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JAITLEY’S 10% TAX ON INCOME FROM CARBON CREDITS A MIXED BAG

MUMBAI/CHENNAI: The Finance Bill proposes to levy a tax of 10% on income earned on transfer of carbon credits. Such a tax will be levied on the gross income, without allowing for any deductions.

According to the explanatory memorandum to the Finance Bill, the income tax (IT) department has been treating the income earned on transfer of carbon credits as business income subject to tax at the rate of 30%. In this context, it seems like a favourable position on the face of it, but it is a mixed bag, say tax experts and industry specialists. Samir Kanabar, tax partner at EY, points out, “There have been several favourable cases at the tax tri bunal and high court levels, such as by the Karnataka High Court in the case of Subhash Kabini Power, where revenue on sale of carbon credit was treated as a `capital receipt’ not subject to any tax. These now stand overturned.” Direct taxes code had recommended that income from sale of carbon credits be treated as business income. Then the tax levy of 10% may be considered as beneficial, adds Kanabar.

He also points out that since 2012, new applications for grant of credit have not been entertained under the UN framework. However, companies in renewable energy sector, including wind farms, or those who adopted green technology , which had applied for it before this date, continue to accumulate credits. They can either adjust carbon credits against any manufacturing business, which is polluting, or can sell the excess credit.

Most sales are via private arrangements. Prevailing market price has dropped, but prior contractual arrangements have helped Indian companies who have such carbon credits to sell. According to industry experts, India is one of the top three sellers of carbon credits in the world, China and Russia, being the other big players.

L&T CHIEF AM NAIK PLEDGES 75 PER CENT OF HIS INCOME TO PHILANTHROPY

MUMBAI: AM Naik pledged to devote 75% of his lifetime income to charity as he gets ready to step down from active leadership of the $16-billion engineering conglomerate Larsen & Toubro a year from now.

“Charity is a personal desire. In my case, giving has continued for three generations. My grandfather and father did not have money so they lived their lives for poor people,” Naik told ETin an interview. “I have committed to use 75% of my income for charitable purposes.”

He’s set up two charitable trusts — the Naik Charitable Trust for education and skill training and the Nirali Memorial Medical Trust, named after his grand daughter who died of cancer in 2007. Naik declined to give details of the amount spent so far and the money he will be directing to philanthropy going ahead.

According to the ET Intelligence Group, Naik took home nearly Rs 200 crore in compensation in 2010-16. In FY16, this included stock options awarded by L&T Infotech. According to a source aware of the matter, since 1995, when Naik made his first donation to a hospital in his native village in Gujarat, he has donated about Rs 125 crore to charitable initiatives.

An asset management company handles Naik’s money while his sister’s family assists him in philanthropy. Naik is currently engaged in building a school and hospital close to L&T’s Powai campus and is also keen on setting up a fire station there. “I want to carry out my charity work at my ‘janmabhoomi’ and my ‘karmabhoomi’,” Naik said.

Naik became the chief executive in 1999 and chairman in 2003.

His long stewardship ushered in rapid growth and diversification at Larsen & Toubro, transforming it into a global engineering conglomerate. His trusts run seven projects and two of these will be commissioned in 2017, one of them being a Vedic school named after his wife that will be inaugurated on her birthday.

Naik recounted how his father asked him to explain where he got Rs 4 lakh to donate to a hospital in his village in 1995 to add a floor. “He was such a principled man that he wanted to know the source of every penny,” he said. “I had to show him my passbooks! I started charity when I did not have much money.”

Naik said both his children are living overseas. “My son is with Google and my daughter has a medical practice,” he said. “Both of them are well settled in the US, and it is unlikely that they will return to settle down in India. As a father, I will always continue to hope that they will return to live in India.”

The succession plan seems to be moving seamlessly forward with SN Subrahmanyan, deputy managing director, seen as succeeding Naik when he retires in September 2017.

There have been hints that Naik may continue as non-executive chairman to guide the company, just as he plans to guide his charitable ventures.

NIRMA, LAFARGE CEMENT RS 9000 CRORE DEAL

MUMBAI: Did you know that detergent maker Nirma is in the cement business? You surely will after this deal. In one shot, 71-year-old Karsanbhai Patel, founder and chairman of Nirma, will make the soap-to-soda ash enterprise the sixth largest cement manufacturer in India, if the transaction goes through.

The Rs 7,000-crore-plus Ahmedabad company on Monday agreed to buy French cement major Lafarge’s local business for an enterprise value of Rs 9,400 crore ($1.4 billion), pipping bigger names like Piramal and JSW. Nirma will finance the acquisition, among the most profitable assets in the country, through a mix of equity and debt. The transaction will ramp up Nirma’s fledgling cement business to 13-million-tonne capacity from two million tonnes in Rajasthan.

Patel, who started his entrepreneurial journey in the late 1960s as a manufacturer of detergent, and cycling around towns and villages to sell it, is known for creating low-priced products. “This acquisition is a landmark and transformational step for the group’s cement business,” said Nirma’s MD Hiren Patel, son of Karsanbhai. “With a strong platform like Lafarge’s India business, we plan to take the cement business to the next level.”

He named his product Nirma after his late daughter Nirupama. Over the years, the low-priced Nirma became such a hit with housewives and captured a large market share, that it unsettled its MNC peers like HUL and P&G. In the 1990s it launched bathing soaps where it replicated its success in the detergent segment. Nirma is now one of the major players in the detergent and toiletries segments.

Over the years, it diversified into manufacturing of raw materials like soda ash, LAB and other related chemicals. Nirma has had a rough start with the cement business. It had originally planned to build a large-sized cement unit in Gujarat but that did not take off for years over environmental issues. The company eventually put the project in cold storage. Later in November 2014, it commissioned its first cement plant in Rajasthan.

The buyout will mark the second biggest acquisition in the cement sector after last week’s proposed purchase of Jaypee Cement by UltraTech for Rs 16,189 crore. Lafarge, the world’s largest cement maker, is divesting its domestic business so that it could conclude its global merger with Swiss’ Holcim and operate as one entity in India.

Earlier, Lafarge wanted to sell part of its domestic business to Birla Corp for about Rs 5,000 crore ($753 million), but the deal ran into regulatory trouble as laws then prohibited the sale of mines linked to cement units. These norms, however, were subsequently changed. The local business of Lafarge comprises three cement plants and two grinding stations. The latest move leaves LafargeHolcim with ACC and Gujarat Ambuja in India with a combined capacity of more than 60 million tonnes, making it the second largest cement manufacturer behind UltraTech.

“This deal is expected to make up for the time lost by Nirma,” said one of the bankers involved in the deal.

Revival hopes, after years of slow growth, have put India’s cement sector on the fast lane of merger & acquisition play. Prior to the Lafarge-Nirma and UltraTech-Jaypee Cement deals, Kolkata-based Birla Corp had snapped up Anil Ambani-led Reliance’s cement business.

Industry analysts expect the Narendra Modi-led government’s thrust on infrastructure and housing will boost cement demand in the country and hence the heightened activity in the industry. From an annual growth rate of 10% in 2008, of late the rate had fallen to 4% while the prices slid from about Rs 1,300 per tonne to about Rs 700 now.

PIRAMAL BOOKS A RIDE ON SIVA’S UTOO

CHENNAI: Billionaire investor Ajay Piramal has pumped in an undisclosed sum to pick up a minority stake in serial entrepreneur C Sivasankaran’s comeback business Utoo Cabs, a cab aggregator.

Siva’s taxi-hailing startup plans to take on Ola and Uber. This is not the first time that he is entering a crowded space. Siva’s belief is “latecomers can win faster with the learnings from competitors’ mistakes at zero cost”. The technology venture has been initially backed by funding from his family and close friends. Utoo was soft launched last month in Chennai and will soon provide services in 8 cities on the back of twin promises that differentiates it — no hatchbacks that are perceived uncomfortable and no surge pricing for passengers.

“Piramal has invested in the company, I cannot reveal anything beyond at this stage,” Sivasankaran told TOI . Emails to Piramal did not evoke a response.

“We will launch in other cities shortly. When I complete the series A funding, I expect a valuation of Rs 10,000 crore with one lakh pick-ups across 8 cities,” Siva said. “I am now getting support from family and friends. I will announce similar investments soon,” he said, adding that “for now, we are not taking any investments from funds”.

Siva also said that his model does not allow payment of subsidies to drivers. “We will also never get into hatchbacks which are not comfortable to passengers and cars that do not have airbags. Ola and Uber have 70% of their fleet comprising Tata Indica,” he said.

With the taxi segment in India growing at over 20-25% annually, the organized sector accounts for just 4-5% of the industry’s $800 million — expected to grow to $7 billion by 2020. With just a few players in the organized sector comprising both local and international players, there is still more room for new operators to emerge and elevate the ground of play, he said.

Siva, who made audacious bets in telecom, has been given a second chance by a court which annulled his bankruptcy. He had applied for bankruptcy protection in a Seychelles court to ward off a claim by his Bahrain-based telecom partner Batelco, which won a court decree for its $212-million claim on its investment in S Tel, for which Sivasankaran stood personal guarantee. S Tel’s telecom licences in India were cancelled along with 121 other permits by the Supreme Court in the 2G scam.

Siva sold Aircel to Maxis, bought and sold Barista coffee chain and stakes in Tamilnad Mercantile Bank, besides a host of other deals.

EXPERIAN LAUNCHES CROSSCORE FOR INTRA-BANK CONNECTIVITY

CHENNAI: Detecting fraud has increasingly become integral to a bank’s financial health with a profusion of products out in the market to cater to this need. With banks tying up with as many as two to five software vendors, credit rating agency Experian expects the launch of CrossCore to ease workflow at banks and help integrate third-party solutions for fraud management.

“With CrossCore, banks can have one platform for different solutions like Acxiom, TeleSign, etc. They will have all the information they need at one place for better fraud and identity services,” says Mohan Jayaraman, head, Experian India, adding that they are currently in initial talks with banks for implementation of CrossCore. Currently, banks employ multiple third-party vendors for their software recruitments, making fraud management difficult as each software comes with its own platform, node and rules of engagement.

Experian itself has multiple fraud management tools. For example, its FraudNet deals with opening of accounts, Hunter with checking the fine print for loan/insurance applications, while Prove-ID helps with international identity verification. “Currently, when bank employees want to verify credentials they have to check into four-five different applications. We wanted to avoid this with the new tool,” says Jayaraman.

Another first for the company is that this product can also check frauds on the asset/deposit side of business. “Fraud management at banks is still largely focused on the lending side of the business i.e. loans, credit cards. For instance our product Hunter vets loan applications for banks, policy details for insurance companies. But there is also significant fraud happening on the deposit side. There could be money laundering activities or attempts to convert black money into white. We hope to be able to prevent this with CrossCore,” he says .

On whether the new tool will act as a data repository for future verification — “No, we can’t save data. This tool helps connect with third-party applications. So it is not designed to store data — as there will be legal complications on ‘our’ access to another network’s data given its highly confidential data on financial transactions. CrossCore is a live interface. But maybe in future, if there are willing participants, we could think of saving data only for a select set,” he says. Another possible addition to CrossCore in future could be inter-bank connectivity. “Currently, we are offering this solution only within the bank,” he adds.

Third-party fraud and identity service providers can engage with CrossCore to connect their services — as can companies through a single integration. “Individual fraud and identity capabilities can be connected to a common API. This tool will give them greater control over their risk exposure,” says Experian.

CORPORATES NOW SWITCHING TO ECO-FRIENDLY PET WATER CONTAINERS

CHENNAI: With increasing research that bubble top containers, used to store drinking water, may contain bisphenol A (BPA), corporates are increasing looking at safer, more eco-friendly options. Bisphenol A’s recent ban from baby feeding bottles in India and 35 other countries has triggered more awareness on the ill-effects of the bubble tops.

Corporates involved in the sale of bubble tops are moving towards PET — with increased life span and greater resistance to heat. Research has also emerged that containers containing BPA could be carcinogenic and cause liver damage. N C Saha, director, Indian Institute of Packaging says repeated washing of the polycarbonate containers in hot water would leach out BPA, causing harm.

“Recently, the Bureau of Indian Standards revised the standards for baby feeding bottle by banning polycarbonate to be used for the manufacturing of baby feeding bottle due to the assumption that polycarbonate might be having BPA (Bisphenol A) which is carcinogenic. There is no scientific evidence about any causality due to the presence of BPA. However, as a preventive measure, more than 30 countries have banned the usage of polycarbonate for the manufacturing of baby feeding bottle. In the same line, the BIS has banned the polycarbonate for baby feeding bottle as a preventive measure and accordingly, the standards has also been revised.” he added.

These containers are manufactured by Petainer Innopac, a company that has a joint venture with Petainer, Europe that manufactures the higher quality PET using their patented technology. With the pre-form for the containers imported from Europe, Petainer Innopac blows them into full-size containers that are being used now in the plant set up in Mumbai last December. “Close to 15 corporates — including Diageo United Spirits, Eureka Forbes —are now using PET bubble tops manufactured by us. In addition to being BPA-free, they have a longer life span, hence reducing the impact on the environment and cutting down on the cost,” said Atit Bhatia, MD, Petainerinnopac. Bhatia added that the overall cost is reduced by over 30%-40%, compared to the conventional bubble tops.

Ashu Khanna, senior vice president, supply chain, Eureka Forbes says, “The PET material used in the jar is also aesthetically appealing and environment friendly. As an environmentally conscious organisation, we are well aware of the ill effects of BPA, and it is in the interest of our planet, our customers, and ourselves to introduce these jars in the market.”

BANKS WILL NOT ALLOW WILFUL DEFAULTERS TO PARTICIPATE IN BIDDING OF FAILED COMPANIES

MUMBAI: Banks will not entertain wilful defaulters or those promoters who have not received a clean chit from the forensic auditor to participate in the bidding process of acquiring distressed companies. But at the same times, banks think promoters are within their rights to participate in bidding process of their own company.

Responding to media at the sideline of a seminar, SBIBSE -3.97 % chairman Rajnish Kumar said, “There is no place for wilful defaulters or people who have dive.

On the cases referred to National Company Tribunal Law he said, “Lot of hope has been pegged on the steady resolution of stressed assets. The process is running as per the timelines. There is considerable interest in the steel sector. But ultimately how many bidders will remain and what resolution plan they will submit to the banks is something you have to wait for some time.

SBI TO DEVELOP TOOL SO THAT BANK DOES NOT LOSE GROUND TO RIVALS: RAJNISH KUMAR

MUMBAI: State Bank of IndiaBSE -3.92 % (SBIBSE -3.92 %) is working to create a tool that will enable the frontline staff the discretion in taking banking decisions without losing ground to the rivals in the banking industry. Speaking at a seminar, chairman Rajnish Kumar said, “So we are working on a tool where the discretion are available to protect the business going away to the competition and we should know the right price.

“Protecting the turf and meeting the challenge from all the new fintech that is coming so we have to be alert to this challenge. We cannot live in this comfort since we have such a huge market share or customer base… The biggest challenge will be to protect the turf and continue to remain a dominant player in India. We are readying ourselves for it,” he had said.

LIKELY BIDS BY FAILED PROMOTERS TO WREST CONTROL OF TROUBLED COMPANIES WORRY BANKS

MUMBAI: Come December, banks will have to grapple with the ethical and financial dilemma of dealing with failed promoters who try to claw back control in troubled companies — where they no longer call the shots — by trying to outbid others in the race.

Promoter shareholders who use shell companies or tie up with offshore funds (acting as fronts) to regain control can be blocked by lenders, the Reserve Bank of India, and authorities like the Ministry of Corporate Affairs on suspic ..

The company now awaits liquidation, which the bank in question believes is more acceptable than writing off most of the loans while letting old promoters walk back.

“Some criteria for evaluation of promoters have to be decided. Would some promoters be required to pay a risk premium given their track record? How much more? For instance, while calculating the present value of future cash flow (to the bank in the form of interest and loan repayment), the committee of banks should be ..

INDIA’S TITAN SEES JEWELLERY SALES RISING MORE THAN 25 PER CENT IN 2017/18: CFO

India’s biggest-listed jeweller TitanBSE -3.77 % Co expects jewellery sales to leap more than a quarter this fiscal year as tighter rules on cash flows and a new sales tax hurt the mom-and-pop firms that dominate the business, a senior company official told.

Both “demonetisation” – removing higher currency bills from circulation – and a new national goods and services tax (GST) are expected to have a marked impact on the gold jewellery industry in India, the world’s second-big ..

NMDC plans bid for $9 billion diamond mine: Sources

India’s state-owned miner NMDCBSE -0.34 % Ltd plans to bid for a $9 billion diamond project in the central state of Madhya Pradesh, three sources directly involved with the plan toldf, competing against resources conglomerates Adani and VedantaBSE -0.68 %.

NMDC plans to shortly send a team to Bhopal for talks with state authorities, one of the sources said.

“By November 30, we will be issuing the notice inviting tender,” Manohar Lal Dubey, Madhya Pradesh’s top mineral resources official, told .

BAJAJ AUTO RAISES VEHICLE PRICES, TVS TO FOLLOW SUIT AS INPUT COSTS SHOOT UP

Bajaj AutoBSE -1.41 %, the country’s largest premium motorcycle maker, has increased vehicle prices by Rs 500 across models from November 1 and its rival TVS Motor CompanyBSE 0.27 % may go for a second round of price revision after passing on the cost to customers just two months back in September. The move has been triggered by a rise in raw material prices of steel and aluminium.

Bajaj Auto had in the September quarter earnings analysts’ call said that commodity costs will increase further in second half of FY18 due to increase in steel and aluminium prices. The company has raised prices in the export market from October 1.

BHEL AIMS NON-POWER REVENUE TO 40% BY 2022

The state-owned power equipment major, Bharat Heavy ElectricalsBSE -5.46 % Limited (BHELBSE -5.46 %) is aiming at doubling the non-power revenue by 2022 and the projects will be executed on a turnkey basis.

The areas like municipal water, Ganga mission, solar, aerospace, defence and metro and high speed rail projects have been identified as growth drivers.

“Currently, our non-power business is 20 per cent and we are aiming at doubling it to 40 per cent by 2022,” BHEL di ..

The power sector remains in stress and with emphasis by the government on renewables, the Central Electricity Authority (CEA) last year had said there was no need for new thermal power plants till 2022.

BHEL had then reacted saying even if new thermal project order might dip, replacement and modernisation projects order book was very strong.

He clarified despite diversification in other areas BHEL remained committed to power.

MINING SECTOR CAN CHURN OUT 25 MILLION JOBS IN COUNTRY: HZL CEO SUNIL DUGGAL

Vedanta Group’s Hindustan Zinc LtdBSE -1.50 % (HZL) said that the mining sector, which is aiming to contribute 7-8 per cent to the GDP, has the potential to create 25 million jobs in the country.

“The mining sector aspires to contribute 7-8 per cent to India’s GDP and if this happens, India would realise a GDP of 9 per cent in the coming years. This is expected to create at least 25 million jobs, directly and indirectly,” HZL CEO Sunil Duggal told .

The country, he said.

TAX DISPUTE STALLS SOLAR PANEL CARGOES, DELAYING PROJECTS

Several solar projects in India are facing delays and inflated costs as customs officials have blocked more than 900 containers of panel shipments for more than a month by demanding higher import duties.

Officials clearing import shipments at the Port of Chennai in South India are classifying solar panels as motors, which attract 7.5 percent import duty as opposed to zero on solar modules, said Sunil Jain, chief executive officer of Hero Future Energies Ltd., a company backed by Int .

“We had imported 40 megawatts of modules earlier in the year from the same port without any hassles and now, suddenly, we can’t get more panels from there,” Azure Power Chairman Inderpreet Wadhwa said.

Anand Kumar, the top bureaucrat at the ministry of renewable energy, said he has written to other departments to sort out the confusion. D.S. Malik, a finance ministry spokesman, couldn’t be reached for comment. Indian customs falls under the country’s finance ministry.

DELHI POWER DISCOMS TO PURCHASE 1,000 MW CLEAN ENERGY BY 2019

The power discoms in Delhi will be able to purchase 1,000 MW clean electricity by 2019, a major step towards implementing the AAP government’s solar policy.

Making the announcement, Delhi Power minister Satyender Jain said if needed, the city government will get more clean energy to keep air pollution in check.

“Discussions with the three discoms were on for nearly six months and they have agreed. In-principle agreement has been made. One thousand MW clean energy wi .

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