Prospecting licence for diamond mining to RIL subsidiary

BHOPAL: The Madhya Pradesh government has accorded a
prospecting licence for diamond mining to an exploration
and production subsidiary of
Reliance Industries Limited.

Following the licence the subsidiary will be able to prospect
over an area of 1800 square kms spread over the Rewa, Sidhi
and Satna districts in Madhya Pradesh, an official release
said here today.

Reliance plans to pump in about Rs 1000 crore in the
prospecting work and it is the second private sector
company to venture into diamond prospecting in Madhya
Pradesh after Australian mining major, Rio Tinto.

Yesterday, the Madhya Pradesh Mining Director,
R K Sharma handed over the prospecting licence
for diamond to RIL CGM, G K Mohapatra in Bhopal.

Besides diamond, the prospecting licence includes
permission for other minerals like
gold, copper, lead, zinc and silver.

The licences have been issued in two parts, one for
an area of 1084 square km and another for
an area of 735 square km in the three districts.

Govt on black money trail, says Pranab Mukherjee

India has begun tracking down money stashed away in secret
bank accounts in Switzerland and Belgium.

The government has finalised dates to renegotiate with
Switzerland and Belgium to broaden the scope of the
existing treaties. The authorities have also stepped up
efforts to bring back money parked illegally in foreign banks.

According to original plans, Finance Minister Pranab
Mukherjee was to meet the Swiss authorities from
December 10-11 to discuss the issue.

“But I think the date for the meeting has been advanced
by a month,” Mukherjee said at the annual Hindustan Times
Leadership Summit on Friday.

The government has also prepared a list of countries with whom
it will sign tax information exchange agreements.

A model of the agreement is in the last stage of finalisation.
The Income Tax Act, 1961, has been amended through the
Finance Act, 2009, with a new formulation to enable the
government to enter into fresh agreements with other countries.

Options for domestic measures to obtain information on bank
accounts maintained abroad by Indian citizens is also under way.

Mukherjee said no estimate had been made of the amount of
funds stashed away in Swiss banks. “It was estimated way back
in 1985, but since then, no fresh details have been worked out,” he said.

Bharatiya Janata Party leader and former deputy prime minister
L.K. Advani earlier said the slush money parked in foreign banks
could be in the range of Rs 25,000 crore (Rs 250 billion) to Rs 75,000 crore
(Rs 750 billion).

Swiss Ambassador to India Phillippe Welti hinted that his country
would be willing to share information with India about bank
accounts of tax defaulters after the two sides revised the existing
treaty on double taxation in December.

“Once the Indian and Swiss governments have agreed on a possible
change in the existing treaty, Switzerland will implement the treaty,”
Welti told a television news channel recently.

Delhi-based think tank National Institute of Public Finance and Policy
had made an estimate of the black money in circulation in the country.
In 1983-84, the amount was between Rs 31,584 crore (Rs 315.84 billion)
and Rs 36,786 crore (Rs 367.86 billion).

According to research carried out by economist Arun Kumar, the size
of the parallel economy in the country could be around Rs 16 lakh
crore (Rs 16.90 trillion), or 40 per cent of India’s gross domestic product —
the market value of all goods manufactured and services generated in a year.

Effectively, the government is missing out on about Rs 5 lakh crore
(Rs 5 trillion) of tax revenue. This is more than the current fiscal
deficit of Rs 4 lakh crore (Rs 4 trillion).

Income Tax sleuths raid 70 places of Madhu Koda,

Ranchi: The Income Tax Department, which is probing a
disproportionate assets charge against former
Jharkhand chief minister and MP Madhu Koda,
Saturday conducted raids at 70 places in eight
Indian states, an official said.

"We are conducting search operation at 70 places
of eight cities of the country.
The search operation is going on against
Madhu Koda and his associates Vinod Kumar Sinha
and Sanjay Chaudhary," IT Department Director
Ujjal Kumar Chaudhary told reporters here.
Most read


"We have associated Enforcement Directorate (ED)
in our search operation.
The search operation is going on based on our
intelligence reports," he added.

The raids were conducted in Koda's properties
in Ranchi, Jamshedpur,
Chaibasa, New Delhi, Mumbai, Nasik, Lucknow and
Kolkata. In Ranchi alone,
raids were conducted at 25 places.

"The search operation is based on our reports
when Madhu Koda was mines
and geology minister and Arjun Munda was
chief minister. Many deals took
place then which indicates transaction of money,"
said Chaudhary.

He refused to reveal the materials and documents
seized in the raids.
According to an official, the IT sleuths seized
documents related to
huge investment and millions of rupees in cash.

Scores of graft cases have been pending against Madhu Koda.
The Jharkhand vigilance department had lodged an FIR against the
former chief minister for amassing wealth disproportionate to
his known sources of income.

According to reports,
Madhu Koda invested
more than Rs.4,000 crore
in mines in South Africa.

Madhu Koda, who was operated upon last week after he complained
of stomach ache, was shifted to his house in Ranchi on Friday.
He was Jharkhand chief minister from September 2006 to August 2008.

Standard Chartered weighs India, China listing

LONDON — British bank Standard Chartered said Thursday
it was considering listing its shares in China and India,
citing a rebound in Asia for helping the company in the third quarter.

"It is clear that the economies in Asia are rebounding and
remain resilient," the bank said in an interim management
report, which contained no figures.

"Their growth rates remain well above the rates of growth
for markets in the West."

The bank said it was "actively considering" listing its shares in
India, where it has been consulting with authorities, and was
"exploring" the possibility of listing in China as well.

Standard Chartered's wholesale banking operations have seen a
"strong and broad-based income performance," with
client earnings in the third quarter broadly in line with
levels reached in the first half.

In the consumer banking unit, according to the statement,
the bank's mortgage business has performed well in
Hong Kong, South Korea, Singapore and India.

But it added that liability margins were under pressure
in a low-interest rate environment, which offset gains
in mortgage income.

Star lawyers get Rs 5 lakh for 5-minute job

Paramita Chatterjee & Reshmi R Dasgupta,

NEW DELHI: As far as prayers go, this variety is the most
rewarding. India’s superstar lawyers make a mini fortune
every time they pray, plead or

appeal, and the bar has now gone up by several notches
thanks to the ongoing legal tussle between the Ambani brothers.

The Ambani vs Ambani battle is just the icing on the cake
for the handful of India’s elite lawyers who are probably
the country’s highest paid professionals. Harish Salve,
Mukul Rohatgi, Ashok Desai, KK Venugopal, and
Abhishek Singhvi are the notables in this essentially boys’ club.

These star lawyers charge around Rs 3-5 lakh for a five-minute
appearance, and can manage up to 10 such appearances per day,
said a lawyer who did not wish to be named. For outstation cases,
the rate is even higher: from Rs 10-30 lakh, plus expenses.

The rates for the Reliance battle could be double that rate,
said members of the legal fraternity close to the matter.

Not every case comes with a Reliance premium, but they
said it’s not unusual for some of India’s top 10-15 advocates
to earn over Rs 50 crore a year by way of legal fees.

That stacks up against the Rs 5-10 crore that CEOs of
Sensex 30 companies make per year as compensation
on an average. For cash-rich clients the race to pocket
one from this league has become even more tight as
public affairs has already weaned away three other stars —
home minister P Chidambaram, HRD minister Kapil Sibal
and BJP general secretary Arun Jaitley —
leaving the rest in high demand.

Then there are the veterans like formal solicitor general
Soli Sorabjee, Shanti Bhushan and Fali Nariman who are
said to be in the same income bracket.

But they, like former law minister Ram Jethmalani
representing the Anil Ambani group in the Reliance case,
take cases selectively. “With the opening up of the economy
and more foreign companies coming in, the landscape of
corporate India has changed,” says
Mr Rohatgi who represents Mukesh Ambani-led
Reliance Industries in the apex court.

Mr Rohatgi refused to comment on what he charges,
while RIL’s other face in the Supreme Court, Harish Salve,
said disclosing his fees would be in violation to his clients’
right of confidence.

“I have no clue as to what RIL is spending per day —
nor is it a matter of any interest to me,” Mr Salve replied to an ET e-mail.

Emails sent to Mr Desai, Mr Venugopal, Mr Sundaram
and Mr Singhvi went unanswered.

The black gown-brigade has come a long way since
the days of legal luminary MC Setalvad who fixed a
standard rate of Rs 1,040 for special leave petitions
(SLPs) and Rs 1,680 for final hearings three decades ago
When a senior SC lawyer wanted to charge Rs 7,000 per
appearance, he had to retreat in the wake of a fraternity uproar.

For outstation cases, the top lawyers are rumoured to
charge around Rs 20-30 lakh, plus expenses for each appearance.
Sure, all of them have managed to stay on the right side of
the law, and count among the top Income Tax payers in the country.

Attorney-general Goolam Essaji Vahanvati and Solicitor-
General Gopal Subramaniam are reportedly paid a fixed
sum when appearing for the government
(a measly Rs 5,500, reportedly) but can charge
commercial rates for PSU cases.

“Litigation has undergone a huge change and it has become
more aggressive in nature,” says Mr Bhushan, another
former union law minister.

Lawyers say that remuneration often depends on the type
and duration of a case.

On Mondays and Fridays, admission/miscellaneous matters
are normally listed for which the lawyer concerned is
not needed to appear for more than 5 minutes!
About 50 to 70 matters are listed before all courts
for admission/miscellaneous matters, as per industry estimates.

“Not much preparation is required for admission matters
so Rs 2-2.5 lakh per appearance is normal,” said a senior
advocate who did not wish to be quoted.

Tuesday, Wednesday and Thursday are earmarked for
matters involving regular hearing for which advocates
can charge upto even Rs 5-10 lakh, depending on the case -
with the most complex cases attracting exceptional rates.
A case would also require a couple of rounds of conferencing,
which are usually included in the total fees, though some
lawyers charge hourly rates of around Rs 2 lakh.

Says top advocate Dushyant Dave who also charges upwards
of Rs 2 lakh per appearance, “Litigation over the years has
become more complex and demanding because of the
nature of issues and stakes. So strategies are more important now.”

For a top lawyer, business could be beyond the court gates too.
Many charge clients for written and oral opinions, besides taking
on retainerships, a crucial legal ploy that cuts both ways.

A retainer is a fixed amount that a client pays in advance
to secure the services of the litigator - and in some cases
also to ensure that he or she does not appear for the other side.

In nearly all the headline-grabbing cases in India, the names
of the lawyers who did not appear are often more intriguing
than those who did, says a senior advocate.

Mr Sorabjee told ET that he charges a normal fee of Rs 1.5 lakh
for admission inclusive of one conference. He said that for regular
hearing matters, he charges around Rs 3 lakh per appearance
and conference.

Mr Sorabjee, Mr Dave and Mr Bhushan said they charge much
less if the litigant happens to be a government servant or
a school teacher or any person in that category.

No new bank licences for now: RBI Deputy Governor

Kochi, Oct 30
The Reserve Bank today said it is not giving any
new banking licences "as of now".

"As of now, we are not giving any new bank licences.

After Yes Bank, no approval has been given so far,"
Reserve Bank of India Deputy Governor Shyamala Gopinath
told reporters on the sidelines of a symposium here.

The Deputy Governor was reacting to a query on the state
government's proposal to set up financial institutions based
on the principle of 'Islamic banking' to attract interest free deposits
from non-resident Keralites.

This proposal had not come before her, she said.

Asked if the RBI would permit the Kerala government to
increase borrowing limit, she said it is not under their purview.
It is an issue between the Centre and state, she said.

The Centre has to allow this.

India set to grow faster in 2010: IMF

Washington, Oct 29

As Asia rebounds rapidly from the depth of the global crisis,
India's growth is expected to accelerate to 6.5 percent in 2010
from 5.33 percent in 2009 on the back of strong domestic demand,
the International Monetary Fund (IMF) said.


"In particular, the normalisation of financial market conditions
is expected to support a rebound of private investment, sustaining
demand even as the fiscal stimulus wanes," it said in the latest
Regional Economic Outlook (REO) for Asia and the Pacific,
released in Seoul Thursday.


Noting that there will continue to be significant differences in
growth patterns within the region, IMF forecast Asia's growth
as a whole to accelerate to 5.75 percent in 2010 from 2.75 percent
in 2009, both higher than previously projected.


"The primary driver of Asia's recovery has been a progressive
return towards normalcy following the abrupt collapse in global
trade and finance at the end of 2008," the report said.


"Just as the US downturn triggered an outsized fall in Asia's
GDP because international trade and finance froze, now their
normalisation is generating an outsized Asian upturn."

This development confirms that Asia has not decoupled from
the rest of the world, the REO noted.


Noting that global conditions are expected to continue to
improve gradually in 2010, the report forecasts that output
in the large G7 economies would grow by 1.25 percent next
year, recouping only half the contraction estimated for 2009,
because private demand in these countries remains constrained
by the legacy of the crisis.


Consequently, overseas demand for Asia's products will
remain subdued, keeping the region's growth well below
the 6.66 percent average recorded over the past decade, it said.

By contrast, emerging Asia, in particular China and India, are
rebounding much more quickly. Sizable monetary and fiscal
stimulus and the rebound in global risk appetite have underpinned
the striking recovery in emerging Asia, the REO said.


With Asia's economic landscape changing significantly since the
May 2009, Australia and the three economies with larger domestic
markets in emerging Asia - namely, China, India, and Indonesia -
experienced smaller downturns and are now returning to their earlier,
relatively high growth rates, the report said.

In some countries, such as China and India, fiscal and monetary
stimulus has supported continued growth in total fixed investment.

Inflation should remain generally subdued, the report said,
"but a pickup in core inflation and inflation expectations suggest
that demand pressures are already playing a role in pushing up
inflation in India."

"At the same time, an upside risk to the nearterm outlook is a
more rapid improvement in financial conditions, both abroad
and in the region."

"In particular, in India, there are upside risks to growth projections
for both this year and the next as signs of recovery are broadening
and the adverse impact of the monsoon is likely to be smaller
than anticipated," the REO said.

In a few special cases, however, the recovery is advancing so
rapidly that output gaps are already starting to close and pressures
are already emerging, it said noting, "In India, for example industrial
production is recovering rapidly, and core inflation and inflation
expectations are rising."

Mutual Fund-What it is ?

by vidyasagar Introduction Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions. With an objective to make the investors aware of functioning of mutual funds, an attempt has been made to provide information in question-answer format which may help the investors in taking investment decisions. What is a Mutual Fund? Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unitholders. The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public. What is the history of Mutual Funds in India and role of SEBI in mutual funds industry? Unit Trust of India was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are – to protect the interest of investors in securities and to promote the development of and to regulate the securities market. As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type. How is a mutual fund set up? A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset management company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unitholders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund. SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme. What is Net Asset Value (NAV) of a scheme? The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV). Mutual funds invest the money collected from the investors in securities markets. In simple words, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day to day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly - depending on the type of scheme. What are the different types of mutual fund schemes? Schemes according to Maturity Period: A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period. Open-ended Fund/ Scheme An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity. Close-ended Fund/ Scheme A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis. Schemes according to Investment Objective: A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows: Growth / Equity Oriented Scheme The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. Income / Debt Oriented Scheme The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations. Balanced Fund The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds. Money Market or Liquid Fund These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. Gilt Fund These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. Index Funds Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. What are sector specific funds/schemes? These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert. What are Tax Saving Schemes? These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme. What is a Fund of Funds (FoF) scheme? A scheme that invests primarily in other schemes of the same mutual fund or other mutual funds is known as a FoF scheme. An FoF scheme enables the investors to achieve greater diversification through one scheme. It spreads risks across a greater universe. What is a Load or no-load Fund? A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If the entry as well as exit load charged is 1%, then the investors who buy would be required to pay Rs.10.10 and those who offer their units for repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns. However, the investors should also consider the performance track record and service standards of the mutual fund which are more important. Efficient funds may give higher returns in spite of loads. A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units. Can a mutual fund impose fresh load or increase the load beyond the level mentioned in the offer documents? Mutual funds cannot increase the load beyond the level mentioned in the offer document. Any change in the load will be applicable only to prospective investments and not to the original investments. In case of imposition of fresh loads or increase in existing loads, the mutual funds are required to amend their offer documents so that the new investors are aware of loads at the time of investments. What is a sales or repurchase/redemption price? The price or NAV a unitholder is charged while investing in an open-ended scheme is called sales price. It may include sales load, if applicable. Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unitholders. It may include exit load, if applicable. What is an assured return scheme? Assured return schemes are those schemes that assure a specific return to the unitholders irrespective of performance of the scheme. A scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or AMC and this is required to be disclosed in the offer document. Investors should carefully read the offer document whether return is assured for the entire period of the scheme or only for a certain period. Some schemes assure returns one year at a time and they review and change it at the beginning of the next year. Can a mutual fund change the asset allocation while deploying funds of investors? Considering the market trends, any prudent fund managers can change the asset allocation i.e. he can invest higher or lower percentage of the fund in equity or debt instruments compared to what is disclosed in the offer document. It can be done on a short term basis on defensive considerations i.e. to protect the NAV. Hence the fund managers are allowed certain flexibility in altering the asset allocation considering the interest of the investors. In case the mutual fund wants to change the asset allocation on a permanent basis, they are required to inform the unitholders and giving them option to exit the scheme at prevailing NAV without any load. How to invest in a scheme of a mutual fund? Mutual funds normally come out with an advertisement in newspapers publishing the date of launch of the new schemes. Investors can also contact the agents and distributors of mutual funds who are spread all over the country for necessary information and application forms. Forms can be deposited with mutual funds through the agents and distributors who provide such services. Now a days, the post offices and banks also distribute the units of mutual funds. However, the investors may please note that the mutual funds schemes being marketed by banks and post offices should not be taken as their own schemes and no assurance of returns is given by them. The only role of banks and post offices is to help in distribution of mutual funds schemes to the investors. Investors should not be carried away by commission/gifts given by agents/distributors for investing in a particular scheme. On the other hand they must consider the track record of the mutual fund and should take objective decisions. Can non-resident Indians (NRIs) invest in mutual funds? Yes, non-resident Indians can also invest in mutual funds. Necessary details in this respect are given in the offer documents of the schemes. How much should one invest in debt or equity oriented schemes? An investor should take into account his risk taking capacity, age factor, financial position, etc. As already mentioned, the schemes invest in different type of securities as disclosed in the offer documents and offer different returns and risks. Investors may also consult financial experts before taking decisions. Agents and distributors may also help in this regard. How to fill up the application form of a mutual fund scheme? An investor must mention clearly his name, address, number of units applied for and such other information as required in the application form. He must give his bank account number so as to avoid any fraudulent encashment of any cheque/draft issued by the mutual fund at a later date for the purpose of dividend or repurchase. Any changes in the address, bank account number, etc at a later date should be informed to the mutual fund immediately. What should an investor look into an offer document? An abridged offer document, which contains very useful information, is required to be given to the prospective investor by the mutual fund. The application form for subscription to a scheme is an integral part of the offer document. SEBI has prescribed minimum disclosures in the offer document. An investor, before investing in a scheme, should carefully read the offer document. Due care must be given to portions relating to main features of the scheme, risk factors, initial issue expenses and recurring expenses to be charged to the scheme, entry or exit loads, sponsor’s track record, educational qualification and work experience of key personnel including fund managers, performance of other schemes launched by the mutual fund in the past, pending litigations and penalties imposed, etc. When will the investor get certificate or statement of account after investing in a mutual fund? Mutual funds are required to despatch certificates or statements of accounts within six weeks from the date of closure of the initial subscription of the scheme. In case of close-ended schemes, the investors would get either a demat account statement or unit certificates as these are traded in the stock exchanges. In case of open-ended schemes, a statement of account is issued by the mutual fund within 30 days from the date of closure of initial public offer of the scheme. The procedure of repurchase is mentioned in the offer document. How long will it take for transfer of units after purchase from stock markets in case of close-ended schemes? According to SEBI Regulations, transfer of units is required to be done within thirty days from the date of lodgment of certificates with the mutual fund. As a unitholder, how much time will it take to receive dividends/repurchase proceeds? A mutual fund is required to despatch to the unitholders the dividend warrants within 30 days of the declaration of the dividend and the redemption or repurchase proceeds within 10 working days from the date of redemption or repurchase request made by the unitholder. In case of failures to despatch the redemption/repurchase proceeds within the stipulated time period, Asset Management Company is liable to pay interest as specified by SEBI from time to time (15% at present). Can a mutual fund change the nature of the scheme from the one specified in the offer document? Yes. However, no change in the nature or terms of the scheme, known as fundamental attributes of the scheme e.g.structure, investment pattern, etc. can be carried out unless a written communication is sent to each unitholder and an advertisement is given in one English daily having nationwide circulation and in a newspaper published in the language of the region where the head office of the mutual fund is situated. The unitholders have the right to exit the scheme at the prevailing NAV without any exit load if they do not want to continue with the scheme. The mutual funds are also required to follow similar procedure while converting the scheme form close-ended to open-ended scheme and in case of change in sponsor. How will an investor come to know about the changes, if any, which may occur in the mutual fund? There may be changes from time to time in a mutual fund. The mutual funds are required to inform any material changes to their unitholders. Apart from it, many mutual funds send quarterly newsletters to their investors. At present, offer documents are required to be revised and updated at least once in two years. In the meantime, new investors are informed about the material changes by way of addendum to the offer document till the time offer document is revised and reprinted. How to know the performance of a mutual fund scheme? The performance of a scheme is reflected in its net asset value (NAV) which is disclosed on daily basis in case of open-ended schemes and on weekly basis in case of close-ended schemes. The NAVs of mutual funds are required to be published in newspapers. The NAVs are also available on the web sites of mutual funds. All mutual funds are also required to put their NAVs on the web site of Association of Mutual Funds in India (AMFI) www.amfiindia.com and thus the investors can access NAVs of all mutual funds at one place The mutual funds are also required to publish their performance in the form of half-yearly results which also include their returns/yields over a period of time i.e. last six months, 1 year, 3 years, 5 years and since inception of schemes. Investors can also look into other details like percentage of expenses of total assets as these have an affect on the yield and other useful information in the same half-yearly format. The mutual funds are also required to send annual report or abridged annual report to the unitholders at the end of the year. Various studies on mutual fund schemes including yields of different schemes are being published by the financial newspapers on a weekly basis. Apart from these, many research agencies also publish research reports on performance of mutual funds including the ranking of various schemes in terms of their performance. Investors should study these reports and keep themselves informed about the performance of various schemes of different mutual funds. Investors can compare the performance of their schemes with those of other mutual funds under the same category. They can also compare the performance of equity oriented schemes with the benchmarks like BSE Sensitive Index, S&P CNX Nifty, etc. On the basis of performance of the mutual funds, the investors should decide when to enter or exit from a mutual fund scheme. How to know where the mutual fund scheme has invested money mobilised from the investors? The mutual funds are required to disclose full portfolios of all of their schemes on half-yearly basis which are published in the newspapers. Some mutual funds send the portfolios to their unitholders. The scheme portfolio shows investment made in each security i.e. equity, debentures, money market instruments, government securities, etc. and their quantity, market value and % to NAV. These portfolio statements also required to disclose illiquid securities in the portfolio, investment made in rated and unrated debt securities, non-performing assets (NPAs), etc. Some of the mutual funds send newsletters to the unitholders on quarterly basis which also contain portfolios of the schemes. Is there any difference between investing in a mutual fund and in an initial public offering (IPO) of a company? Yes, there is a difference. IPOs of companies may open at lower or higher price than the issue price depending on market sentiment and perception of investors. However, in the case of mutual funds, the par value of the units may not rise or fall immediately after allotment. A mutual fund scheme takes some time to make investment in securities. NAV of the scheme depends on the value of securities in which the funds have been deployed. If schemes in the same category of different mutual funds are available, should one choose a scheme with lower NAV? Some of the investors have the tendency to prefer a scheme that is available at lower NAV compared to the one available at higher NAV. Sometimes, they prefer a new scheme which is issuing units at Rs. 10 whereas the existing schemes in the same category are available at much higher NAVs. Investors may please note that in case of mutual funds schemes, lower or higher NAVs of similar type schemes of different mutual funds have no relevance. On the other hand, investors should choose a scheme based on its merit considering performance track record of the mutual fund, service standards, professional management, etc. This is explained in an example given below. Suppose scheme A is available at a NAV of Rs.15 and another scheme B at Rs.90. Both schemes are diversified equity oriented schemes. Investor has put Rs. 9,000 in each of the two schemes. He would get 600 units (9000/15) in scheme A and 100 units (9000/90) in scheme B. Assuming that the markets go up by 10 per cent and both the schemes perform equally good and it is reflected in their NAVs. NAV of scheme A would go up to Rs. 16.50 and that of scheme B to Rs. 99. Thus, the market value of investments would be Rs. 9,900 (600* 16.50) in scheme A and it would be the same amount of Rs. 9900 in scheme B (100*99). The investor would get the same return of 10% on his investment in each of the schemes. Thus, lower or higher NAV of the schemes and allotment of higher or lower number of units within the amount an investor is willing to invest, should not be the factors for making investment decision. Likewise, if a new equity oriented scheme is being offered at Rs.10 and an existing scheme is available for Rs. 90, should not be a factor for decision making by the investor. Similar is the case with income or debt-oriented schemes. On the other hand, it is likely that the better managed scheme with higher NAV may give higher returns compared to a scheme which is available at lower NAV but is not managed efficiently. Similar is the case of fall in NAVs. Efficiently managed scheme at higher NAV may not fall as much as inefficiently managed scheme with lower NAV. Therefore, the investor should give more weightage to the professional management of a scheme instead of lower NAV of any scheme. He may get much higher number of units at lower NAV, but the scheme may not give higher returns if it is not managed efficiently. How to choose a scheme for investment from a number of schemes available? As already mentioned, the investors must read the offer document of the mutual fund scheme very carefully. They may also look into the past track record of performance of the scheme or other schemes of the same mutual fund. They may also compare the performance with other schemes having similar investment objectives. Though past performance of a scheme is not an indicator of its future performance and good performance in the past may or may not be sustained in the future, this is one of the important factors for making investment decision. In case of debt oriented schemes, apart from looking into past returns, the investors should also see the quality of debt instruments which is reflected in their rating. A scheme with lower rate of return but having investments in better rated instruments may be safer. Similarly, in equities schemes also, investors may look for quality of portfolio. They may also seek advice of experts. Are the companies having names like mutual benefit the same as mutual funds schemes? Investors should not assume some companies having the name "mutual benefit" as mutual funds. These companies do not come under the purview of SEBI. On the other hand, mutual funds can mobilise funds from the investors by launching schemes only after getting registered with SEBI as mutual funds. Is the higher net worth of the sponsor a guarantee for better returns? In the offer document of any mutual fund scheme, financial performance including the net worth of the sponsor for a period of three years is required to be given. The only purpose is that the investors should know the track record of the company which has sponsored the mutual fund. However, higher net worth of the sponsor does not mean that the scheme would give better returns or the sponsor would compensate in case the NAV falls. Where can an investor look out for information on mutual funds? Almost all the mutual funds have their own web sites. Investors can also access the NAVs, half-yearly results and portfolios of all mutual funds at the web site of Association of mutual funds in India (AMFI) www.amfiindia.com. AMFI has also published useful literature for the investors. Investors can log on to the web site of SEBI www.sebi.gov.in and go to "Mutual Funds" section for information on SEBI regulations and guidelines, data on mutual funds, draft offer documents filed by mutual funds, addresses of mutual funds, etc. Also, in the annual reports of SEBI available on the web site, a lot of information on mutual funds is given. There are a number of other web sites which give a lot of information of various schemes of mutual funds including yields over a period of time. Many newspapers also publish useful information on mutual funds on daily and weekly basis. Investors may approach their agents and distributors to guide them in this regard. Can an investor appoint a nominee for his investment in units of a mutual fund? Yes. The nomination can be made by individuals applying for / holding units on their own behalf singly or jointly. Non-individuals including society, trust, body corporate, partnership firm, Karta of Hindu Undivided Family, holder of Power of Attorney cannot nominate. If mutual fund scheme is wound up, what happens to money invested? In case of winding up of a scheme, the mutual funds pay a sum based on prevailing NAV after adjustment of expenses. Unitholders are entitled to receive a report on winding up from the mutual funds which gives all necessary details. How can the investors redress their complaints? Investors would find the name of contact person in the offer document of the mutual fund scheme whom they may approach in case of any query, complaints or grievances. Trustees of a mutual fund monitor the activities of the mutual fund. The names of the directors of asset management company and trustees are also given in the offer documents. Investors should approach the concerned Mutual Fund / Investor Service Centre of the Mutual Fund with their complaints, If the complaints remain unresolved, the investors may approach SEBI for facilitating redressal of their complaints. On receipt of complaints, SEBI takes up the matter with the concerned mutual fund and follows up with it regularly. Investors may send their complaints to: Securities and Exchange Board of India Office of Investor Assistance and Education (OIAE) Exchange Plaza, “G” Block, 4th Floor, Bandra-Kurla Complex, Bandra (E), Mumbai – 400 051. Phone: 26598510-13 What is the procedure for registering a mutual fund with SEBI ? An applicant proposing to sponsor a mutual fund in India must submit an application in Form A along with a fee of Rs.25,000. The application is examined and once the sponsor satisfies certain conditions such as being in the financial services business and possessing positive net worth for the last five years, having net profit in three out of the last five years and possessing the general reputation of fairness and integrity in all business transactions, it is required to complete the remaining formalities for setting up a mutual fund. These include inter alia, executing the trust deed and investment management agreement, setting up a trustee company/board of trustees comprising two- thirds independent trustees, incorporating the asset management company (AMC), contributing to at least 40% of the net worth of the AMC and appointing a custodian. Upon satisfying these conditions, the registration certificate is issued subject to the payment of registration fees of Rs.25.00 lacs For details, see the SEBI (Mutual Funds) Regulations, 1996.

India recovery hinges on rich economies: Pranab

NEW DELHI:
Even though India braved the global financial
crisis better than other countries, a meaningful
recovery depends on how quickly some
key economies turn the corner, finance minister
Pranab Mukherjee said Friday.

"By merely generating demand in the domestic
economy and exploring markets for exports, it is not
possible to have a sustainable recovery," Mukherjee
told the annual Hindustan Times
Leadership summit
at the Taj Palace Hotel here.

"Developed economies of Europe, Japan and
US account for 62 percent of our exports.

Another of our key export sectors is information
technology. But it has also been hit, because
outsourcing has been reduced badly," he said.

"Recovery is halting, slow -
whether it will be steady
I cannot say right now.
I still have to wait for the figures
to come,"
said the finance minister, adding:
"Third quarter and four quarter - I am confident.
We will reach the targets."

Mukherjee, one of the senior-most cabinet ministers
in Prime Minister Manmohan Singh government, said
the road ahead for the Indian economy was long,
arduous with many hindrances.
"We have to go a long way.
The journey won't be easy."

The finance minister said there were several
forecasts on India's gross domestic product
(GDP) growth, including those by the Prime
Minister's Economic Advisory Council and the
Reserve Bank of India - which were also
working on some studies.

He said he was hoping for a growth
of between 6-6.5 percent
during the current fiscal. At the same time, he said,
pressures on the price line were still to abate and
estimated the annual inflation rate at 6-6.5 percent
by the year-end.

The finance minister said he was also trying to garner
political support for a host of economic legislations -
such as a new companies act, labour reforms and
opening up of the pension and insurance sectors.

"I will try and get the legislations
as fast as possible.
I don't know when - whether in the
winter session or the
next. I will try and get support from
my coalition partners
and as much as possible from outside the coalition."

Outsourcing finally comes to India. I-T dept to outsource. Infosys to setup a BPO for I-T

by Sriram Vadlamani ·



Do what you do best and outsource the rest.

Income Tax department has finally realized that
It has outsourced most of its operations to a BPO,
which will be set-up by Infosys. I-T department will
be focusing more on tax evaders.


There are 5 lakh cases pending at the I-T department at
the end of the year 2008. I-T department is also facing
severe shortage of manpower, which is estimated to
be 33% of the total workforce. Posts of Deputy
and assistant commissioners itself are falling short by 33%.


I-T department will take the help of Infosys to set-up a
centralized processing unit for tax returns. With this
new BPO you can expect your tax returns to come a
lot quicker. The pilot will be set-up in Bangalore in the
next 6 months an will be tested on citizens of Bangalore.
In 5 years time other centers will be rolled
out across the country.


Infosys will be paid 250 crores for 5 years. I-T department
will provide the office space and Infosys will be responsible
for the hardware, logistics to move scanned tax returns
to the centralized processing unit and software for data mining.


There is one issue though.
The privacy of the taxpayer is
at risk. Infosys staff will be privy
to the information of the citizens.


Mint says that there are no laws to protect the
privacy so government is free to outsource its operations.


This is a little discomforting. I am sure there will be checks
and balances in place. But, we all know what checks and
balances have done so far.

If you are in Bangalore expect your tax returns faster.

Be wary while dealing with currency notes: IGP

Workshop to create awareness on fake currency held

Access to latest technology is one of the reasons
for production of fake currency

On any given day,
RBI gets 40 fake currency notes:
Gopalakrishna Upadhya


.

Davangere: H.N. Satyanarayana Rao, Inspector-General
of Police (Eastern range), has called upon the people
to act prudently while dealing with the currency notes
particularly of high denominations such as
Rs. 500 and Rs. 1,000 and defeat the efforts
of anti-social elements circulating fake currency
notes in the country.

Inaugurating a fake currency awareness camp
organised by the Police Department here on Friday,
Mr. Rao expressed concern that all measures taken
to thwart the attempts of anti-social elements from
circulating fake currency notes had failed.

The fake currency notes looked like original notes
because the anti-social elements had access to the
latest technology for producing fake notes.

According to him, if people are alert, then
they would be able to distinguish between the
fake and original currency notes.

Mr. Rao said that most businessmen were unknowingly
handling at least a couple of fake currency notes every day.
He stressed on the need for people to familiarise
themselves with the way original notes look so that
they can detect a fake note when they come across
one and thus defeat the designs of the people
producing and circulating fake currency notes to
destabilise the economy of the country.

Gopalakrishna Upadhya, Chief Manager of the
State Bank of Mysore, made a power-point
presentation on fake currency. He said the
Reserve Bank of India found at least 40 fake
currency notes every day and noted that fake
currency was being circulated in rural parts
as people of rural places were gullible and
were unable to differentiate between the
original and fake currency notes.

Mr. Upadhya said that fake currency was distributed
among labourers who carried out public works in
Uttar Pradesh. He alleged that fake currency
notes were being sent into our country by Pakistan
via Nepal and Uttar Pradesh. There are three to
four counterfeit notes in every million notes.
All the fake currency that was in circulation
was made of colour photostat of the original
note or the scanned one.

Mr. Upadhya said that earlier we used to differentiate
between the fake and original notes with the help of
the watermark embossed on the original currency.
But now even the fake currency would have that
watermark almost similar to the original one.

Earlier, the Superintendent of Police said no case
of printing of fake currency notes had been
reported in Davangere district. However, there
were a couple of complaints about distribution
of fake currency.

The district police were planning to organise such
meetings and screening films in rural places
alerting the people about the original currency
and fake currency.

Kumar S. Karning, Additional Superintendent of Police was present.

A large number of traders and bankers and those who were running different financial institutions attended the meeting.

‘Long way to go before recession ends’-Y.V.Reddy

Asia likely to re-emerge as dominant
region in a decade or two: Y.V. Reddy

Magnitude of trade between
India and China will be defining factor

Crisis is triggered due to excessive imbalance without
remedial policy actions

HYDERABAD:
Former Governor of Reserve Bank of India Y.V. Reddy
has said that the recent correction in the global
recession was minor and much remains to be
achieved before normalcy is restored in
world economy.

Delivering the Justice
Konda Madhava Reddy memorial lecture on
the topic ‘global financial crisis and Asia’ here on Friday,
Mr. Reddy said the slowdown was generally traced to excesses
in many areas of economic and financial managements in
several countries. Since the crisis was at global level,
all policy interventions at crisis management should be
at national-level.

He added that the crisis
was not simply a failure of markets,
but the State apparatus in money and finance.

Therefore, a balance between governments and markets
had to be considered.
Critical scenario

The crisis had reaffirmed the prospect of Asia re-emerging as
a dominant region within a decade or two.

It was critical for Asia to assess its problems, prospects and role
in the process of rebalancing and designing normalcy in global
economic management.
The most defining factor for re-emergence
of Asia as a force in global economy might be
magnitudes and quality of trade between China and India,
he said.

Mr. Reddy felt
the crisis was triggered by one set of countries
consuming too much and saving less while another set saved too
much and consumed too little. These excessive imbalances were
known but remedial policy actions were not taken at national and
global levels.

RBI leaves key rates unchanged

27 October 2009,
|
MUMBAI: The Reserve Bank today raised statutory
liquidity ratio (SLR), the portion of deposits that
banks are required to keep in government
securities, by 100 basis points to 25 per cent.

The RBI, however, kept other key rates and ratios l
ike repo, reverse repo and cash reserve ratio unchanged.

The decision to raise SLR, in the second quarterly review
of the credit policy, is aimed at reducing liquidity and fighting the
inflationary expectations, which has started building up,
especially in the case of food items.

RBI to teach Pune villagers how to bank

Swati Shinde,
|
PUNE: As part of its platinum jubilee celebrations,
the Reserve Bank of India (RBI) has launched an
outreach programme in the country with an aim
to create awareness among villagers about banking and its benefits.

The RBI is trying to develop Khopi, located 30 kilometers from Pune,
as a model village with a target to motivate every villager to have
his/her own bank account. The model will then be replicated in other
villages. Besides Khopi, eight more villages around Pune including Kalyan,
Shivare, Vinzer, Kusgaon, Shivapur, Kelad, Sangvi and Velhe have been
selected for the outreach programme.

The RBI had reasons to identify Khopi for its pilot project.
Forget about villagers not having bank accounts, Khopi
does not even have a single doctor. People need to rush
to Pune for every small medical necessity.
So when Maya More, an MBBS aspirant,
approached the RBI seeking an education loan,
her request was readily accepted.

Maya comes from a poor family and could not afford to study
medicine until Wednesday, when RBI disbursed her an education loan.



Maya received an amount of Rs 2.80 lakh for the next five years after
which she took admission into
Bharati Vidyapeeth Medical College in Katraj.

"My parents are not very well off.
We do a bit of farming, but we are
hardly able to run a family of four
with what we earn. We don't get enough price
for our crops. And studying MBBS is not easy
with the exorbitant fees. When I learnt of this scheme,
I told my father about it and he willingly agreed to approach
the RBI for a loan, which was accepted."

Maya is not the only beneficiary though.
"There are several self-help groups (SHG)
operating in the villages. In order to strengthen
their business, SHGs also need loan but they do
not have access to banks as they are unaware of
the concept. As part of our drive, we are trying to
tell them what banks are, what it means to create an
account, how to take loan, repay them among other things,"
said Kamala Rajan, chief general manager and
principal of College of Agricultural Banking (CAB), RBI.

Under the programme, the CAB has undertaken various
programmes for creating awareness about financial inclusion
among villagers. In this context, a team of officers from the
CAB will visit nine different villages in the district till March next year.

CBI digs up Rajus’ accounts in Mauritius

M Sagar Kumar
25 October 2009,
|
HYDERABAD: A top Indian team including sleuths from the
Central Bureau of Investigation (CBI) has zeroed in on
six bank accounts in Mauritius
linked to alleged money laundering by
B Ramalinga Raju, prime accused in the
Satyam scam, and his family members.

The team, headed by CBI DIG V V Lakshminarayana,
included an RBI officer, and left for Mauritius on October 18.
“In all, there is at least Rs 600 crore in the six accounts in Mauritius
linked to the Satyam scam and the figure can rise
by the time the investigations are over,” the sources said.

During the course of its investigations in the Satyam scam,
the CBI discovered that the scam money was either stashed
in foreign bank accounts or was being diverted back to India
through these accounts. Accordingly, the CBI special court sent
letters rogatory to six countries where the bank accounts linked to
the scam were said to be in operation. Apart from Mauritius,
the letters rogatory were sent to courts in the US, UK, Belgium,
British Isles and Singapore.

“The purpose of sending the letters rogatory was to
request the courts in these countries to record the statements
of the account holders and other connected persons and
convey the same to the special CBI court in Hyderabad,”
the sources said.

The CBI team left for Mauritius after the court there
communicated that it had recorded the statements of the
account holders and others as sought by the Indian investigating agency.

“The purpose of taking the RBI officer was to check the banking
norms and procedures in Mauritius and assist the CBI in tracing
the money trail,” the sources added.

The Interpol is assisting the CBI in unearthing the foreign link in the
Satyam scam, the sources said, and added that the CBI teams will
visit the other countries where such bank accounts are alleged to
exist as soon as the courts respond to the letters rogatory.

By establishing the foreign link in the Satyam scam,
the CBI hopes to prove its case that the Raju family had floated
almost 325 alleged benami companies and that the foreign accounts
acted as conduits to divert the money from Satyam only to be re-routed
to these fictitious companies and then laundered further for purchasing
land and property in and around Hyderabad. The CBI team is scheduled
to return to Hyderabad on Sunday.

Cairn India completes $1.6 b financing for Rajasthan project

Mr Rahul Dhir, CEO, Cairn India


New Delhi, Oct. 14 Cairn India has completed financing arrangements for $1.6 billion for funding its Rajasthan project. In a statement issued here, the company said the borrowings were of a long-term nature with tenure of six years.

“The proceeds from this facility will be used to repay the existing facility of $850 million and to continue to fund the ongoing projects in Rajasthan. The financing has been arranged through a combination of US dollars and Indian rupee borrowing by accessing both domestic and international markets,” the company said.

The international borrowing of $750 million consists of a fully underwritten portion of $500 million by Standard Chartered Bank and $250 million loan by International Finance Corporation, a member of the World Bank group. The domestic borrowing has been underwritten by the State Bank of India for Rs 4,000 crore ($850 million). SBI Capital Markets Ltd acted as advisors to Cairn India for the domestic borrowing, the company said.

Mr Indrajit Banerjee, Chief Financial Officer and Executive Director, Cairn, told Business Line that “this is in line with our strategy to fund development projects through debt fund and realigning the capital structure to provide financial flexibility for the future.”

Stating that he was comfortable with Cairn’s financial position, Mr Banerjee said, “tapping both the domestic and overseas markets at the same time in a very unique manner, will help in improving the company’s liquidity position.”

For 2008-09, Cairn’s gross investment in Rajasthan project was estimated at $2 billion and for 2010-11 when the project is expected to be complete the gross investment is estimated to be between $1.5 billion and $1.8 billion.

Mr Rahul Dhir, Managing Director and Chief Executive, Cairn India, said “The financing has been completed by accessing two diverse markets on competitive terms in these current challenging times…..We stand committed to achieve our approved targets and deliver value to all our stakeholders.”

Cairn started production from the Mangala field in Rajasthan on August 29 and delivered its first volumes of crude oil to MRPL on October 8. The resource base has continually grown since the discovery of Mangala in 2004 and the focus in the coming years will be to realise the full potential of the Barmer Basin. The Mangala, Bhagyam and Aishwariya (MBA) fields together with their Enhanced Oil Recovery potential are being developed in sequence and when complete MBA production is expected to rise to at least 175,000 barrels of oil a day.
Stake hike

Petroliam Nasional Berhad (Petronas) has increased its stake in Cairn India Ltd. The Malaysian state-owned oil company owned a little over 12 per cent in Cairn India.

On Wednesday Cairn Energy Plc, the parent of Cairn India, informed the London Stock Exchange that Petronas has acquired another 43.6 million shares from it, representing 2.34 per cent stake. With this the total stake of Petronas in Cairn India increases to 14.94 per cent.