Author: Abhirup Roy

Amazon, Future Talks Have Failed, Lawyers Tell India’s Supreme Court

Talks between Amazon and India’s Future Retail aimed at resolving a long-running dispute.

New Delhi: Talks between Amazon.com Inc and India’s Future Retail aimed at resolving a long-running dispute over whether Future‘s retail assets can be sold to Reliance Industries have failed, lawyers for the companies told the Supreme Court on Tuesday, March 15.

Also Read: How Reliance Industries Built and Is Now Cutting Down Its House of Debt

Both Amazon and Future said they would like to resume arbitration proceedings in Singapore that had been put on hold by the New Delhi High court.

The Supreme Court said it will hear arguments from Amazon on Wednesday and decide on the matter.

 

(Reuters)

‘Spiritual Guru’ of Chitra Ramkrishna Ran NSE as ‘Puppet Master’, SEBI Probe Finds

Chitra Ramkrishna shared confidential information with a yogi, leading the SEBI to describe the former NSE head’s actions as “unimaginable” and “could shake the very foundations of the stock exchange”.

Mumbai: The former head of India’s largest stock exchange shared confidential information with a yogi and sought his advice on crucial decisions, a probe by the market regulator has found, ahead of the bourse’s much-awaited public listing.

In a case of “bizarre misconduct” that was a “glaring breach” of regulations, Chitra Ramkrishna, the former chief executive of National Stock Exchange (NSE), shared information including the bourse’s financial projections, business plans and board agenda with a purported spiritual guru in the Himalayas, the Securities and Exchange Board of India (SEBI) said.

“The sharing of financial and business plans of NSE … is a glaring, if not unimaginable, act that could shake the very foundations of the stock exchange,” SEBI said in an order, imposing penalties on Ramkrishna, the bourse and other top former executives for the lapses.

Ramkrishna, who quit NSE in 2016 citing “personal reasons”, was not immediately reachable for comment. NSE and SEBI did not respond to requests for comment.

Allegations of corporate governance lapses have dogged NSE for several years. The exchange had planned to go public in 2017 but its listing was derailed by allegations officials had provided some high frequency traders unfair access through co-location servers, which could speed up algorithmic trading.

After a three-year investigation, SEBI fined the exchange over $90 million and barred it from raising money on securities markets for six months. NSE challenged the order in court and has sought SEBI’s approval to file for a new IPO.

However, during that investigation, SEBI found documents showing Ramkrishna’s emails to an unknown person, who she said during questioning was a “spiritual force” she had sought guidance from for 20 years.

Ramkrishna, in her defence, told SEBI that sharing of information with the person who was “spiritual in nature” did not compromise confidentiality or integrity.

The SEBI order however stated that it was “absurd” for Ramkrishna to contend that sharing sensitive information such as dividend pay-out ratios, business plans and the performance appraisals of NSE employees did not cause harm.

The SEBI probe also found the purported guru had substantial influence over the appointment of a mid-level executive, without any capital market experience, directly as an adviser to Ramkrishna with inadequate documentation and a salary higher than most senior NSE officials.

The guru was running the exchange, and Ramkrishna was “merely a puppet in his hands”, SEBI said.

Questions emailed to an address given in the SEBI order as belonging to the guru were not immediately responded to.

SEBI also said NSE and its board were aware of the exchange of confidential information but had chosen to “keep the matter under wraps”.

The regulator fined NSE Rs 2 crore ($270,000) and has barred the exchange from launching any new products for six months.

SEBI imposed a penalty of Rs 3 crore on Ramkrishna and barred her from any bourse and SEBI-registered intermediary for three years.

Ramkrishna was among a group of executives who in the early 1990s started NSE as a challenger to the more established BSE Ltd, then known as Bombay Stock Exchange. She was appointed joint managing director of NSE in 2009 and promoted to CEO in 2013.

(Reuters)

Insider Trading: SAT Blocks SEBI Order Barring Future Group CEO Biyani From Markets

The tribunal has asked Future Group promoters to deposit a sum of Rs 110 million as an interim measure.

Mumbai: The Securities Appellate Tribunal (SAT) has blocked market regulator SEBI’s order that barred Future Group chief executive Kishore Biyani from the securities markets for a year, over accusations of insider trading in 2017, a group company said on Tuesday.

Biyani is also embroiled in a legal battle with Amazon.com Inc over the sale of Future’s retail assets to Reliance Industries.

“Future Group promoters have been asked to deposit a sum of Rs 110 million as an interim measure,” Future Corporate Resources said in a statement, adding that the tribunal had stayed the Securities and Exchange Board of India order.

SEBI did not immediately respond to a request for comment.

Also read: A Look Inside an Amazon Warehouse – Where Profits Are Placed Ahead of Workers

The regulator had said Biyani and his brother Anil had traded in shares of their Future Retail firm through a group company on the basis of unpublished price-sensitive information.

SEBI said its investigation showed the two opened a trading account for a company called Future Corporate Resources Pvt Ltd, which traded in shares of Future Retail before a demerger of some businesses of the latter boosted its share price.

Challenging the order on Monday before the SAT, Future said the information was already in the public domain and that while the shares were bought in March 2017, the actual terms of the restructuring began in April.

The case will next be heard on April 12, Future Corporate Resources said.

Amazon has appealed in the Supreme Court to block the Future-Reliance deal, saying it violates some pre-existing contracts with Future.

(Reuters)

UN Calls For ‘Maximum Restraint’ as Farm Protesters Plan Road Blockade

“The rights to peaceful assembly & expression should be protected both offline & online,” the Office of the United Nations High Commissioner for Human Rights tweeted.

Mumbai: The United Nations human rights office called on Indian authorities and protesting farmers to exercise “maximum restraint” hours before the growers impose a nationwide road blockade on Saturday seeking a repeal of new agricultural laws.

Tens of thousands of farmers have camped on the outskirts of New Delhi for more than two months, blocking key roads and demonstrating against the laws they say will benefit large private buyers at their expense.

The protests have mostly been peaceful, but a tractor rally on January 26, 2021 flared into turmoil as some farmers clashed with police in New Delhi. Since then, authorities have shut down the mobile internet in parts of the national capital and heavily barricaded border roads to prevent protesters from coming into the city again.

Also read: Farmers’ Protest: All You Need to Know About the Countrywide ‘Chakka Jam’ on February 6

“The rights to peaceful assembly & expression should be protected both offline & online,” the Office of the United Nations High Commissioner for Human Rights said on Twitter late on Friday. “It’s crucial to find equitable solutions with due respect to #HumanRights for all.”

The farmers will hold a three-hour “chakka jam”, or road blockade, starting around noon local time (06:30 GMT) across the country except in New Delhi and a couple of neighbouring states.

While the protests were initiated by rice and wheat growers from northern India, particularly opposition-ruled Punjab state, support has been growing across the country.

Also read: Farmers’ ‘Chakka Jam’: Delhi Police to Monitor Social Media for ‘Rumours’

The issue has also caught international attention with celebrities such as pop star Rihanna and environment campaigner Greta Thunberg announcing their support for the farmers. The United States has also urged India to resume talks with farmers.

Modi’s government has held multiple rounds of talks with farmer representatives but failed to resolve their differences. The government says the reforms will bring much-needed investment to the farm sector, which accounts for nearly 15% of India’s $2.9 trillion economy and about half its workforce.

(Reuters)

SEBI Demands Rs 626 Billion From Sahara in Supreme Court Petition

Sahara, once the sponsor of India’s national cricket team, has been embroiled in a battle with SEBI over repaying billions of dollars to investors who put their money in a bond scheme that was later ruled to be illegal.

Mumbai: India’s market regulator has filed a petition with the Supreme Court asking it to direct embattled Sahara conglomerate chief Subrata Roy and two of his companies to deposit Rs 626 billion ($8.4 billion) that it said was due to its investors.

The Securities and Exchange Board of India (SEBI) told the Supreme Court that Sahara had failed to comply with 2012 and 2015 court orders to deposit the entire amount it collected from investors along with 15% annual interest, according to a copy of the petition filed on Wednesday and seen by Reuters.

Sahara, once the sponsor of India’s national cricket team, has been embroiled in a battle with SEBI over repaying billions of dollars to investors who put their money in a bond scheme that was later ruled to be illegal.

Roy was arrested in March 2014 for failing to attend a contempt of court hearing and has been on bail since 2016. He has denied any wrongdoing.

SEBI said that Sahara’s non-compliance over eight years had caused the regulator “great inconvenience” and that those guilty of contempt should be taken into custody if they failed to deposit the amount.

Also read: Amazon Asks SEBI to Probe Future Retail for Insider Trading

“Saharas have made no efforts whatsoever to comply with the orders and directions,” SEBI told the court. “On the other hand contemnors’ liability is increasing daily and contemnors are enjoying their release from custody,” it said.

The regulator said that only a part of the principal amount had been deposited by Sahara and the balance with interest had ballooned to more than 626 billion rupees.

A Sahara spokesman, responding to a query from Reuters, disputed the amount saying the company had already deposited about 220 billion rupees with the regulator, which it said was “mischievously” adding interest on the entire amount to arrive at the sum demanded.

In its defence, Sahara has previously told the court that it had refunded in cash most of the money it collected from investors and submitted relevant documents with the regulator, which was not verifying them.

SEBI had invited claimants through advertisements in about 150 newspapers but refunded just over 1 billion rupees to investors, the Sahara spokesman said in an email, adding that SEBI said last year it would not entertain any more claims.

“How can there be claimants since Sahara has already paid back, long time back,” the spokesman said. “It is a typical case of double payment.”

Sahara and Roy have been in the spotlight recently after they got a district court to stall the release of Netflix’s series Bad Boy Billionaires featuring Roy, among others, claiming it would damage his reputation.

Netflix later released the show after the court lifted its injunction.

(Reuters)

Bharat Nidhi Limited Faces Shareholder Backlash

The investors have asked the Securities and Exchange Board of India (SEBI) to stall the buyback process, investigate the matter and appoint an independent valuer.

Mumbai: A group of minority shareholders in India’s Bharat Nidhi Ltd (BNL), a company owned by Indian media baron Vineet Jain, have sent multiple complaints to the market regulator against a proposed share buyback they say “grossly undervalues” the company.

The investors have asked the Securities and Exchange Board of India (SEBI) to stall the buyback process, investigate the matter and appoint an independent valuer, according to copies of the complaints seen by Reuters.

“We are shareholders who have invested in the company a long time ago and instead of protecting our interests the company is now seeking to push us out of the company at an artificially depressed price,” one of the complaints dated June 27 read. The complaint was received by SEBI on July 1.

With investor awareness on the rise, India has seen an increase in minority shareholder activism and fight for good corporate governance and better value, Shriram Subramanian, founder of proxy advisory firm InGovern, said.

Bharat Nidhi is following the due legal procedures set out by the regulators under the applicable laws, Company Secretary Amita Gola told Reuters in an emailed response. “We believe the concerns raised are unfounded,” she said.

BNL is a major shareholder in Bennett, Coleman & Co. Ltd. (BCCL), publisher of India’s biggest English daily, the Times of India, and owner of Times Internet that runs popular digital platforms such as property site Magicbricks, music streaming app Gaana and restaurant reservation company Dineout.

Also read: Times Group Says Vineet Jain Was Conducting ‘Reverse Sting’ on Cobrapost

Jain and his family control BNL through crossholdings, according to the company’s 2018 annual report. They control Bennett, Coleman through a similar structure of holdings.

BNL’s revenue comes mainly from distributing publications of BCCL in and around New Delhi and it is also an investment holding company.

Last month, BNL sought to buy back 21,791 shares at 11,229 rupees ($162.93) per share for about $3.5 million.Shareholders do not have to sell their shares in the buyback.

The buyback offer is part of a regulatory requirement to provide an exit opportunity to shareholders of companies listed on de-recognised regional stock exchanges, if the companies do not choose to list on the National Stock Exchange of India or BSE Ltd.

The offer of 11,229 per share values the company at about 32.79 billion rupees. That, according to the minority shareholders, is based on the book value instead of its fair value, which they say is significantly higher.

The offer is barely above the company’s book value of 11,130 rupees per share, according to the company’s 2018 balance sheet.

SEBI did not immediately respond to requests for comment.

“We need to highlight that the valuer seems to have used incorrect data, faulty logic and inappropriate discounting in the valuation report to reverse work the valuation back to the company’s approximate book value only,” the complaint said.

($1 = 68.9200 Indian rupees)

(Reuters) 

Court Declares Vijay Mallya a ‘Fugitive Economic Offender’

Mallya is the first to declared a fugitive under the new Fugitive Economic Offenders Act, which empowers authorities to seize assets of super-rich offenders.

Mumbai: A court in India set up under anti-money laundering laws declared liquor and aviation tycoon Vijay Mallya a “fugitive economic offender” on Saturday, paving the way for the government to seize his assets, according to Reuters partner ANI.

India recently approved a bill, the Fugitive Economic Offenders Act, empowering authorities to seize assets of super-rich fugitives. The ruling is likely to empower government agencies to confiscate his properties in India and overseas.

The bill is part of a push to prosecute a number of accused who have fled India in the last four years even as the country reels from a series of banking scandals, including a Rs 14,500 crore fraud at state-run Punjab National Bank that was uncovered in February.

The financial crime-fighting agency Enforcement Directorate had sought to declare Mallya a “fugitive economic offender”.

Also Read: After Unfavourable Extradition Ruling, What Will Mallya Do Next?

On Saturday, Mallya became the first person to be declared fugitive under the new law. His lawyer could not be reached for comment.

India has been trying to extradite Mallya from Britain after the collapse of his defunct Kingfisher Airlines.

It wants to bring fraud charges against the 62-year-old businessman over $1.4 billion in loans Kingfisher took out from Indian banks which the authorities argue he had no intention of repaying.

A London court ruled on Monday that Mallya should be extradited to India adding that there was a prima facie case against the tycoon, who moved to Britain in March 2016.

Mallya, who co-owned the Formula One motor racing team Force India which went into administration in July, has denied any wrongdoing and says the case against him is politically motivated.

(Reuters)

RBI Clamps Down on Bandhan Bank Over Owner’s Stake

The non-banking financial company sector is in trouble after a series of defaults by one of the biggest names in the sector raised fears of a credit crunch that roiled India’s financial markets in the past week.

Mumbai: Bandhan Bank Ltd said on Friday the Reserve Bank of India (RBI) had withdrawn its “general permission” to open new branches and frozen its chief executive’s salary for failing to bring down its main shareholder’s stake to below 40%.

The bank is majority owned by Bandhan Financial Holdings Ltd, a so-called non-banking financial company (NBFC) that does not take deposits. Bandhan Financial Holdings has an 82.28% stake in the bank.

The NBFC sector is in trouble after a series of defaults by one of the biggest names in the sector raised fears of a credit crunch that roiled India’s financial markets in the past week.

The turmoil in domestic bonds, stocks and the rupee prompted the Reserve Bank of India (RBI), the country’s market regulator and the finance ministry to intervene with assurances.

Bandhan Bank said it was taking necessary steps to comply with the licensing condition to bring down its main shareholder’s stake to 40%.

“The bank can open branches with prior approval of RBI and the remuneration of the managing director and CEO of the Bank stands frozen at the existing level, till further notice,” the lender said in a statement.

Kolkata-based Bandhan Bank is a former micro lender, which was one of two companies that won bank permits from the Reserve Bank of India in 2014.

It is known for its low-cost model and high margins. According to its website, the bank has 937 branches across India.

Shares in Bandhan closed down 0.9% on Friday.

(Reuters)

PNB Discloses Rs 9.42 Billion Additional Exposure in Fraud Probe: Document

The new disclosure takes PNB’s overall exposure in the still unravelling fraud case to well over the $2 billion mark.

The new disclosure takes PNB’s overall exposure in the still unravelling fraud case to well over the $2 billion mark.

Credit: Reuters/Toby Melville/Files

Mumbai: The Punjab National Bank has told police that it has uncovered additional exposure of about Rs 9.42 billion ($145.2 million) in connection with a massive alleged fraud, according to a court filing seen by Reuters.

In what has been dubbed as the biggest fraud in India’s banking history, PNB, the country’s second-biggest state-run lender, said last month it had been defrauded of about $2 billion by two jewellery groups who raised credit from overseas banks based on fraudulent guarantees issued in collusion with rogue PNB staff.

In a court filing on Tuesday, police said the Gitanjali group of companies controlled by jeweller Mehul Choksi allegedly defrauded PNB of Rs 70.8 billion ($1.09 billion). PNB had previously pegged its exposure to the Gitanjali companies at 61.38 billion rupees.

The new disclosure takes PNB’s overall exposure in the still unravelling fraud case to well over the $2 billion mark.

A lawyer for Gitanjali group’s head, Mehul Choksi, said he was unaware of the new allegations and declined to comment. Choksi and his nephew Nirav Modi, who is the other main accused in the case, have both denied any wrongdoing.

(Reuters)