Kishore Biyani plans to merge HomeTown with FabFurnish

HomeTown may be spun off from Future Retail to create a new firm by combining it with FabFurnish.com

Mumbai: Kishore Biyani, group chief executive officer of retail conglomerate Future Group, may hive off the home retail business HomeTown from its flagship Future Retail Ltd and create a new home furnishing company by combining it with FabFurnish.com, which it acquired last month.

Future Group is the parent of listed companies such as Future Retail Ltd, Future Lifestyle Fashions Ltd and Future Consumer Enterprise Ltd.

The company has been operating the HomeTown retail chain for the last 10 years and creating a standalone home furnishings company is a move towards unlocking value, the company said.

“We are looking at creating value as we merge and create an independent identity for our home furnishing business,” Biyani told a press conference on Wednesday to announce the re-launch of fabfurnish.com on 5 May along with a campaign and discounts in the marketplace.

HomeTown is expected to become a Rs.1,000 crore business by the end of the current financial year which makes it the largest home furnishing company in the country, said Mahesh Shah, chief executive officer, HomeTown.

There are 42 HomeTown retail stores and the plan is to add eight more in this fiscal year, he added.

Globally, very few retailers sell everything from fashion to furniture and groceries, with most large companies specializing in a particular area of operations, said Abhishek Malhotra, leads the consumer industries and retail products practice for India at AT Kearney. “It makes sense to start creating separate specialist companies now that these businesses are gaining scale,” he said.

However, in India, not many home furnishing firms have gained success or scale. Reliance Industries Ltd’s retail arm Reliance Retail exited from its home furnishings retail business Reliance Living in 2014. Even hypermarket chain HyperCITY Retail India Ltd exited the furniture and electronics retail business two years ago.

Meanwhile, Swedish furniture and home furnishings maker Ikea’s first India store is expected to launch in 2017, which could further disrupt the sector.

Biyani, however, feels that by the time Ikea launches, HomeTown will be a sizeable business, with Rs.1,500 crore revenue and, hence, would not be impacted.

HomeTown will be a vendor on Fabfurnish.com, which will also sell home and furnishing products from other retailers.

Ashish Garg, co-founder, FabFurnish, said the company will turn profitable in the next three months, adding that it will be one of the first online retailers to achieve profitability in India as it looks to keep costs low and boost business.

Over the next three months Future Group will also launch its eZone app and online shopping portals for Big Bazaar, shoe brand Clarks and plus-sized women’s clothing brand All, said Vivek Biyani, director Future Group.

The group’s original listed entity Pantaloons Retail India Ltd and Future Venture India Ltd have over the years changed forms and names to become three listed entities spanning across groceries retail—Future Retail, Future Lifestyles (fashion) and Future Consumer Enterprise (an integrated packaged consumer goods company).

Currently, Future Retail is in the process of merging with Bharti Retail Ltd which will see the creation of two companies—one with the front-end retail operations and the second a back-end, infrastructure and investments company.

The home furnishings company, if created will be the fifth listed company of the group.

Sun Capital

Reforms in India will be slow, tedious: Morgan Stanley

Experts said domestic woes, including ballooning NPAs reported by banks and weak quarterly numbers in various other sectors, also added to the market weakness recently.

Big bang reforms will not be the operating template for India and the process will be a 'slow and tedious one', says a Morgan Stanley report.

The global financial services major said that the recently announced Budget for 2016-17 has proved once again that major reform initiatives will not be the operating template for the country.

"Reforms in India will be a slow and tedious process, requiring the buy-in of the opposition and the bureaucracy," it said. Since the beginning of this year, Indian markets have seen heavy volatility largely owing to high fluctuations in global markets led by the Shanghai Composite and domestic events such as the Union Budget, it said.

The Indian equity markets have seen extreme weakness due to various negative factors, including global economic slowdown fears, falling crude prices, worries related to Chinese economy and muted quarterly earnings.

Experts said domestic woes, including ballooning NPAs reported by banks and weak quarterly numbers in various other sectors, also added to the market weakness recently. Meanwhile, the index slumped to its lowest level in 21 months, when the Sensex crashed 807 points to drop below the 23,000-mark on February 11, this year.

"Moreover, what was evident once again this year, is that while India may be in a relatively better position based on external macro indicators compared to 2013, the correlations with global markets always rise disproportionately during periods of heightened uncertainty in other parts of the world," the report added.

Sun Capital

Crompton Greaves to sell overseas power unit to First Reserve for $126M

Crompton Greaves sells global power biz 

Parent Avantha Group has been selling non-core assets to cut debt. 

Crompton Greaves has inked a deal with US private equity fund First Reserve International to sell its global power business for an enterprise value of €115 million (about Rs. 846 crore). The sale will enable the company to reduce debt and focus on its faster-growing Indian businesses.

The company’s consolidated debt stood at Rs. 2,744 crore in FY15. Earlier, Crompton Greaves had announced the de-merger of its consumer products business into a wholly owned subsidiary Crompton Greaves Consumer Electricals.

Paring debt

In October 2015, the company sold its Canadian Power Transformer business to PTI Holdings Corp. These deals will help Crompton Greaves bring down its debt and expand its consumer products business.

On Wednesday, the Avantha Group company’s shares rose 8.81 per cent to Rs. 151.85 on a steady BSE, which closed 0.55 per cent higher.

On May 28, 2015, the company informed the stock exchanges that it had got non-binding proposals from “interested parties” from across Europe, North America and Indonesia. Later, on February 4, it said that discussions with a potential buyer were on.

Sun Capital

Paragon Partners launches $200-m India-focused mid-market PE fund

PE firm Paragon Partners has raised $50 million, marking the close of its $200 million growth fund, PPGF-I to invest in mid-size companies.

PPGF was established in 2015 by Siddharth Parekh and Sumeet Nindrajog. It is an AIF-Category II Private Equity fund, investing in high growth mid-market private companies in India.

The fund will focus on five key sectors — consumer discretionary, financial services, infrastructure services, industrials and healthcare services. The fund has an advanced pipeline of investment opportunities across these sectors.

Paragon Partners advisory board includes Deepak Parekh (Chairman, HDFC Ltd), Harsh Mariwala (Chairman, Marico Ltd & Founder Member), Sunil Mehta (Chairman, SPM Capital Advisors Pvt Ltd) and Jeff Serota (ex Sr. Partner at Ares Private Equity).

Siddharth Parekh, co-founder, Paragon Partners said: “We believe the next decade in India will see a strong resurgence of growth in key sectors such as manufacturing, financial services and infrastructure.”

The company said with its first close, PPGF-I has completed the funding of its first investment in Capacite Infraprojects Ltd, a leading EPC player based in Mumbai. Capacite is engaged in the construction of buildings (including super high rise structures) and factories, for large real estate developers, corporates and institutions.

The company currently has a footprint across Mumbai, NCR and Bengaluru regions and will look to grow this on a selective basis. Capacite is promoted by Rahul Katyal, Rohit Katyal and Subir Malhotra.

PPGF-I has seen significant interest from onshore and offshore institutions, family offices and HNIs. Domestic investors include India Infoline, Edelweiss Group and Infina Finance Private Ltd (an associate of Kotak Mahindra Bank Ltd).

Sun Capital

Banks disburse over Rs 1.15 lakh crore under PM Mudra Yojana

Banks have so far disbursed over Rs 1.15 lakh crore under Pradhan Mantri Mudra Yojana (PMMY), financial services secretary Anjuly Chib Duggal said on Tuesday.

Micro Units Development and Refinance Agency Ltd (Mudra) focuses on 5.75 crore self-employed who use funds totalling Rs 11 lakh crore and provide jobs to 12 crore people.

Under PMMY, loans between Rs 50,000 and Rs 10 lakh are provided to small entrepreneurs.

"We have been working with Mudra. It has been a runaway success ... we are looking at Rs 1.15 lakh crore plus right now," she said at an event organized by MFIN here.

The scheme was launched by Prime Minister Narendra Modi in April last year.

Three products available under the PMMY are Shishu, Kishor and Tarun, to signify the stage of growth and funding needs of the beneficiary micro unit or entrepreneur.

Shishu covers loans of up to Rs 50,000 while Kishor covers those above Rs 50,000 and up to Rs 5 lakh. Tarun category provides loans of above Rs 5 lakh and up to Rs 10 lakh.

With regard to Banks Board Bureau, Duggal said, she would be meeting newly appointed chairman Vinod Rai this week to discuss operationalisation of this specialised body.

Last month Rai, a former CAG, was appointed head of Banks Board Bureau by Prime Minister Narendra Modi.

The bureau will give recommendations on appointment of directors in public sector banks and advise on ways to raise funds and mergers and acquisitions to the lenders.

There are 22 state-owned banks in India including SBI, IDBI Bank and Bhartiya Mahila Bank.

Besides, she said that there would be meeting of heads of the bank on March 22 to discuss about the recently launched crop insurance scheme by Prime Minister.

The crop insurance scheme scheme has already been approved by the Cabinet that would replace the existing ones to ensure that farmers pay less premium and get early claims for the full sum insured.

Investment Banking

Apollo Tyres enters two-wheeler segment with Acti series

To invest Rs. 4,000 cr on capacity expansion at Chennai centre.

Apollo Tyres has entered the two-wheeler segment with the launch of the ‘Acti’ series.

One of the leading tyre makers in the country, the company also said that it will invest Rs. 4,000 crore in the next financial year to expand its bus, truck tyres in Chennai.

Designed and developed at the company's global R&D centre in Chennai, the Apollo Acti series for bikes and scooters would cover nearly 85 per cent of the replacement market for two-wheeler tyres in India, the company said on Monday.

“The presence in the two-wheeler segment will help the company cement its leadership position in India. The Apollo Acti series will provide the best value proposition to our customers along with an enjoyable driving experience,” Onkar S Kanwar, Chairman, said here at the launch.

The two-wheeler category, which is growing at a CAGR of 8.5 per cent in India, holds huge potential for tyre manufacturers, the company said.

The company said it is looking at selling 1.20 lakh tyres each month initially, going up to five lakh tyres each month in the next two years. However, the company is sourcing the tyres from one of its vendors in Chennai and will decide on setting up a new plant or investment for two-wheeler tyres in the future.

“It depends on demand and branding of the tyres. We will be outsourcing the tyres for the next two years and we will decide on a greenfield or brownfield when the time comes,” Neeraj Kanwar, Vice-Chairman and Managing Director, told reporters.

To expand its existing tyre plants and capacities, Kanwar said Apollo will invest $600 million (around Rs.4,000 crore) next financial year to enhance capacity at its plants in India (Chennai) and abroad (Hungary).

He added that the company is also in the process of doubling the capacity of its Chennai plant to 12,000 truck and bus radials a day from 6,000 earlier.

The company’s shares closed at Rs. 170.35 on the BSE on Monday, up 2.65 per cent from the previous close.

Fund Raising

India says will ensure that banks are well-capitalised

India has "good control" over stressed loans at state-owned banks and will ensure lenders are well-capitalised, junior finance minister Jayant Sinha said on Friday.

Speaking as senior officials from the banks, the Reserve Bank of India and the finance ministry held an annual meeting, Sinha said the government would allocate capital based on the banks' capital-adequacy ratios, performance and credit growth.

"We will provide more as necessary to ensure that our banks are well-capitalised," he told reporters.

"As far as the set of stressed assets is concerned, as far as the NPA (non-performing assets) situation is concerned, that we think we now have very good control over and of course (we are) working very closely with the RBI."

Some critics accused the government of skimping on a bailout for the ailing state banks after Finance Minister Arun Jaitley did not announce additional funding in his Feb. 29 budget.

He stuck to plans to provide state banks with 250 billion rupees ($3.7 billion) of new capital in the next financial year towards a sector-wide bailout that the government estimates will cost $26 billion over four years.

Stressed loans -- those that have already turned bad and those seen at risk of doing so -- amount to 8 trillion Indian rupees ($119 billion), or 11.25 percent of total loans, Sinha said on Friday.

A recent surge in bad loans at state-run lenders after their regulator ordered a clean-up has led rating agencies to suggest banks will need more capital support from the government to cover losses and meet Basel III global banking rules.

More than two-dozen state-run lenders account for over two-thirds of India's banking assets and some 85 percent of troubled loans in the financial sector.

($1 = 67.0630 rupees)

Sun Capital

Raghuram Rajan to wait until April to cut rates again

The Reserve Bank of India will wait a month to cut interest rates again, according to economists in a Reuters poll who mostly said New Delhi's latest fiscal deficit target looked optimistic.

Finance Minister Arun Jaitley committed to fiscal discipline in his Feb 29 budget, lowering the deficit target further for the fiscal year that starts next month, but offered little in the way of reforms investors have been waiting for.

Investors and traders in financial markets have been hoping RBI Governor Raghuram Rajan will follow soon with a rate cut, like he did last year.

But the majority of economists polled said he would not repeat the surprise cut of 25 basis points he delivered just a few days after last year's budget, with 20 of 28 saying a cut was unlikely before next month's policy review on April 5.

"Although we doubt the fiscal math, the fact that the government has been sticking to the stated math, in whatever way they are doing it, creates room for Rajan to cut rates soon," said Kunal Kundu, India economist at Societe Generale.

"They will probably bring the fiscal deficit down in a way that is not desirable, by cutting public capex, but Rajan has indicated that even if fiscal consolidation leads to lower growth he would still be OK with it," he said.

Asked what they thought about the fiscal deficit target for the next fiscal year, nearly two-thirds of the economists said Jaitley was being optimistic. The rest felt it was about right.

About two-thirds, 17 of 25, also predict the RBI will cut its benchmark repo rate by 25 basis points to 6.50 percent next month. Two predicted a deeper 50 basis point cut to 6.25 percent, while six saw no change.

After an April cut, the RBI is set to ease policy again in the last quarter of the year, according to the consensus view.

That is a very different outlook from what happened last year, when the RBI sliced 125 basis points off rates, twice unexpectedly and in-between meetings.

Last year's rate cuts came as inflation cooled rapidly around the world, triggering a wave of similar easier policy from major central banks. Consumer price inflation in India was 5.7 percent in January.

That exceeds Rajan's inflation target of 5 percent set for March 2017. Coupled with a weakening rupee, predicted to fall to record lows in the coming 12 months, rising inflation could stall the RBI's easing cycle.

There is a roughly one-in-three chance of the rupee falling to 70 per dollar, a Reuters poll of currency strategists showed on Thursday.

India is set to raise wages by almost 25 percent for its millions of public sector employees, a once-in-a-decade bonanza that will cost roughly $16.6 billion dollars, something that economists widely agree is inflationary.

Despite that extra expenditure, as well as planned outlays on farming and schemes to guarantee minimum employment for people in rural areas, Jaitley surprised investors by pledging to cut the fiscal deficit to 3.5 percent of gross domestic product in the 2016-17 fiscal year.

The RBI, however, is not yet convinced.

A possible source of revenue next fiscal year is sales of government stakes in public sector companies, the budget says.

But successive governments have had a poor track record selling off companies and it could be especially hard amid global stock market turmoil.

Three policymakers aware of the RBI's budget deliberations said they were combing the numbers to test how Jaitley struck a balance and whether the impact of the public pay rise had been fully accounted for.

Sun Capital

Piramal Realty plans to invest Rs 16,000 cr in 4 years

Piramal said that the company is looking to increase its commerical portfolio as well in the coming years.

Piramal Realty, the real estate arm of Ajay Piramal-owned Piramal Group, plans to invest Rs 16,000 crore in development of real estate projects and acquisition of land, over the next 4 years.

Anand Piramal, executive director, Piramal Group told FE that while the company already has a roughly 9 million square feet of residential projects pipeline to be executed till 2020, the company is open to acquiring fresh parcels of land and distressed assets.

The company is also in the midst of developing an office project in Kurla, near Bandra Kurla Complex (BKC) ad-measuring 2.5 million square feet.

The company launched a luxury project at Byculla called Piramal Aranya, which will entail an investment of R4,300 crore over the lifecycle of the project.

The sea-facing 70-storey high rise residential project will be spread across 7 acres and is in close proximity to the 60 acre botanical gardens on the west.

In 2015, Goldman Sachs and Waurburg Pincus had invested a total of $434 million in Piramal Realty, giving the company a strong bandwidth to invest in real estate projects.

Piramal said that the company is looking to increase its commerical portfolio as well in the coming years. “As of now we just have one project, but going forward we would like to have a combination of both residential and commercial real estate.

With the expectation of 7%-8% growth in the Indian economy, the focus on commercial real estate will come back and we would like to have a healthy mix of both segments”.

Sun Capital

Large-value accounts responsible for rising NPAs: CBI chief

A group of "large-value" corporate accounts has pushed up non-performing assets (NPAs) and associated financial frauds in the country since 2008, CBI chief Anil Sinha said this week, at a time when dozens of Indian banks are swamped with bad loans.

The crisis runs deep, Sinha said at a financial conference in Mumbai on Wednesday, weeks after the Supreme Court asked the Reserve Bank of India (RBI) to provide details of companies that have each defaulted on loans of more than Rs500 crore.

However, the Central Bureau of Investigation (CBI) director did not give details of the accounts that are being examined by the agency.

India's banking sector, dominated by about two-dozen state-run lenders, has been bruised by its highest bad-loan ratio in years as lagging economic growth hit companies' abilities to service debt.

In August 2013, then CBI director Ranjit Sinha told a gathering of government officials that the "bulk of the NPAs is from the top 30 accounts, which is learnt to be running into thousands of crores."

A loan is recognised as a non-performing asset when the repayment is delayed beyond 90 days. This forces the bank to make provisions by setting aside funds, further restricting its lending capacity.

At the Mumbai meet, Anil Sinha said defaulters are not getting deterred because of "weak and diffused" accountability mechanisms in banks and financial institutions.

"Added to this is the unduly slow and long process by which such loans and advances are red-flagged, declared NPAs, then wilful defaulters and finally fraudulent," he said. It "allows large borrowers ample time to walk with the funds.to tax havens."

According to government figures, gross NPAs of 39 listed banks stood at Rs 4.43 lakh crore in December 2015, nearly ten times the 2009 level.

"The CBI has recently registered a case of cheating and fraud against Kingfisher and its erstwhile management involving allegations of defrauding banks to the tune of Rs 7,000 crore," Sinha said.

"This case was registered in July 2015, but the loans or advances were taken during 2004-2012. However, despite our repeated requests, the banks did not file a complaint with the CBI. We had to register the case on our own initiative."

RBI governor Raghuram Rajan has set banks a March 2017 deadline to clean up their balance sheets and treat some troubled loan accounts as bad and make provisions for them by the end of this March.

Sinha also underscored the need for pre-emptive action to thwart deposit scams that thrive in India's vast informal financial sector.

"The second case relates to PACL -Pearls Agrotech Corporation Ltd-which has reportedly collected over Rs 51,000 crore of illegal deposits from nearly 5.5 crore investors," he said, referring to the scandal that illustrated the risks faced by millions of low-income Indians who live outside the banking system.

"It needed the Supreme Court to step in to order investigations. Should not the regulator have suo moto (on its own) stepped in?"

Sun Capital

RBI releases draft norms for account aggregators

Such NBFCs should have minimum net-owned funds of Rs2 crore and cannot provide any services other than account aggregation

The Reserve Bank of India (RBI) on Thursday released draft guidelines for setting up of non-banking finance companies (NBFC) that would act as account aggregators and provide customers with a single platform view of all their financial holdings across banking, insurance, mutual funds, provident funds and shares.

“At present, persons holding financial assets such as, savings bank deposits, fixed deposits, mutual funds and insurance policies do not get a consolidated view of their financial asset holdings, especially when the entities fall under the purview of different financial sector regulators. Account aggregators would fill this gap by collecting and providing information of customers’ financial assets in a consolidated, organized and retrievable manner to the customer or any other person as per the instructions of the customer,” RBI said in its release.

Such NBFCs should have minimum net-owned funds of Rs.2 crore and cannot provide any services other than account aggregation, the central bank said, adding that the account aggregator cannot support transactions in financial assets. Only NBFCs that have registered with the RBI will be allowed to undertake account aggregation. However, companies that aggregate accounts of only a particular financial sector governed by other regulators can be exempt from seeking RBI approval, the central bank said.

Initially, only financial assets whose records are stored electronically and are under the regulation of the financial sector regulators, namely RBI, Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA) and Pension Fund Regulatory and Development Authority (PFRDA) shall be considered for aggregation, the draft norms said.

The NBFCs would provide account aggregation services in response to a specific application by the customer for availing such services and would be backed by appropriate agreements and authorisations, the draft norms said.

“No financial asset-related customer information pulled out by the account aggregator from the financial service providers should reside with the account aggregator,” the central bank said.

Pricing of services would be as per the account aggregator’s board-approved policy, RBI added.

In July 2015, RBI governor Raghuram Rajan had announced the intention of setting up such NBFCs for account aggregation.

The central bank has sought comment and feedback on the draft norms by 18 March.

Sun Capital

Sebi set to get tougher with wilful defaulters

Regulator will make it hard for wilful defaulters to raise funds from public; they can opt for rights issues or share sales to institutional investors

Mumbai: The Securities and Exchange Board of India (Sebi) will make it difficult for so-called wilful defaulters from raising fresh equity or debt from the public, according to two people familiar with the agenda of the regulator’s next board meeting.

The move will mark yet another effort by the Indian government, the Reserve Bank of India (RBI) and now Sebi to crack down on the problem of bad loans.

A wilful defaulter is a company or individual who borrowed money and has no intention of paying it back, has diverted the money to some other purpose than the one for which it was borrowed, or has sold the asset acquired or developed with the money without the lender’s knowledge.

Sebi will, however, allow such entities to raise funds through rights issues or share sales to institutional investors, said one of the two persons, asking not to be identified.

The entity will need to disclose itself as a wilful defaulter in the offer document if it chooses to go in for a rights issue (sale of shares to existing shareholders), or a qualified institutional placement, added this person

Sebi’s board meeting is scheduled for 12 March. A Sebi spokesperson did not respond to an email seeking comment.

In January 2015, Sebi issued a draft paper proposing that wilful defaulters would not be allowed to sell shares, debt securities and non-convertible preference redeemable shares to the public.

The paper suggested that wilful defaulters be barred from taking control of another listed entity, but that they be allowed to participate in counter offers to deal with hostile takeover bids.

Each of these restrictions would be applicable if the issuer, its promoter, group company or director of the issuer of such securities were in the list of wilful defaulters published by RBI, the stock market regulator said.

“The final regulations will be based on the discussion paper that dealt with the wilful defaulters,” said the second person, who too asked not to be identified.

In addition to restrictions to fund raising, such entities and persons will be ineligible to serve as market intermediaries or run mutual funds or alternative investment funds, added the second person.

Bankers said such restrictions would help.

RBI has been asking banks to get tough on wilful defaulters and has a tough set of rules in place which say that anyone tagged a wilful defaulter cannot raise fresh funds from the banking system.

The banking regulator, however, has been of the view that such defaulters also need to have their access to capital markets restricted. “If someone has knowingly stopped repaying banks, then why should he be allowed to access the capital markets? Any such limitation on the borrower would definitely be a power for the banks since they can squeeze these wilful defaulters better,” said Ashwani Kumar, chairman and managing director of Dena Bank and chairman of the Indian Banks’ Association.

While RBI has not disclosed the quantum of loans that fall under the wilful default category, data has emerged from some large public sector banks.

Loans worth Rs.11,700 crore given by State Bank of India have been locked up as non-performing assets as nearly 1,160 defaulters have wilfully decided not to repay, PTI reported on 24 February.

Another state-owned lender, Punjab National Bank (PNB), declared 904 borrowers who owed it a combined Rs.10,869.71 crore as of December-end as wilful defaulters. PNB added 140 companies to the list of wilful defaulters in the December quarter alone.

While banks believe that banning wilful defaulters helps their cause, corporate lawyers caution against a sledgehammer approach.

“Wilful defaulters should be restricted from raising funds from public because there is no accountability to return funds to shareholders. However, Sebi should steer clear of a blanket restriction on fund-raising by defaulters as this would potentially limit the chances of a revival of the company and the existing shareholders would end up paying the price,” said Tejesh Chitlangi, a partner at IC Legal.

Parag Bhide, senior associate at Advaya Legal, said Sebi should approach the issue on a case-by-case basis.

“A complete ban on wilful defaulters may not be good for existing shareholders, including retail investors. Further, such a lifetime exile from financial markets may not be constitutional. Ideally, there should be some time limit (three-five years) for such a ban.”

Sun Capital

Jewellery sector contributes to black money: CBEC chief

Despite the ongoing jewellers' strike to protest against reimposition of 1 percent excise duty on gold and diamond jewellery, CBEC today said the sector contributes to generation of black money and needs to be brought under the tax ambit.

"We have brought jewellery (sector) into the tax net. This is the levy which we had attempted two years ago and withdrawn... This is the sector which you will agree with me needs to be brought into tax needs," Chairman of the Central Board of Excise and Customs (CBEC), Najib Shah today said at an event organised by industry body Assocham.

"This is a sector which lends itself to generation of unaccounted wealth." Finance Minister Arun Jaitley in the Budget for 2016-17 had proposed 1 percent excise duty on jewellery without input credit or 12.5 percent with input tax credit on jewellery excluding silver other than studded with diamonds and some other precious stones.

Jewellers are on a three-day pan-India strike to protest against the proposed re-introduction of 1 percent excise duty on gold and diamond jewellery and mandatory quoting of PAN by consumers for transaction of Rs 2 lakh and above.

Shah noted: "... manufacturing sector contributes 17 percent of GDP. We have a huge chunk of industry which is out of the tax net." The CBEC chairman said the revenue department will take a hit of Rs 1,000 crore due to the change in CENVAT credit rules.

"But we thought it is essential because the cost of litigation for you and me are much more than revenue which otherwise we have got," he said.

Noting that the government has increased some duties, Shah said it's done so to create a level-playing field for Indian industries as was the case in defence.

He urged industries to stop demanding exemptions to avail of goods and services tax (GST).

"If you want GST, you should not demand exemptions because two don't go together," Shah said.

 

Sun Capital

Dilip Buildcon bags Rs 545.4-cr contract in Goa

MUMBAI: Engineering firm Dilip Buildcon today said it has bagged Rs 545.4-crore contract from the Ministry of Road Transport and Highways to construct 640-km eight-lane cable-stayed bridge across the Zuari in Goa. 


The Bhopal-based company has partnered with Ukrainian firm Mostobudivelnyi Zahin (MBZ) for its technical expertise to construct the cable bridge, a statement here said. 

Dilip Buildcon will have a majority stake of 70 per cent in the joint venture firm while the remaining 30 per cent will be held by MBZ, it said. 

"This is our first project in Goa, and we hope to complete the project before time. Mostobudivelnyi Zahin, which has a vast experience in construction of cable suspension bridges, will be our technology partner," Dilip Buildcon Executive Director and CEO Devendra Jain said. 

This contract is part of the Rs 676.19-crore, 1.084-km-long project, which is expected to be completed in 36 months. 

"There are around 4-5 cable suspension bridges built on a large scale in India, and this would be the second-largest cable bridge length-wise in the country, after Vidyasagar Setu in Kolkata. With this contract, we are now present in 12 states," he said.

Banks delayed in declaring Kingfisher as defaulters: CBI

Banks delayed in declaring Kingfisher as defaulters: CBI

The Central Bureau of Investigation (CBI) on Wednesday blamed commercial banks for the delay in declaring Kingfisher Airlines (KFA) and its promoter Vijay Mallya as defaulters.

"The CBI registered a case of cheating and fraud against Kingfisher and its erstwhile management involving allegations of defrauding banks to the tune of Rs 7,000 crore. This case was registered in July 2015, but loans were taken during 2004 to 2012. However, despite our repeated requests, banks did not file a complaint with the CBI. We had to register the case on our own initiative," CBI director Anil Sinha while addressing a conference jointly organised by the Indian Banks Association and the investigating agency.

HT had reported on February 29, 2016 that the RBI was questioning banks for lending Rs 5,253 cr to Kolkata-based REI Agro Ltd after the CBI uncovered fraud.

Sinha cited the example of how the agency's suo moto action against Pearls Agro eventually led to the arrest of the company's chairman.

SBI chairman Arundhati Bhattacharya, who was also present on the occasion, didn't comment on the issue.

SBI, along with other banks, had lent close to Rs 7,000 crore to the UB Group, the parent company of KFA. It was only last month that PNB declared the airline and Mallya wilful defaulters, a claim currently being contested by Mallya.

"While I fully understand that loan defaults can happen due to business risk and reasons beyond control of banks, borrowers and regulators, yet a significant part of the defaults are wilful and fraudulent," Sinha said. "What causes greater concern is that a major part of the NPAs and frauds are in large-value accounts," he said, adding that a large part of such funds moves outside the country to tax havens through unofficial channels.

Gross non-performing assets (NPAs) of banks have gone up from Rs 44,957 crore in 2009 to Rs 3 lakh crore in 2015.

The CBI investigated 171 cases of bank frauds involving Rs 20,646 crore of funds in 2015.

Sun Capital

DCB Bank buys 5.81% stake in Annapurna Microfinance

Deal values the micro lender at Rs 172 crore. 

DCB Bank Ltd has acquired a 5.81 per cent stake in Odisha­based Annapurna Microfinance Pvt Ltd for Rs 9.99 crore (about $1.5 million). 

The move strengthens the business partnership between the two companies, Murli M Natrajan, managing director and CEO at DCB Bank, said in a statement filed to stock exchanges. DCB’s microfinance initiatives help it achieve its financial inclusion goals, he added. 

DCB, formally known as Development Credit Bank, was founded in 1995. It has 176 branches in 17 states and two union territories in India. 

Gobinda Pattnaik, managing director at Annapurna Microfinance, said the transaction will help it strive forward to achieve its goal of serving the financially underserved. “This capital infusion is a mandate for growth,” he said. 

Annapurna focuses on rural locations of Odisha, Chhattisgarh and Madhya Pradesh. It has 14 branches each in Odisha and Madhya Pradesh and six in Chhattisgarh. It has half a million members and assets under management of Rs 720 crore

The latest transaction values Annapurna at Rs 172 crore. The firm had earlier also raised funding. In April last year, it secured Rs 25 crore in a Series C round of funding from Samridhi Fund, which is managed by SIDBI Venture Capital Ltd, a wholly owned subsidiary of state-run SIDBI and an existing investor in the firm. 

In 2014, the microlender raised Rs 30 crore in a Series B round of funding led by Belgian Investment Company for Developing Countries, with participation from the existing investor Incofin Investment Management's Rural Impulse Fund II.

The firm posted total income of Rs 61.61 crore for the six-month period ended September 20, 2015, up from Rs 22.69 crore a year earlier, according to its half-yearly audit report. Net profit jumped to Rs 6.85 crore from Rs 58 lakh.

Sun Capital Services