Veni Vidi Vici- ‘I came, I saw, I conquered’. Prof. Sree Sreenivasan could well make it his tagline for his USIS lecture on Social Networking! As a participant, I found his talk no less than mesmerizing.
On 19th July, 2011 American Centre, Kolkata has arranged a session with Columbia University Professor and Dean Dr. Sreenivasan. The discussion was centering on how social networks actually could play a role in democracy.
In recent past, we have seen some popular uprising in Middle East and Egypt, which are popularly referred to as twitter or Facebook revolution. Professor interacted on this in a very lively manner, though the title of the discussion was ‘New Media: Defining Democracy’ but it was never so limited in discussion. In a lively manner, professor through his wonderful presentation took us to the universe of the social networking. What are the countries that are hooked into this, what’s the latest trend in this, can an individual stay really aloof from social networking in present day scenario etc.
In India, I can bet that no institution can ever think of having a lecture period on Facebook, Orkut, Twitter or Google Plus. But Prof. Sreenivasan has been doing this in the Columbia School of Journalism for past few years. Actually, he encourages students on getting into social networking so that actually it ‘ruins their interest’ in it!
Time to time there was snap polls that how many in the audience actually know how to connect on linkedin and twiiter and some other interesting stuffs. The response was really surprising, most of us really don’t know the mechanism of those sites. Large number of school students were present and they made the programme very lively with their continuous participation.
In the course of the discussions, good, bad and the ugly side of the social networking has been focused upon. The renowned digital media from USA emphasized the need for social media practices that balances in perfect tune on & off line status.
How did the professor himself be part of Facebook? That’s co-incidentally a Kolkata connection. He glued into the ‘Scrabulous’ (online Scrabble) – popular game on Facebook, much before Farmville and Mafia became everyone’s darling! It has been developed by St Xavier’s College alumni Jayant and Rajat Agarwala, that attracted him to join it. Though in this city of warmth, this is Professor’s first visit!
In the lively Q&A session, moderated by veteran journalist Snehasis Sur, so many interesting questions came up. One of them was how far face book ‘revolution’ or ‘peace initiative’ can yield result? Isn’t profanity a common practice on the social media platform?
Isn’t social media making us ‘unsocial’ too? He considered the scenario as ‘glass half filled’. He told, “My family is in four countries, so it’s the best platform to keep in touch with each other.” Humorously enough, how so many eyebrows were raised when his FB friends saw he (Prof. Sreenivasan) is now friend with his mother-in-law! But he himself has taken a tough challenge that how for another 5 years he would keep away his kids away from this networking world. His twins will reach teen then.
Though he is for social networking, but he never encouraged fake accounts on networking sites. To keep inquisitive parents and curious cousins at bay, he advocated a real name culture. In his words, “You should have only one account on any social website because then you will be more real. It won’t be a case of split personality…”
He was introduced to us by Acting USA Consul General in Kolkata Clinton S “Tad” Brown as a person who teaches facebook and orkut (In India many would lose their consciousness after knowing this) but the most skeptic of the same. And all I can say the ‘City of Joy’ welcomed him with his skepticism & mastery.
Professor, waiting eagerly to meet you again…
Welcome back to ‘Coolcutta’!
Friday, 22 July 2011
Sunday, 3 July 2011
Cyclone: The story of an Individual
Assumption & Prejudice are two deadly words in the English Dictionary. Actually this is what I believe. If a person’s act is driven by assumption and prejudice that cannot be good for anyone.
Just to share, I used to know a person who was in colloquial term can easily be tagged as ‘metro sexual.’ I was pretty open with him almost in every sort of discussions, but that can cause some heart burn in some other places, I never ever even think of. Not even once.
But my inability to understand certain indication of brewing storm actually resulted in a hurricane. Or should I call it a cyclone? Hurricane has a shorter life span than cyclone, so am attributing this as a cyclone.
Why it’s a cyclone? Because it has a far-reaching effect, the immense casualty, massive destruction and recovery (if at all) would take a long time and above all the people who are in face of it (here it’s in a singular term) is Helpless. So I am not finding much difference between the natural cyclone caused by the movement of the wind and the man-made cyclone caused by the movement of certain communication tools!
And this cyclone is based on Assumption & Prejudice. The assumption was that a particular person favours a particular person over others and the very assumption is based on prejudice of a third person. Deadly combination of this prejudice and assumption actually destroyed a firm base of professionalism & healthy working condition.
This is not like actual cyclone that after the rebuilding everything will fade away from memory, but actually this has a huge after effect: THIS CANNOT BE REBUILT. It would definitely fade away from memory of certain individuals who are not directly or indirectly hit in this, but the person who faced 4-fold attack from different direction, for that individual, this would probably continue to stay as ‘The MEMORY’ of a certain place.
Cyclone cannot do any good to anybody, but here the case is slightly different… It actually benefitted all other than an ill-fated individual, who is still in process to find out why of things!!
Just to share, I used to know a person who was in colloquial term can easily be tagged as ‘metro sexual.’ I was pretty open with him almost in every sort of discussions, but that can cause some heart burn in some other places, I never ever even think of. Not even once.
But my inability to understand certain indication of brewing storm actually resulted in a hurricane. Or should I call it a cyclone? Hurricane has a shorter life span than cyclone, so am attributing this as a cyclone.
Why it’s a cyclone? Because it has a far-reaching effect, the immense casualty, massive destruction and recovery (if at all) would take a long time and above all the people who are in face of it (here it’s in a singular term) is Helpless. So I am not finding much difference between the natural cyclone caused by the movement of the wind and the man-made cyclone caused by the movement of certain communication tools!
And this cyclone is based on Assumption & Prejudice. The assumption was that a particular person favours a particular person over others and the very assumption is based on prejudice of a third person. Deadly combination of this prejudice and assumption actually destroyed a firm base of professionalism & healthy working condition.
This is not like actual cyclone that after the rebuilding everything will fade away from memory, but actually this has a huge after effect: THIS CANNOT BE REBUILT. It would definitely fade away from memory of certain individuals who are not directly or indirectly hit in this, but the person who faced 4-fold attack from different direction, for that individual, this would probably continue to stay as ‘The MEMORY’ of a certain place.
Cyclone cannot do any good to anybody, but here the case is slightly different… It actually benefitted all other than an ill-fated individual, who is still in process to find out why of things!!
Monday, 13 June 2011
Result Out: One Month On...
This is exactly a month since the results of the assembly elections were declared. Some were expected, some were not… In short there was not much surprise in the result! But the results were enough to supply some food for thought, both politically and in general course.
Let see the political picture first.
One may argue that the change of guard in West Bengal is a complete shocker. No it’s not! In 2009, ‘Change’ was seen in respect of vote share. That has multiplied manifold in another two years. West Bengal was going green was anybody’s guess.
34 years is a long time in democratic politics. Consecutive 7 win for the left in this state had actually made them over confident and more importantly complacent. They started moving away from the grassroot and certain hasty steps in land acquisition etc. made them answerable to the mass. ‘Opposition’ led by now-CM Mamata Banerjee didn’t keep any stone unturned to make the Left sit in the opposition!
But here lies the actual surprise. Though Left was routed in Bengal, still it has 41% vote share! After 34 years, managing 41% vote is a difficult task. As some are assuming, Left cannot come back, that might not be true at all. One week is a long time in politics, so 5 years like a light year. Mamata has already started with a faux pas in bringing the Singur Ordinance… So Left will wait for some opportunities to come and encash on the same.
Left has lost Kerala by a whisker. UDF has managed to get 11 lakhs vote more than the LDF. Only 0.89% swing in favour of UDF brought them to power. Kerala didn’t give any mandate for any particular party. The moral victory is for the Left as CPIM is still the biggest party in the Kerala Assembly.
Kerala & WB has played as eye openers to some of the political thought leaders. Elections can’t be won if the party disassociates itself from the mass. ‘Taken for granted’ is a not acceptable by the electorates. Plan the future based on the reality. These are the lessons for the Left in Bengal, whereas Kerala has proved that able and robust leadership coupled with inclusive growth is key to the success.
In the grassroot level, some unwanted people have registered as ‘primary member’ of CPIM. They are nothing but opportunist, the force which want to earn some benefits by using the party name. They should be thrown out in order to make the party more disciplined.
CPIM General secretary Prakash Karat denied any need for leadership change, But I feel that must be started from the top and filtered down the same thereafter. Theorists like Karat cannot win election on its own!! The left must go back to the basic now and understand the realities beyond ‘Das Capital’ & ‘Communist Manifesto!’
Other Southern state Tamil Nadu has given a strong mandate against corruption. The most dangerous social ailments have been rampant in that state. By throwing away DMK (gripped withy 2G Scams), Tamil Nadu wanted a government free from corruption. But the question is how far AIADMK led by Jayalalitha can deliver the same, only time will say! Kerala too has paraded with VS in corruption issues, which almost made them win the election.
Assam & Pondicherry didn’t make anyone surprised. The Only thing with the Assam win, Gogoi-led Congress managed to be in power consecutive for third term, which might help UPA in centre to resolve complicated north-east trouble.
If we analyse the impact of these election in the national context, it is heartening for the UPA. But winning 2014 won’t be easy as Corruption, Price rise and some other core issues are huge concern for the general public. Inclusive growth with equity is the key for any political party with real developmental agenda.
Let see the political picture first.
One may argue that the change of guard in West Bengal is a complete shocker. No it’s not! In 2009, ‘Change’ was seen in respect of vote share. That has multiplied manifold in another two years. West Bengal was going green was anybody’s guess.
34 years is a long time in democratic politics. Consecutive 7 win for the left in this state had actually made them over confident and more importantly complacent. They started moving away from the grassroot and certain hasty steps in land acquisition etc. made them answerable to the mass. ‘Opposition’ led by now-CM Mamata Banerjee didn’t keep any stone unturned to make the Left sit in the opposition!
But here lies the actual surprise. Though Left was routed in Bengal, still it has 41% vote share! After 34 years, managing 41% vote is a difficult task. As some are assuming, Left cannot come back, that might not be true at all. One week is a long time in politics, so 5 years like a light year. Mamata has already started with a faux pas in bringing the Singur Ordinance… So Left will wait for some opportunities to come and encash on the same.
Left has lost Kerala by a whisker. UDF has managed to get 11 lakhs vote more than the LDF. Only 0.89% swing in favour of UDF brought them to power. Kerala didn’t give any mandate for any particular party. The moral victory is for the Left as CPIM is still the biggest party in the Kerala Assembly.
Kerala & WB has played as eye openers to some of the political thought leaders. Elections can’t be won if the party disassociates itself from the mass. ‘Taken for granted’ is a not acceptable by the electorates. Plan the future based on the reality. These are the lessons for the Left in Bengal, whereas Kerala has proved that able and robust leadership coupled with inclusive growth is key to the success.
In the grassroot level, some unwanted people have registered as ‘primary member’ of CPIM. They are nothing but opportunist, the force which want to earn some benefits by using the party name. They should be thrown out in order to make the party more disciplined.
CPIM General secretary Prakash Karat denied any need for leadership change, But I feel that must be started from the top and filtered down the same thereafter. Theorists like Karat cannot win election on its own!! The left must go back to the basic now and understand the realities beyond ‘Das Capital’ & ‘Communist Manifesto!’
Other Southern state Tamil Nadu has given a strong mandate against corruption. The most dangerous social ailments have been rampant in that state. By throwing away DMK (gripped withy 2G Scams), Tamil Nadu wanted a government free from corruption. But the question is how far AIADMK led by Jayalalitha can deliver the same, only time will say! Kerala too has paraded with VS in corruption issues, which almost made them win the election.
Assam & Pondicherry didn’t make anyone surprised. The Only thing with the Assam win, Gogoi-led Congress managed to be in power consecutive for third term, which might help UPA in centre to resolve complicated north-east trouble.
If we analyse the impact of these election in the national context, it is heartening for the UPA. But winning 2014 won’t be easy as Corruption, Price rise and some other core issues are huge concern for the general public. Inclusive growth with equity is the key for any political party with real developmental agenda.
Monday, 6 June 2011
Two Sisters: Winning Streak of Indian Business
India is the most preferred investment destination for last few years for its conducive environment. Many consider 1991 was a watershed year in Indian economic history. Macro economic reforms measure taken by Dr. Manmohan Singh, the-then Finance Minister of Narsimha Rao government, lift the barriers for the foreign investment in India & as thought of Indian economy took a massive turn thereafter.
India is preferred destination for investment for its political stability, natural resources, a large no. of English speaking population, well regulated financial market and tested legal system and above all investor-friendly attitude of the government. Some statistics might help in understanding the same. Cumulative amount of FDI inflows into India from 2000-2011 is
US$ 1, 94,814 million & amount of investment in 2010-11 is US$ 19,427, though it’s a decline from 2009-10 where the invested amount was US$ 25,834. (FACT SHEET ON FOREIGN DIRECT INVESTMENT From AUGUST 1991 to MARCH 2011 of DIPP)
Countries like USA, UK, Netherlands, Japan, Germany, Singapore, Mauritius, France etc. didn’t waste much time to grab the opportunity to tap the potential market in India. As there were (are) several sectoral caps in the foreign direct investment, most of the initial investment was in form of Joint Ventures. With regular changes in FDI norms, nature of investment too has changed. Still, most preferred route for investment in the potential market is Joint Venture.
To substantiate this fact, we might refer to two cases of recent past; yes, you have rightly guessed, those are:-
‘Cairn-Vedanta deal caught in regulatory hurdles’
‘RIL-BP has struck the biggest ever JV in the context of foreign investment & production sharing’
Let’s see the present legal nitty-gritty of doing business in India by examining these two cases.
Cairn-Vedanta Deal
Vedanta Resources wants to buy a 51% controlling stake in Cairn India for $8.5 billion. Vedanta Resources is in talks with Cairn Energy, which has a 62.4% stake in Cairn India, to buy a controlling stake in the unit. Till date, Cairn-Vedanta deal has not been cleared. As one of the JV partners of Cairn India, ONGC has objected the deal and raised the issue of Royalty payment. It has approached the government not to give ‘go-ahead’ to London-listed Vedanta Resources’ $9.6 billion acquisition of Cairn India until the issue of excess royalty it pays on Rajasthan crude oil is sorted out. Government too has upheld ONGC’s stand and it said, ONGC’s consent is required to sell its majority stake in Cairn India to Vedanta Resources. Earlier, the petroleum ministry was ready to give “in-principle” approval for Vedanta provided 11 preconditions were met. Cairn India is the operator of the Rajasthan block with a 70% participating interest and its joint venture (JV) partner ONGC has a 30% participating interest.
RIL-BP Deal
A 50:50 joint venture formed by the RIL-BP for sourcing and marketing gas in India, taking the overall investment in the partnership to $20 billion or Rs 90,000 crore. BP is taking a 30% stake in 23 RIL-operated PSCs in India, including the offshore producing KG D6 block. This is the single-largest foreign direct investment (FDI) flow into India ever and a multi-year commitment. Valuation was justified with analysts having valued RIL’s upstream business at around $30 billion implying $9 billion for a 30% stake.
So, what is a Joint Venture (JV)? Why it’s so important, what’s the purpose behind a JV?
JV as the name suggests is an arrangement between two or more companies either for long term or for completion of a specific project. This is a symbiotic business association whereby the complimentary resources of the partners are mutually shared and put to use. This could be equity-based or contractual. It might be a new business or an existing business which is expected to get benefit from the new partner.
Overall, it is an effective business strategy for enhancing marketing, positioning and client acquisition. The alliance can be a formal contractual agreement or an informal understanding between the parties.
Joint Ventures include Leveraging Resources, Exploiting Capabilities and Expertise, Sharing Liabilities, Market Access & Flexible Business Diversification.
JVs may be classified as equity and contractual JV. An equity JV is an arrangement whereby a separate legal entity is created in accordance with the agreement of two or more parties like in case of RIL-BP. Most common form of Equity JV is 74:26, 51:49 & 50:50, though other forms too are present. Among these 50:50 JV is most dangerous as no single company can pass any resolution without the help of the other partner. In other two cases resolutions can be passed in much easier way. Recently, by issuing a Press Note, government has removed the condition of prior approval in case of existing joint ventures/ technical collaborations in the "same field" for the foreign partners.
The contractual JV is mostly for a limited period where creation of separate legal entity is not needed or feasible. This kind of JV is seen in the areas like:-
• Technology transfer agreements
• Joint product development
• Purchasing agreements
• Distribution agreements
• Marketing and promotional collaboration
• Intellectual advice
• Engineering, Procurement and Construction (EPC) arrangements
In both the above mentioned case, it is equity-based partnership. Unlike RIL-BP deal, Vedanta-Cairn stake sale is facing so much regulatory hurdles as the issue of controlling stake is there. According to SSPA (Share Sale & Purchasing Agreement), acquisition doesn’t need any approval per se. The acquired entity maintains its individuality. But, once a company wants to buy out more than 50% of the equity stake in the target company, it involves a change in the management and control of the company. In the Cairn-Vedanta case, this is exactly the regulatory hurdle. Vedanta wants to 51% controlling stake in Cairn India where change of management is evident.
The terms and conditions on which acquisition takes place are generally Mutual negotiation between the parties without any intervention of the court or other regulator. However if the target company is a listed company, then provisions of the Securities Contract Act, Take Over Code of SEBI etc. may apply in some cases as in Cairn-Vedanta ongoing saga.
Though, Cairn had claimed that its deal with Vedanta was a corporate transaction and not a transfer of stake. So, did not require the permission of government, but reluctantly agreed to it. Moreover, the application did not recognise the rights of partner ONGC. SEBI is yet to give nod on the proposed open offer by the company.
Analysts said the two deals (RIL-BP and Cairn-Vedanta) were completely different. In Reliance, the Indian company was selling a significant minority stake; Reliance will remain in charge of operations and retain a majority stake. On the other hand, Cairn-Vedanta would have involved a transfer of ownership. Besides, the Cairn-Vedanta $9.6-billion deal was a transaction between two London-listed companies and the money would not come into India. The RIL-BP deal, in contrast, will be the single-largest foreign direct investment. Also, there was no company to pre-empt the deal as was the case with ONGC in Cairn.
RIL-BP is important from foreign investment perspective too. Generally, a proposal for joint venture with foreign equity, does not require any approval if it conforms to the industry / product classification and foreign equity limit. But the JVs, which are not satisfying those clauses, fall under the approval route.
Foreign companies come to India as an incorporated entity by floating a company under the Companies Act, 1956 through Joint Ventures or Wholly Owned Subsidiaries. In this case BP requires government nod as it’s a 50-50 JV. According to existing norm, more than 49% investment by a foreign company needs prior approval of FIPB. But RIL doesn’t need any clearance as it is selling only 30% stake to BP & there is no change in management.
Presently there are two ways to invest in India. Those are:-
Automatic Route
Approval Route
Foreign Investment notification is issued by Department of Industrial Policy & Promotion (DIPP) by issuing Press Note annually.
Regardless of the 2 routes, FDI caps for certain sectors are needed to address two main concerns: (i) protection of national security interests (e.g. telecom/broadcasting), and (ii) protection of certain segments of Indian industry and/or Indian consumers (retail/ real estate). Recently 51% investment in multi brand retail is permitted.
FDI is prohibited under Automatic as well as Approval Route for the following sectors:
• Atomic Energy
• Lottery Business including Government /private & online lotteries etc.
• Gambling and Betting
• Agriculture and Plantations (Other than Tea plantations etc;)
• Nidhi company
• Trading in Transferable Development Rights (TDRs)
• Real Estate Business or Construction of Farm Houses
Thus, from the above analysis we can see there is a close connection between the FDI & JV. Companies are exploring Indian market mostly by strategic alliance in form of a JV, where sectoral caps of FDI is taken care of. Vedanta-Cairn cannot discourage other investors as this single case actually involves almost all legal implications. India thus will continue to be the heart of partnership business, be it foreign or domestic.
Courtesy:
The Economic Times
The Hindu Business Line
The Business Standard
The Mint
Nisithdesai.com (for JV Information)
Website of DIPP
Website of RBI
Website of RIL
Website of BP
Website of Cairn India
Website of Vedanta Resource
Website of ONGC
India is preferred destination for investment for its political stability, natural resources, a large no. of English speaking population, well regulated financial market and tested legal system and above all investor-friendly attitude of the government. Some statistics might help in understanding the same. Cumulative amount of FDI inflows into India from 2000-2011 is
US$ 1, 94,814 million & amount of investment in 2010-11 is US$ 19,427, though it’s a decline from 2009-10 where the invested amount was US$ 25,834. (FACT SHEET ON FOREIGN DIRECT INVESTMENT From AUGUST 1991 to MARCH 2011 of DIPP)
Countries like USA, UK, Netherlands, Japan, Germany, Singapore, Mauritius, France etc. didn’t waste much time to grab the opportunity to tap the potential market in India. As there were (are) several sectoral caps in the foreign direct investment, most of the initial investment was in form of Joint Ventures. With regular changes in FDI norms, nature of investment too has changed. Still, most preferred route for investment in the potential market is Joint Venture.
To substantiate this fact, we might refer to two cases of recent past; yes, you have rightly guessed, those are:-
‘Cairn-Vedanta deal caught in regulatory hurdles’
‘RIL-BP has struck the biggest ever JV in the context of foreign investment & production sharing’
Let’s see the present legal nitty-gritty of doing business in India by examining these two cases.
Cairn-Vedanta Deal
Vedanta Resources wants to buy a 51% controlling stake in Cairn India for $8.5 billion. Vedanta Resources is in talks with Cairn Energy, which has a 62.4% stake in Cairn India, to buy a controlling stake in the unit. Till date, Cairn-Vedanta deal has not been cleared. As one of the JV partners of Cairn India, ONGC has objected the deal and raised the issue of Royalty payment. It has approached the government not to give ‘go-ahead’ to London-listed Vedanta Resources’ $9.6 billion acquisition of Cairn India until the issue of excess royalty it pays on Rajasthan crude oil is sorted out. Government too has upheld ONGC’s stand and it said, ONGC’s consent is required to sell its majority stake in Cairn India to Vedanta Resources. Earlier, the petroleum ministry was ready to give “in-principle” approval for Vedanta provided 11 preconditions were met. Cairn India is the operator of the Rajasthan block with a 70% participating interest and its joint venture (JV) partner ONGC has a 30% participating interest.
RIL-BP Deal
A 50:50 joint venture formed by the RIL-BP for sourcing and marketing gas in India, taking the overall investment in the partnership to $20 billion or Rs 90,000 crore. BP is taking a 30% stake in 23 RIL-operated PSCs in India, including the offshore producing KG D6 block. This is the single-largest foreign direct investment (FDI) flow into India ever and a multi-year commitment. Valuation was justified with analysts having valued RIL’s upstream business at around $30 billion implying $9 billion for a 30% stake.
So, what is a Joint Venture (JV)? Why it’s so important, what’s the purpose behind a JV?
JV as the name suggests is an arrangement between two or more companies either for long term or for completion of a specific project. This is a symbiotic business association whereby the complimentary resources of the partners are mutually shared and put to use. This could be equity-based or contractual. It might be a new business or an existing business which is expected to get benefit from the new partner.
Overall, it is an effective business strategy for enhancing marketing, positioning and client acquisition. The alliance can be a formal contractual agreement or an informal understanding between the parties.
Joint Ventures include Leveraging Resources, Exploiting Capabilities and Expertise, Sharing Liabilities, Market Access & Flexible Business Diversification.
JVs may be classified as equity and contractual JV. An equity JV is an arrangement whereby a separate legal entity is created in accordance with the agreement of two or more parties like in case of RIL-BP. Most common form of Equity JV is 74:26, 51:49 & 50:50, though other forms too are present. Among these 50:50 JV is most dangerous as no single company can pass any resolution without the help of the other partner. In other two cases resolutions can be passed in much easier way. Recently, by issuing a Press Note, government has removed the condition of prior approval in case of existing joint ventures/ technical collaborations in the "same field" for the foreign partners.
The contractual JV is mostly for a limited period where creation of separate legal entity is not needed or feasible. This kind of JV is seen in the areas like:-
• Technology transfer agreements
• Joint product development
• Purchasing agreements
• Distribution agreements
• Marketing and promotional collaboration
• Intellectual advice
• Engineering, Procurement and Construction (EPC) arrangements
In both the above mentioned case, it is equity-based partnership. Unlike RIL-BP deal, Vedanta-Cairn stake sale is facing so much regulatory hurdles as the issue of controlling stake is there. According to SSPA (Share Sale & Purchasing Agreement), acquisition doesn’t need any approval per se. The acquired entity maintains its individuality. But, once a company wants to buy out more than 50% of the equity stake in the target company, it involves a change in the management and control of the company. In the Cairn-Vedanta case, this is exactly the regulatory hurdle. Vedanta wants to 51% controlling stake in Cairn India where change of management is evident.
The terms and conditions on which acquisition takes place are generally Mutual negotiation between the parties without any intervention of the court or other regulator. However if the target company is a listed company, then provisions of the Securities Contract Act, Take Over Code of SEBI etc. may apply in some cases as in Cairn-Vedanta ongoing saga.
Though, Cairn had claimed that its deal with Vedanta was a corporate transaction and not a transfer of stake. So, did not require the permission of government, but reluctantly agreed to it. Moreover, the application did not recognise the rights of partner ONGC. SEBI is yet to give nod on the proposed open offer by the company.
Analysts said the two deals (RIL-BP and Cairn-Vedanta) were completely different. In Reliance, the Indian company was selling a significant minority stake; Reliance will remain in charge of operations and retain a majority stake. On the other hand, Cairn-Vedanta would have involved a transfer of ownership. Besides, the Cairn-Vedanta $9.6-billion deal was a transaction between two London-listed companies and the money would not come into India. The RIL-BP deal, in contrast, will be the single-largest foreign direct investment. Also, there was no company to pre-empt the deal as was the case with ONGC in Cairn.
RIL-BP is important from foreign investment perspective too. Generally, a proposal for joint venture with foreign equity, does not require any approval if it conforms to the industry / product classification and foreign equity limit. But the JVs, which are not satisfying those clauses, fall under the approval route.
Foreign companies come to India as an incorporated entity by floating a company under the Companies Act, 1956 through Joint Ventures or Wholly Owned Subsidiaries. In this case BP requires government nod as it’s a 50-50 JV. According to existing norm, more than 49% investment by a foreign company needs prior approval of FIPB. But RIL doesn’t need any clearance as it is selling only 30% stake to BP & there is no change in management.
Presently there are two ways to invest in India. Those are:-
Automatic Route
Approval Route
Foreign Investment notification is issued by Department of Industrial Policy & Promotion (DIPP) by issuing Press Note annually.
Regardless of the 2 routes, FDI caps for certain sectors are needed to address two main concerns: (i) protection of national security interests (e.g. telecom/broadcasting), and (ii) protection of certain segments of Indian industry and/or Indian consumers (retail/ real estate). Recently 51% investment in multi brand retail is permitted.
FDI is prohibited under Automatic as well as Approval Route for the following sectors:
• Atomic Energy
• Lottery Business including Government /private & online lotteries etc.
• Gambling and Betting
• Agriculture and Plantations (Other than Tea plantations etc;)
• Nidhi company
• Trading in Transferable Development Rights (TDRs)
• Real Estate Business or Construction of Farm Houses
Thus, from the above analysis we can see there is a close connection between the FDI & JV. Companies are exploring Indian market mostly by strategic alliance in form of a JV, where sectoral caps of FDI is taken care of. Vedanta-Cairn cannot discourage other investors as this single case actually involves almost all legal implications. India thus will continue to be the heart of partnership business, be it foreign or domestic.
Courtesy:
The Economic Times
The Hindu Business Line
The Business Standard
The Mint
Nisithdesai.com (for JV Information)
Website of DIPP
Website of RBI
Website of RIL
Website of BP
Website of Cairn India
Website of Vedanta Resource
Website of ONGC
Wednesday, 25 May 2011
An Open Letter to Mr. Jairam Ramesh
To
Mr. Jairam Ramesh,
I sincerely believe that when you have doubted the ‘class’ of IIT and IIM faculties, you never meant to reflect the same sentiment of your former cabinet colleague Dr. Shashi Tharoor of ‘Cattle Class’ fame. You wanted to say something which can bring back the focus on you, so you chose two best public funded institutes if the state. Naturally, media is again showing you and running after you. You have successfully reached your target. Congrats.
Now let me say something about your 'class' comment.
Being an IIT alumnus you must know that institutes like IITs & IIMs have been established for a definite purpose. Over the years both these centres of excellence have proved its worth and made a mark in world platform & still counting. Their fame is not only for the students, but for the teachers too.
More importantly, if an institute is capable of producing ‘world class students’ I think their faculty members have to have the capability of nurturing the future world figures. If these talents are not shown the perfect way of unfolding their petals, they won’t even earn a name in India, leave aside world! Bright & the brilliants come to the IIMs and the IITs. Through a very tough selection procedure they made it to these august institutions and (surprisingly enough) the faculty of these institutes only select them!! These future world class students actually know the standard of the faculty as well as the institutes, so they choose these places! Do you think Mr. Minister, a student who aspires to be a world leader would chose a ‘below standard’ faculty as his/her mentor? I think, you know that teaching the brightest and the best is one of the most challenging jobs for a faculty. ‘Inept’ teachers cannot produce world class students, isn’t it so? What’s your take Mr. Minister?
I am associated with Indian Institute of Management Calcutta as a Trainee Teaching Associate. For the professional purpose I have the opportunity to work very closely withy many faculty members of this institute, both seniors and juniors. In almost all the cases I found, they are engaged in research works of very innovative kind or developing a new model. I would rather say, it’s really difficult to find them in campus as they always get invitations to attend various programmes worldwide. Actually ’world’ waits for them to get a pie of their knowledge and experience! Do you really call these faculties ‘incompetent’ in the world platform, Mr. Minister? Unlike the ‘world class’ institutes, students of IITs engage in project works which has long term sustainability and effectiveness. If you don’t believe ne, please do a Google search, you will get the list.
As you know Mr. Minister, India is different from world in many aspects. India still carries the tag of having a substantial percentage of people who don’t get a full square meal regularly. Primary education system is limping. Little number of students comes for higher education and a tiny percentage to IIMs and IITs. Still, India is proud of scientific research, management development, grassroots innovation, student entrepreneurship and many more. So why do IIM faculties need to follow the world model for attaining the status of ‘world class’ performer? If they think of India and research takes that specific direction, where’s the problem? Why does India need the approval of the West to prove its Excellence? Would you kindly explain this, Mr. Minister?
At the end, I want to say that there is always scope for improvement. IITs and IIMs are undoubtedly the best of the institutions and they boast of their faculty and students. But at the same time, complacency must not kill the scope for future development and innovations. Everywhere, be it ‘India’ or ‘World’ there are some people who might not be’ that good’, but experience says, peer pressure transforms them for better. Who knows, one day ‘world’ might adjudge its ‘class’ comparing their performance with the IIMs and IITs? What’s your take on this Mr. Minister?
Sincerely,
Anwesha Banerjee
TTA, IIM Calcutta
Kolkata
PS: Congress party seems to have a problem in ‘class’ structure. First it was ‘cattle classes, then ‘world class’. I think the party needs a ‘class’ of its own!!
Mr. Jairam Ramesh,
I sincerely believe that when you have doubted the ‘class’ of IIT and IIM faculties, you never meant to reflect the same sentiment of your former cabinet colleague Dr. Shashi Tharoor of ‘Cattle Class’ fame. You wanted to say something which can bring back the focus on you, so you chose two best public funded institutes if the state. Naturally, media is again showing you and running after you. You have successfully reached your target. Congrats.
Now let me say something about your 'class' comment.
Being an IIT alumnus you must know that institutes like IITs & IIMs have been established for a definite purpose. Over the years both these centres of excellence have proved its worth and made a mark in world platform & still counting. Their fame is not only for the students, but for the teachers too.
More importantly, if an institute is capable of producing ‘world class students’ I think their faculty members have to have the capability of nurturing the future world figures. If these talents are not shown the perfect way of unfolding their petals, they won’t even earn a name in India, leave aside world! Bright & the brilliants come to the IIMs and the IITs. Through a very tough selection procedure they made it to these august institutions and (surprisingly enough) the faculty of these institutes only select them!! These future world class students actually know the standard of the faculty as well as the institutes, so they choose these places! Do you think Mr. Minister, a student who aspires to be a world leader would chose a ‘below standard’ faculty as his/her mentor? I think, you know that teaching the brightest and the best is one of the most challenging jobs for a faculty. ‘Inept’ teachers cannot produce world class students, isn’t it so? What’s your take Mr. Minister?
I am associated with Indian Institute of Management Calcutta as a Trainee Teaching Associate. For the professional purpose I have the opportunity to work very closely withy many faculty members of this institute, both seniors and juniors. In almost all the cases I found, they are engaged in research works of very innovative kind or developing a new model. I would rather say, it’s really difficult to find them in campus as they always get invitations to attend various programmes worldwide. Actually ’world’ waits for them to get a pie of their knowledge and experience! Do you really call these faculties ‘incompetent’ in the world platform, Mr. Minister? Unlike the ‘world class’ institutes, students of IITs engage in project works which has long term sustainability and effectiveness. If you don’t believe ne, please do a Google search, you will get the list.
As you know Mr. Minister, India is different from world in many aspects. India still carries the tag of having a substantial percentage of people who don’t get a full square meal regularly. Primary education system is limping. Little number of students comes for higher education and a tiny percentage to IIMs and IITs. Still, India is proud of scientific research, management development, grassroots innovation, student entrepreneurship and many more. So why do IIM faculties need to follow the world model for attaining the status of ‘world class’ performer? If they think of India and research takes that specific direction, where’s the problem? Why does India need the approval of the West to prove its Excellence? Would you kindly explain this, Mr. Minister?
At the end, I want to say that there is always scope for improvement. IITs and IIMs are undoubtedly the best of the institutions and they boast of their faculty and students. But at the same time, complacency must not kill the scope for future development and innovations. Everywhere, be it ‘India’ or ‘World’ there are some people who might not be’ that good’, but experience says, peer pressure transforms them for better. Who knows, one day ‘world’ might adjudge its ‘class’ comparing their performance with the IIMs and IITs? What’s your take on this Mr. Minister?
Sincerely,
Anwesha Banerjee
TTA, IIM Calcutta
Kolkata
PS: Congress party seems to have a problem in ‘class’ structure. First it was ‘cattle classes, then ‘world class’. I think the party needs a ‘class’ of its own!!
Thursday, 19 May 2011
Friday the 13th: The ‘Red’ letter day
The Great Fall.
The longest running Communist government in a state has had its end on Friday, the 13th. This might not be as suspense thriller as the Hollywood blockbuster is, but it’s no less than a roller coaster saga for the Left as well as Mamata Banerjee!!
This is very much a predictable result. Opinion Polls and Exit polls have already given almost the same numbers as what the TMC Alliance and Left have got. So, that it would be ‘Left’s poll for exit’ was assumed. Officially though, run up for this moment has begun 2 years back. First phase of ‘Paribartan’ was seen in Loksabha election of 2009. Civic body elections too didn’t give any scope to stimulate confidence in CPIM. For mishandling of Singur, Nandigram and to some extent Rizwanur Rahaman death case, the war cry for ‘Change’ had gradually acquired a strong support base. And the Tsunami called ‘Paribartan’ indeed has washed away the Left even from their traditional strongholds.
The mandate is clear. Bengal has not only voted against the Left but also for the TMC-Congress alliance. Had it been only negative votes, alliance couldn’t have got 2/3rd majority with almost all the standing ministers losing including the CM Budhhadeb Bhattacharya. Alliance was successful enough to convince people that why they should vote for them. Moreover CPIM has continuously lost contact with the grassroot level. Almost three and a half decades in power made them overconfident. By the time they started taking the ‘corrective’ measures, it was already very late. And the ‘Mamata’ factor... In my previous articles (‘Winds of Change’ & ‘Paint it Green’) I have already talked about her: from whimsical to mature, how she transformed herself. Why people have started to see her as the best alternative to Left. With ‘never-say-no’ mentality she actually brought Jasmine Revolution here.
It is learnt from the CSDS survey that richest and the poorest have voted for the agent of change i.e. Didi. Why is it so? Just rewind a bit. Many believe that Higher Education & Industry was destroyed by CPIM. No English education in the Primary Level too has angered the rich & the urban upper middle class. On the other hand, ‘CPIM is taking away land from the poor’ the clever campaign by TMC was enough to make their mind change. They had the ready reference of Nandigram-Singur-Lalgarh.
Many Left sympathizers left heartbroken, the Rightist supporters are falling short of words. Expectation from the new government is enormous. Now, they want to see the actual ‘Change’ as promised in the manifesto. It can be surely said that people won’t wait another 34 years to witness change.
Mamata, by dedicating this victory to ‘Ma-Mati-Manush’ has told that this is the ‘second independence of Bengal.’ Pranab Mukherjee has already promised her a special package for Bengal for economic reconstruction as WB in debt-trap. The other challenge would be how she resolves the on-going ‘Hill’ problems and ‘jangalmahal’ and Maoist insurgency. With the ‘temporary’ end of the Communist era in Bengal, this time industrialists might be surer to invest here. Didi has announced to bring reforms in law and order, education, health and in other sectors. But the first & foremost challenge is definitely to maintain peace everywhere. Rural Bengal has bled long in vendetta politics. This should stop at once. It must be ensured that no one is without shelter in fear of being killed by the political enemies. I hope here it won’t be the beginning of Tamil Nadu way of politics where government and opposition always target each other. I wish CPIM will play the role of a Constructive opposition and won’t protest all the policies of new government like last 34 years opposition did.
State-Centre relation in Bengal too would change now. Predictably, centre will shed off its hostility towards this state. UPA II government has got enough boosters in the just-concluded assembly elections. Other than Tamil Nadu, they have performed well. Though they have won in Kerala by a whisker.
As the biggest ally of the UPA II, Mamata has so long opposed new land acquisition bill, pension bill and some other important bills. As soon as mandate was for her, she told a television channel that she wants new land policy. It is learnt, the bill is due to pass in the next session of the Parliament. Now whether she takes the same stand in these bills, would be a continuing focus. As of now centre won’t go against much of her will, as, if her party withdraws support, UPA II will be in big trouble. In West Bengal TMC has got absolute majority, so they don’t need Congress at all to run the government. Loksabha election is another 3 years away, so Congress has time, so they might adopt ‘Go slow’ policy in these contentious issues.
What is the road ahead for CPIM? As some are saying, is this really the end of Communism in India? I think, no. CPIM has lost contact with people and real issues related to the poor. They have got 5 years of time to go back to the basics from where they had begun. In the grass root level there are corruptions, nepotism and ‘brigades of opportunist members’, this practice must be put to an end. In order to channelize energy and confidence among the party members, CPIM has to start afresh. The Left here has already realised that there were huge percentage of negative voting for them. They have lost 7% of their dedicated vote-bank, whereas TMC has gained 19%. People have the ultimate authority to reject and select, so they have to find out why the electorates don’t want them any more. Organisational capability is not everything.
I believe, the biggest problem for CPIM is the disjunction between the Politbureau and the general mass. Politbureau decision is not always in consistency with the ground realities. Some are merely theoretical. Now Prakash Karats must learn from V S Achuthanandans. Hats off to the octogenarian for his efforts, he has almost done it in Kerala. Many are saying in Kerala, LDF has achieved a moral victory.
However, ‘Change’ is constant in democratic politics. Everywhere in the world and in India there is change of guard in elections. Because West Bengal was an exception, the change has resulted in so much of discussions, celebration, and frenzy.
Getting elected consecutively for 7 terms is history from all aspects. Long term in power always has a negative angle. It gives a certain contentment on the part of the government that the incumbent doesn’t have any alternative and whatever they are doing is good for the people. Electorates are taken for granted.
I belong to that generation who hasn’t seen any other government other than the Left front in my state. I was born when they were already in their second term. So we also don’t know what Green Revolution can bring to us. We have heard the ‘reign of terror’ by Sidhhartha Sankar Ray government from ’72-’77, we have not seen that. So veterans fear the repeating of that dark history.
But I am optimistic, after all Bengal is getting her first woman Chief Minister!! My only scepticism lies in the fact that if Didi remains current version of herself, we will see ‘dictatorship’ of ‘Durga in a crumpled Sari’!! Hope floats, ‘Paribartan’ might be seen in didi too...!!
The longest running Communist government in a state has had its end on Friday, the 13th. This might not be as suspense thriller as the Hollywood blockbuster is, but it’s no less than a roller coaster saga for the Left as well as Mamata Banerjee!!
This is very much a predictable result. Opinion Polls and Exit polls have already given almost the same numbers as what the TMC Alliance and Left have got. So, that it would be ‘Left’s poll for exit’ was assumed. Officially though, run up for this moment has begun 2 years back. First phase of ‘Paribartan’ was seen in Loksabha election of 2009. Civic body elections too didn’t give any scope to stimulate confidence in CPIM. For mishandling of Singur, Nandigram and to some extent Rizwanur Rahaman death case, the war cry for ‘Change’ had gradually acquired a strong support base. And the Tsunami called ‘Paribartan’ indeed has washed away the Left even from their traditional strongholds.
The mandate is clear. Bengal has not only voted against the Left but also for the TMC-Congress alliance. Had it been only negative votes, alliance couldn’t have got 2/3rd majority with almost all the standing ministers losing including the CM Budhhadeb Bhattacharya. Alliance was successful enough to convince people that why they should vote for them. Moreover CPIM has continuously lost contact with the grassroot level. Almost three and a half decades in power made them overconfident. By the time they started taking the ‘corrective’ measures, it was already very late. And the ‘Mamata’ factor... In my previous articles (‘Winds of Change’ & ‘Paint it Green’) I have already talked about her: from whimsical to mature, how she transformed herself. Why people have started to see her as the best alternative to Left. With ‘never-say-no’ mentality she actually brought Jasmine Revolution here.
It is learnt from the CSDS survey that richest and the poorest have voted for the agent of change i.e. Didi. Why is it so? Just rewind a bit. Many believe that Higher Education & Industry was destroyed by CPIM. No English education in the Primary Level too has angered the rich & the urban upper middle class. On the other hand, ‘CPIM is taking away land from the poor’ the clever campaign by TMC was enough to make their mind change. They had the ready reference of Nandigram-Singur-Lalgarh.
Many Left sympathizers left heartbroken, the Rightist supporters are falling short of words. Expectation from the new government is enormous. Now, they want to see the actual ‘Change’ as promised in the manifesto. It can be surely said that people won’t wait another 34 years to witness change.
Mamata, by dedicating this victory to ‘Ma-Mati-Manush’ has told that this is the ‘second independence of Bengal.’ Pranab Mukherjee has already promised her a special package for Bengal for economic reconstruction as WB in debt-trap. The other challenge would be how she resolves the on-going ‘Hill’ problems and ‘jangalmahal’ and Maoist insurgency. With the ‘temporary’ end of the Communist era in Bengal, this time industrialists might be surer to invest here. Didi has announced to bring reforms in law and order, education, health and in other sectors. But the first & foremost challenge is definitely to maintain peace everywhere. Rural Bengal has bled long in vendetta politics. This should stop at once. It must be ensured that no one is without shelter in fear of being killed by the political enemies. I hope here it won’t be the beginning of Tamil Nadu way of politics where government and opposition always target each other. I wish CPIM will play the role of a Constructive opposition and won’t protest all the policies of new government like last 34 years opposition did.
State-Centre relation in Bengal too would change now. Predictably, centre will shed off its hostility towards this state. UPA II government has got enough boosters in the just-concluded assembly elections. Other than Tamil Nadu, they have performed well. Though they have won in Kerala by a whisker.
As the biggest ally of the UPA II, Mamata has so long opposed new land acquisition bill, pension bill and some other important bills. As soon as mandate was for her, she told a television channel that she wants new land policy. It is learnt, the bill is due to pass in the next session of the Parliament. Now whether she takes the same stand in these bills, would be a continuing focus. As of now centre won’t go against much of her will, as, if her party withdraws support, UPA II will be in big trouble. In West Bengal TMC has got absolute majority, so they don’t need Congress at all to run the government. Loksabha election is another 3 years away, so Congress has time, so they might adopt ‘Go slow’ policy in these contentious issues.
What is the road ahead for CPIM? As some are saying, is this really the end of Communism in India? I think, no. CPIM has lost contact with people and real issues related to the poor. They have got 5 years of time to go back to the basics from where they had begun. In the grass root level there are corruptions, nepotism and ‘brigades of opportunist members’, this practice must be put to an end. In order to channelize energy and confidence among the party members, CPIM has to start afresh. The Left here has already realised that there were huge percentage of negative voting for them. They have lost 7% of their dedicated vote-bank, whereas TMC has gained 19%. People have the ultimate authority to reject and select, so they have to find out why the electorates don’t want them any more. Organisational capability is not everything.
I believe, the biggest problem for CPIM is the disjunction between the Politbureau and the general mass. Politbureau decision is not always in consistency with the ground realities. Some are merely theoretical. Now Prakash Karats must learn from V S Achuthanandans. Hats off to the octogenarian for his efforts, he has almost done it in Kerala. Many are saying in Kerala, LDF has achieved a moral victory.
However, ‘Change’ is constant in democratic politics. Everywhere in the world and in India there is change of guard in elections. Because West Bengal was an exception, the change has resulted in so much of discussions, celebration, and frenzy.
Getting elected consecutively for 7 terms is history from all aspects. Long term in power always has a negative angle. It gives a certain contentment on the part of the government that the incumbent doesn’t have any alternative and whatever they are doing is good for the people. Electorates are taken for granted.
I belong to that generation who hasn’t seen any other government other than the Left front in my state. I was born when they were already in their second term. So we also don’t know what Green Revolution can bring to us. We have heard the ‘reign of terror’ by Sidhhartha Sankar Ray government from ’72-’77, we have not seen that. So veterans fear the repeating of that dark history.
But I am optimistic, after all Bengal is getting her first woman Chief Minister!! My only scepticism lies in the fact that if Didi remains current version of herself, we will see ‘dictatorship’ of ‘Durga in a crumpled Sari’!! Hope floats, ‘Paribartan’ might be seen in didi too...!!
Friday, 8 April 2011
8th April- a day to remember
Today i.e. 8th April, 2011 is a very special day. Last year on this date I made a promise to myself. I would observe some people for a year to find out whether I am right in believing that I am merely a ‘use and throw’ or to some extent a ‘recyclable’ object!! & just after a year I am surprised to see that I was very correct.
In last one year so many things happened-good, bad and the ugly. But my position didn’t change. Last April I got a call (which is very rare) from a ‘very close’ friend to know his story of achievement. Later, I realized, it was to prove that even if we start from the same point, only intelligent & meritorious people emerge as triumphant!! After that call, I was simply rewinding and found since the beginning of his journey I have contributed too whenever needed!! Though, predictably, no acknowledgment was there. I didn’t even care as I believe friendship doesn’t ask for such minor details.
Few months later, when we have a talk again, I could clearly remember that I have told him, next year would be his only!! His reply was, ‘no, no. I am so young to be an achiever! ’ In between I had my stint of success(?) & failure about which he was least bothered.
For last few months we didn’t have any talk. Both of us were too much busy… Today evening, I saw something on Facebook, he is indeed the’ young achiever of this yea’r and have climbed up quite a few steps up in the ladder!! Hats off o his dedication and hardwork.I am immensely happy because my prediction was dot on but at the same time shocked too as because he didn’t pick up the phone or replied to the sms!! I am leaving aside that he didn’t even feel to let me know this great news!!
Still, I am happy for you my friend precisely for two reasons. If the first one is for your success, then the second one is of course for me. Surprised? I know I am a recyclable object… and my dear friend has again proved me right!!
In last one year so many things happened-good, bad and the ugly. But my position didn’t change. Last April I got a call (which is very rare) from a ‘very close’ friend to know his story of achievement. Later, I realized, it was to prove that even if we start from the same point, only intelligent & meritorious people emerge as triumphant!! After that call, I was simply rewinding and found since the beginning of his journey I have contributed too whenever needed!! Though, predictably, no acknowledgment was there. I didn’t even care as I believe friendship doesn’t ask for such minor details.
Few months later, when we have a talk again, I could clearly remember that I have told him, next year would be his only!! His reply was, ‘no, no. I am so young to be an achiever! ’ In between I had my stint of success(?) & failure about which he was least bothered.
For last few months we didn’t have any talk. Both of us were too much busy… Today evening, I saw something on Facebook, he is indeed the’ young achiever of this yea’r and have climbed up quite a few steps up in the ladder!! Hats off o his dedication and hardwork.I am immensely happy because my prediction was dot on but at the same time shocked too as because he didn’t pick up the phone or replied to the sms!! I am leaving aside that he didn’t even feel to let me know this great news!!
Still, I am happy for you my friend precisely for two reasons. If the first one is for your success, then the second one is of course for me. Surprised? I know I am a recyclable object… and my dear friend has again proved me right!!
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