CAduniya.com : CA India Blog

MUMBAI (Reuters) - The BSE Sensex is expected to start lower on Monday, tracking weaker regional markets, but Satyam Computer Services Ltd could bounce after the government appointed a three-man board to restore confidence in the scandal-hit outsourcer.

“Whatever shares had to be sold have already been sold and now with the old board out and a new board in, foreign investors will feel encouraged to invest in the stock and in the Indian market,” said Arun Kejriwal, director of Kris Brokerage.

An accounting fraud, revealed by chairman and founder Ramalinga Raju last Wednesday in a stunning resignation letter, has battered Satyam shares, with its market value plunging to $330 million at Friday’s close, against more than $7 billion just six months ago.

Bigger rivals Infosys Technologies, which reports December quarter result on Tuesday, Tata Consultancy Services and Wipro are expected to be in focus on a

perception they could benefit from problems in Satyam.

However, the main BSE index, which fell 5.5 percent last week to 9,406.47, could ease on concerns the Satyam scandal could trigger tighter regulations. Foreign funds sold $262 million worth of Indian equities on Wednesday following Satyam’s revelations.

Read  about satyam scandal at www.ghotala.in

Read all about Satyam Scandal / Ghotala at

www.Ghotala.in

• Satyam CFO, who attempted suicide, had offloaded over 92,000 shares
• Satyam’s bank statements go missing
• In India, Crisis Pairs With Satyam Fraud
• Raju family also pledged Maytas stocks, assets as collateral
• Satyam head Raju arrested, board scrapped
• Satyam’s U.S. Investors File Actions Alleging Fraud
• ‘Satyam fraud: Not a one man show’
• Does Satyam have cash to pay salaries?
• Satyam CFO Srinivas Vadlamani Attempts Suicide
• A team from India’s capital markets regulator will meet Satyam’s Raju

read details & view more news at www.Ghotala.in

Satyam was - one of the favourite large-cap stocks for investors. I am left wondering - if such things happen in a large-cap company, which is one of India’s top…What is going on in others? But there is one thing - this further makes us understand what risk of Equity investing actually is… No company is safe.

This could be just the tip of the iceberg, god knows who else in Satyam is involved and its the investors who take the grunt.

Read full story>

Also Read Satyam actual letter from Mr. Ramalinga Raju to its board directors admitting fraud

In the country’s biggest corporate fraud involving about Rs 8,000 crore, iconic IT company Satyam was on Wednesday hurtling towards Satyam’s board members.

Five facts about Satyam disaster following the shocking disclosure of accounts fudging by its founder Ramalinga Raju, who then quit as chairman - leaving an uncertain future for the company and its 53,000 employees.

By the end of the day, the fourth largest IT company lost a staggering Rs 10,000 crore in market capitalisation as investors reacted sharply and dumped shares, pushing down the scrip by 78 per cent to Rs 39.95 at BSE. The NYSE-listed firm could also face regulator action in the US.

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MUMBAI: In possibly the biggest single day fall for a stock, Satyam Computer Services lost 77 per cent to end at Rs 40.25 on NSE. The stock’s woes began in December after the company’s promoters made a $1.6-billion bid for Maytas Properties and Maytas Infrastructure promoted by Chairman B. Ramalinga Raju’s son.

However, adverse market reaction, which saw the company’s ADR take a knock of 54.5% to $5.70, made the company call off the proposed acquisition. At the time, Chairman Raju evinced surprise saying he was “surprised by the market reaction to this decision even though we were quite positive about the merits of the acquisition.”
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Announcement for Members holding Certificate of Practice (COP) with regard to Compliance of CPE hours requirements for the Calendar Year 2008 (27.12.2008)

Deadline of 31st December, 2008 for completion of minimum 20 CPE hours of structured learning for 2008 extended upto 31st January, 2009

The government is likely to revise downwards indirect tax collections target for the current financial year by at least Rs 20,000 crore, because of cut in industrial production due to the global economic slowdown and duty sops. Also, direct tax collections, which constitute 53 per cent of total tax revenue for the government, has registered a growth rate of only 11 per cent in the current fiscal so far, as against a required rate of 16 per cent to achieve the budget estimate. (more…)

The economic slowdown will not prevent the government from meeting its 2008-09 direct tax collection target. “We are confident of achieving the 2008-09 target of Rs 3,95,000 crore,” said N.B. Singh, chairman of the Central Board of Direct Taxes (CBDT). According to CBDT officials, British telecom firm Vodafone will pay Rs 10,000 crore as capital gains tax following an order by Bombay High Court.

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For the second time last week, the Sensex on Friday stood at above the 10K mark. The closing level of 10,099.91 points marked a gain of 4.2 per cent over the previous week’s close. Some positive momentum emerged in the markets last week after a lower Inflation figure of 6.8 per cent was announced (for the week ended December 6). This figure was 1.2 percentage points lower than the previous week’s figure.

Net investment by foreign institutional investors (FIIs) for last week stood at Rs 330.9 crore. The price of crude Oil stood at $40.98 per barrel at the end of last week, falling nearly 7.6 per cent during the week.

The government may introduce provisions in the new direct tax code to prevent misuse of double taxation avoidance agreements India has with other countries. The new code is likely to be unveiled before the year ends. A government official said a discussion paper on the code, a major initiative undertaken under the guidance of the former finance minister and present home minister P Chidambaram, is being fine-tuned. “A discussion paper on the code explaining the rationale behind every change would be placed in the public domain,” the official added. A draft bill on the code may also accompany the paper to enable everyone to express their views on the proposed changes. Double taxation treaties are essentially agreements between two countries that seek to eliminate the double taxation of income or gains arising in one country and paid to residents/companies of the other country. The idea is to ensure that the same income is not taxed twice. In many instance, however , these agreements are misused to evade taxes. This is called ‘treaty shopping,’ where usually residents of a third country take advantage of a tax treaty between two countries. For example, many companies in other countries route their investments into India through Mauritius or Cyprus to take advantage of the tax treaty that these countries have with New Delhi. Both, India-Mauritius and India-Cyprus tax treaties provide that capital gains arising in India from the sale of securities can only be taxed in Mauritius and Cyprus. This means no capital gains tax on investments in securities routed through Mauritius and Cyprus, as they do not levy tax on capital gains. The discussion paper on the code would explore ways to check this treaty-shopping. Mr Chidambaram was actively involved in the exercise of drafting the code.

The government will prevent chartered accountants (CAs) from offering consultancy and advisory services to the companies which hire them for auditing their accounts. This is being done to lend greater credibility to company accounts. The statutory auditors, who vet the financial accounts of a company, will be restricted from providing their corporate clients services such as investment management, actuarial services and investment banking. The proposal forms part of the Companies Bill 2008, currently pending before the Lok Sabha. The move is expected to usher in greater independence in the audit function and infuse greater confidence in the minds of investors on the credibility of financial statements. At present, the statutory auditors are barred from providing accounting and internal audit services for their clients, but are allowed to deliver consultancy and advisory services. Under the guidelines proposed in the new legislation, statutory auditors will also be prohibited from providing services like design and implementation of financial information system, investment advisory, rendering of outsourced financial work and management services. The initiative assumes significance in the wake of a slowdown in the economy where companies may hire consultancy services from their statutory auditors who may turn a blind eye to discrepancies in financial statements. “The proposal seeks to place specific restrictions on the services which a chartered accountant, acting as a statutory auditor, can provide for his client,” says Institute of Chartered Accountants of India president Ved Jain, adding the proposal will help avoid conflict of interests. The move may come as a major damper for many practising CAs who have been providing audit as well as consultancy services for their clients. According to Ernst and Young India director Rahul Roy, the proposal can lead to a great shakeup within the accounting profession. He, however, agreed that the move is in line with globally followed practices.

NEW DELHI — India’s government will increase spending and ease some taxes in an effort to stimulate an economy that has been hammered by the global economic slowdown and the recent Mumbai terrorist attacks.

The measures on Sunday came a day after the country’s central bank cut benchmark interest rates in the hope of cushioning the downturn.

The government said it will spend 200 billion rupees ($4 billion) more than previously planned, bringing expenditures to a total of three trillion rupees over a four-month period through end of the fiscal year on March 31.

The office of Prime Minister Manmohan Singh also signaled that more spending increases would be needed in the next budget year.

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P Chidambaram’s tenure as finance minister in the last 54 months saw the Indian economy register 9 per cent plus growth in three consecutive years that resulted in buoyant tax collections. But record-high crude oil prices and populist schemes announced by the Congress-led coalition government eroded many gains achieved in the first four years.

How rupee fluctuations affect your investment.

• If the rupee falls in value, the rupee returns on commodities such as gold increase, (assuming that international gold prices remain constant)
• If the rupee appreciates in value, the rupee returns on gold decline
• An investment in overseas assets will fall in value if the underlying currency depreciates, and investors will tend to lose out
• But a strengthening currency will result in gains for investors in overseas assets such as property and bonds (assuming that asset prices remain constant)

The rupee fell to a record low past 50.60 against the US dollar hammered by continuous outflow of capital and record offloading of shares on the stock markets.

The rupee started weaker at 50.55 against the dollar and was at 50.52/53 against the dollar, but still down 0.4 per cent from the previous day’s close. The rupee later hit a record low of 50.65 to a dollar.

The previous time the rupee touched 50.60 against the dollar was on 20 November, when it was more than 22 per cent down over the year.

In the afternoon trade, the domestic currency was trading at 50.53/57 to a dollar, off the record low of 50.65. The rupee had closed at 50.30/32 on Monday.

Dealers said market sentiment has been weighed down by rising demand for the US currency and expectation of a further fall in domestic stock prices.

State-run banks were seen selling dollar at Rs50.60 on behalf of the Reserve Bank of India, dealers said.

The country’s main share index, the BSE Sensex, was more than 2 per cent lower, caught in the sell-off as the economic outlook deteriorated. .

Foreign funds have so far sold around $13.7 billion worth of shares in 2008, after buying a record $17.4 billion last year.  (2nd December, 2008)  Source

NEW DELHI (Reuters) - India will take all necessary monetary and fiscal steps to protect economic growth with the global financial crisis now likely to be more severe and prolonged, the prime minister said on Monday.

The Reserve Bank of India (RBI) on Saturday unexpectedly cut its main short-term lending rate for the second time in as many weeks to ease a growing cash squeeze, spur faltering economic growth and fend off damage from the financial crisis.

Analysts said the surprise RBI move, coming just a week after it left rates unchanged at a policy review, showed its concern that strains on Asia’s third-largest economy were quickly becoming more severe.

“I would like to assure each one of you that the government will take all necessary monetary and fiscal policy measures on the domestic front to protect our growth rates,” Singh told top business leaders.

“On the international front, we are working closely with other countries to ensure coordinated policy action and increased development cooperation for the containment of this crisis.”

India’s economy has grown at or above 9 percent for the past three fiscal years, but is expected to expand less than 8 percent this year as the global slowdown reduces exports. Industrial output grew at an annual rate of just 1.3 percent in August.

NEW DELHI — The Indian rupee weakened to a record low against the dollar on Thursday, compounding the financial woes of a nation that should be a prime candidate to help pull the world out of its economic slump.

The currency has depreciated 26.5% against the dollar so far this year, closing in local trading Thursday at a 49.85 rupees. Analysts expect it soon to breach the psychologically important level of 50 rupees, possibly falling as far as 55 rupees, and not to recover measurably for up to six months.

Other currencies around the world in slower-growing, smaller economies have seen sharper declines against the dollar. And a weak rupee helps big Indian technology companies that export computer services.

MUMBAI: The Reserve Bank of India (RBI) has left all key rates unchanged in its mid-term monetary policy review announced today.

RBI has left the cash reserve ratio (CRR) at 6.5%, repo rate at 8%, and SLR at 25%.

It has lowered the FY09 growth forecast to 7.5-8%. In its statement, the RBI has mentioned that India is not immune to global developments, and that inflation still remains a concern.

The statement added the central bank may add liquidity if required, and would not shy away from curbing liquidity if recent steps seemed inflationary.

RBI said that the rapid credit growth is a cause for concern, and that credit growth needs to be moderate and continued correction. However, it also expressed fears that enhanced government borrowings in H2 may lead to further implications.

Mumbai: The rickety Indian economy made many listed companies on the stock exchange to turn round their financial figures to comply with market expectations.

Among 4,867 companies listed, on the Bombay Stock Exchange and 1,288 companies listed on the National Stock Exchange, almost 1,200 companies, including 25-30 firms on the benchmark of Sensex and Nifty indices, were found to be on the guilty line

As per a study ‘Early Warning Signals of Corporate Frauds’ by the Institute of Chartered Accountants of India (ICAI), and Indiaforensic Consultancy Services, around 73 percent of those surveyed resorted to the swindle to attain analyts’ expectations while the unlisted firms opted for it to avoid taxes and attract investments from foreign firms. These unexpected findings have evoked significant reaction. Commenting on the trust involved in the figures mentioned by those listed firms, Vidya Rajarao, Executive Director of Financial Advisory Services at consultancy PricewaterhouseCoopers says, “Accounting fraud is the most egregious fraud because it goes against the basic concept of investor confidence in financial statements, if these are manipulated then there is no other information which is trustworthy.”

D. Murali

Chennai: All of a sudden, conferences and seminars on IFRS (the International Financial Reporting Standards) are the in-thing, where you can find accounting professionals busy taking notes and asking questions, so that they are ready for the 2011 deadline when India will be converging with IFRS.

But why should we be focussing on the IFRS now? When posed that query, Dr Kamal Gupta, former Technical Director of the Institute of Chartered Accountants of India (ICAI), asks in response, “Can India be isolated, if more than 100 countries already adopt IFRS, and more than 150 will adopt it by 2011?”

Even in the US, with a prime GAAP, something epoch-making has happened - subject to certain conditions, the domestic US companies will be moving towards IFRS, he adds. “If the US does it, the UK does it, Brazil, China, Russia… how can India be left.”

Most of our companies have global kind of links, be it for exports, imports, shareholding, and so on, reminds Dr Gupta during an evening interaction with Business Line recently. “Therefore, we must do our accounting in a manner that the world understands. So I think more than ever, there is a need for it. The Institute, the Government, the industry recognise it.”

While convergence is good, on a theoretical and conceptual framework, there are tremendous practical difficulties, Dr Gupta cautions. “However, we must first accept the concept, so that we can deal with the difficulties as we go along.”  more