Shell companies crackdown: 450,000 lakh directors may face axe

As many as 450,000 directors may face disqualification for their association with shell companies, Union minister P P Chaudhary said on Thursday as the government steps up its fight against the black money menace.

Asserting that genuine corporates will not face action, the minister of state for corporate affairs said non-compliant companies are tarnishing the image of good ones.


As the ministry pushes ahead with the efforts to weed out shell companies — a term used for entities that have not been carrying out business for long and are allegedly used as conduit for illegal fund flows — Chaudhary told PTI in an interview that the profile of all disqualified directors will be examined.

The ministry has struck off names of 2,17,239 companies from the records as on September 22 as these have not been carrying out business activities for a long period and have also defaulted on compulsory filings while more such firms are likely to face action.

“As on September 22, a total of 3,19,637 directors have been identified and flagged as disqualified under Section 164 (2) (a) of the Companies Act, 2013… It is estimated that the final list may touch the figure of about 450,000 (directors),” Chaudhary said.

Section 164 pertains to disqualification for appointment of director. Under sub-section 164(2) (a), a person who has been a director with a company that has not filed financial statements or annual returns for three consecutive financial years will face disqualification.

“It shall also be important to examine their (disqualified directors) general profile and association with other companies and the levels of their corporate governance standards,” he said.

The exercise of striking off dormant companies and disqualifying directors is in furtherance of ease of doing business and will be good for genuine corporates, he noted.

“Non-compliant companies are tarnishing the image of good companies,” Chaudhary said, adding that action should have been taken long ago.

Shell companies crackdown: 450,000 lakh directors may face axe

Of Shalya, economic slowdown: Modi out attacking critics of his Mahabharata

It is not very common for Prime Minister Narendra Modi to respond to criticism — and rarer still that he should choose to compare some of his critics with a character from the Mahabharata.

On Wednesday, Modi attacked his critics, who had blamed the government for the current economic slowdown and questioned his policies on demonetisation and the implementation of the goods and services tax (GST). He said: “There are many Shalyas today… they spread pessimism and get a good night’s sleep only after they spread gloom and hopelessness.”
Who is Shalya? A character from the Mahabharata, he was the ruler of the Madra kingdom. Being the brother of Madri, one of the wives of King Pandu, Shalya was expected to fight for the Pandavas against the Kauravas in the Kurukshetra battle. But on being wooed by the Kauravas, led by Duryodhana, he decided to be with them and became the charioteer of Karna, another warrior who should have been part of the Pandava army but ironically ended up fighting against them.

Who killed Shalya? On the eighteenth day of the Kurukshetra battle, Shalya was nominated to head the Kaurava army and fought valiantly, only to be defeated and later killed by Yudhishthira. Shalya had another tussle with the Pandavas much before the Kurukshetra battle. Just before Arjuna emerged as the winner to qualify as the groom for Draupadi, Shalya was also present there as an aspirant. But he failed to hit the target and lost Draupadi. Peeved by this defeat, Shalya had joined hands with other kings and fought Arjuna, but was defeated in that battle with Bhima coming to Arjun’s rescue.

So, was Modi referring to Arun Shourie or Yashwant Sinha when he described his critics as Shalyas? Sinha is very much part of the Bharatiya Janata Party (BJP). Indeed, Sinha is a member of the Margdarshak Mandal, a team that Modi had set up in 2014 as a group of elder statesmen of the party to provide guidance and advice to the younger leadership. It is a different matter that the Margdarshak Mandal might have been a clever way of sidelining some of these senior leaders. But Sinha surely is not one who left the BJP camp, which Shalya can certainly be accused of.

Moreover, senior leaders of the BJP came out with sharp statements in response to Sinha’s criticism. Finance Minister Arun Jaitely made a controversial personal attack against Sinha, and Minister of State for Civil Aviation Jayant Sinha (also Yashwant Sinha’s son) wrote an article in another newspaper defending the Modi government’s track record in managing the economy. A few other BJP acolytes also wrote articles and made statements in defence of the government. Essentially, Sinha’s criticism was taken as an attack from within and the party apparatus saw the need for responding to the points that were made by the senior BJP leader.

Does that mean Modi’s Shalya is Arun Shourie?

From Modi’s perspective, the description may be only partially correct. In October 2015, a general secretary of the BJP let it be known to the media that Shourie had ceased to be a member of the party. It seemed that all BJP members were expected to renew their membership after every six years and Shourie, according to the general secretary, did not renew his membership. The day of that announcement was significant as it came soon after Shourie criticised the Modi government’s performance. M Venkaiah Naidu, a Union minister in the Modi Cabinet then, said Shourie’s views were shared neither by the party nor the people.

But it is also true that unlike Shalya, Shourie is yet to join the Congress or any other Opposition party. So, the comparison at best is only partially true. Like Shalya, Shourie has criticised people from his former party, but he has not switched sides so far. Or does Modi believe that criticising him or his policies is tantamount to joining an Opposition party? Or is the comparison made to hint at Shalya’s grim future when he switched sides?

Yet, it is significant that the combined impact of criticism from Sinha and Shourie has brought out the most detailed response from the prime minister, outlining what he believes are his key economic achievements. After Sinha’s outburst, Shourie’s comments on demonetisation did lose some bite, also because there was no novelty factor in his attack.

It was also not a voice from within. Shourie was partly a Shalya, and not a Sinha, who attacked the party from within. More importantly, Shourie’s comments could easily be used by the BJP as proof of yet another unhappy person targeting the government. Indeed, it could be argued that Shourie’s comments have in some ways neutralised the impact of the Sinha attack.

A key point in Sinha’s attack was that like him many other leaders within the BJP are as disappointed with the government’s performance in managing the economy, but are afraid to speak up. So, Shourie’s speaking up after a few days of the Sinha comments could well be seen as a relief of sorts for BJP. Imagine a situation where some other leaders within the BJP fold spoke up in response to Sinha’s attack! For the BJP, the problem would have been more difficult to manage. Shourie, after all, could be dismissed as Shalya, as Modi actually tried to do.

The more significant implication of Modi’s detailed response along with the Shalya analogy seems to be the implicit message to all BJP members that they should not get encouraged by Sinha and start speaking up. Modi’s response is meant to shut up all such elements within the BJP as he has also offered the proverbial olive branch to the trade and industry by assuring them that GST procedures will be reviewed and that no harassment will take place by reopening their past accounts.

Of Shalya, economic slowdown: Modi out attacking critics of his Mahabharata

Sensex at 32,500 by yr-end? 0utlook solid but gains to slow: Poll

The BSE Sensex, already up over 18 percent this year, is forecast to add another 3 percent by end-2017 to 32,500 from Tuesday’s close of 31,497, according to the poll of 50 strategists taken over the past week.


If realised, that would mark its best calendar year performance in percentage terms since 2014. The latest predictions were lower than the 33,000 – which would be a record – forecast in the June poll. The existing record high, struck in August, is 32,686.

While Indian shares have been among the star global performers this year, the domestic economy has been slowing since the middle of 2016. The latest data showed economic growth cooled to a three-year low in the quarter through to June.

That unexpected slowdown, which was reported in August, prompted foreign investors to pull cash out of India and triggered two consecutive down months in the Sensex for the first time since early 2016.

Still, the average price-to-earnings ratio of 23 on the BSE Sensex is at a 17-year high, suggesting stock prices are stretched.

“Valuations are very rich and even the liquidity flow from FIIs (Foreign Institutional Investments) is now drying up,” said B.V. Rudramurthy, managing director at Vachana Investments.

About 60 percent of respondents said the index was overvalued.

The remainder don’t think Indian shares are overvalued now, though they expect it will be so if further gains were made as predicted in the latest Reuters poll by end-2018.

“The stock market has been optimistic about an eventual corporate earnings recovery, justifying the valuations. That is the single biggest risk,” said Ajay Bagga, executive chairman at OPC Asset Solutions.

The Sensex was forecast to rise to a record high of 34,000 by the middle of next year and then to 35,000 by end-2018.

The biggest risks to those forecasts were persistent weakness in economic activity and lower-than-expected corporate earnings, according to analysts.

The government’s decision late last year to ban high-value currency notes took over 85 percent of cash out of circulation, a demonetisation drive that has hurt consumer spending and businesses.

That, along with a push this year in July to unify various state-level taxes into one national goods and services tax, has disrupted business and cast a shadow over economic activity.

“Economic activity has to pick up for corporate (profit) growth as there is unutilised capacity. But too many harsh reforms have impacted growth at a time when the market is overvalued,” said A.K. Prabhakar, head of research at IDBI Capital.

“Still, there is no major avenue to invest post demonetisation. The idle cash which has come into the system is likely to keep markets elevated.”

Sensex at 32,500 by yr-end? 0utlook solid but gains to slow: Poll

Economy on right track: PM Modi

Prime Minister Narendra Modi on Wednesday lambasted the critics of his government’s economic policies and expressed commitment to carrying out further reforms to reverse the trend of declining GDP (gross domestic product) growth.

Modi compared the “achievements” of the three years of the National Democratic Alliance (NDA) government led by him against the “failures” of the previous United Progressive Alliance (UPA) regime, arguing this was not the first time that the economic growth had fallen to 5.7 per cent in a quarter. The UPA regime’s record was much worse, he added.

He said the current government had made a paradigm shift from policy paralysis of the previous government to policy implementation.


Modi assured the companies coming into the formal economy, that they would not be hounded and their old records would not be examined. He said demonetisation had led to a reduction in the cash-GDP ratio to 9 per cent now, compared with over 12 per cent before November 8, 2016.

ALSO READ: Manmohan Singh: Reform process incomplete

Amid concerns raised by many over hassles under the goods and services tax (GST) regime, the Prime Minister said the new tax system had added 1.9 million new taxpayers. Two days before the GST Council meeting on Friday, he assured that changes would be made in the new system as and when the need arose.

graph On job creation, he said the reforms undertaken by his government were playing a big role in employment generation. “This is true that after recording 7.5 per cent GDP growth on an average in the previous three years, economic expansion declined to 5.7 per cent during the April-June quarter of the current financial year. But, this is also true that this government is committed to reversing this trend,”Modi said, speaking at the 50th anniversary of the Institute of Company Secretaries of India (ICSI) here.
Compared to this, the last two years of the UPA government witnessed 6 per cent growth, he said, adding that he was taking only the last two years of the Manmohan Singh government to compare growth numbers under the revised methodology.

The GDP growth declined to 5.7 per cent or less eight times during the Manmohan Singh rule, he said.

Those UPA years were not good for the economy as low growth was associated with high inflation, fiscal deficit, and current account deficit, he said.

Modi said India’s economy had seen quarters that clocked only 1.2 per cent or 0.2 per cent economic growth.

Modi took on the economists who have pointed fingers at the methodology to calculate GDP when the growth rate was high, saying when the economic expansion fell to 6.1 per cent and 5.7 per cent in the past two quarters, these very same economists started lauding correctness of GDP numbers.

He rolled out the statistics of auto sales, tractor sales, two-wheeler sales, rise in domestic air traffic, telecom subscribers, sale of FMCGs, PMI numbers, natural gas production, disbursal in personal loans, advances by housing finance companies, non-banking finance companies, capital market numbers to buttress his point that demand had revived in the economy.

He said the government had taken many important decisions aimed at economic reforms and this process would continue. “We will continue to take necessary steps to promote economic development and foreign direct investment. We will also maintain financial stability.”

In the past three years, he said, the government had carried out 87 small and big reforms relating to 21 sectors. “We have initiated changes in defence, construction, financial services, food processing among these sectors.”

Economy on right track: PM Modi

With Gujarat taking lead, states vie to attract electric vehicle makers

With the Centre making its intent on electric vehicles clear, state governments are swinging into action to lure the new investments that automakers will pump into manufacturing them. Three weeks ago, Karnataka became the first state to roll out an electric vehicle policy to encourage manufacturing, while Telangana, another state with an automobile manufacturing base, is learnt to be working on its policy.

Gujarat, a prominent state for auto manufacturing, has already attracted investments worth over Rs 5,000 crore, making it the envy of other states. This includes a Rs 4,000 crore investment commitment from the JSW Group for electric cars and a Rs 1,151 crore plan by Suzuki to set up a lithium-ion battery unit with Toshiba and Denso. Tata Motors, which has bagged the country’s biggest tender for 10,000 electric cars, will manufacture these vehicles (electric Tigor) at its Sanand plant in Gujarat. With these developments, Gujarat will have a natural lead over competing states.

Manoj Das, principal secretary (industry and mines) with the Gujarat government, told Business Standard that the state is evaluating various options and a policy for electric vehicles is “under consideration”. Das added that an “announcement will be made at the right time”.


ALSO READ: Hybrid, electric vehicles continue to attract incentives under FAME scheme


He also said that the JSW project falls under the mega-project category and would get the incentives that exist for such large ventures.

The Union government aims to have an all-electric fleet of vehicles in the country by 2030. “The Centre can only show a direction but all investments happen at the state level. The states also benefit from tax revenue and employment generation. They will have to draw up suitable policies to catch the investors’ attention. There will be a competition,” said an industry official. The electric vehicle space is attracting new participants, including start-ups who will make investments.

Karnataka, which boasts of the presence of leading auto companies like Toyota, Volvo, Honda Motorcycles, and Bosch, has launched the Electric Vehicle and Energy Storage Policy 2017. The policy aims to attract investments worth Rs 31,000 crore in electric vehicle manufacturing and charging infrastructure. “I am sure this policy would be a game-changer in the industry and will be a model for other states. Our real work starts now, focusing on developing a ready ecosystem for a vibrant EV sector in the state,” R V Deshpande, Karnataka’s industries minister, said while announcing the policy last month.

ALSO READ: Tata to supply 10,000 electric cars to EESL from Gujarat’s Sanand plant


Karnataka’s neighbouring state, Telangana, is also preparing to come up with a policy for electric vehicles. It is learnt to be seeking inputs from industry bodies and other experts. Other states with a large automobile manufacturing base, such as Haryana, Maharashtra, and Tamil Nadu, have not spelt out their electric vehicle policy as of now. Mahindra & Mahindra, which in May announced the setting up of a battery pack facility in Maharashtra’s Pune, did not comment on queries seeking details of incentives (if any) that it got from the state government.

ALSO READ: JSW Energy to set up Rs 4k-cr electric car manufacturing plant in Gujarat


States like Rajasthan are offering fiscal incentives to manufacturers who are investing in electric vehicle facilities. Jeetender Sharma, founder and managing director at Okinawa, an Indian start-up that invested Rs 35 crore in an electric scooter unit in Rajasthan’s Bhiwadi, said he is availing of fiscal incentives to the tune of 20-25 per cent on the investments. He said there would have been no incentives for his project if it was manufacturing conventional fuel-run scooters.

With Gujarat taking lead, states vie to attract electric vehicle makers

Gravitational wave pioneers win Nobel prize for physics


Three US scientists won the 2017 Nobel prize for physics on Tuesday for opening up a new era of astronomy by detecting gravitational waves, ripples in space and time foreseen by Albert Einstein a century ago.

The work of Rainer Weiss, Barry Barish and Kip Thorne crowned half a century of experimental efforts by scientists and engineers.
Measuring gravitational waves offers a new way to observe the cosmos, helping scientists explore the nature of mysterious objects including black holes and neutron stars. It may also provide insight into the universe’s very earliest moments.

Gravitational wave pioneers win Nobel prize for physics

The first detection of the waves created a scientific sensation when it was announced early last year and the teams involved in the discovery had been widely seen as favourites for Tuesday’s prize.

“We now witness the dawn of a new field: gravitational wave astronomy,” Nils Martensson, acting chairman of the Nobel Committee for Physics, told reporters. “This will teach us about the most violent processes in the universe and it will lead to new insights into the nature of extreme gravity.”
Weiss said the award of the 9 million Swedish crown ($1.1 million) prize was really a recognition of around 1,000 people working on wave detection.

Gravitational wave pioneers win Nobel prize for physics

Two US-based instruments working in unison, called the Laser Interferometer Gravitational-Wave Observatory (LIGO), detected the first waves caused by colliding black holes. A European sister facility, known as VIRGO based in Italy, has also detected waves more recently.


Those spotted so far have come from very distant black holes —extraordinarily dense objects whose existence was also predicted by Einstein —that smashed together to form a single, larger black hole. Weiss believes this is just the start.

“There are a huge amount of things … in the universe that radiate gravitational waves. The black holes are the most obvious but there are many, many others,” he said in a telephone call with the Nobel committee.

Other experts share that excitement and said LIGO and VIRGO offered new ways to explore the fundamental nature of the universe that have so far been impossible, even with the most sophisticated telescopes.

Gravitational wave pioneers win Nobel prize for physics

News digest: RBI monetary policy review, Mallya held in UK, and more

Excise duty on petrol, diesel cut by Rs 2/L; Govt may suffer Rs 26k-cr loss

Facing public resentment over the recent spike in fuel prices, the government on Tuesday cut the excise duty on both branded and unbranded petrol and diesel by Rs 2 a litre from Wednesday. According to sources, the finance ministry was initially reluctant to reduce the duty due to revenue concerns, but relented after discussions with the petroleum ministry on implementing steps to bring down petrol prices to Rs 60-65 a litre. (Read more)

Monetary policy review: Why RBI might not cut rates today


The six-member Monetary Policy Committee (MPC), headed by Reserve Bank of India Governor Urjit Patel, will announce its interest rate decision today. Analysts largely expect the central bank to maintain the status quo, but add there could be a rate cut later in the financial year. There are also some who see the rate-cut cycle, which started on January 15, 2015, by bringing down the repo rate to 7.75 per cent from 8 per cent, to have reached its end. (Read more)

PE firms make record exits of $9.4 billion in 2017

Private equity (PE) investors have sold a record $9.4 billion worth of shares in the first nine months of the year, against the previous high of $6.6 billion in 2016. (Read more)

Tax department to engage with corporates to spur receipts

Amid slowing growth in advance tax collections, the income-tax department is exploring enhanced engagement with the top 100 companies to facilitate compliance. A committee set up under the direct tax department to review assessment and scrutiny has identified “taxpayer segmentation” to improve collections. (Read more)

Vijay Mallya held in UK in money laundering case, gets bail

Beleaguered liquor baron Vijay Mallya was arrested here on Tuesday in a money-laundering case filed by the Enforcement Directorate (ED), before being released on bail by the Westminster Magistrates’ Court. (Read more)

Govt plans new schemes to add shine to gold savings

In line with the thinking that gold should be looked upon more as a currency than a commodity, the government and the Reserve Bank of India (RBI) are considering gold-based savings products, for which returns would be with reference to gold, but with no need to purchase the yellow metal.

News digest: RBI monetary policy review, Mallya held in UK, and more