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* Private Equity and Venture Capitalist may also bid in Infrastructure

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Private Equity and Venture Capitalist may also bid in Infrastructure TOP

At present, the Private Equity (PE) funds and Venture capitalists (VCs) can only participate indirectly in the infrastructure projects by committing funds to one of the bidders. Securities Exchange Board of India (SEBI) registered VC funds and PE firms are barred from bidding for infrastructure projects, as they do not meet conventional qualifications like gross revenue, net worth or net cash accruals.

But now the government is likely to allow private equity (PE) funds and venture capitalists (VCs) to be part of the consortia that bid for infrastructure projects. As a result, paucity of capital could be solved. This move would be of significant implication for PE players who have committed large investments in the infrastructure sector. 

To ensure that money actually flows in, the winning fund must make equity contribution to the project or ensure that the financing can be tied up for the project. Their selection would also be based on the funds committed to India rather than the total uncommitted investible funds.

The last Budget had allowed pass through status under Section 10(23FB) only to VC funds investing in nine sectors. The funds operating in the power sector, which used to get pass through status till last fiscal, lost this facility.

The status was allowed only for VC funds investing in sectors including biotechnology, Information Technology relating to hardware and software development, nanotechnology, seed research and development, R&D of new chemical entities, dairy industry, poultry industry, investments in hotel-cum-convention centers, production of bio-fuels and setting up specified infrastructure facilities — including roads, highway projects, water supply projects, irrigation projects, solid waste management systems, ports and airports.

Now the government may restore pass through status for venture capital funds operating in this sector. The restoration of pass through status would make power sector VC funds eligible for exemption in income by way of dividend and capital gains accruing to the fund company.

The proposal would not only invite international VCs to step up exposure in the Indian power sector but also help in developing such funds within the country.

Urban Land Ceiling Regulation Act 1976, imposing restrictions on land holding in Maharastra, has been scrapped by the State Government. As a result the development will be more spread out now as large peripheral areas were frozen because of the Act and there was a lot of negativism in terms of approvals in this sector. It will further help to stabilize spiralling property prices.

Analysts estimate close to 76,863 acres may be released in nine urban conglomerates across the state; Mumbai alone will get around 17,000 acres for fresh development. Real estate activity in other cities like Thane, Pune, Nagpur, Nashik, Kolhapur, Solapur, Sangli and Aurangabad will too be affected by the new policy.

Currently, residents in India are permitted to hedge their commodity price risk after obtaining specific approvals from the Reserve Bank of India (RBI) or from select Authorized Dealers (ADs).

In view of the volatility in global oil prices, domestic oil refining and marketing companies have been representing the RBI for permission to hedge commodity price risk on inventories as well in international exchanges/markets, to modulate the impact of adverse price fluctuations on their margins.

It has been decided to permit domestic oil marketing and refining companies to hedge their commodity price risk to the extent of 50 per cent of their inventory based on the volumes in the quarter proceeding the previous quarter. The hedging may be undertaken through Category – I banks, which have been authorized by RBI. The hedges may be undertaken using over-the-counter (OTC) / exchange traded derivatives overseas with the tenor restricted to a maximum of one-year forward.

The Ministry of Corporate Affairs is of the view to make it mandatory for the foreign investors to file a declaration about beneficial ownership in Indian ventures. Under Section 187(C) of the Companies Act, if someone holds shares for the benefit of any other person, a declaration has to be filed.

Making it mandatory would mean that in sectors where foreign direct investment is restricted, foreign investors would have to declare to the government if they hold any stake indirectly for which funds have been provided through loans or any other means. So foreign investors owning stake through an ‘Indian front’ may have to give a declaration.

Bringing of such a provision into the FDI policy would mean that every foreign company which invests in India through entity in another country (a holding company in Mauritius, for instance), will have to give a declaration to this respect.

Facts:  The respondent company allegedly failed to remit the payment demanded by the petitioner towards his consultation fee. Consequently, he filed the petition under section 439 along with section 433(e). The respondent disputed the debts claimed by the petitioner and pleaded that the company betrayed the trust and committed professional misconduct even though the company was financially solvent having net assets more than its liabilities.

It was held that the present case was a case of bona fide disputed debt. The petitioner, a technical consultant, has approached the court with the following prayer:-

(i)        the respondent company be wound up by the court under the provisions of the Companies act 1956

(ii)       A liquidator be appointed to take over the charge of the Company

(iii)     Payment of Rs 11, 00,000 along with interest at the rate of 18% p.a from August 2002 is made to the petitioner.

The company disputed the debts claimed by the petitioner and pleaded that the winding up petition has been filed to hide the breach and dereliction committed by the petitioner himself. Besides, the company stated in the reply that it is financially solvent and is a profiteering company having net assets more than the liabilities.

Held: The principles on which court acted was:-

(i)       If the debt is not disputed on some substantial ground the court may make the order.

(ii)     If the debt is bona fide disputed, there cannot be “neglect to pay” within the meaning of section 433(1)(a) of the Act and petition for winding up is not maintainable.

(iii)     Dispute with regard to payment of interest is not a bona fide dispute

(iv)    The defence of respondent company should be in good faith, one of substance and likely to succeed in point of law.

As a result the case was dismissed without any order as to costs.

New Delhi patent office has rejected pharmaceutical giant Astra Zeneca’s patent application for its lung cancer drug Iressa (Active ingredient: Gifitinib) after hearing pre-grant oppositions filed by Natco Pharma Ltd and J M Pharmaceuticals Ltd, for more than a year.

The patent office rejected the application citing the provisions of Sec 25(1) (d) which states that the invention was publicly known or publicly used in India before the priority date of that claim or “known prior use” of the drug.

Earlier patent applications pertaining to imatinib (Gleevec®) from Novartis and teriparatider DNA origin (Forteo®) from Eli Lilly have been rejected by the Indian Patent office as a result of spate of pre-grant oppositions filed by several Indian pharmaceutical companies and few NGOs.

One of the leading two- wheeler manufacturers, Bajaj Auto Ltd is planning to sue south Indian rival TVS Motor Co for “infringing” upon intellectual property rights of its patented digital twin spark ignition (DTSi) technology. Bajaj Auto holds an Indian and several foreign patents for this technology. Two of the most popular models manufactured by Bajaj Auto, ‘Pulsar’ and ‘Discover’ are powered by DTSi engines.

Bajaj Auto, clearly says it is a case of IPR violation by TVS on three counts and the company’s legal department is preparing to go to court at the earliest. “The first is the purpose for which they are doing it (use of twin spark ignition for enhanced performance and better mileage). Secondly, the size (of engine) is same and third, construction of engine is also the same,”.

TVS, on the other hand, has said that “Flame” one of its forthcoming model, is fitted with a three-valve engine working on the CCVTi technology, which is different from Bajaj's DTSi. In retaliation to the allegations as leveled by Bajaj Auto, TVS has filed a Rs 250-crore defamation suit in the Bombay High Court

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