Insurance Bill: IRDA To Control Agent Commission - Dec 23, 2008

The government along with the IRDA taking a shot at making the insurers more accountable has said that every insurance company will have to report the details of management expenses to the insurance regulator. Apart from this, the commission payment or any other remuneration to an insurance agent or an intermediary will now be governed by the regulations set by IRDA.

Along with this, no insurer will be allowed to reject a claim if the policy has been in existence for 5 years and this will be good news for life insurance policyholders with even old claims being rejected on various grounds. And now it will be the Securities Appellate Tribunal that will settle the dispute cases between the insurers and the regulator. Whereas earlier the cases drag on in civil courts.

Besides this, the insurers will also have to pay an annual fee and register themselves to avoid their license getting cancelled. But on the other hand, the insurers will get more flexibility in hiring of agents. IRDA will not issue agent licenses anymore and instead it will now be left to the insurers.

For instance, the new FDI cap will be 49 per cent and Indian promoters will not be mandated to divest their stake to 26 per cent. The norms for holding equity and transferring capital have been made stringent. On the top of that, shareholders voting rights will be restricted to equity shares held by them, prior approval of IRDA will be needed if anyone plans to transfer more than 1 per cent of the paid-up equity capital of the insurer. Not just this, but reinsurers can open branches in India. All this, only after the parliament gives its nod to the bill.

Software Dealers Demand CENVAT Benefits - Dec 23, 2008

However, after the declaration of CENVAT on IT products by Central government, which would be reduced by 4%, the dealers anticipated that the decision would help improve the market performance that has been slow due to economic recession. A week after the government''s decision, the distributors like Ingram Micro and Redington are still taking advantage of imported software and the modified excise duty is not being applied on them.

The Indian Software Dealers Association (ISODA) members informed that distributors have not yet reduced the prices on products from Tally, Adobe and Symantec. On the other hand, after the government''s declaration the reduction was implemented on Microsoft licenses four to five days.

The members protesting the monopolistic attitude of distributors and in order to make them realize the strength of ISODA, have decided to call for a ''no transaction day'' on Dec 22, informed Harinder Singh Salwan, Secretary, ISODA.

Hemant Chabria, Secretary, ISODA informed that dealers were protesting about the fact that even after the government''s announcement the distributors are taking advantage by selling the products at higher rates.

Salwan informed that on Dec 22, all the 100 members of ISODA will protest and no billing, payment, supply or transaction will take place on that day. "We want to let our distributors realize that ISODA is a strong association and they cannot run business according to their own will," he said.

An ISODA member shared that the association had directly interacted with top officials of Redington and Ingram Micro over the issue of reducing the excise duty by four percent and the distis had agreed with them.

On the other hand, when the software dealers conveyed the message to an executive of one of the distributors, he refused to acknowledge the reduced rates, saying that ISODA is not a recognized body and cannot play any role in modifying the distributor''s decision.

ICSI National Award For Excellence In Corporate Governance - Dec 22, 2008

Mahindra & Mahindra Ltd has informed that the Company has been conferred the prestigious ICSI National Award for Excellence in Corporate Governance for the year 2008 at a function held in Vigyan Bhawan, New Delhi. The award is presented to those companies which follow the highest standards of corporate governance and follow best practices which are worthy of being exemplified.

The Institute of Company Secretaries of India (ICSI), a premier professional body has been set up under an Act of Parliament to develop and regulate the profession of Company Secretaries.

Mr. Arun Nanda, Executive Director, Mahindra & Mahindra Ltd, received the award on behalf of the Company from His Excellency Mohammad Hamid Ansari, the Honourable Vice President of India. Shri Prem Chand Gupta, Honble Union Minister for Corporate Affairs was also present on the occasion, along with other Jury members.

ICSI, while conferring this award to Mahindra & Mahindra, has stated that this award has been conferred on Mahindra in recognition of the Companys commitment to transparency, high integrity and its vision for the future, a customer centric approach, innovative thinking, its sustainable relations with all stakeholders and the top managements creative contributable capabilities.

This award is the most recent recognition of the good Corporate Governance practices followed at Mahindra. These are practices built on core values and ethics and the award is a reiteration of its philosophy that good governance goes beyond good working results and financial propriety and is a pre-requisite for excellent performance in terms of stakeholder value creation.

Mahindra had earlier bagged the Golden Peacock Award for Excellence in Corporate Governance, 2006. Mahindra has also been assigned the Governance & Value Creation (GVC) Level -1 by CRISIL for Governance and Value Creation which indicates that the capability of the Company with respect to wealth creation for a its stakeholders while adopting strong Corporate Governance practices is the highest.

The US based Reputation Institute recently ranked Mahindra among the top 10 Indian companies in its Global 200; The World best Corporate Reputations list.

Press Release : Mahindra & Mahindra Ltd, one of Indias leading companies, received the prestigious ICSI National Award for Excellence in Corporate Governance for the year 2008 at a function held in Vigyan Bhawan, New Delhi.

The award is presented to those companies which follow the highest standards of corporate governance and follow best practices which are worthy of being exemplified.

The Institute of Company Secretaries of India (ICSI), a premier professional body has been set up under an Act of Parliament to develop and regulate the profession of Company Secretaries.

Mr. Arun Nanda, Executive Director, Mahindra & Mahindra Ltd, received the award on behalf of the Company from His Excellency Mohammad Hamid Ansari, the Honourable Vice President of India.

Shri Prem Chand Gupta, Honble Union Minister for Corporate Affairs was also present on the occasion, along with other Jury members.

ICSI stated that this award has been conferred on Mahindra in recognition of the companys commitment to transparency, high integrity and its vision for the future, a customer centric approach, innovative thinking, its sustainable relations with all stakeholders and the top managements creative contributable capabilities.

This award is the most recent recognition of the good Corporate Governance practices followed at Mahindra. These are practices built on core values and ethics and the award is a reiteration of its philosophy that good governance goes beyond good working results and financial propriety and is a pre-requisite for excellent performance in terms of stakeholder value creation.

Mahindra had earlier bagged the Golden Peacock Award for Excellence in Corporate Governance, 2006. Mahindra has also been assigned the Governance and Value Creation (GVC) Level - 1 by CRISIL for Governance and Value Creation which indicates that the capability of the Company with respect to wealth creation for all its stakeholders while adopting strong Corporate Governance practices is the highest.

The US based Reputation Institute recently ranked Mahindra among the top 10 Indian companies in its Global 200 The Worlds Best Corporate Reputations list.

Troubled Paint Makers Look At Real Estate Recovery - Dec 22, 2008

The Rs 11,500 crore domestic paints industry is likely to get a much needed boost on account of cuts in home loan rates. The industry has been reeling under production cuts and a slump in the automobile sector. In any country, the paints industry has been a barometer of economic activity. The demand goes up in a boom as people buy more homes and cars, and businessmen put up more commercial space and factories.

The paint industry has two segments namely decorative (used in houses and commercial buildings) and industrial. The growth in the decorative segment came down to 15 per cent from 18 per cent in the last one year whereas the growth in the industrial segment dropped to just 3-4 per cent from 15 per cent.

To deal with this, the industry has decided to lower production in order to check the pile-up of inventory. Some have put their expansion plans on hold and still others are figuring out if their stocks can be exported. On the other hand, those who had bet on high-end paints, as consumers moved rapidly up the value chain, now find no takers.

The market leader Asian Paints had to temporarily close its chemical plant in Gujarat that makes phthalic anhydride (PAN), a component used in paint making, for its own use as well as for other paint makers. Besides this, the paint manufacturers now find it difficult to roll-back prices because of the depreciation in the rupee. Naturally, they are eyeing the real estate sector to bail them out of the situation.

The automobile industry that accounts for almost 90 per cent of the demand for industrial paint is also facing its worst ever crisis. The industry witnessed the worst decline in sales in 8 years this November, according to the Society of Indian Automobile Manufacturers, as buyers stayed away on account of tight liquidity.

NRC - Outcome Of AGM - Dec 22, 2008

NRC Ltd has informed that the members at the 61st Annual General Meeting (AGM) of the Company held on December 18, 2008, inter alia, have accorded to the following:

1. Adoption of the Balance Sheet of the Company as at June 30, 2008 and the Profit and Loss Account for the 15 months period ended on that date together with the Directors Report and the Auditors Report thereon.

2. Reappointment of Shri Ashok Goenka, as the Director of the Company, liable to retire by rotation.

3. Appointment of M/s. Lodha & Co., Chartered Accountants, as Auditors of the Company from the conclusion of the Annual General meeting until the conclusion of the next Annual General meeting of the Company on remuneration, terms and conditions as approved by the Board of Directors.

4. Appointment of Shri Arun Jain as Director.

5. Appointment of Shri Arun Jain as Managing Director of the Company and the remuneration payable to him for the period from February 22, 2008.

6. Appointment of Shri. L S Mehta as Director and Managing Director for the period from December 13, 2007 to February 21, 2008 and the remuneration paid to him and waiver of recovery of the said remuneration paid for want of approval of the Central Government, subject to the permission of the Central Government for such waiver.

7. Waiver of the remuneration paid to Shri A K Luke, as Managing Director during the period from February 20, 2007 to December 12, 2007 for want of approval of the Central Government, subject to the permission of the Central Government for such waiver.

Housing Demand To Pick Up In 2009 - Dec 22, 2008

Housing demand which has remained unresponsive in 2008 due to high prices and interest rates is likely to pick up in the new year in the backdrop of a declining interest rate regime, according to a leading home finance company.

Although there is a temporary slowdown, the demand for housing will increase in 2009, LIC Housing Finance Director and Chief Executive R R Nair said. While he would not predict price movements in the realty sector, Nair said that there was a "possibility" of them increasing.

Advising buyers not to delay their home purchases in the hope of a fall in prices, Nair said, "builders may start jacking up prices once they liquidate their inventories.

Now, rates have started falling. Builders might wait for a while, for two months or so, to liquidate their inventories. After that, it is anybody''s guess (on a likely price increase), Nair said. Asked whether the sector was facing a slowdown pan-India, Nair said that this phenomenon was confined only to a few pockets and was not an all-India problem.

There might be slowdown in a few pockets including Mumbai and Bangalore but there is no problem elsewhere, he said. Asymmetric price hikes in a few regions was the main reason for the slowdown, he said.

Realty prices flared up till January this year after they either stabilized or started declining except in select locations where they increased, he said. According to him, despite the increase in interest rates, customers stand benefited to the tune of 35 per cent. Prices across the board declined by 20 per cent and were it not for the rate hikes, they would have flared up by another 15 per cent, he said.

As an example, he said, LIC Housing Finance had increased its interest rates by 1.25 per cent till December which worked out to be Rs 80 for an EMI of 20 years. Price reduction in the sector has been a minimum of 20 per cent across the board. If the interest rates had not increased, prices would have further gone up further by at least 15 per cent. So, 35 per cent is permanent savings for the customer.

The slowdown mainly afflicts those builders who are targeting investors or speculators. But for those who are targeting genuine end-users, it is not a problem. May be some end-users were waiting for a price reduction but this is temporary and should not be considered a regular feature, he said.

ICICI''s Kamath To Hang Boots Next Year - Dec 20, 2008

Kundapur Vaman Kamath, ICICI Bank CEO and Managing Director will hang his boots on April 30, 2009. He will be remembered for making interest rates sound interesting and the otherwise ''boring'' banking profession cool. He made a mark for himself in the country where people only banker without difficulty is the RBI governor.

Kamath''s success is the envy of bankers everywhere, but his feat of taking a small bank and turning it into the country''s second largest lender is hard to match. Kamath, born in Mangalore in the December of 1947, preferred banking as his profession. Mangaloreans have made a name for themselves in this field, with at least five banks founded by people from the region.

But IIM-educated Kamath ventured beyond where his predecessors treaded and made access to credit a real possibility for customers from different walks of life. After graduating from IIM-Ahmedabad in 1971, he joined the erstwhile Industrial Credit and Investment Corporation of India in the project finance division and dabbled in leasing, venture capital and credit rating fields. In 1988, he moved to the Asian Development Bank, Manila, where he worked on many projects in developing countries before returning to ICICI as its Managing Director and CEO in 1996.

Slowdown Forces RIL To Revamp Retail Formats - Dec 20, 2008

Mukesh Ambani is going back to the drawing board once again two years after opening its first retail store ''Reliance Fresh'' in November 2006. There would be three main business units, value, lifestyle and joint ventures.

The value retailing will have formats like Reliance Fresh, Reliance Super and Reliance Mart under it. In the meantime, lifestyle will consist retailing formats such as Reliance Digital, Reliance Trends, Reliance Wellness, Reliance Footprint and Reliance Jewels.

The joint ventures will have tie-up businesses with Hamleys for toys, Marks & Spencer for apparel and Pearl Europe for optical retailing. Nevertheless, all these formats will still sport their current brand identity and the back-end operations will be one for each business unit.

This may result in job losses as many as 800 employees, including most of the expats were asked to resign in the last two weeks. Way back in 2006, during the company''s annual general meeting, Chairman Mukesh Ambani had said Reliance will hire over five lakh employees and spend Rs 10000 crore for its retail venture. Industry experts expect the gross margins to improve by two-three per cent and even the supply costs to reduce by as much as 40 per cent after the consolidation.

The Road Ahead For Chanda Kochhar - Dec 20, 2008

Chanda Kochhar will take over the control of India''s second largest bank on the 1st of May next year from KV Kamath. Kochar will become the Managing Director and Chief Executive Offier of ICICI Bank, an organization that she joined as a management trainee some 24 years ago.

Chanda Kochhar will step into the corner office at ICICI to become one of the most powerful women in Indian business. At the age of 46, it may be heavy load to carry, but Kochar''s credentials left no doubt that she will be the chosen one. Kamath, her predecessor said, Chanda is a well rounded banker. She has handled all the key portfolios. For the last few years, Kochhar has increasingly become the public face of ICICI, pushing the bank''s achievements.

Even before that, Chanda was integrally involved with the operational side of the bank after joining as a trainee in 1984. In 1993 she was nominated to be a part of the core team that set up ICICI bank. By 1997, she was heading the large corporate clients group and in 2001, she went on to the head retail vertical.Further, Kochhar became a part of the top management when she was promoted to CFO in 2006 and finally was handed the post of Joint MD in 2007.

The past year has been a difficult one for ICICI as the stock has tumbled and investors have become disbelieving about its growth projection. Not only this, even the depositors have turned cautious. But Kochhar remains confident that these worries will be overcome. In the meantime, as she works on damage control, Kochhar is looking for future opportunities, which may lie in reviving the bank''s corporate focus and looking for consolidation.

HDFC Cuts Home Loan Rates By 50 Bps - Dec 20, 2008

Country''s largest housing finance company, HDFC Ltd, cut the lending rate on Dec 19 by 50 basis points for loans of more than Rs 20 lakh for both existing and new customers. It also introduced a new slab for sub-Rs 20 lakh.Loans of up to Rs 20 lakh will attract an interest rate of 10.25 per cent and the rates for loans above this level has been pegged at 11.25 per cent down from 11.75 per cent. The new rates are effective from Monday.

The advantage of a cut in retail prime lending rates (RPLR) will accumulate to all the existing floating rate customers over a period of next three months based on their respective reset dates. The housing major''s decision to reduce rates comes within 24 hours of Home Minister P Chidambaram announcing in Parliament that the government will persuade banks to reduce loans for existing home loan borrowers as well. HDFC also decided to reduce the deposit rates by 50 basis points. HDFC''s closest competitor in home loans ICICI Bank had earlier in this month reduced interest rates by 150 basis points to 11.50 per cent for fresh loans of up to Rs 20 lakh. Public sector banks have already capped the interest rates at 8.5 per cent for loans up to Rs 5 lakh to encourage low-income housing.

For middle-income loans of Rs 5-20 lakh, the PSU banks would charge a maximum of 9.25 per cent. These rates would be reset only after five years. The scheme by PSU banks is valid up to June 30, 2009.The state-run banks have also done away with processing fee and pre-payment charges for loans up to Rs 20 lakh. In addition, the PSU lenders have decided to offer free life insurance cover to the home loan seekers as an add-on with the credit.