run for the presidential elections in May 2014. For the 6-foot-7 father of three, this isn’t the first foray into politics; he made a bid to become the mayor of Kiev in 2005 — the first of three failed runs for the post. Klitschko represents the group of Ukrainians who seek closer ties with the West and a relationship with the European Union.Vegas In Tokyo?Gambling mogul Sheldon Adelson is willing to invest $10 billion to put up a casino in Japan, the world’s third most prosperous economy, as it gets closer to legalising casino gambling. The chief executive of Las Vegas Sands (LVS), the largest casino developers in the world, wants to build gambling resorts in Tokyo and Osaka.Fraud FalloutSaradha Group chairperson Sudipta Sen has been sentenced to three years’ imprisonment and a fine of Rs 10,000 after he confessed to flouting provident fund guidelines. This is the first sentence handed down to Sen, who faces a string of complaints in connection with a Rs 20,000-crore ponzi scam that duped around 1.7 million investors. Sen admitted that various arms of the group did not deposit money deducted from employees’ salaries to their provident fund accounts.Stepping On The GasBillionaire entrepreneur and CEO of Tesla Motors, Elon Musk, 42, made $1.1 billion in the course of a day after the company’s shares gained nearly 14 per cent on 25 February. The haul brought his net worth to $11.7 billion, up 47.8 per cent since January 2014. Musk owns 23 per cent of the electric car manufacturer.(Photographs by Bivash Banerjee, Getty Images, Reuters, Bloomberg, Honda)(This story was published in BW | Businessworld Issue Dated 24-03-2014)
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