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India & Pakistan aim at identical fiscal deficit
- Published on 15 January 2014
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India and Pakistan are in the same fiscal boat. Both have set almost identical targets to reduce their respective fiscal deficit and revive economic growth.
Pakistan Government is committed to reducing its fiscal deficit (FD) to 3.5% of gross domestic product (GDP) by the end of 2016-17. The Indian Government has not yet announced FD target for that year. But its FD target for 2015-16 is 3.6%.
The means to achieving these targets and the underlying circumstances are, however, relatively different for both countries. Pakistan has embarked on fiscal consolidation under its obligations flowing from the economic restructuring loan that it has taken from IMF. Pakistan has embarked on big-ticket reforms that include privatization of 31 enterprises, unwinding tax benefits-centric crony capitalism, phasing out electricity subsidies and foreign trade reforms.
India, on the other hand, has embarked on fiscal consolidation to ward off risk of downgrade by credit rating agencies. It also wants to avoid going to IMF again for fresh restructuring loan.
BNP Paribas India triggers review of FDI policy for financial services
- Published on 04 May 2014
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The Government is considering whether to amend foreign direct investment (FDI) policy to allow FDI in the business of trusteeship and estate planning services.
The Finance Ministry would take a policy decision on this issue after getting comments from the Reserve Bank of India (RBI), Department of Financial Services and Department of Economic Affairs.
The trigger for policy review is an application from BNP Paribas India Holding Private Limited (BNPP India) to incorporate a subsidiary to serve as trusteeship services trustee for private trusts and charitable trusts and to provide estate planning services to its customers in the country.
India to belatedly formulate norms for pesticides-laced paints
- Published on 08 May 2014
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Image courtesy: NPIC of the US
The Union Government is belatedly gearing up to formulate regulations for production and marketing of insecticide-laced paints that would kill/repel mosquitoes, cockroaches, houseflies and such pests from the buildings.
India’s Pesticides regulator named Registration Committee (RC) constituted under the outdated Insecticides Act, 1968 last month asked its secretariat to draft guidelines for registration of pesticides additive-based paints for control of household pests. The Committee intends to consider the draft registration norms at its next meeting.
This directive follows a presentation by Asian Paints Limited on 11th April 2014 to the Committee on the use of Deltamethrin in paints for control of mosquitoes, cockroaches, etc.
Pune Infoport gears up to buy Express Towers-owning firm
- Published on 21 May 2014
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Image courtesy: expresstowers.in
Pune Infoport Private Limited (PIPL) is bracing to acquire 97.32% equity stake in Indian Express Newspapers (Mumbai) Limited (IENML) that owns iconic Express Towers at Nariman Point in Mumbai.
As IENML had earlier demerged its publishing business, the proposed transaction actually means purchase of Express towers at an enterprise value of Rs 840 crore including existing debt of Rs 70 crore on the assets.
PIPL is raising Rs 300-crore debt through private placement of non-convertible debentures (NCDs) to part finance the acquisition of IENML, which is 51% owned by Indian Express Group and 49% by ICICI Ventures. The NCDs would be refinanced as lease rental discounting loan from banks on maturity of the debentures after 18 months from the date of issue.
PIPL is special purpose vehicle in which 51% stake held by Panchshil Techpark Private Limited (PTPL), a high-profile real estate company which is majority-owned byMr. Atul Chordia and his family. The remaining 49% shares of PIPL are held by four companies belonging to Blackstone Real Estate Partners, which is a part of American private equity fund Blackstone. PIPL will manage IENML as its subsidiary.
According to PIPL, “The business of Indian Express Newspapers (Mumbai) Limited is subject to significant risks” that include securing several governmental approvals which are essential to complete the acquisition of Express towers.
PIPL has told investors that IENML“requires approvals and/or documents from various government entities at the Central and State Government level for its operations in relation to Express Towers. There is a reasonable uncertainty that Indian Express Newspapers (Mumbai) Limited will obtain these approvals, consents or enter into these documents or enter into binding documentation in a timely manner which could have a material adverse effect on Indian Express Newspapers (Mumbai) Limited’s business prospects.”
Another significant risk is that “an increase in the interest rates on the existing financial assistance availed by Indian Express Newspapers (Mumbai) Limited may increase its repayment obligations which may adversely affect its operations and cash flows.”
Yet another risk faced by PIPL is the termination of existing lease agreements and leave and license agreements with existing tenants which would affect the cash flows and operations of IENML.
Moreover, the vacant spaces in Express Towers may not be immediately leased or let out as IENML may not be able to find tenants for the vacant space immediately given the market conditions and high lease rentals to be obtained to ensure profitability.
In January 2008, Indian Express Group had decided to demerge its publishing business from IENML and induct ICICI ventures to enhance the value of Express Towers. The publications business is currently managed by Indian Express Limited.
From the Files