Current Affairs Current Affairs - 26 November 2015 - Vikalp Education

Online Vikalp, Current Affairs, Current Awareness, General Awareness, Aptitude Classes, Daily News, General Knowledge, General Awareness For All Competitive Exam, current affairs quiz,current affairs in india, current affairs about sports, current affairs and gk, current affairs about india, current affairs daily quiz, current affairs dairy, current affairs education, Top News, Breaking News, Latest News

Current Affairs - 26 November 2015

General Affairs

2015 Set to be Hottest on Record, 2016 Even Hotter Due to El Nino: UN
  • 2015 Set to be Hottest on Record, 2016 Even Hotter Due to El Nino: UNGENEVA:  This year is set to be the hottest on record and 2016 could be even hotter due to the current El Nino weather pattern, the UN weather agency said on Wednesday.

    The World Meteorological Organization (WMO) said global average surface temperatures in 2015 were likely to reach what it called the "symbolic and significant milestone" of 1 degree Celsius above the pre-industrial era.

    "This is due to a combination of a strong El Nino and human-induced global warming," the WMO said in a statement.

    Next week world leaders will gather in Paris to discuss plans to curb greenhouse gas emissions and prevent world temperatures rising beyond 2 degrees above pre-industrial levels.

    The El Nino weather pattern, marked by warming sea-surface temperatures in the Pacific Ocean, causes extremes such as scorching weather and flooding. Meteorologists expect El Nino to peak between October and January and to be one of the strongest on record.

    A preliminary estimate based on data from January to October showed that the global average surface temperature for 2015 was around 0.73 degrees Celsius above the 1961-1990 average of 14.0 degrees Celsius, and approximately 1 degree Celsius above the pre-industrial 1880-1899 period, the WMO said.

    "This is all bad news for the planet," WMO Secretary-General Michel Jarraud said in a statement.

    The years 2011-2015 have also been the hottest five year period on record, with temperatures about 0.57 degrees Celsius (1.01 degrees Fahrenheit) above the 1961-1990 reference period.

    Global ocean temperatures were unprecedented during the period, and several land areas -- including the continental United States, Australia, Europe, South America and Russia -- broke previous temperature records by large margins.

    "The world's ten warmest years have all occurred since 1998, with eight of them being since 2005," the WMO said.

    Next year may yet be even warmer, since levels of greenhouse gases in the atmosphere have risen to a new record every year for the past 30 years, and the El Nino phenomenon is likely to continue into 2016.

    "The year whose annual mean temperature is likely to be most strongly influenced by the current El Nino is 2016 rather than 2015," the WMO said.

'Great Expectations,' Says PM Modi as He Reaches Out to Opposition
  • 'Great Expectations,' Says PM Modi as He Reaches Out to OppositionNEW DELHI:  Prime Minister Narendra Modi today sought the support of all political parties to run Parliament ahead of the winter session, and, in a first of sorts, informed them that he has deputed environment minister Prakash Javadekar to brief them on the stand India will take at the crucial Paris climate summit that the PM attends next week.

    "There are great expectations from Parliament... Let's make it function," said Prime Minister Narendra Modi, who dropped by at the meeting called by parliamentary affairs minister Venkaiah Naidu and attended by both opposition parties and the ruling BJP's allies at the Centre.

    The PM's offer to keep the opposition briefed on the Paris summit is seen as an attempt by the government to be more inclusive and take all parties on board. It comes amid its fresh bid to build a consensus to pass in the winter session, bills that give effect to crucial economic reforms like the Goods and Services Tax or GST.

    The government is in a minority in the Rajya Sabha or upper house and needs the opposition's help to pass the constitutional amendment by a two-thirds majority in this session so that it can meet a deadline of April 2016 for implementation.

    The GST bill has been blocked chiefly by the Congress, which wants changes made to it. But the bill's fate will hang on other factors too.

    Parties like the Rashtriya Janata Dal and Janata Dal United, along with the Congress, want a debate and resolution on what they call "rising intolerance" first.

    "The government is ready to listen to the Opposition's demands on various issues. We have sought support on GST. There is demand for a government resolution on intolerance. The government doesn't agree with this perception but will do what can be done under parliament norms," said Mr Naidu.

    The Congress plans a two-day discussion on the Indian Constitution and the role played in its creation by Dr Bhim Rao Ambedkar. PM Modi is expected to intervene or reply at the end of the debate and that may set the tone for the entire session.

    To ensure peace, Lok Sabha Speaker Sumitra Mahajan will meet floor leaders of all parties later in the evening.

AAP Leader Bhagwant Mann Challenges Sukhbir Badal for Dope Test
  • AAP Leader Bhagwant Mann Challenges Sukhbir Badal for Dope TestCHANDIGARH:  Under fire from the Shiromani Akali Dal following allegations that he came drunk to events, Aam Aadmi Party (AAP) lawmaker Bhagwant Mann hit back today and challenged Punjab Deputy Chief Minister Sukhbir Singh Badal and other leaders to get a dope test done.

    "Let us have a dope test of all leaders (in Punjab). I will be the first one to give my blood for the dope test. I urge you and other leaders to get a dope test done also," Mr Mann, a well-known comedian-actor, said in a video uploaded on his Facebook page.

    Throwing a challenge to Mr Badal and other leaders, Mr Mann said: "You must realise that in a dope test, drug abuse of over one year shows up.

    "Just by getting effigies (of your opponents) burnt by your sycophants will not solve anything. Know the ground reality, Mr Badal," Mr Mann said.

    Mr Mann claimed that Mr Sukhbir Badal was being called names on social media and linked to drug abuse too.

    "This is a great opportunity for you to clear your own name. On social media, people call you 'Sukha Amli' (Amli in Punjabi means drug addict). You should get your blood tested and make its report public so that you can clear your name."

    Punjab has been in news in recent years for rampant drug addiction, particularly among youths and in rural areas.

    Mr Mann challenged Mr Badal to give proof of the allegations of drug addiction and alcoholism against him (Mann) launched by Akali Dal leaders and supporters.

    "Baseless allegations are being made against the AAP, our leaders and particularly against me for some time now. Give us proof of these allegations," Mr Mann said.

    He said the ruling party was using a Punjabi news channel, whose ownership is linked to the Badal family, to defame him and the Aam Aadmi Party.

    Mr Mann said the Akali Dal government had failed to provide good governance and had lost touch with people.

    "You don't want to take any responsibility. You blame the central government for farmers' misery, and the BSF for drug menace in Punjab. You can blame (former Pakistan president) Pervez Musharraf for the Punjab Police firing on innocents," Mr Mann said.

    Mr Mann said he and his party leaders were ready to challenge the Akali Dal leadership on any issue.

    The AAP, which won all its four Lok Sabha seats in 2014 in Punjab, is emerging as a third force in the state to challenge the Akali Dal and the opposition Congress.

Aamir Khan Stands by Comments, Says 'Wife and I Don't Intend to Leave India'
  • Aamir Khan Stands by Comments, Says 'Wife and I Don't Intend to Leave India'NEW DELHI:  Lacerated by critics for his "leaving India" comments linked to the "intolerance" debate, actor Aamir Khan today asserted that he stood by what he said and "neither I, nor my wife Kiran, have any intention of leaving the country."

    In a statement, the 50-year-old actor said: "I stand by everything that I have said in my interview. To all those people who are calling me anti-national, I would like to say that I am proud to be Indian, and I do not need anyone's permission nor endorsement for that. To all the people shouting obscenities at me for speaking my heart out, it saddens me to say you are only proving my point."

    The clarification comes after a storm over his comments at an event in Delhi on Monday.

    "When I chat with Kiran at home, she says, 'should we move out of India?' That's a disastrous and big statement for Kiran to make. She fears for her child. She fears what the atmosphere around us will be. She feels scared to open the newspapers every day. That does indicate that there is this sense of growing disquiet, there is growing despondency apart from alarm," he had said at the Ramnath Goenka Excellence in Journalism Awards.

    Responding to the attacks on him since then, Mr Khan said: "We never did (have any intention of leaving), and nor would we like to in the future. Anyone implying the opposite has either not seen my interview or is deliberately trying to distort what I have said. India is my country, I love it, I feel fortunate for being born here, and this is where I am staying."

    The government had called Mr Khan's comments alarmist, with ministers alleging a conspiracy to tarnish India's image.

    Union Minister Venkaiah Naidu said: "Some are propagating wrong things some are coming under wrong propaganda. There is more tolerance in India. People of India are tolerant."

    Among those who lashed out at the actor were his colleagues from the film fraternity, like Anupam Kher and Raveena Tandon.

    But Mr Khan won strong support from opposition parties like the Congress.

    Incidents like attacks on rationalists, a mob killing over beef-eating rumours and controversial statements by central ministers have been held up by opposition parties and a section of civil society as examples of intolerance under the current regime.

Indian-Origin Engineer Discovers New Green Power Source
  • Indian-Origin Engineer Discovers New Green Power SourceMONTREAL:  An Indian-origin engineer and his team from Concordia University have created a technology to harness the electrical energy from blue-green algae.

    Both photosynthesis and respiration, which take place in plants cells, involve electron transfer chains.

    "By trapping the electrons released by blue-green algae during photosynthesis and respiration, we can harness the electrical energy they produce naturally," said engineering professor Muthukumaran Packirisamy who did his MS in Mechanical Engineering from Indian Institute of Technology, Madras.

    Also known as cyanobacteria, blue-green algae are the most prosperous microorganisms on earth.

    "By taking advantage of a process that is constantly occurring all over the world, we have created a new and scalable technology that could lead to cheaper ways of generating carbon-free energy," said Mr Packirisamy who is member of the American Society of Mechanical Engineers.

    The invention, however, is still in its early stages.

    "We have a lot of work to do in terms of scaling the power cell to make the project commercial," he said.

    Currently, the photosynthetic power cell exists on a small scale and consists of an anode, cathode and proton exchange membrane.

    The cyanobacteria or blue green algae are placed in the anode chamber.

    As they undergo photosynthesis, the cyanobacteria release electrons to the electrode surface.

    An external load is connected to the device to extract the electrons and harness power.

    Mr Packirisamy hopes that the micro-photosynthetic power cells will soon be used in various applications, such as powering cell phones and computers.

    "And maybe one day, they will power the world," he added in a paper published in the journal Technology.

Business Affairs 

I-T department launches PAN-based e-litigation management system
  • I-T dept launches PAN-based e-litigation management systemPromising more reforms to make India more attractive for foreign investments, Prime Minister Narendra Modi on Tuesday assured investors that he would "carefully hold" their hands and expressed hope that the GST regime would be rolled out in 2016.
    Speaking at the India Singapore Economic Convention, PM Modi said India is exploring a potential partnership with Singapore's Changi Airport for developments of two Indian airports and invited companies here to join in building smart cities.
    "In the last 18 months, the run-ways for the take-off of the economy have been made. Reforms are happening in a big way. They are now reaching to the last mile. Reform is to transform the system so that they perform. They aim at helping people realise their dreams.
    "It means more charm on the faces and less forms in the offices. Efforts to deepen financial markets have been made," Modi said.
    The Prime Minister said his government began to liberalise FDI laws soon after coming to power last year and the latest round of FDI reforms have made India the "most open economy" in the world.
    "We are also conscious of last mile operational issues in such matters and we are fine tuning the norms. Recently, we further eased FDI norms, after which India is the most open economy in terms of FDI," he added.
    While talking about 40 per cent increase in FDI and improvement in rankings like ease of doing business and world competitiveness index, Modi said, "Perceptions are turning into positive outcomes".
    "We are hopeful to roll out GST regime in 2016. The company law tribunal is being set up. FDI inflows have gone up by 40 per cent compared with previous year's comparative period. Perceptions are turning into positive outcomes. FDI commitments are translating into reality," he noted.
    Modi also outlined 14 decisive steps taken to address regulatory and taxation concerns and said that India offers tremendous opportunities for investments, ranging from affordable housing to smart cities, railways to renewable energy.
    "I am here to invite you to India in a bigger way. I have also come to assure you that I am there to carefully hold your hands," Modi said.
    "Our commitment to mitigate the dangers of climate change arise from the belief that nature is our mother. We will do more than required," he added.
    About his two-day visit, Modi said, "My visit has been very positive and productive and I had excellent meetings with Singapore leaders. We have concluded a strategic partnership which takes the relationship to a new level."
    "We have set high level of ambitions for this relationship. Our historic ties and cultural proximity are our assets," he said, while referring to a large Indian diaspora present here.
    The Prime Minister said economic partnership has been the key driver of the India-Singapore relationship.
    Noting that Singapore is India's tenth largest trade partner globally and second largest in ASEAN, Modi said the bilateral trade has risen manifold.
    "Singapore has emerged as the second largest source of FDI into India. The outward Indian FDI into Singapore has also risen in the recent times. Singapore is one of the top destinations for Indian investments. A significantly large number of companies are registered in Singapore," he noted.
    Modi also referred to the partnership in development of Amaravathi, the new capital of Andhra Pradesh, and the new container terminal at Jawaharlal Nehru Port.
    "I expect even more exciting partnership. India has a scope for expansion. Your are fond of going vertical, India's growth prospects are both vertical and horizontal. India and Singapore can work together in many promising areas," he said.
    "We are also exploring potential partnership with Changi Airport of Singapore for two airport terminals in India.
    "I am fully aware of the importance and role Singapore has played in Act East policy. I am looking to working with Singapore in a much bigger way," he said.
    Modi also said that Singapore could join in launch of rupee bonds in foreign countries.
    Referring to IMF chief Chrtistine Lagarde's statement that India was a bright spot in the global economy, Modi said he was here to personally deliver this message.

Failure of economic reforms could hamper investments, says Moody's
  • Failure of reforms could hamper investments: Moody'sMoody's Investors Service on Wednesday cautioned that a loss of momentum on reforms may hamper investment and prove to be a 'downside factor' for Indian companies, even as it said most corporates will benefit from strong economic fundamentals and accommodative monetary policy.
    It further said that weak global cues and an impending US rate hike may also have an impact on Indian businesses.
    Moody 's said that a failure by the government in implementing key reforms such as Goods and Services Tax (GST ) and land acquisition laws could hamper investment and signal a derailed reform prospect.
    "A healthy 7.5 per cent GDP growth for India for the fiscal year ending March 2017 and a pick-up in manufacturing activity will be broadly supportive of business growth," Moody's VP and Senior Credit Officer Vikas Halan said.
    But despite these overall supportive domestic conditions for the country's corporates, potential headwinds loom from a loss of reform momentum, he said.
    The Modi administration so far this year has been unable to enact legislation on key reforms, including a unified goods and services tax and the Land Acquisition Bill.
    "It seems highly unlikely that the major reforms will get enacted by the Upper House of Indian Parliament where the ruling coalition is in minority. A failure to implement these reforms could hamper investment amid weak global growth," Halan added.
    The ruling NDA government has said it is willing to discuss with the Congress to get the GST Bill passed in the winter session of Parliament beginning on Thursday. The passage of the Bill in the forthcoming session is essential to ensure rollout of GST from April 1, 2016.
    In its 2016 outlook for Indian non-financial corporates, Moody's said a 7.5 per cent growth, easing inflation resulting in lower interest rate will lead to improving corporate cash flows and be broadly supportive of business growth.
    "However, the corporates remain vulnerable to the volatile Indian rupee as against the US dollar and to low commodity prices, which has in turn led to a sharp decline in external trade," Halan added.
    The fall in commodity prices has benefited many Indian corporates given the country's status as a net importer of raw materials and its recent history of high inflation. But low commodity prices will result in deterioration of credit metrics of metals and mining companies, it said.
    The other 'downside factors' listed by Moody's in its report are loss of reform momentum leading to annual GDP growth falling below 6 per cent, resulting in a deterioration of credit metrics. Also higher interest rates brought on by rising inflation and/or exchange rate volatility, resulting in a tight funding environment is a factor.
    Moody's said that the upside factors include further government measures that could sustain the GDP growth at 8 per cent or more, leading to a broad-based improvement in corporate credit metrics.
    Besides, improvement in the global macroeconomic environment leading to stabilising commodity prices and credit markets would be positive, it said.
    Stating that loss of reform momentum remains a concern, Moody's said: "The government is unlikely to win a majority in the upper house if it keeps losing state elections like it did recently in Delhi and Bihar. Opposition parties are unlikely to allow key reforms to go through."
    By sector, Moody's expects upstream oil and gas companies to benefit from lower fuel subsidy burdens, although low crude and domestic natural gas prices will continue to hurt profitability.
    Refining and marketing companies meanwhile should benefit from healthy margins as demand growth outpaces expected capacity additions, it said.
    Moody's negative outlook for the steel industry reflects elevated leverage and an extended period of low prices due to continuing steel imports, while the negative outlook for metals and mining companies reflects bleak global commodity prices.
    In the real estate sector, Moody's expects demand to improve in 2016 on the back of lower interests rates, although approval delays could push back project launches for property developers.
    In the auto sector, Moody's said the retail sales volume will grow 6 per cent in 2016 on the back of sustained growth in passenger vehicles sales and a recovery in commercial vehicle sales.
    The telecom companies that Moody's rates in India have reported improving revenue per user (ARPU) and EBITDA margins, however, the competition remains intense and the regulatory framework continues to evolve.

Government working on e-commerce definition for clarity, says Nirmala Sitharaman
  • Govt working on e-commerce definition: Nirmala SitharamanIn view of 'very complex' and 'multi-layered' business structure of e-commerce firms, the government is working on a proper definition to bring clarity on a host of issues including taxation, Commerce and Industry Minister Nirmala Sitharaman said.
    " (e-commerce) is not a simple or a black and white issue. We have had stakeholders' meeting. State governments have given their inputs, so we thought at least we should define this whole thing as what is a market place, why it is a market place, when it is portal related," Sitharaman told PTI.
    She said the whole issue related with the e-commerce business is "very complex" and it has "become multi-layered".
    "So that is why we are working on it...It (definition) should happen soon," she added.
    The minister also clarified that the ministry is not looking at foreign direct investment (FDI) in e-commerce retail.
    E-commerce itself has a lot of issues as most of the companies in this sector are dealing in logistics and keeping inventories also, Sitharaman said, adding "the entire discussion is about the various levels at which level playing field is absent (for brick and mortar stores)."
    Many states have started taxing these firms because they are keeping inventories, she added.
    "State government thought fit to have VAT on them or they are imposing service tax. So at the end of the day, these companies started questioning why you are taxing us?
    "At the same time, e-commerce strictly means you just create the portal, where a buyer and a seller come together but you (the companies) are not finishing off with that, you are also holding stocks of one seller or many sellers," the minister said.
    As per the current FDI policy, e-commerce activities refer to the activity of buying and selling by a company through an e-commerce platform.
    At present, 100 per cent FDI is allowed in business-to- business (B2B) e-commerce and not in the retail segment.
    Global players are looking at India as it is one of the fastest-growing markets in Asia-Pacific, along with China.
    Rise in Internet penetration, adoption of smartphones and lower data rates are completely changing the way India shops.
    According to estimates, the sector's size is around $5 billion annually.
    When asked about her expectation for the Parliament session and GST roll out, she said the government is engaging with the opposition on all important matters.
    "Somewhere national priorities should be understood and opposition parties cannot be seen obstructing Parliament one session after the other," she said.
    She added that implementation of Goods and Services Tax bill would give a huge boost to the GDP and that additional growth is not going to confined only to BJP ruled states.

    More Carrot, Less Stick
    • On November 6, Power Minister Piyush Goyal announced a scheme for turning around power distribution companies, ordiscoms , reeling under a combined debt of more than Rs 4.2 lakh crore. Under the scheme, called the Ujwal DISCOM Assurance Yojana (UDAY ), the states will take over 75 per cent debt of their discoms and, in return, get leeway to borrow more. For the other 25 per cent debt, the discoms will issue bonds. The government has thrown in other sops too - such as more funds and coal - for states that opt for the scheme, start selling power at market rates, depoliticise decision-making in the sector and bring transmission & distribution (T&D) losses under control. The target is to reduce national T&D losses from 28 per cent to 15 per cent in the next three years, leading to savings of Rs 57,523 crore by 2019.
      The plan looks perfect at first glance but the fate of similar schemes in the past makes one sceptical about its efficacy. The biggest drawback, say experts, is lack of disincentives for states that go back on their promises. The only deterrent is that they may have to forfeit their claim on funds under the Integrated Power Development Scheme (IPDS) and the Deen Dayal Upadhyaya Gram Jyoti Yojana. Last year, the Cabinet had approved Rs 44,011 crore for the IPDS; for the latter, the government has a pool of Rs 39,275 crore. A similar scheme, the Financial Restructuring Plan, or FRP, was launched by the UPA government in 2011/12 when the debt of discoms was Rs 2.4 lakh crore. But losses of the eight states that opted for it rose instead of falling. Some of them, such as Rajasthan, Uttar Pradesh, Tamil Nadu and Haryana, have now been put on notice by the Reserve Bank of India, which has said that banks will not lend more money to their discoms. However, unlike the FRP, which was for 10 states, UDAY is open to all the states whose discoms are in losses (around 22).
      In the FRP, the states were asked to take over 50 per cent outstanding short-term liabilities, whereas the discoms were asked to issue bonds, backed by their state governments, for the rest. After this, banks were allowed to give discoms additional loans. The states were also asked to rationalise tariffs.

      1. The scheme will rework the Rs 4.3 lakh crore debt of discoms. It will also encourage states to bring down T&D losses and power subsidies.
      2. State governments can take over 75 per cent of this debt and issue bonds to pay lenders.
      3. This extra borrowing will not be added in states' fiscal deficit numbers.
      4. States have to push discoms towards operational efficiency improvements.
      5. The scheme is optional.

      In UDAY, the states will take over 75 per cent debt of their discoms as on September 30, 2015, over two years - 50 per cent this year and 25 per cent next year. This additional debt will not be included in their fiscal deficit numbers for these two years. They will issue ordinary bonds to fund this debt. The idea is to reduce interest payments as state loans carry a much lower rate (8-9 per cent) than the 14-15 per cent that the discoms pay. CRISIL has predicted savings of Rs 12,000 crore a year on this account alone, though this can impact banks' margins by 8 per cent. Unlike the FRP, under which corporate bonds were issued, the states will this time be allowed to issue non-SLR (statutory liquidity ratio) bonds and state development loans. Non-SLR bonds are not eligible for banks' SLR holdings and so are in lesser demand.
      Among the top debt-ridden states, only Tamil Nadu is in a position to take more debt comfortably. For Rajasthan, the worst-hit, with cumulative losses of more than Rs 81,000 crore, any additional borrowing could be a nightmare as its fiscal deficit is already 3.5 per cent of state gross domestic product. The states are yet to come out with a response to the scheme. The toughest call is to how to pay the principal on these bonds when they mature. The central government, of course, can breathe a little easy as annual losses of distribution companies are gradually coming down. In 2011/12, the losses were Rs 76,877 crore. This year, they are expected to be Rs 60,000 crore.
      Still, implementation will be the key. Like the FRP, the new scheme also requires states to rationalise tariffs within the next three years. But will the states do it, especially as power has become a central issue in assembly elections? This year, for instance, Punjab did not increase tariff despite losses by distribution companies. It goes to polls in February 2017. The Chief Minister of Uttar Pradesh, Akhilesh Yadav, has already said that UDAY is an effort to help banks, not to provide electricity to the poor, hinting at another round on politics on this. Uttar Pradesh also goes to polls in early 2017.
      Also, in the eight states that opted for the FRP in 2012, the gap between average revenue and average cost of supply is Rs 1.40 per unit. Even if UDAY does well, the states will be able to bring down the gap to only 70 paise a unit by the end of 2017/18. That is why Goyal is pushing the companies to reduce the cost of generation by 35 paise per unit by more rationalised use of coal. But there is no road map for this.
      So, all in all, the plan will stay on paper if it is not backed fully by the states.

    Moment of Reckoning
    • Arvind Dham Amtek Auto is swirling in financial crisisMore than three decades ago, the son of a Haryana irrigation department officer, Arvind Dham, joined the family business of construction, in 1985. But, despite his professional education as an architect, Dham's heart was not in construction. That was also when the government was opening up the automobile industry to the private sector and new entrants such as Maruti Suzuki were hunting for young entrepreneurs to develop a supplier base for the Maruti 800, its new compact car. Dham, just 24 then, saw an opportunity in the sunrise sector and bagged the contract to manufacture connecting rods under the flagship Amtek Auto .
      That love affair with the automotive industry took him on a fairytale journey to manufacture engine rods, flywheel ring gears and transmission forks for companies such as Tata Motors, Fiat and Ford India until 2001/02, when the domestic business fell short of his ambitions. Dham set his sights overseas with an acquisition binge that began 15 years ago, but intensified between 2005 and 2014, resulting in a total of 22 acquisitions in areas such as iron casting, metal forging and machining. German Neumayer Tekfor and Kuepper Group (the two generate revenue of approximately $1 billion) and the forging and metal businesses of Japanese Asahi Tec were among the largest acquisitions. These units are now cash positive and catapulted Amtek into a large player in the global casting and forging business. They also helped it diversify across geographies and expand its clientele. 
        Amtek became the world's largest player with a 20 per cent market share in turbocharger housing and 15 per cent in ring gears. Surely, he added marquee clients such as BMW and Daimler; but with mounting liabilities, Dham also found himself in a debt trap that he is now struggling to get out of. On revenue of Rs 15,707 crore in its fiscal ended September 2014, Amtek had reported a whopping total debt of Rs 17,663 crore. Its cumulative debt now stands at Rs 19,000 crore at the group level. Its annual interest outgo of Rs 1,900 crore had squeezed the finances enough to make it default on Rs 200 crore worth of bonds to JP Morgan in September.
      JP Morgan had to limit redemption of two schemes that held Amtek bonds. On September 4, the stock crashed to a 52-week low of Rs 25.60, almost one-tenth from the price of Rs 231 in November 2014. But the biggest hint of trouble came in August, when Amtek reported a net loss (Rs 157.60 crore) in the April-June quarter for the first time in more than 20 years. It was followed by a face-off with ratings agency Care Ratings on August 7. "The ratings have been suspended as the company has not furnished the information required by Care for monitoring of the rating," Care Ratings had said. The company claims it was in discussion with banks to realign its debt and, therefore, failed to share adequate information with rating agencies. Brickworks Ratings also downgraded its rating from A+ to C.
      A fortnight later, the National Stock Exchange and the Bombay Stock Exchange decided to remove Amtek Auto from their futures and options segments. Since expiry dates for the contracts were not far away, the decision created a huge selling pressure. The Amtek Auto stock tanked 37 per cent on August 18.
      Just a year ago, Amtek Auto was flying high. The group reported a net profit of Rs 941 crore in fiscal ended September, 2014 - a three-fold rise in just three years. Analysts had initiated a 'Buy' coverage on the stock around the middle of 2014. None other than Nomura went bullish on the stock in June 2014 to give a target price of Rs 416, more than double the then price of Rs 201.
      The Reversal of Fortune
      Today, Amtek's market capitalisation has slipped from a peak of around Rs 6,745 crore (October 30, 2007) to just Rs 945 crore (November 13, 2015). You would wonder what changed in a matter of one year, particularly when the domestic automobile industry seems to be on a recovery mode! Surely, the spate of overseas acquisitions and investment in domestic capacity addition added debt to the business and increased interest outgo. But, the domestic growth expectations went awry and that, says Dham, led to what he calls a 'cashflow mismatch'.
      "There is a misconception that overseas assets are dragging down the Indian business. In most of the businesses we acquired, we have seen rich dividends in terms of increased profits. These are very lucrative assets and people have to be patient for them to perform. If I were to sell all overseas assets, I could wipe out all my debt," claims Dham.
      Most growth concerns came from the domestic market even as the overseas business continued to grow. For Amtek Auto, overseas business generates $2.5 billion revenue, while another $1.5 billion comes from domestic operations.
      The revival of the domestic auto industry has been patchy, with only a handful of players like Maruti, Hyundai and Honda leading growth in the passenger vehicle segment. The two-wheeler market has been under pressure from lacklustre rural demand. Motorcycles, which form about two-third of the segment, failed to grow for several quarters. Scooters, with double-digit growth, have been the saving grace, but they account for just 30 per cent of two-wheeler sales. In the commercial vehicle segment, only medium and heavy commercial vehicles have been growing, while light commercial vehicles continue to register negative growth with no immediate sign of revival. Tractors, a key segment for Dham, has declined for over twelve months. Construction, another user segment for Amtek, has also been struggling to grow with real estate market down in the dumps.
      Hoping for growth, Amtek had invested Rs 5,000 crore in expanding domestic capacities between 2011 and 2014 to become a leading global player in its core casting, forging and machining business. Indeed, Amtek had almost doubled capacities in the crankshaft, flywheel and gear assembly, anticipating strong demand from local manufacturers. But utilisation couldn't reach an optimum level - it is at a mere 50 per cent now. Dham blames sluggish Indian market for the current state of affairs of the company. "We were expecting a high double-digit growth from domestic business from 2014. But segments like LCVs, two-wheelers and tractors have disappointed us," he says. 
      The Task Ahead
      Anticipating the problems, Dham says the management had, in March, initiated the process of asking the banks to realign debt. "This is not a restructuring. The repayment of debt is to be realigned to cash flows. The interest payment continues as usual," said Dham. The annual interest payout for Amtek is about Rs 1,900 crore. As a part of this realignment exercise, Rs 600 crore of the Rs 800 crore bonds held by banks will also be rolled over. However, JP Morgan will see a resolution of the issue, Dham added.
      Bankers say Amtek Auto is still not a non-performing asset on their books. They are still evaluating a possibility of supporting the company by way of a working capital loan, but that decision will be taken jointly by the lenders in the coming days. Dham says all his customers and bankers have been supportive.
      Industry insiders say the auto component business follows the automotive industry in business cycles. Amtek is not alone. Several other local players like Asahi India, Minda Industries and Caparo Industries owned by NRI Lord Swraj Paul are dealing with similar trouble. But their problems are now compounded by slowdown, says Sudam Maitra, who headed purchase for large automakers like Maruti and Tata Motors. "Component makers face the most pressure in a sluggish market. They are squeezed on costs by manufacturers. Only a few players who have a strong asset turnover ratio can manage to sustain by maximising utilisation of their plants. Amtek, it seems, is paying the price for persistent slowdown in our economy and the auto market," he said. And, though Amtek's clients aren't affected by the crisis at the group yet, they could if things spiral out of control. A Maruti Suzuki executive said the supply of components from Amtek that go into manufacturing engines, and are critical for more than 10 of its models, have remained normal. "We haven't heard of any employee issue or disruptions in Amtek plants, so far," says Kuldeep Janghu, the general secretary of the Maruti Employees' Union.
      Former Maruti Suzuki boss Jagdish Khattar, who now operates his own multi-brand car business, says, "For a person to grow so big, the business has to be run professionally. The fact that so many financial people are supporting shows the confidence imposed in him."
      Escaping the Debt Trap
      Clearly, Amtek's revenues and profits are insufficient to support its ambitious expansion. Dham has little option but to reduce debt to lessen the interest outgo and bring back the company into profitability.
      Dham says he plans to reduce the debt to Rs 12,000 crore over 18 months by selling assets worth nearly $1 billion (approximately Rs 6,500 crore). Along with refinancing of debt at lower rates of interest, this would nearly halve the annual interest outgo to between Rs 1,000-1,100 crore.
      The strategy is to monetise Amtek's non-core assets and non-automotive businesses such as SMI Amtek Crankshaft, a joint venture company with Sumitomo of Japan, besides selling minority stakes in foreign subsidiaries in the core businesses, if need be. Dham has roped in Morgan Stanley to identify potential buyers of minority stakes in overseas businesses. And its $500 million strong German subsidiary, Tekfor, which manufactures shafts, flanges and cam lobes - extensively used in engines and gears - is amongst the first to grab attention from trade and financial players.
      Amtek's overseas assets are currently estimated to be worth $2 billion. "We expect to raise somewhere in the range of $500-600 million through the overseas dilution," says Amtek Auto global CEO John Flintham. "We have received a large number of enquiries for our overseas units, including Tekfor group, which was brought out of insolvency two years ago. The interest has come from trade and financial players around the globe."
      'We have received a large number of enquiries for our overseas units, including Tekfor group, which we brought out of insolvency two years ago. The interest in these has come from trade and financial players around the globe,' says John Flintham Global CEO, Amtek Auto (Photo: Vivan Mehra)
      Amtek is also negotiating with potential buyers from China and the US to offload a 50 per cent stake in Amtek Railcar, which makes railway freight cars.
      Ernst & Young and Grant Thornton have been appointed to identify buyers for non-core domestic businesses. This comes after Dham has already consolidated the group's debt in a single entity. In November 2014, Amtek Global Technologies, the Singapore-based holding company of the groups international businesses, secured long-term finance of Rs 1,800 crore from Kohlberg Kravis Roberts (KKR) to replace its existing bridge loan after consolidating all the company's existing debt.
      Another asset, Italian coffee chain Barista, the country's second-largest after Cafe Coffee Day, is already on the block. It is managed by his daughter, Anamika. Dham, 'a foodie himself', now wants to dilute around 50 per cent in his food business under Carnation Hospitality, a wholly-owned subsidiary of industrial packaging firm Rollatainer, which also operates Wendy, Kylin and is the master franchisee of Italian chain Jamie Oliver. Dham also hopes to garner $50-100 million from industrial real estate owned across India to redeem the debt.
      Amtek's debt to EBIT ratio has reached an all-time high and was more than 7X in 2014 with Rs 2,494 crore clocked as its consolidated profit before interest and tax. It's the highest amongst its peers. Its rival Motherson Sumi Systems, which has grown much faster and emerged far bigger than Amtek Auto, has a consolidated revenue of $6 billion with a much lower debt to EBIT ratio of 2.4X. For Bharat Forge, another competitor, the figure stood at 2.2X in 2014/15.
      'For a person to grow so big, it has to be run professionally; and the fact that so many financial people are supporting, shows the confi dence imposed in him,' says Jagdish Khattar CMD, Carnation Auto, and former MD, Maruti Suzuki India (Photo: Rajwant Rawat)
        Given Dham's track record, nobody's writing him off yet. For, Dham has gone through this phase in the past too. Although he retains a partial interest in real estate, thanks to his background in architecture, Dham had also diversified into the dotcom business and even forayed into pharma where a proposed plant in Bhiwadi was later turned into a metal foundry unit. But he has no regrets.
      "Mistakes are part of business," says Dham, a former fast bowler who played for Punjab. "We have to realise and take the right steps. Now we would only focus on the automotive business and bring down the debt by a third in the next year or so."
      With economic recovery nowhere in sight, Dham surely can't rely on better business to get him out of the debt trap. But, he will need to work at the pace of a fast bowler to ease the burden that he has set out to achieve.
      Analysts tracking the auto ancillary sector have been cautious about Amtek. "Amtek made silly investments when its cash flow was healthy. A hardcore auto component company went into the coffee business," says independent analyst P. Tulsian. "Now, the promoters want to reduce debt and monetise their assets. Even if they erase it by a billion, the worst for the company is over. They have healthy assets, like Tekfor, which they are looking to sell or even exit."
      Meanwhile, Dham has already chalked out retirement plans. He is a movie buff and also loves reading. Dham's planned abode in the Himalayas, where he intends to spend some quality time with his wife and sister, far from the hustle and bustle of corporate life, is almost ready.
      There is a clear succession plan in place with younger heirs being groomed to manage these businesses. Dham manages the entire business with active managerial participation from close family and a team of expatriate honchos. He is assisted by his two nephews in running the domestic operations, while his engineer son Anupam shuttles between London and Frankfurt to keep a hawk's eye on the global business, stretching from Japan in the East to Mexico in South America.
      Dham plans to gradually restrict his involvement to an advisory role. But that is for later. "I would love to spend time with my family as I hardly get to do that. This should happen once we get the debt issue settled and bring the business back on track," he says with a smile.

      General Awareness


        • 1. Who has been appointed as the Vice Chairman of the board of the Bank for International Settlements (BIS) on 10 November 2015?
          1) Usha Thorat
          2) Janet Yellen
          3) Raghuram Rajan
          4) Arundhathi Bhattacharya
          5) Arun Jaitely
          2. Where is the headquarters of Bank for International Settlements (BIS)?
          1) Frankfurt (Germany)
          2) Washington DC (USA)
          3) Basel (Switzerland)
          4) Paris (France)
          5) Tokyo (Japan)
          3. Which bank agreed to provide $ 273 million loan for the improving rural roads in the States of Assam, Chhattisgarh, Madhya Pradesh, Odisha and West Bengal on 9 November 2015?
          1) IMF
          2) World Bank
          3) Asian Development Bank
          4) NDB
          4. Which bank announced partnership deal with a leading UAE-based bank Emirates NBD, to help NRI customers in the gulf carry out their remittances instantly and more conveniently on 12 November 2015?
          1) ICICI Bank
          2) Bank of Baroda
          3) SBI
          4) Axis Bank
          5) Bandan Bank
          5. List of Foreign banks and the country of incorporation given. Select the wrong combination.
          1) Citi Bank - USA
          2) BNP Paribas - Germany
          3) Sumitomo Mitsui Banking Corporation-Japan
          4) DBS Bank Ltd - Singapore
          5) Credit Suisse A.G - Switzerland
          6. On 30 October 2015, the World Bank has maintained its growth forecast for India in 2015-16 at ......
          1) 7.8 percent
          2) 7.9 percent
          3) 8.1 percent
          4) 10.1 percent
          5) 7.5 percent
          7. RBI on 27 October 2015 permitted the companies to sell rupee-denominated bonds in overseas markets. Indian rupee denominated bonds issued in offshore capital markets also called as ........
          1) Convertible Debenture Bonds
          2) Convertible Desi Bonds
          3) Masala Bonds
          4) Amortized Principle Bonds
          5) Zero Bonds
          8. In a move to boost dollar inflows into the country, RBI allowed non-resident Indians
          (NRIs) can opt to invest in the NPS on 30 October 2015. NPS stands for ......
          1) Non Pension System
          2) NDA Pension System
          3) Narrow Pension System
          4) National Pension System
          5) Notional Pension System
          9. PFRDA stands for .......
          1) Pension Fund Regulatory and Development Authority
          2) Pension Fund Regulatory and Dearness Allowance Authority
          3) Provident Fund Regulatory and Development Authority
          4) Pension Fund Rules and Development Authority
          5) Persons Fund Regulatory and Development Authority
          10. Present Chairman of PFRDA....
          1) Hemant G Contractor
          2) U.K.Sinha
          3) Raghuram Rajan
          4) R.S.Sharma
          5) T.S.Vijayan
          11. RBI on 13 Nov 2015 extended the deadline for applicants of the Bharat Bill Payment System Operating Units (BBPOUs) till ........
          1) 31 Dec
          2) 1 Dec
          3) 18 Dec
          4) 30 Nov
          5) 25 Dec
          12. On all services, the Swachh Bharat Cess at the rate of 0.5% come in to effect from....
          1) 15 Jan 2016
          2) 31 Dec 2015
          3) 1 Apr 2016
          4) 1 Mar 2016
          5) 15 Nov 2015
          13. Bancassurance means ....
          1) bank deposit scheme for the employees of insurance companies.
          2) bank and an insurance company form a partnership so that the insurance company can sell its products to the bank's client base.
          3) Deposits of Banks with RBI, insured by DICGC.
          4) An insurance scheme to insure bank deposits, so that if the bank closes then the insurance company pay the compensation to the customer.
          5) LIC scheme for BPL families alone.
          14. In context of business and banking, what is CRAR?
          1) Capital to Risk And Range
          2) Credit Rate And Ratio
          3) Capital to average Rate Assets and Risk
          4) Capital to Risk Weighted Assets Ratio
          5) None of above
          15. First female President of Nepal is ......
          1) Bidhya Devi Bhandari
          2) Onsari Gharti Magar
          3) Hina Rabbani Khar
          4) Draupadi Murmu
          5) Mridula Sinha
          16. 'm power' the app launched by whom, a new mobile application for its troops on 7 Nov 2015?
          1) BSF
          2) CRPF
          3) CISF
          4) Assam Rifles
          5) RAF
          17. The Director Generals of the different organizations given. Locate the wrong option.
          1) Assam Rifles - H J S Sachdev
          2) BSF(Boarder Security Force) - D K Pathak
          3) Central Industrial Security Force (CISF) - Surender Singh
          4) Central Reserve Police Force (CRPF) - Prakash Mishra
          5) None of above
          18. INDRA is the joint military exercise of India and .......
          1) France
          2) USA
          3) Japan
          4) Russia
          5) China
          19. On 10 November 2015, the Indian Coast Guard's largest offshore patrol vessel has been inducted into Indian Navy. It is....
          1) Vikranth
          2) Sukanya
          3) Samyuktha
          4) Padma
          5) Samarth
          20. Which Indian Communication satellite launched successfully on 11 November 2015 by the European Ariane 5 VA-227 launch Vehicle?
          1) GSAT-12
          2) GSAT-14
          3) GSAT-15
          4) GSAT-13
          5) GSAT-17
          21. Which of the following Social Media has came forward to help BSNL to setup 100 WiFi hotspots in Rural India?
          1) My app
          2) Google+
          3) Facebook
          4) Twitter
          5) Google
          22. World Science Day for peace and Development observed on ......
          1) 28 Feb
          2) 18 Sep
          3) 10 Nov
          4) 10 Dec
          5) 18 Nov
          23. World Diabetes Day observed on ....
          1) 14 September
          2) 14 October
          3) 14 November
          4) 14 December
          5) 14 January
          24. National Education day observes on 11 November to commemorate the birth anniversary of ......
          1) Jawaharlal Nehru
          2) Sarvepalli Radhakrishnan
          3) Madan Mohan Malaviya
          4) Moulana Abul Kalam Azad
          5) Mahatma Gandhi
          25. Terrorists attacked Bataclan music hall on 14 November 2015 killing many persons. Where is the Bataclan concert hall?
          1) UK
          2) Italy
          3) Austria
          4) Israel
          5) France
          26. Who is the President of France?
          1) Malcolm Turnbull
          2) Angela Merkel
          3) Francois Hollande
          4) Matteo Renzi
          5) Justin Trudeau
          27. Cabinet Committee on Economic Affairs (CCEA) increased the MSP of Rabi crops of 2015-16 season to be marketed in 2016-17 ranging from 5% to 15% compare to previous year prices. MSP stands for ....
          1) Maximum Support Price
          2) Minimum Square Price
          3) Minimum Support Price
          4) Most Support Price
          5) Mark Support Price
          28. CACP recommends the Minimum Support Prices (MSPs) to incentivize the cultivators to adopt modern technology, and raise productivity overall. CACP stands for .....
          1) Calculation for Agricultural Costs & Prices
          2) Commission for Agricultural Crops & Prices
          3) Commission for Agricultural Costs & Prices
          4) Committee for Agricultural Costs & Prices
          5) Code for Agricultural Costs & Prices
          29. Who is acting as the Chairman of CACP (holding additional charge)?
          1) M.S. Swaminathan
          2) Radha Mohan Singh
          3) Dr. Ashok Vishandass
          4) Mohanbhai Kalyanjibhai Kundariya
          5) Dr. Sanjeev Kumar Balyan
          30. Who headed the Committee of Eminent Persons (CEP) suggested the major changes in the Joint Entrance Examination (JEE) on 8 November 2015?
          1) U.R. Rao
          2) Ved Prakash
          3) Ashok Misra
          4) Abid Hussian
          5) Rajiv Prakash
          31. SIT (Special Investigation Team) on Black Money team submitted its third report to the Union government recently. Who is heading the SIT?
          1) Justice H.L.Dattu
          2) Justice G.Rohini
          3) Justice Cyriac Joseph
          4) Justice M.B. Shah
          5) Justice A.P. Shah
          32. The Bankruptcy Law Reform committee submitted its report to Union Ministry of Finance on 4th November 2015. Who is heading this committee?
          1) Vijay C Kelkar
          2) M.B. Sha
          3) Arvind Pangariya
          4) Urjhith Patel
          5) T. K. Viswanathan
          33. Who is the chairman of the committee, which formed by the Ministry of Human Resource Development to frame the new Education Policy?
          1) Ved Prakash
          2) Shailaja Chandra
          3) T S R Subramanian
          4) Sewaram Sharma
          5) Sudhir Mankad
          34. National Green Tribunal asked which north eastern state to clear its stand on declaration of eco sensitive zone on 4th November, 2015?
          1) Manipur
          2) Meghalaya
          3) Tripura
          4) Assam
          5) Arunachal Pradesh
          1-3, 2-3, 3-3, 4-3, 5-2, 6-5, 7-3, 8-4, 9-1, 10-1
          11-3, 12-5, 13-2, 14-4, 15-1, 16-3, 17-5, 18-4, 19-5, 20-3
          21-3, 22-3, 23-3, 24-4, 25-5, 26-3, 27-3, 28-3, 29-3, 30-3
          31-4, 32-5, 33-3, 34-4

      No comments:

      Featured post

      Current Affairs - 16 December 2018

      General Affairs   Cyclone Phethai Gathers Over Bay Of Bengal, May Hit Andhra On Monday ...

      Copyright © 2016. Vikalp Education