ABOUT INDIA SPECTRUM AUCTION...

What is Spectrum auction all about? A primer on the ongoing spectrum auction, its process and how it would impact the companies Shishir Asthana | Mumbai February 7, 2014 Last Updated at 10:42 IST 

One more round of spectrum auction has brought the telecom sector back in news. Telecom sector stocks have been volatile as competitive bids have raised the spectrum auction prices. The sector creates a sense of awe on account of technical jargons surrounding it. The entire auction process throws up an image of a Bollywood movie where business men and women are trying to outbid each other. Nothing could be further from the truth. 

Here is an attempt to demystify the sector, understand what is spectrum, why and how are they being auctioned and how would it impact the companies who are the winners and what does it mean to the losers. First let’s understand what is being sold -- Spectrum. We were first introduced to spectrum in school when we saw that seven colours were produced when a white light hits a glass prism. In simple terms, spectrum can be considered as a range of all lights of various wavelengths. But light is part of a larger spectrum called the electromagnetic (EM) spectrum. EM spectrum has in it a range of similar EM radiations like visible light, infrared light, ultraviolet light, X-rays and the one that is useful to us here is radio waves. As these are all radiations, they travel and spread as they go. Waves are defined by attributes of wavelength (length of the wave), amplitude (height of the wave) and frequency (number of cycles per seconds). Radio waves are those that have frequency of 3 kHz (3000 cycle per second) to 300 GHz (3 billion cycles per second). Audible frequency for human is between 20 Hz to 20,000 Hz. Consider waves moving around us at different speeds (frequencies) between 3 kHz and 300 GHz. Different frequencies are utilised for different purposes. The Radio FM stations air their channels around the 100 MHz frequencies. Out of these, government of India has selected two -- 900 MHz and 1800 MHz to be auctioned to telecom companies. Higher frequencies can carry more data per second. As in case of radio, any company winning the licence of using a frequency has a natural monopoly over the band. 

By auctioning spectrum, government is actually attempting spectrum management. Like land, mineral, oil, gas and water are exclusive property of a state, so is radio frequencies. Government manage these frequencies, as it is scarce, for various uses like telecom, radio, television and defence. Increasing applications and new technologies such as 2G, 3G and 4G has further created a need for more spectrum. Within each frequency, government splits it up into circles (cities or states) and divides it to various users.

The auction process The present auction is being conducted online and is termed as a Simultaneous Multiple Rounds Ascending (SMRA) e-auction. Government hopes to raise Rs 48,000 crore through this auction by giving away 403.2 MHz in the 1,800 MHz band and 46 MHz in the 900 MHz band. The spectrum available for licencing will be valid for 20 years. Bidders have a choice of paying the full amount upfront or defer it by paying 33 per cent of bid amount in 1,800 MHz and 25 per cent of bid amount in case of 900 MHz within 10 days of auction close. There is a moratorium of 2 years of payment of balance amount which shall be recovered in 10 equal annual instalments which will attract an interest of 10 per cent. Each applicant has to apply along with Earnest Money -- in the form of a bank guarantee, which changes as per circles as prescribed by the government. 

There are two stages in the auction – Clock stage and Frequency Identification Stage. The clock stage will establish the bidders and number of blocks to be awarded in each service area while the second stage will identify specific frequency blocks for the winning bidders. Auctions on both the spectrum bands are being conducted simultaneously. In the clock stage, bidding proceeds in rounds where bids can be placed for some or all service areas. Bidders will be informed about the Clock Round Price per block for each of the service areas in both the bands where spectrum is put to auction. In each round, the bidder’s choice will be a ‘Yes/No’ if he agrees to bid at the Clock Round Price. If the answer is Yes, he then has to select the number of blocks in the area. In 1,800 MHz blocks of 200 kHz are on sale while in 900 MHz, each block size is of 1MHz. In the first Clock round, the price per block will be the reserve price. In subsequent rounds, the Clock Round price will be determined by the excess demand in the previous Clock Round. The Clock Rounds will continue until demand can be satisfied within each and every service area in each of the bands. Price increments will not be more than 10 per cent of the previous Clock Round. What does it mean for the winners and losers? While the winners get the exclusive right to use the spectrum, those who have lost the bid in that area will not be able to operate in it. They will not be able to get subscribers in the area where they do not have a licence. However, if a consumer has a connection of the particular telecom operator and travels to an area where the operator is not present, he will be charged interconnect user charges. Why are the bids so competitive? For the serious players it makes sense to have a pan India presence, which is why we see aggressive biddings in the present auction rounds as Vodafone and Bharti’s licenses are expiring in some of the metros. What makes this auction all the more interesting is that a new player Reliance Jio, the telecom arm of Reliance Industries is applying for the licence and would like to get the maximum possible licences across the country. The number of spectrum he wins will impact his pan India roll out plan.

How do spectrum prices impact consumers? There are two ways a telecom company can recover their investment in getting the spectrum license. First is by increasing their consumer base and second is by increasing their tariffs. For an existing player, increasing customer base is difficult in the current scenario, thus the only option left is to increase tariffs. But that's easier said than done given the current competetive scenario. Companies are thus introducing new applications to supplement their revenue. 

http://www.business-standard.com/article/companies/what-is-spectrum-auction-all-about-114020700227_1.html

POWER TRANSMISSION...A BIG OPPORTUNITY..!!!!!!!!!!!

Gridlock could idle big chunk of 25,000 MW

Noor Mohammad | New Delhi, Bhopal | Updated: Feb 03 2014, 01:23 IST

A clutch of power plants coming up in Orissa and Chhattisgarh may have to grossly underutilise their capacities over the next three years, resulting in generation losses in excess of Rs 1 lakh crore for these private sector players, an unfortunate situation in a country starved of electricity.

The plants could be compelled to run at below full capacity because the likely delay in the setting up of the transmission network to wheel the power to open-access consumers in the northern and western regions of the country. The potential surplus power from these plants with a combined capacity of 25,000 MW, and involving investments over Rs 1.25 lakh crore, can’t be sold in the two coal-bearing home states due to the lack of demand. The bulk of the power from these plants was meant to be sold outside these states.

These plants are being developed by private players that include Jindal Steel, Sterlite Energy, KSK Energy and Visa Power. The developers have booked 24,000 MW transmission capacity with central transmission utility Power Grid Corporation of India under long-term open access for wheeling power to consumers in the northern and western regions.

Half the planned capacity has already been commissioned but the transmission bottleneck has meant the plants are running at a plant load factor (PLF) of 30-50%, much lower than the 85% normal capacity utilisation. The projected loss in generation, consequently, could be to the tune of 3,720 MW in 2013-14. That translates into a revenue loss of Rs 10,400 crore if the cost of electricity is taken at Rs 4 a unit.

This figure could reach Rs 52,400 crore in FY16 if transmission projects don’t take off. The 10 750-kV inter-regional transmission lines connecting Jharsuguda in Orissa with Aurangabad in Maharashtra via Bhopal were expected to be commissioned by end of March but are now likely to slip by one to two years primarily due to issues relating to diversion of forest land.All companies, except central sector PSUs, are required to provide alternative land for afforestation while acquiring forest land to set up projects.

Alarmed at the prospect of these generation projects becoming unviable due to inter-regional power transmission constraints, the Association of Power Producers ( APP) has written a letter to power secretary PK Sinha, asking for an expeditious resolution to problems hampering the transmission projects.Banks and financial institutions that funded the power plants could end up taking a hit if these projects are stranded. “These generation capacities are in the process of being put up in Orissa and Chhattisgarh by 26 generating companies. Though 50% of the capacity has become operational, despite the availability of coal, the plants are forced to operate at a sub-optimal PLFs primarily due to inter-state transmission bottlenecks. It would be a major loss for the consumers and disastrous for the developers and lenders if these projects remain underutilized due to these bottlenecks,”Ashok Khurana, director general, APP, said in the latter sent to the power secretary.

Khurana added: “Since identifying land for compensatory afforestation is proving to be a generic and major hindrance impacting most of these inter-state transmission lines being developed, it is requested that the projects may be treated at par with PSU projects for compensatory afforestation like ultra mega power power projects.”

http://www.financialexpress.com/news/gridlock-could-idle-big-chunk-of-25000-mw/1222641/0

5 Yrs of Service- ask for Gratuity Benefits..!!!!

Know your gratuity benefits

ANAND KALYANARAMAN

If you stay on with your employer for 5 years or more, you will be entitled to gratuity when you resign, retire or are retrenched.
Job-hopping can increase your pay, but good old loyalty also has its perks. Stay on with your employer for five years or more, and you are entitled to gratuity when you resign, retire or are retrenched. This monetary reward to be paid by your employer in recognition of your years of service is mandated by the Payment of Gratuity Act. Most establishments employing 10 or more workers fall under the Act.
The amount you get as gratuity depends on the number of years you have served and the last drawn monthly salary. Roughly, you get half a month’s Basic and DA for every completed year of service. Here’s the formula to calculate gratuity: (Number of years of service) * (Last drawn monthly Basic and DA) *15/26. So, if you have served 30 years and draw monthly Basic and DA of Rs 20,000 when you leave the job, you get gratuity of Rs 3,46,154 calculated as (30 * 20,000 *15/26). Your employer can choose to pay you more but the maximum amount of gratuity according to the Act cannot exceed Rs 10 lakh. Amount paid above this will be in the nature of ex-gratia — something voluntary and not mandated according to law.
If you serve more than six months in the last year of employment, it is considered as a full year of service. For instance, if your tenure is 30 years and 7 months, the years of service for gratuity calculation will be rounded off to 31. But if you serve 30 years and 5 or 6 months, then the number of years of service will be considered as 30.
Waiving the rule
Going by the book, gratuity is payable only if you have been with the employer for five years or more. But this rule is waived if an employee dies or is disabled. In such cases, gratuity is paid to the nominees or to the employee, even if the tenure is less than 5 years.
Even employees not covered under the Payment of Gratuity Act are entitled to gratuity. But in such cases, the formula for gratuity calculation differs. It is computed as the (number of years of service) * (average monthly salary in the last 10 months of employment) * (15/30). This computation makes the gratuity amount lesser than that under the Act. For instance, in the above example, an employee not covered by the Act will be entitled to Rs 3,00,000 as gratuity, calculated as (30 * 20,000 * 15/30). This is Rs 46,154 lower than employees covered under the Act are entitled to. Another difference is that only fully completed years of service are considered in the calculations, and partial service in the last year, even if it in excess of six months, is ignored. For instance, service of 30 years and 7 months, will be considered as 30 years and not 31 years.
Another positive is the favourable tax treatment that gratuity receipt enjoys. Tax treatmentIf you are a government employee, then the entire amount you get is exempt from tax. If you are not a government employee but are covered under the Act, you get tax deduction for an amount which is the lower of the following:
a) Actual gratuity received
b) 15 days Basic and DA for each completed year of service (according to calculations in the example above)
c) Rs 10 lakh
Say, in the instance above, your employer paid you gratuity of Rs 5,00,000, which is more than the Rs 3,46,154 actually payable under the law. You will enjoy tax deduction on Rs 3,46,154 and the surplus Rs 1,53,846 will be subject to tax. Note that the total tax deduction on gratuity amounts received, including those from previous employers in earlier years, cannot exceed Rs 10 lakh.
Employees not covered under the Payment of Gratuity Act are also entitled to tax deduction on the amount they receive. The deduction rules are similar to those applicable for employees covered by the Act.
anand.k@thehindu.co.in(This article was published on December 21, 2013)

http://www.thehindubusinessline.com/features/investment-world/know-your-gratuity-benefits/article5487047.ece

Sweet pill for sugar mills ....

Sweet pill for sugar mills in higher ethanol blending cap

fe Bureau | New Delhi | Updated: Dec 12 2013, 15:57 ISTSUMMARYCash-starved sugar mills stand to gain an annual Rs 7,500 crore if an informal group of ministers

Cash-starved sugar mills stand to gain an annual Rs 7,500 crore if an informal group of ministers’ recommendation to double the mandatory blending of ethanol with petrol to a 10:90 ratio were to be implemented. This assumes that raising the blending limit will stir competition among industrial consumers, paving the way for the diversion of some molasses, even with sucrose content, towards the bio-fuel production and drive up prices of ethanol and sugar by 10% each.
Considering that the country needs 244 million tonnes of cane with an average recovery rate of 10% to produce the predicted sugar output level of 24.4 million tonnes for 2013-14, this benefit, albeit indirect, will translate into roughly R31 per quintal of cane.
However, there would still be a viability gap for sugar mills, especially those in Uttar Pradesh where the state-advised price (SAP) of R280/quintal for cane is way above the “viable price” of R225 as per the formula mooted by the C Rangarajan panel.
It is another matter though that considering the experience so far, 10% ethanol blending is an idea easier proposed than implemented. Ethanol content in petrol in India is projected to be just 2% this fiscal, even though 5% blending was first approved a decade ago.
Factoring in a direct benefit of R2.25 per quintal on interest-free loans recently announced by the Centre as well as an additional R11.03 per quintal incentive provided by the UP government in the form of a waiver of entry tax, purchase tax and society commission, the supposed indirect benefit of R31 per quintal from the 10% blending programme could significantly bridge the gap between the current viable price and SAP in the state.
Once endorsed by the Cabinet, the suggestion of the panel led by agriculture minister Sharad Pawar could provide sugar mills R7,050 crore more a year on a consumption level of 23.5 million tonnes if prices of the sweetener move up by 10% from the current R3,000 per quintal. Moreover, mills may get an additional R441 crore even on a supply of 105 crore litres for the current 5% blending limit if ethanol prices rise 10% from the average rate of R42 per litre, as offered against the last tender finalised by oil marketing companies (OMCs) in August.
However, the price of ethanol for the additional supplies of 105 crore litres to realise the 10% blending target will have to rise significantly to make it viable for mills, said Abinash Verma, director-general of the Indian Sugar Mills Association (ISMA). This is because to generate the additional quantity while keeping supplies steady for other consuming sectors — including chemical and potable alcohol industries — the mills have to produce ethanol from even B-heavy molasses, which also contain some sugar content. Currently, mills produce ethanol from C-heavy molasses after extracting the optimum amount of sucrose content.
The diversion of B-heavy molasses into ethanol production for an additional 105 crore litres will result in a reduction of sugar production by 1.7 million tonnes, according to sugar analysts.
To offset mills against the reduction of sugar stocks, OMCs have to offer at least Rs 50 per litre of ethanol, one of them said.
However, reducing sugar production by 1.7 million tonnes will have an indirect benefit for the industry in the form of cutting the current glut in supplies and preventing a sharp downward spiral in prices. It will generate up to Rs 5,500 crore of cash from ethanol sales for the industry, which has been marred by a liquidity crunch due to excess stocks and low realisations from sugar sales as demand stays steady while raw material costs remain elevated. Of course, it would save some interest costs for mills over and above the benefits mentioned above.
However, senior industry executives, while hailing the government’s move to raise the blending limit, have expressed doubts over the actual implementation of the progamme any time soon. This has also cast serious doubts over the government’s target of 20% mandatory blending by 2017.
While OMCs blame lack of adequate supplies for their inability to implement the programme, producers say the “slow and delayed” action by OMCs in floating and finalising tenders are to be blamed for this. The government’s latest deadline of June 30, 2014, for the strict implementation of the 5% blending has already expired, making deadlines irrelevant.
http://www.financialexpress.com/news/sweet-pill-for-sugar-mills-in-higher-ethanol-blending-cap/1206580/0

SUGAR...PRICE RISE ON THE CARDS AFTER 3-6 MONTHS...!!!

 Sanjeeb Mukherjee  |  New Delhi  

November 30, 2013 Last Updated at 00:40 IST

Sugar output likely to fall by 10-15%
However, it might not any impact on prices or supplies as opening stock of sugar is much more than required at around 9 mn tonnes
As the impasse between the government and millers continued in Uttar Pradesh, analysts said India’s sugar output in 2013-14 could drop 10-15 per cent on a year ago if crushing did not start in 15 days. In Maharashtra and Karnataka, too, crushing has not started, as the farmers are demanding a higher cane price.However, it might not have any impact on prices or supplies as the opening stock of sugar, nine million tonnes, is much more than required, said the chairman of the Commission for Agricultural Costs and Prices, Ashok Gulati. “We have excess stock and a 10-15 per cent cut in production would bring the market to equilibrium.” “The more the cane stands in the field, there is a possibility of production getting impacted, as the sucrose in those would go down,” an expert said.Indian Sugar Mills Association on Friday said till November, 0.80 million tonnes of sugar was produced in the country, 67 per cent less than last year, as 208 of India’s 400-odd sugar mills started crushing. On Thursday, Food Minister K V Thomas said there was no impact on production, but conceded output could fall if the impasse continued and the farmers did not bring the cane to the mills. He said production in the 2013-14 crop marketing year (October-Sept-ember) was expected to be 24.4 mt, 2.7 per cent less a year ago.However, this drop is due to drought in Maharashtra and Gujarat last year and not because of the current logjam between millers and sugarcane growers.India’s sugar production in 2013-14 is estimated at 24.4 million tonnes, while demand is estimated at 23.5 million tonnes. “The difference between demand and supply of sugar is expected to be around 0.85-0.90 million tonnes,” Thomas said. He said the old five-year cycle of excess and deficient production in sugar is over.The impasse of sugarcane pricing has impacted crushing with as more than 70 of the 99-odd private mills in Uttar Pradesh have suspended their operation. The crushing had to start from middle of November.http://www.business-standard.com/article/economy-policy/sugar-crisis-impact-production-expected-to-fall-by-10-as-the-impasse-between-sugarcane-farmer-and-millers-continues-in-uttar-pradesh-and-also-elsewhere-experts-feel-that-india-s-sugar-production-in-2013-14-could-drop-by-around-10-15-as-compared-to-113112900642_1.html

JPMorgan to pay investors $4.5 bn....!!!!!!!!!

 Reuters  |  New York  November 16, 2013 Last Updated at 22:06 IST

JPMorgan to pay investors $4.5 bn

The bank agrees to settle claims by investors who lost money on mortgage-backed securities before the US housing market collapsed

JPMorgan Chase & Co said on Friday it agreed to pay $4.5 billion to settle claims by investors who lost money on mortgage-backedsecurities before the collapse of the US housing market. 
The bank reached the agreement with 21 institutional investors in 330 residential mortgage-backed securities trusts issued by JPMorgan and Bear Stearns, which it took over during the financial crisis, according to the bank and lawyers for the investors. 
The deal still has to be accepted by seven trustees overseeing the securities holdings, the parties said. 
The settlement does not include trusts issued by Washington Mutual, which JPMorgan also acquired. The deal is separate from the preliminary $13 billion settlement JPMorgan has reached with the US government that would resolve a raft of actions over residential mortgage-backed securities. 
“This settlement is another important step in JPMorgan’s efforts to resolve legacy related RMBS matters,” the bank said in a statement. 
The bank said it believes reserves it has built will cover the expense of “this and any remaining” mortgage securities litigation. The 21 investors include BlackRock Inc, Metlife Inc, Allianz SE’s Pacific Investment Management Company, the TCW Group and Bayerische Landesbank.  
Under the agreement, the trustees have until January 15 to accept the offer, which may be extended for another 60 days, according to JPMorgan and Gibbs & Bruns, the Houston law firm that represented the institutional investors. 
Kathy Patrick of Gibbs & Bruns called the deal “an important milestone” in a three-year effort by the group of 21 bondholders. 
The seven trustees over the bonds include Bank of New York Mellon Corp. Kevin Heine, a spokesman for the Bank of New York Mellon, said the bank would “evaluate the proposed settlement along with the other trustees.” 
If accepted, the deal would resolve claims that JPMorgan and Bear Stearns misrepresented the mortgages underlying the securities, JPMorgan said. 
The settlement also would resolve servicing claims on all trusts issued by the bank and Bear Stearns between 2005 and 2008. JPMorgan is the third bank to strike a deal with investors over shoddy mortgage-backed securities issued in the run-up to the financial crisis.  
Bank of America Corp agreed to a $8.5-billion settlement in June 2011 with 22 institutional investors. That deal is still awaiting court approval.
In 2012, bondholders in trusts issued by Ally Financial’s bankrupt former mortgage lending arm, Residential Capital, won an agreement to bring an $8.7 billion claim, although that was later reduced to $7.3 billion. 
Gibbs & Bruns has represented investors in all three settlements. In 2011, the law firm said its investor clients had instructed trustees overseeing $95 billion of securities issued by JPMorgan, Bear Stearns and Washington Mutual to investigate whether the bonds were backed by ineligible mortgages. Washington Mutual is not included in the deal because of  litigation between the Federal Deposit Insurance Corp and JPMorgan over who is responsible for losses at the former mortgage lender, according to a person familiar with the matter.  
The exclusion explains the difference between the amount of the announced deal and reports last month that JPMorgan was near an agreement with the investors for close to $6 billion, said another person familiar with the negotiations.  
The separate tentative $13 billion settlement between JPMorgan and the U.S. government also has been complicated by that dispute, according to other sources. 
JPMorgan CEO Jamie Dimon has vowed to resolve legal and regulatory issues that have been weighing heavily on the company since May 2012.
In October, JPMorgan reported its first quarterly loss under Dimon as it recorded more than $9 billion of expenses to build its litigation reserves.  JPMorgan is the biggest US bank by assets.

http://www.business-standard.com/article/international/jpmorgan-to-pay-investors-4-5-bn-113111600413_1.html 

CSR to make available 50,000 more jobs in the sector: Experts

NEW DELHI: Compulsory corporate social responsibility is likely to increase the demand for professionals in this field by as much as 50 per cent in the coming years and the industry is likely to see at least 50,000 more job opportunities in the CSR sector, experts say. 
Around 8,000 companies would fall under the Companies Act's ambit and this in turn would open a host of new job opportunities for individuals looking to work in the social development field. 
At present, the CSR work of a company is mostly done by corporate communications team but with this law, many firms would have to build a strong team of around five-six people for the purpose. 
According to leading executive search firm GlobalHunt MD Sunil Goel, "the demand for CSR professionals will surge 50-60 per cent and we may have to train fresh hands to fulfil this need of the industry". 
Echoing similar sentiments, DLF Foundation CEO Rajender Singh said, "some of the demand for CSR professionals is likely to be filled with internal placement. However, the industry is likely to see at least 50,000 more job opportunities in the CSR sector". 
According to experts, the social sector is already a popular option and has low entry barriers and going forward, a lot of people could explore CSR as a career option. 
"CSR should see a spurt in career opportunities. But the real growth would be in effective CSR management agencies which would require a combination of management and CSR experts," Ashwajit Singh, Chairman and MD, IPE Global, a management consultancy company for development sector, said. 
According to Changeyourboss.com CEO Bhupender Mehta: "Big or small, every company makes efforts towards corporate social responsibility with intention of giving something back to the society and with this law, the number of people exploring CSR as a career option will go up for sure." 
Select companies would have spend two per cent of their average profit over the last three years for CSR. 
This would be applicable to firms having turnover of Rs 1,000 crore or more, or with net worth of Rs 500 crore and above, or entities having net profit of Rs 5 crore and more. 
Experts, however, believe that NGO's may not be the target to build the CSR team, and many institutes such as TISS and XISS have trained talent that can be hired through campus placements for the purpose. 
They say people with experience in projects management in organisations like UNDP can also be invited to join the teams. 
"For the companies who will be honestly getting into this for the first time will not poach employees from NGOs, but may look at some sort of tie-ups to avoid the hassles of making the numbers," Prisma Global Executive Director and COO Amitabh Roy Chowdhury said.

http://economictimes.indiatimes.com/news/news-by-industry/jobs/csr-to-make-available-50000-more-jobs-in-the-sector-experts/articleshow/24082365.cms