WEDNESDAY, 24 DECEMBER 2014

www.business-standard.com

24 pages in 2 sections

MUMBAI (CITY)
~5.00

VOLUME XIX NUMBER 96

THE MARKETS ON TUESDAY

Sensex
27,506.46
Nifty
8,267.00
Nifty Futures*
8,340.40
Dollar
~63.29
Euro
~77.39
Brent crude($/bbl)
58.92 #
Gold (10 g)##
~26,750.00

195.33
57.00
73.40
~63.25**
~77.53**
59.05**
~320.00

ECONOMY & PUBLIC AFFAIRS P18

WILL VISTARAS PREMIUM

ECONOMY TAKE OFF?

YELLENS FIRST YEAR AS FED

CHIEF: A STEADY COURSE

*(Jan) Premium on Nifty Spot; **Previous days close; # At 6 pm IST

## Market rate, including VAT and premium

> IN

TAKE TWO P13

Domestic banks surge in M&A league table

BRIEF

With the pool of high-value cross-border

deals shrinking, global banks fall behind

Militants kill 37 people in Assam

Thirty-seven people were killed and 10

others injured in a series of attacks by
suspected National Democratic Front of
Bodoland (Songbijit) militants at four places
in Sonitpur and Kokrajhar districts of Assam.
All those killed in the Sonitpur attack were
stated to be adivasis, said Superintendent
of Police Sanjukta Parasar. A group of the
militants with sophisticated arms fired at
people in Sonajuli under Biswanath Chariali
sub-division in Tinisuti near the Arunachal
Pradesh border, she said. Additional paramilitary personnel were being rushed by
Union Home Ministry to these districts. 8 >

ABHINEET KUMAR

Mumbai, 23 December

Verdict in Satyam case on March 9

A special court on Tuesday set March 9 as the

date for the verdict in the multi-crore
accounting fraud in erstwhile Satyam
Computer Services.
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S Bhattacharya is Coal India chief

A Cabinet committee has appointed Sutirtha

Bhattacharya, a 1985 Andhra Pradesh cadre IAS
officer, as the new chairman and managing
director of Coal India.
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Dow index tops 18,000 for first time

The Dow Jones Industrial Average rose to a

record 18,043.61 on Tuesday, up 84.17 points, or
0.5 per cent, as faster-than-forecast growth in
the US gross domestic product boosted
confidence in the economy and overshadowed
declines in healthcare companies.
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Fate of insurance Bill uncertain

The Insurance Laws (Amendment) Bill that

would have enabled the sector to have up to 49
per cent foreign investment in companies,
among other provisions, was unable to make its
way into a law on Tuesday as the Rajya Sabha
was adjourned sine die on the last day of the
winter session.
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Govt slashes health Budget

The government has ordered a cut of nearly 20

per cent in its FY15 healthcare Budget due to fiscal
strains, putting at risk key disease control initiatives in a country whose public spending on
health is among the lowest in the world.
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Cabinet decision on spectrum base

The Centre is likely to take a call this month on

the base price of telecom spectrum to be
auctioned in February next year. The spectrum
base price will be placed before Cabinet in this
month for its decision, a source said.

TO OUR READERS

The four-page commercial feature, AutoMania,

being distributed as a separate section, is
equivalent to paid-for advertisement. No
Business Standard journalists were involved in
producing it. Readers are advised to treat it as
an advertisement.

CIPLA: THE AFFORDABLE

INDIAN DRUG WARRIOR

As Business Standard looks

ahead to its 40th
anniversary in March, we bring you
a special series on Indias journey
through the past 40 years. SEE PAGE 2
to know how Cipla has grown to
become one of the mightiest
multinationals on patents and is
producing low-cost drugs for the
world's extreme poor

Homegrown investment banks

have overtaken many global giants
in the mergers and acquisitions
(M&A) league table this year as
domestic deals took prominence
over cross-border transactions.
M&A in India has been long
dominated by international banks
that have consistently captured
the top five positions in annual
rankings. But for the first time two
homegrown investment banks
have broken into this club this

year with ICICI Securities and

Kotak Investment Banking,
respectively, placed at fourth and
fifth positions, according to
Bloomberg data.
These are closely followed by
JM Financial at sixth place. This
puts them ahead of Goldman
Sachs, Morgan Stanley, Standard
Chartered, JPMorgan, HSBC and
UBS. The top three positions,
however, are still with international heavyweights, Citi, EY and
Bank of America Merrill Lynch.
It captures the changes that
have taken place since the election

DEAL SEALED

For the first time this

year, two local
investment banks figure
among the top five

Advisor
Market Total deal
(deal count)
Rank share (%) value ($mn)
Citi (5)
1
16.98 8,401.27
EY (31)
2
16.92 8,372.51
BofA Merrill Lynch (6)
3
15.65 7,742.80
ICICI Securities (13)
4
15.38 7,610.51
Kotak Investment Banking (15) 5
9.00 4,451.87
JM Financial (10)
6
8.78 4,347.40
Goldman Sachs & Co (3)
7
8.33 4,122.09
Evercore Partners Inc (1)
7
8.33 4,122.09
GCA Savvian Group (4)
7
8.33 4,122.09
HSBC Bank (1)
10
6.45 3,190.98
Source: Bloomberg/Data as on 22 December

results were announced. The

change in the economic environment has boosted the confidence of

local companies, said Sourav

Mallik, senior executive director
and head of M&A at Kotak

BJP creates history in

J&K, Jharkhand
New Delhi, 23 December

LOTUS BLOOMS IN JHARKHAND

81 seats
BJP+

2009
20
42*
JMM
18
19
Congress+
25
6**
JVM
11***
8
Others
18
6

2014

Change

+22
+1
-19
-3
-12

J&K UNDECIDED
87 seats
PDP
BJP
NC
Congress
Others

2008
21
28
11
25
28
15
17
12
10
7

2014

PHOTO: PTI

Change

+7
+14
-13
-5
-3

BJP is Bharatiya Janata Party; JMM, Jharkhand Mukti Morcha; JVM, Jharkhand Vikas Morcha; PDP,
Peoples Democratic Party; NC, National Conference
* (BJP 37+ All Jharkhand Students Union 5), ** (Congress 6, Janata Dal United 0, Rashtriya Janata Dal
0), *** In 2009, JVM and Congress were allies (Congress 14+ JVM 11)

Though the PDP spokesman noted

out there were ideological differences with the BJP, he refused to
comment on a possible alliance with
the party.
It will be easier to come together with the Congress than the BJP to
form a government in Jammu and

Kashmir, said senior PDP leader

and member of Parliament Muzaffar
Hussain Baig.
Turn to Page 6 >
OPINION
>

Edit: Lessons from two elections

Related reports on

11 >

19 >

~20k-cr laundered through penny stocks

Capital markets regulator, I-T department suspect tax evasion and market manipulation
JAYSHREE P UPADHYAY

New Delhi, 23 December

CHECKING THE BOOKS

| Scam of ~20,000 crore in listed

space being probed
| Enquiry on by several agencies,
including the SIT on black money
| About 100 companies under
scanner; most of these exist only
on paper
| The Securities and Exchange
Board of India might pass an
order against 25 of these
companies

The Securities and Exchange Board of

India (Sebi), the income-tax department and the special investigative team
(SIT) on black money are learnt to be
spearheading a multi-agency probe
into an alleged flow of unaccounted
money through 100 listed companies.
According to sources, Sebi is examining the role of these companies in
misuse of the exchange platform to
launder money and evade taxes. In
the near term, the regulator might
pass an order against 25 of those.
Considering the number of companies involved, regulatory estimates
peg the quantum of the alleged scam
at close to ~20,000 crore.
The companies include Pearl
Agriculture,
Pearl
Electronics,
Greencrest Financial Services, Global
Infrastructure and Finance, Mishka
Finance and Trading, Dhanleela
Investment, Mahan Industries,

Prabhav Industries and Advance

Technologies. Most of these stocks are
penny counters. Queries sent to the
companies elicited no response.
Revenue Secretary Shaktikanta
Das, while talking about black money
stashed abroad by Indians, had recently referred to unaccounted money
present in the domestic market. The
quantum of domestic black money is
equal to the money stashed abroad,
Das had said.
The SIT on black money has already
taken the case on record. We had
received a reference from the incometax department that the promoters of
certain low-value listed companies are
using the stock exchange platform to
get an advantage of long-term capital
gains (LTCG) and evade taxes. The
probe against some companies is currently underway, said a source privy to
the matter.
The modus operandi is believed to
be similar to the one seen in the cases of
Radford Global and First Financial

Turn to Page 6 >

Buy to raise UltraTechs capacity to 65 mt a year

BS REPORTER

BJP supporters celebrate the partys victory in J&K and Jharkhand

Assembly polls, at their headquarters in New Delhi on Tuesday.

Investment Bank. His bank advised

on 15 transactions worth over $4.4
billion, including group firm Kotak

Jaiprakash sells 2 cement

units for ~5,400 crore

Hung House in Jammu and Kashmir as Peoples Democratic Party

remains undecided on ally; Jharkhand may get first non-tribal CM
he Bharatiya Janata Party
(BJP) on Tuesday came close
to the majority mark in
Jharkhand, where it has said it
would ally with the All Jharkhand
Students Union to form a government, and became the second
largest party in Jammu and Kashmir
with 25 seats. The BJP fell badly
short of the 44 seats needed in the
87-member J&K Assembly to form a
government and was unable to win
a single seat in the Valley (all but
one of its candidates lost their
deposits in Srinagar). But it achieved
the distinction of being the only
national party to have won more
than 20 seats in the Assembly.
The partys parliamentary board
will meet on Wednesday to take a
view on its alliance partner in J&K
and finalise the name of its chief
ministerial candidate in Jharkhand.
In a first, despite a 30 per cent tribal
population, the eastern state could
get a non-tribal chief minister. The
name doing the rounds is Raghubar
Das, vice-president of the state unit
from Singhbhum, who has won the
Jamshedpur East seat. Das, who
migrated to Jharkhand, is from the
Other Backward Classes.
In J&K, which gave no party
enough seats to form a government
on its own, the ball was in the court
of the Peoples Democratic Party
(PDP) that won the most number of
seats and is likely to stake claim to
form a government. However, it wasnt clear whether it will ally with the
Congress (against which it had campaigned using bitter invective) or the
BJP. The trends are showing that
we will not be forming a government
on our own. It is a difficult situation
for us," said PDP chief spokesperson
Naeem Akhter. On whether it could
partner the Congress, Akhter evaded
a direct reply but said that the vote
was against the national party.

Compiled by BS Research Bureau

MahindraBank'sacquisitionofING
Vysya Bank in a $2.4-billion deal.
While global banks have an
edge in cross-border transactions,
domestic players claim to have
greater bonding with local companies. Indian clients are more
comfortable with domestic banks
in their understanding of the local
environment. Even the inbound
deals have a strong domestic leg
and investors coming in want to
have better understanding of the
market, so domestic banks have
an edge, said Ajay Saraf, executive director, ICICI Securities,
which advised Ranbaxy during its
$4.1-billion acquisition by Sun
Pharmaceuticals.

Services. In an order passed last week,

Sebi whole-time member Rajeev
Kumar Agarwal had barred 260 market
entities, including two companies, their
promoters, brokers and a clutch of
investors, from accessing the securities
markets.
The regulator has accused these entities of misusing stock exchanges to generate long-term capital gains of around
~485 crore, and converting unaccounted
cash into legitimate money.
Acording to initial investigations by
Sebi, these 100 companies exist only
on paper and are using the exchange
platform to convert black money into
white. These firms, thanks to the clause
of a compulsory one-year lock-in on
shares issued through the preferential
route, were eligible for LTCG on any
gains made on sale of these shares. The
regulatory probe is determining the
role of traders and operators that acted
in concert with promoters to artificially rig volumes and prices.
Turn to Page 6 >

BS REPORTERS

New Delhi/Mumbai, 23 December

JAIPRAKASHS SALES

Units
Buyer
Value(~cr)
Jaiprakash Associates completed its divestment programme aimed at cutting debt with
Gujaratcementplant UltraTech
3,800
the sale of two cement plants in Madhya
Bokarocementplant Dalmia
851
Pradesh to UltraTech Cement for ~5,400 crore
(74%equity)
Cement
on Tuesday. The company has in total divestBulksaleofland

1,529
ed assets worth over ~20,000 crore.
TheMadhyaPradeshplantsincludetwocapHP*hydropower
JSW Energy
9,700
tive power plants. In September last year,
projects
JaiprakashsolditscementplantinGujarattothe
MP*cementplantswith UltraTech
5,400
Aditya Birla group company for an enterprise
captivepowerunits
value (that is, including the units debt) of ~3,800
Total
21,280
crore. The transaction comprised an integrated
unit in Sewagram and a grinding unit in
*Himachal Pradesh, Madhya Pradesh
Source: Jaiprakash Associates
Wanakbori with a combined capacity of 4.8 million tonnes (mt) a year. UltraTech is Indias
The board of directors of the company met
largest cement maker. The deal will push the
companys India capacity to 65 mt a year. on Tuesday to approve a memorandum of
Switzerlands Holcim, operating through ACC understanding with UltraTech for the Madhya
and Ambuja Cements in the country, has a Pradesh plants. The deal includes clinker capaccapacity of about 57 mt a year. UltraTech has ity of 2.1 mt a year and cement-grinding capacity of 2.6 mt a year in Bela along with a captive
plans to take its capacity to 71 mtpa by 2016.
In a statement on Tuesday, Manoj Gaur, power plant of 25 Mw. Another 3.1 mt of clinker
executive chairman, Jaiprakash Associates, capacity and 2.3 mt of cement-grinding capacsaid: With this disinvestment, Jaiprakash ity in Sidhi will also be sold along with a 155-Mw
Turn to Page 6 >
Associates major disinvestment plans get rest- captive power plant.
ed and the focus will now shift to innovative
operational efficiencies to match with the best REST OF THE NEWS
8>
in class, coinciding with the imminent revival > Singapores GIC buys Nirlon
of the Indian economy.