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DHL Express to increase rates by 6.9% in India

NEW DELHI: DHL Express, an international express courier service provider, today announced the average price increase of 6.9 per cent in India with effect from January 1, 2017.

“DHL Express…announced its annual general average price increase, effective January 1, 2017. In India, the average price increase will be 6.9 per cent,” the company said in a statement.

“DHL Express is focused on being the quality leader in the international time definite delivery business,” DHL Express CEO Ken Allen was quoted as saying in the statement.

“Our annual price increase supports this aspiration by allowing us to invest in a truly world-class network that generates significant value for our customers. Our prices reflect both the value embedded in our service and our uncompromising long-term commitment to service quality,” Allen said.

“DHL continues to invest in India and its global network to improve delivery speed, efficiency and provide superior service quality to our customers. The annual rate increase will support ongoing expansions, quality enhancements while helping to neutralise the impact of inflation and the depreciating rupee,” DHL Express India SVP and Country Manager R S Subramanian said.

DHL Express adjusts its prices annually, taking into account inflation, currency dynamics and other rising costs, such as expenses related to compliance with enhanced security regulations, in each of the more than 220 countries and territories that it serves.

Price adjustments will vary from country to country, depending on local conditions, and will apply to all customers where contracts allow.

Jindal defaults on interest repayments to its bonds holders due in September 2016

MUMBAI/KOLKATA: Jindal Steel & Power Ltd (JSPL) Jindal Steel & Power has defaulted on interest repayments to its bonds holders, who did not receive any interest income falling due in September 30, 2016. Those non-convertible debentures (NCDs) had a coupon rate of 9.8 per cent with about two-10 year maturities with banks, provident funds believed to be the investors. Axis Trustee Services was the trustee.

“The non payment of interest on the NCD’s has been disclosed as per regulatory norms. The said non payment is due to short-term cash flow mismatches and will be paid in due course,” a JSPL spokesperson told ET.

In a letter date October 1, 2016, the company informed the National Stock Exchange of the development. “This is to inform you in terms of Regulations 30, 51, 56 of SEBI, the company has not made payment towards the interest due on the following NCDs the due date for payment of which was September 30, 2016,” JSPL said in a letter dated October 1, 2016 to the NSE.

Earlier this year, ratings major

Crisil

had cut JSPL’s corporate debt rating to ‘D’, which is default category, from ‘BB+’ earlier. According to Crisil, JSPL had a total outstanding debt of Rs 40,000 crore, of which Rs 26,200 crore was in long term instruments and Rs 13,800 crore in short term papers.

In March, Franklin Templeton Mutual Fund, the biggest holder of the company’s bonds, dumped its holdings in the debt-laden steel maker. Franklin offloaded about Rs 1,000 crore worth of JSPL securities at a steeper discount to the price at which it first sold the company’s papers in February. ICICI Prudential Asset Management, which has the second -highest holding of JSPL bonds. ICICI Prudential, which held JSPL securities worth almost Rs 500 crore as January 30, said JSPL has demonstrated a track record of ontime repayment to mutual funds having redeemed debt instruments around Rs 2,300 crore since September 2015.

Some of JSPL securities held by ICICI Prudential are in fixed maturity plans (FMPs), which are close-ended products.

Adani, Essar get DRI notice for overvaluing imports

(This story originally appeared in on Sep 13, 2016)

The Directorate of Revenue Intelligence has issued show-cause notices to the Adani Group and the Essar group companies for inflating the value of capital goods imported for power plants. DRI is also believed to have prepared another show-cause notice, which is expected to be issued in the next two days to ADAG’s Reliance Infrastructure for allegedly inflating the value of coal imports.

Officials said the overvaluation in the case of Adani and Essar was Rs 800 crore and Rs 500 crore, respectively. In the case of ADAG, the overvaluation is pegged at Rs 350 crore. TOI was the first to report on the alleged violations in December 2014.

DRI has been investigating 40 power generating companies and traders for the past couple of years. According to DRI, some prominent public and private sector companies inflated the import value of coal beyond that prevailing in the international market. Some companies are also being probed for allegedly inflating the value of imported capital goods. According to DRI, power tariffs were fixed based on the inflated values, which resulted in consumers paying higher charges.

DRI has alleged that Adani Group and Essar have imported capital goods through intermediaries in tax havens. It claims that the companies’ objective was to siphon off money abroad while availing higher power tariff compensation based on artificially-inflated costs of imported coal or capital goods.

While the coal was directly shipped from Indonesian ports to importers in India, the import invoices were routed through one or more intermediaries based in a third country such as Singapore, Dubai, Hong Kong and British Virgin Islands. These intermediary firms appear to be either subsidiaries of Indian importers or their front companies. This was the modus operandi used in the import of capital goods too. Investigations into overvaluation by other companies are still in progress.

Meanwhile, the Supreme Court has stayed an order of Appellate Tribunal for Electricity (APTEL) that directed the Central Electricity Regulatory Commission to award compensatory tariffs to

Adani Power

and Coastal Gujarat Power (Tata group) based on power purchase agreements for their power plants in Mundra. APTEL has also disallowed compensatory tariff to Adani Group’s power plant at Tiroda in Maharashtra and Kawai in Rajasthan.

Companies deny any wrongdoing

Responding to TOI’s request for a comment, Essar said it had received a show-cause notice by DRI, in which the agency had sought its `clarification’ in the context of invoicing issues. It added, “We strongly refute and deny the allegation. All our procurements stand the strictest scrutiny of law. Our project cost compares favourably with similar projects built in India. We are responding to the concerns raised in the notice… We are confident that the explanations provided will be considered satisfactory by the adjudicating authorities.

Adani Group said, “We have been importing coal for more than 10 years from various countries like Indonesia, China, and South Africa etc. All imports have taken place at contemporaneous prices prevailing in the international market, which have all along been accepted by customs authorities across all ports in India.

Reliance ADAG said it had not received any show-cause notice yet. “All our coal imports are fully compliant with laid down rules and regulations. The coal was imported only for captive consumption from independent suppliers under long term contracts. The purchase price of imported coal was on the basis of then prevailing widely and globally accepted highly traded coal indices on a year to year basis. There is no manipulation of any test report by the company,” ADAG said.

All business activities in compliance with law, says GMR Infra

GMR Infrastructure today said all its business activities and investments in overseas entities are in compliance with applicable tax laws in respective countries.

Referring to reports related to ‘Paradise Papers’ that the group has a “number of overseas subsidiaries in attempt of tax avoidance through offshore entities”, the company said all foreign investments of GMR group were well within the permissible limits of FEMA, Income Tax Act, Companies Act, 2013, Sebi and RBI regulations.

“Further, all its business activities and investments in overseas entities are in conformity with well-established norms and are in compliance with all applicable tax laws in respective countries,” it said in a release.

According to the release, the group is not involved in or made any attempts of tax avoidance in any country.

“As the company is involved in developing and operating capital intensive infrastructure projects, which require multiple partners of global repute, setting up subsidiaries in various countries becomes a business necessity…,” it added.

FDI may rise 25% as FSSAI eases product approval norms: Harsimrat Kaur Badal

NEW DELHI: Foreign direct investment in the food processing sector is likely to go up by at least 25 per cent as FSSAI streamlines regulations to ease product approvals, Union Minister Harsimrat Kaur Badal has said.

The Food Safety and Standards Authority of India (FSSAI) had laid down quality standards for only 370 products. The regulator‘s approval was a must for all other products.

Now that the approval process has been relaxed, products with ingredients that are approved by the regulator may not require any approval, which will lead to more innovation and product launches and promote traditional food, Badal told PTI.

“Our contention has all along been that proprietary food products, for which standards are not defined in the Food Safety and Standards regulations, but have approved and standardised additives should not require product-by-product approval. This approach espoused by the Food Processing Ministry has now found favour with the regulator,” Badal added.

Proprietary food means an article of food that has not been standardised under the food safety and standards regulations.

FSSAI has also issued a notice for operationalisation of standards for proprietary food, under which the definition has been changed.

The proprietary food has now been defined as an article of food that has not been standardised under the regulations but which contains approved ingredients and additives. From now on, such products may not require regulatory approval.

However, the notice mentions that proprietary food does not include dietary supplements, nutraceuticals and genetically modified food products, among others. And the onus for the safety of food products will be on food business operators.

The regulator has also uploaded a list of more than 8,000 permitted food additives, the food items in which they can be used and the recommended maximum level.

“With these new regulations in place, the industry’s concerns regarding product approvals will be addressed to a large extent. And I am optimistic that in coming months, there will be an increase of 25 per cent FDI in the food processing sector,” Badal said.

She added that the Food Processing Ministry has been repeatedly taking up all these issues with FSSAI to find a solution to the problems being faced by the industry.

“I myself had also met Health Minister J P Nadda a few times on these issues,” she said.

The minister had also written a letter to the Prime Minister in this regard.

The minister also mentioned that clarity on import of the products and introduction of risk-based inspection system is a noteworthy step, which would remove clutter for importers and others.

“Now, our efforts have yielded results. This will ease the process of doing and expanding business in the food processing sector,” the minister added.

The regulator has also notified that food items which have at least 60 per cent shelf life or more will only be allowed to import, a move aimed at checking dumping of products.

“Now, the regulator is moving in the right direction and we hope it will continue with the same,” All India Food Processors Association Amit Dhanuka said.

The legality of FSSAI’s earlier product approval process was questioned by the Supreme Court last year, which stopped it on the ground that it was an advisory rather than a regulation.

Post ruling, FSSAI came out with a circular on August 26, saying the approval process will be accorded the status of regulation.

Indian food processing industry accounts for 32 per cent of the country’s total food market, which is estimated at around USD 190 billion and ranked fifth in terms of production, consumption and exports.

The industry employs 13 million people directly and 35 million indirectly. In the last 15 years, the sector attracted FDI to the tune of USD 6,548 million.

FSSAI rolls out guidelines for food recall

NEW DELHI: India’s food safety authority has set guidelines for the process to recall food products from markets if found unsafe, putting the onus of implementing any recall on manufacturers and distributors.

Food Safety and Standards Authority of India (FSSAI) also said it may review the license of the concerned food company if the recall is related to serious health issues.

The new guidelines come more than two years after the controversial recall of Maggi noodles.

FSSAI will monitor the progress of the recall and assess the adequacy of the action taken by food companies. It will also ensure the destruction of the recalled item, according to the guidelines.

“All food business operators as prescribed in the Regulation 7 of Food Safety and Standards (Food Recall Procedure) Regulations, 2017 must have an up-to-date recall plan as provided in Annex (Model recall Plan)- I,” the guidelines said.

“At the time of recall being carried out, the FBO shall submit their detailed recall plan to the CEO, FSSAI,” it said. The concerned company should also inform consumers, depending upon the extent of the recall.

The regulator had sought to expedite the process of putting in place a national framework to recall products when found unsafe or defective in 2015 after it banned Nestle’s instant noodle Maggi on account of high lead content, ordering the FMCG firm to recall all nine of its variants.

While the structure and process of the food recall system was first drafted by the FSSAI in 2011 it was not implemented till 2015.

( Originally published on Nov 28, 2017 )

Organised jewellery retailers to witness change in fate in next three quarters

KOLKATA: After the contraction in demand for jewellery in 1HCY16, organised jewellery retailers are expected to witness a change in fate in the next three quarters and record 10 per cent-12 per cent top line growth in FY17, says India Ratings and Research (Ind-Ra). The sector posted flat revenue growth in FY16 and low single digit growth in Q1FY17. Ind-Ra believes that the higher number of wedding days coupled with reduced obstacles on the regulatory front will drive volumes.

The World Gold Council highlighted that gold imports contracted and jewellery demand fell by 32 per cent in H1CY16 to around 186 tonnes in India. The key hurdles that the industry faced in 1HCY16 have been 1) strike by jewellers on account of imposition of excise duty and government regulations, 2) delays in purchases on the expectation of fall in gold prices, 3) increase in recycled gold, and 4) possibility of higher share of unaccounted gold in the system due to the spike in prices, regulatory hurdles and levy of excise duty.

Higher number of wedding days in H2FY17 (both on a sequential and year on year basis) together with fading regulatory hurdles is likely to provide a boost to the revenue growth in the coming quarters. Wedding jewellery is a key driver for demand and accounts for 60 per cent-65 per cent of the market demand.

Additionally, the Government’s recent measures namely, increase in the limit of collectible amount under the Gold Savings Scheme to 35 per cent from 25 per cent of net worth and the compulsory hallmarking of jewellery will boost the organised jewellery sector and aid in shifting some of the demand from the unorganised sector. The Gold Savings Scheme contributed 15 per cent-30 per cent of the revenues for the organised jewellers; prior to 2014 when it was closed by the Government. Although the Government resumed the Scheme in 2015, the maximum collectible amount was capped at 25 per cent of the net worth.

The agency believes that organised jewellery retailers are likely to see an improvement in EBITDA margins in FY17 by 100-200bp (FY16: around 8 per cent) on the back of the increased share of high margin diamond jewellery and higher gold prices. However the expansion through franchisee mode may constrain the improvement in margins, given the lower mark up in this channel.

Organised jewellers also face an overhang of the impending GST Bill. The GST committee report recommends an all-inclusive tax rate of 2 per cent-6 per cent on precious metals. The sector currently pays VAT and excise at 1 per cent each and hence the GST rate over and above 2 per cent is likely to increase the tax incidence on end consumers. We expect any increase on account of higher GST to be passed on to the end consumer; albeit it may impact non-wedding segment demand and prompt customers to opt for the unorganised sector.

Jewellery retailers suffered major disruptions in the last two quarters on account of closure of business, due to the jewellers 42-day strike which began in March 2016 in response to the Government regulations namely imposition of excise duty and mandatory pan card requirement for jewellery purchases above INR0.2m. Additionally, consumer demand for jewellery remained muted on account of high as well as volatile gold prices (gold prices have increased about 27 per cent yoy in the H1CY16 to around INR30,000/10gm).

No Brexit bonfire for City of London, but it won’t be a ‘rule taker’

LONDON: London has no desire for a bonfire of regulations to retain its position as a top international finance centre after Brexit but it is ready to act if the European Union blocks access, the City of London’s political leader said.

While it is still the only global centre to rival New York, London has seen some business and job losses since the shock 2016 Brexit vote and financial services were largely forgotten by British leaders during EU porce negotiations, cutting the City off from its biggest single customer.

“It’s disappointing to lose business but it’s not at all catastrophic,” Catherine McGuinness, who leads the ancient financial district’s ruling body, the City of London Corporation, told Reuters.

The City, McGuinness said, neither wanted nor expected Prime Minister Boris Johnson’s government to light “a bonfire of regulations”. Still, a financial capital the size of London could not be a “rule taker”, she said.

“We’re not looking for a bonfire of regulation, we’re not looking for a move away from international standards – absolutely not,” McGuinness said. “We’re not expecting any major deregulation at all.”

Asked if it was worth Britain seeking so-called equivalence, essentially agreeing to stay aligned with EU financial rules in return for market access, McGuinness said: “I would hope that equivalence decisions could be made because they ought to be pragmatic and we are completely aligned in terms of rules.”

It would be irrational of the EU to refuse, she said.

“Its clear that we can’t be rule takers – we must be rule makers. We need to look at what our strengths are and what we need to do to build on them effectively – and hopefully that’s against the framework of international regulations that we will help to shape.”

The EU says it wants to examine planned UK pergence from EU rules before deciding on any UK access.

Fish bear finance
London’s Brexit job losses so far to the EU were around 7,500, McGuinness said, still at the low end of the range predicted by investment consultant Oliver Wyman which said in 2016 that the British capital could shed 65,000 to 75,000 jobs in a sector that employs a million people.

London dominates the world’s $6.6 trillion-a-day foreign exchange market, it is the biggest centre for international banking and the second largest fintech hub in the world after the United States.

New York retained the top spot in a survey of global financial centres published in September by Global Financial Centres Index, with London strengthening its position in second.

While trading in euro shares and some derivatives has left for other European centres – with some to New York – after Brexit, no one European competitor has dominated and so London views New York, Shanghai, Tokyo, Hong Kong and Singapore as its true rivals.

Some elements of the bond, derivatives and capital markets had moved after Brexit, McGuinness said, though London retained by far the deepest capital markets in its time zone.

The finance sector pays more than 10% of Britain’s tax bill, but McGuinness said in 2019 that British leaders were throwing it under a bus during Brexit negotiations by focusing on the goods trade and largely ignoring finance.

Britain’s trade deal with the EU, clinched last month, does not cover financial market access.

“It was disappointing, it was very surprising. I’ve speculated it’s because fish is more picturesque than finance, it may be that we don’t tell our own story well enough or perhaps they felt the sector was big enough it make its own way,” she said.

McGuinness said she hoped Johnson’s government would now focus on the future of the City, helping green finance, fintech, Environmental, Social, and Corporate Governance (ESG) and new types of companies generate capital.

“I think we’ll stay the FX capital of the world – that would be my prediction,” McGuinness said when asked about the long-term future of the City. “We are very confident in London’s basic strengths and that we will make up business elsewhere.”