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Dear Readers, The pre-budget crescendo of second guessing the Hon’ble Finance Ministers speech on the floor of the Indian Parliament on 28 th February is on full swing. Various sectors which have been facing a tough economic environment like Auto Component, Telecom, Real Estate and Hospitality have been asking for tax breaks and incentives to provide a stimulus to growth. Targeting higher revenue collections, there has been talk of taxing the Super Rich at a higher rate of tax (higher than the 30% rate presently in force) and introducing Estate or Inheritance Tax. RNM is of the view that although the creamy layer of society does have a higher level of responsibility towards upliftment of the poor, given the severe economic climate it is unlikely that the Government would be able to justify to India Inc. and its Pundits this Robin Hood approach. RNM had presented its pre-budget proposals to both the leading Opposition Party of the country as well as to the leading Chamber of Commerce in which nine issues were raised in the Direct and Indirect Tax field for consideration. The recent relaxation offered to Hotel sector by the Reserve Bank of India (RBI) which has permitted utilization of External Commercial Borrowing (ECB) towards repayment of Rupee Loans availed of for new hotel Projects of Rs. 250 cr and above upto certain limits, should provide a fillip to investments in this sector as well as help improve bottomline figures which were stressed due to high interest burdens. Hope all assessee’s are gearing up for payment of Advance Taxes, the next installment of which is due by March 15. Regards, U.N. Marwah For and behalf of the RNM Alert Editorial Board www.rnm.in ISSUE NO.49 JANUARY, 2013 RNM ALERT Thinking of the Bottom Line – Think of Us
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Page 1: Thinking of the Bottom Line – Think of Us JANUARY, 2013 ... Alert VOL... · collections, there has been talk of taxing the Super Rich at a higher rate of tax (higher than the 30%

Dear Readers, The pre-budget crescendo of second guessing the Hon’ble Finance Ministers speech on the floor of the Indian Parliament on 28th February is on full swing. Various sectors which have been facing a tough economic environment like Auto Component, Telecom, Real Estate and Hospitality have been asking for tax breaks and incentives to provide a stimulus to growth. Targeting higher revenue collections, there has been talk of taxing the Super Rich at a higher rate of tax

(higher than the 30% rate presently in force) and introducing Estate or Inheritance Tax. RNM is of the view that although the creamy layer of society does have a higher level of responsibility towards upliftment of the poor, given the severe economic climate it is unlikely that the Government would be able to justify to India Inc. and its Pundits this Robin Hood approach. RNM had presented its pre-budget proposals to both the leading Opposition Party of the country as well as to the leading Chamber of Commerce in which nine issues were raised in the Direct and Indirect Tax field for consideration. The recent relaxation offered to Hotel sector by the Reserve Bank of India (RBI) which has permitted utilization of External Commercial Borrowing (ECB) towards repayment of Rupee Loans availed of for new hotel Projects of Rs. 250 cr and above upto certain limits, should provide a fillip to investments in this sector as well as help improve bottomline figures which were stressed due to high interest burdens. Hope all assessee’s are gearing up for payment of Advance Taxes, the next installment of which is due by March 15.

Regards,

U.N. Marwah

For and behalf of the RNM Alert Editorial Board

www.rnm.in

ISSUE NO.49 JANUARY, 2013

RNM ALERT Thinking of the Bottom Line – Think of Us

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Issue No. 49: January, 2013 Page 2 of 22

CONTENTS Direct Tax

- Case Laws

- Definition of Transfer 4 - Income from House Property 4 - Profit & Loss from Business and Profession 4 - Capital Gain 4-5 - Cash Credits 5 - Set off & carry forward 5 - Deduction 5 - Transfer Pricing 5-6 - Procedure for Assessment 6 - Procedure for Assessment for Search Cases 6 - Tax Deduction at Source 6 - Appeals to Appellate Tribunal 7 - Penalties 7

Indirect Tax Central Excise

- Case Laws - Tool Kits etc with tow wheelers are input 8 - No dues of private Co. can be removed from director 8 - Penalty not imposable when duty paid voluntarily 8 - No time limit is prescribed for availment of cenvat credit 8-9 - Grant of refund 9

Service Tax - Case Laws

- Validity of retrospective effect 9 - Inclusion of value of study material provided 9-10 - Cenvat Credit of outdoor catering services 10 - Penalty & payment before issuance of SCN 10 - Suo Moto Adjustmnet of differential service tax amount 10 - Penalty not imposed when no Mala fide alleged 10

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Issue No. 49: January, 2013 Page 3 of 22

DIRECT TAX DIRECT TAX

Company Law Updates - Circular/ Notification/ Guidance

- Filing of B/S & P&L in XBRL mode for F.Y. commencing on or after 1.4.11 11 - Filing of cost audit report & compliance report in XBRL mode 11

RBI & SEBI Updates - Circular

- ECB policy – NBFC – Infrastructure Finance Cos. 12 - FDI in India – issue of equity share under the FDI scheme 12 - ECB Policy – Repayment of Rupee loan & for fresh rupee capital expenditure 13

Corporate Finance - Latest News

- Private Equity 14-15 - Mergers & Acquisition 16-19 - Venture Capital 19-21 - Debt 21

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Issue No. 49: January, 2013 Page 4 of 22

DIRECT TAX Case Laws Definition of Transfer Sec 2(47) - Capital gain assessable in year of development agreement; no matter when physical possession of asset is given. [Source: G. Sreenivasan vs DCIT [2012] 28 taxmann.com 200 (Coch.]

House Property Sec 22 - ALV of flats, built by assessee engaged in construction business, lying unsold, is assessable as income from house property. [Source: Ansal Housing Finance & Leasing Co. Ltd. [2013] 29 taxmann.com 303 (Delhi)]

Profit & Gain from Business & Profession Sec 37(1) - Allowability of Pollution control expenses - Assessee-company put up an affluent treatment plant - In order to control pollution, assessee incurred certain expenditure on maintenance of garden – Held, since expenditure on garden had nexus with assessee's business activity, same was to be allowed as revenue expenditure. Expenditure incurred by assessee on foreign country registration for marketing its products in foreign countries and promoting sales, was to be allowed as revenue expenditure. [Source: Torrent Pharmaceuticals Ltd. vs CIT [2013] 29 taxmann.com 405 (Gujarat)]

Sec 40A(3) - Where assessee, who was supplying articles such as food items and other items necessary for travel in trains, purchased articles from a small concern which insisted on cash payment for ensuring continuity and timely supplies, benefit of rule 6DD(k) could not be denied to assessee. [Source: R.C.Goel vs CIT [2013] 29 taxmann.com 406 (Delhi)]

Sec 41(1) - Where assessee unilaterally wrote back amount of retirement gratuity in assessment year 1976-77 which was allowed as expenditure in assessment year 1972-73, same would not be treated as remission or cessation of liability so as to attract provisions of section 41(1). [Source: Elgin Mill Co. Ltd vs CIT [2013] 29 taxmann.com 391 (Allahabad)]

Capital Gain Sec 50C - Where assessee, a shareholder of KMPL, alongwith other shareholders sold entire shares of KMPL to 'R', it could not be regarded as an indirect transfer of flats owned by KMPL to 'R' and, consequently, provisions of section 50C could not be applied to transaction of sale of shares [Source: Irfan Abdul Kader Fazlani vs ACIT [2013] 29 taxmann.com 424 (Mum.)]

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Issue No. 49: January, 2013 Page 5 of 22

Sec 54EC - Exemption under section 54EC is available even on short-term capital gains calculated as per section 50 on sale of depreciable assets held for more than 36 months. [Himalaya Machinery (P.) Ltd. vs DCIT [2013] 29 taxmann.com 380 (Gujarat)]

Cash Credits Sec 68 - Where assessee proved sale transaction of shares by filing mass documentary evidence and payment of sale price was made through bank channel, sale transaction could not be disbelieved only because assessee could not give identity of purchasers. [Source: Sudeep Goenka vs CIT [2013] 29 taxmann.com 402 (Allahabad)]

Sec 69A - Where certain addition was made on ground of unaccounted income introduced in garb of cash deposits, assessee's plea that addition confirmed, if any, in trading results had to be set off against said unaccounted income, was to be accepted. [Source: Megha Industries vs CIT [2013] 29 taxmann.com 404 (Gujarat)]

Set off and carry forward Sec 70 - Surrendered income during course of survey has to be assessed separately as deemed income without setting off losses under sections 70 and 71. [Source: Liberty Plywood (P.) Ltd. vs ACIT [2013] 29 taxmann.com 268 (Chandigarh - Trib.)]

Deduction Sec 80I - Where an industrial undertaking, which was being run by a company, got amalgamated with assessee-Company, it was not a case of transfer and assessee was entitled to deduction under section 80-I in respect of profits earned from industrial undertaking. [Source: Bhuwalka Steel Industries Ltd. vs CIT [2013] 29 taxmann.com 384 (Karnataka)]

Transfer Pricing Sec 92C - Transfer pricing adjustment in relation to advertisement, marketing and sales promotion expenses ("AMP expenses") incurred by the assessee for creating or improving the marketing intangible for and on behalf of the foreign AE is permissible.

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Issue No. 49: January, 2013 Page 6 of 22

Earning a mark-up from the Associated Enterprises ("the AE") in respect of AMP expenses incurred for and on behalf of the AE is allowable. However, the matter is restored to the file of TPO for de novo adjudication in the light of certain guidelines outlined by Tribunal in its order. [Source: L.G. Electronics India (P.) Ltd. [2013] 29 taxmann.com 300 (New Delhi - Trib.) (SB)]

Procedure for Assessment Sec 143(2) - Notice under section 143(2) issued after expiry of prescribed period is an uncurable defect and consequently, block assessment made in pursuance of said notice is erroneous and not sustainable. [Source: Sanjeev R. Arora vs ACIT [2013] 29 taxmann.com 287 (Mumbai - Trib.)]

Sec 147 - Where issue relating to deduction under section 10B in respect of assessee's unit was specifically examined during original assessment and allowed with some modifications, Assessing Officer could not re-open such assessment without placing tangible material to disprove such claim. [Source: Moser Baer India Ltd. vs DCIT [2013] 29 taxmann.com 325 (Delhi)] Sec156 - Assessee who himself submitted revised return of self assessment of his income under section 140A, was liable to pay interest from date when his tax liability was finally determined by appellate order and not from date of his filing revised return. [Source: Misrilal Jain vs CIT [2013] 29 taxmann.com 302 (Jharkhand)]

Procedure for Assessment for Search cases Sec 158BB - On assessee's failure to file IT return by the due date under section 139, payment of advance tax per se cannot indicate his intention to disclose income so as to exclude the applicability of Chapter XIV-B provisions i.e. "Special Provisions for assessment of search cases. [Source: A.R.Enterprises vs ACIT [2013] 29 taxmann.com 50 (SC)]

Tax Deduction at Source S. 194H - TDS under section 194H attracted so long as payment is in the nature of brokerage or commission; Section 194H does not require that relationship between the payer and the payee be necessarily of a principal and agent. [Source: SKOL Breweries Ltd. vs ACIT [2013] 29 taxmann.com 111 (Mumbai - Trib.)] Sec 199 - Where TDS certificates were issued in name of joint venture for executing a works contract, in view of failure of joint venture to file return and claim credit for TDS certificates, said credit could be allowed to assessee in capacity of individual co-joint venturer. [Source: Bhooratnam & Co vs ACIT [2013] 29 taxmann.com 275 (Andhra Pradesh)]

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Issue No. 49: January, 2013 Page 7 of 22

Appeals to Appellate Tribunal Sec254 - The Tribunal has power to extend the period of stay beyond 365 days under the Third Proviso to s. 254(2A) even if the delay in disposing off the appeal is not attributable to the assessee as there may be several other reasons for not disposing of the appeal by the ITAT. [Source: Vodafone West Ltd vs. ACIT (ITAT Ahmedabad) ITA No.386 and 387/Ahd/2011]

Penalties Sec 271(1)(c): The AO called upon the assessee to produce evidence as to the nature and source of the amount received as share capital, the creditworthiness of the applicants and the genuineness of the transactions the assessee simply folded up and surrendered the sum of Rs. 40.74 lakhs by merely stating that it wanted to “buy peace“. In the absence of any explanation in respect of the surrendered income, the first part of clause (A) of Explanation 1 to s. 271(1)(c) is attracted because the nature and source of the amount surrendered are facts material to the computation of total income. The absence of any explanation regarding the receipt of the money, which is in the exclusive knowledge of the assessee leads to an adverse inference against the assessee and is statutorily considered as amounting to concealment of income under the first part of clause (A) of the Explanation to s. 271(1)(c) and penalty has to be levied. [Source: CIT vs. MAK Data Ltd (Delhi High Court) ITA No. 415/2012]

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Issue No. 49: January, 2013 Page 8 of 22

INDIRECT TAX

Central Excise Case Laws Tool Kits etc. with two wheelers are input Rule 2(k) of the CENVAT Credit Rules, 2004 - CENVAT Credit - Input - Assessee, a manufacturer of two wheelers, took credit of duty paid on bought out tool kits sold alongwith two wheelers - Assessee had paid duty on value of two wheelers inclusive of value of tool kits - Department denied credit arguing that they were not input - HELD : Central Motor Vehicle Rules, 1989 make it mandatory for driver of every vehicle to carry tool kit prescribed by manufacturer - Hence, tool kit and first aid kit are necessary accessories of the motor vehicle - Since supply of tool kit by assessee was in compliance with statutory requirement, such tool kit being accessories were used in relation to manufacture of vehicle - Accordingly, credit was available thereon. [Source: Hero Motocorp Ltd. v. Comm. of Cent. Ex. Delhi-III, [2013] 30 taxmann.com 19 (New Delhi - CESTAT).] No Due of Private Company can be recovered from Director Section 87 of the Finance Act, 1994 - Recovery of any amount due to Central Government - Assessee was a director in private companies against which proceedings for recovery of sums due had been initiated - Department sought to distrain personal properties of assessee - Assessee argued, since no show-cause notice was issued to her and no adjudication order was passing naming her, recovery could not be made from her - HELD - Expression 'such person' in section 87 means person by whom any sum is payable under Act - Entire process of section 87 can be pursued only against defaulter viz., person from whom Government dues are recoverable under Act - Since no notice was issued to assessee and no order was passed against her and certificate of recovery didn't contain her name, there was no sum payable by her under Act - Further, in absence of any provision enabling recovery of dues of private companies from director thereof, dues of private companies could not recovered from assessee - Hence, attachment of assessee's properties was invalid and set aside [Source: Suman N. Agarwal v. Union of India, [2013] 30 taxmann.com 59 (Bombay)] Penalty not imposable when duty paid voluntarily Purchase of gears and clutches – Gear assembly and clutch assembly classifiable under Central Excise Tariff Heading 84.83 manufactured by assessee and further used in manufacture of Tiller Machine- Assessee paid duty voluntarily- Commissioner (Appeals) not justified in imposing penalty _ Appeal rejected- Section 11AC of Central Excise Act, 1944. [paras 3,4] [Source: Comm. of C. EX., Aurangabad V/s Sunmoon sleeves pvt. Ltd., 2013 (287) E.L.T. 319(Tri.–Mumbai)] No time limit is prescribed for Availment of Cenvat Credit In Rule 4(1) of Cenvat Credit Rules, 2004 cannot be read as ‘... shall be taken immediately...’ – Department plea that delay makes it difficult for them to verify as to whether inputs had actually been received or not, rejected – On facts, inputs received during April, 2000 to December, 2006, when judgement of Apex Court about eligibility to avail credit was against assessee- However, on Apex Court holding in 2006 that inputs

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Issue No. 49: January, 2013 Page 9 of 22

were eligible for credit, assessee took credit during Jan. 2007 to March, 2007, for inputs received from April, 2000 to December, 2006- On such facts, credit taken held not to be time barred. [paras 6,8] [Source: Steel Authority of India Ltd. V/s Comm. of C. EX., RAIPUR, 2013 (287) E.L.T. 321 (Tri.- Del)] Grant of Refund Contract of importer with foreign supplier showing lower price- However, duty paid on higher price inadvertently shown by foreign supplier in invoices - No lis involved between importer and Revenue on any legal point – HELD: Refund claim has to be adjudicated independently of decision on application for reassessment under Sections 149 and 154 of Customs Act, 1962 – In that view, importer was entitled to refund of excess paid duty – However, as authorities below had not verified and examined documents submitted by importer, and their views on correction thereof were not available, matter remanded to original adjudicating authority – Section 27 ibid. [paras 9,10] [Source: Luminous power technologies p. ltd. V/s COMMR. OF CUS., NEW DELHI, 2013 (287) E.L.T. 350 (Tri. - Del.)}]

Service Tax Case Law

Validity of retrospective effect Renting of immovable property – Amendment to the definition of taxable service by Finance Act, 2010 and retrospective effect thereto – Validity of – No provision under Constitution of India which restricts the right of Parliament to legislate retrospectively creating a tax liability – Even if it is assumed that the amendment is not merely clarificatory but creates a substantive liability or right, the Parliament’s right to legislateand create liabilities or rights with retrospective effect can be curtailed only by a restriction placed upon the legislative power of Parliament by one or the other provision of Constitution of India, for example, the restriction of creating an offence with retrospective effect or the restriction from enhancing the punishment for an offence with retrospective effect as found in Article 20(1) of Constitution of India – Entry 92C in List I of Seventh Schedule of Constitution of India. [Source: R.R. Ahuja V/s Union Of India, 2013 (29) S.T.R. 127 (M.P.)] Inclusion of value of study material provided

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Issue No. 49: January, 2013 Page 10 of 22

Valuation (Service Tax) – Commercial Training and Coaching services – Inclusion of value of study material provided – Benefit under Notification No. 12/2003 – S.T. – HELD: C.B.E. & C. Circular No. 59/8/2003- S.T., dated 20-6-2003 stating exemption applicable only if material is ‘standard textbook’ - Expressions ‘ standard textbook’ not used in impugned notification and purchase of material from another entity – Therefore, no reason to deny benefit – Assessee entitled to benefit – No merit in impugned order – Impugned order set aside – Section 67 of Finance Act, 1994. [2011 (24) S.T.R. 453 (Tribunal) relied on]. [Source: 2013 (29) S.T.R. 138(Tri.–Mumbai) Chate coaching classes pvt. ltd. V/s Comm. of C. EX., Aurangabad] Cenvat credit of Out Door Catering Service Cenvat credit – Service paid on outdoor Catering service received by appellant for providing food to their employees and on running a cab service for transportation of employees from home to factory and back to home eligible to Cenvat credit as they are input services – Pre-deposit waived – Appeal allowed – Rule 2(l) of Cenvat Credit Rules, 2004. [Source: Paramount communication ltd. V/s Comm. of C. EX., Jaipur, 2013 (29) S.T.R. 146 (Tri. – Del.)] Penalty and Payment before issuance of SCN On perusal of Section 78(3) of Finance Act, 1994 mandate of Act that if assessee fails to pay tax intime and file returns but subsequently pays tax and informs Department, SCN not required _ Same clarified by Board’s Circular No. 137/167/2006-CX.4, dated 3-10-2007 – Therefore, SCN not required to be issued – No merits in impugned order qua imposition of penalty – Portion of order imposing penalty set aside – Sections 73(3) and 76 of Finance Act, 1994. [Source: Gupta Coal field & washeries ltd. V/s Comm. of service tax, Nagpur, 2013 (29) S.T.R. 166 (Tri. – Mumbai)] SuoMotuAdjustment of Differential Service Tax amount Demand – Excess payment – Suo motu adjustment of differential Service Tax amount – Confirmation of demand on ground of adjustment not in succeeding period, failure to give intimation to jurisdictional officer within 15 days and adjustment in excess of monetary limit of `50,000 – HELD : In view of Rule 4B (ii) of Service Tax Rules, 1994 monetary limit inapplicable – Delay in arrival of settlement of value of services reasonable explanation for non-adjustment in succeeding period – Adjustment reflected in tax returns submitted – Therefore, assessee not to be denied adjustment as denial would amount to recovery of tax for same service twice – Impugned demand and interest set aside – Section 13 of Finance Act, 1994. [Source: Siemens ltd. V/s Comm. of Cent. Ex., Pondicherry, 2013 S.T.R. 168 (Tri. – Chennai)] Penalty Not Imposable When no Mala Fide Alleged Penalty for inadvertent availment of credit of Service Tax not imposable when no mala fide alleged in the Show Cause Notice – Appellant inadvertently availed credit of the value of the invoice instead of the amount of Service Tax, which he immediately reversed and paid interest – No mala fide alleged in the show cause notice – Imposition of penalty not justified – Sections 11A and 11AC of Central Excise Act, 1944 – Rules 25 and 26 of Central Excise Rules, 2002. [para 5] [Source: Prayas casting ltd. V/s Comm. of C. Ex., Vadodara, 2013 (29) S.T.R. 171(Tri.–Ahmd.)]

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Issue No. 49: January, 2013 Page 11 of 22

COMPANY LAW UPDATES

Circular/Notification/Guidance Filing of Balance Sheet and profit and Loss Account in XBRL mode for the financial year commencing on or after 01.04.2011 In continuation of General Circular Nos. 16/2012 dated 06.07.2012, 34/2012 dated 25.10.2012 and 39/2012 dated 12.12.2012 on the subject cited above, Ministry of Corporate Affairs has extended the time limit to file the financial statements in the XBRL mode without any additional fee/penalty up to 15th February, 2013 or within 30 days from the date of AGM of the Company, whichever is later. [Source: General Circular No. 01/2013 dated 15th January, 2013] Filing of Cost Audit Report and Compliance Report in XBRL mode In continuation of MCA’s General Circular Nos. 8/2012 dated May 10, 2012, 18/2012 dated July 26, 2012 and 43/2012 dated December 26, 2012, it has been decided that all cost auditors and the companies concerned are allowed to file their Cost Audit Reports and Compliance Reports for the year 2011-12 [including the overdue reports relating to any previous year(s)] with the Central Government in the XBRL mode, without any penalty, within 180 days from the close of the company’s financial year to which the report relates or by February 28, 2013, whichever is later. [Source: General Circular No. 02/2013 dated 31st January, 2013]

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Issue No. 49: January, 2013 Page 12 of 22

RBI UPDATES CircularExternal Commercial Borrowings (ECB) Policy – Non-Banking Financial Company – Infrastructure Finance Companies (NBFC-IFCs) It has been decided to enhance the ECB limit for NBFC-IFCs under the automatic route from 50% of their owned funds to 75 % of their owned funds, including the outstanding ECBs. NBFC-IFCs desirous of availing ECBs beyond 75 % of their owned funds would require the approval of the Reserve Bank and will, therefore, be considered under the approval route. Further, it has also been decided to reduce the hedging requirement for currency risk from 100 per cent of their exposure to 75 per cent of their exposure. [Source: RBI/2012-13/367 A. P. (DIR Series) Circular No. 69 dated 7th January, 2013]

Foreign Direct Investment (FDI) in India - Issue of equity shares under the FDI scheme allowed under the Government route On review of the policy on issue of equity shares/ preference shares under the Government route by conversion of import of capital goods, etc, the following conditions have been amended: c.f. A.P.(DIR Series) Circular No. 74 dated June 30, 2011

Earlier Condition Revised condition

Para 3(I) Import of capital goods/ machineries/equipments (including second-hand machineries),

Import of capital goods/ machineries/equipments (excluding second-hand machineries),

Para 3(I)(b) There is an independent valuation of the capital goods / machineries / equipments (including second-hand machineries) by a third party entity, preferably by an independent valuer from the country of import along with production of copies of documents /certificates issued by the customs authorities towards assessment of the fair value of such imports;

There is an independent valuation of the capital goods / machineries / equipments (excluding second-hand machineries) by a third party entity, preferably by an independent valuer from the country of import along with production of copies of documents /certificates issued by the customs authorities towards assessment of the fair value of such imports;

[Source: RBI/2012-13/375 A. P. (DIR Series) Circular No. 74 dated 10th January, 2013]

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Issue No. 49: January, 2013 Page 13 of 22

External Commercial Borrowings (ECB) Policy –Repayment of Rupee loans and/or fresh Rupee capital expenditure As per the extant guidelines, Indian companies in the manufacturing and infrastructure sector (as defined under the extant ECB policy), which are consistent foreign exchange earners, are allowed to avail of ECBs for repayment of outstanding Rupee loan(s) availed of from the domestic banking system and / or for fresh Rupee capital expenditure. On a review, it has been decided to include Indian companies in the hotel sector (with a total project cost of INR 250 crore or more), irrespective of geographical location as eligible borrowers under this scheme. [Source: RBI/2012-13/387 A. P. (DIR Series) Circular No. 78 dated 21st January, 2013]

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Issue No. 49: January, 2013 Page 14 of 22

CORPORATE FINANCE

Latest News Private Equity AION Raises Funds To Invest In Distressed Companies A special situations fund jointly owned by ICICI Ventures and Apollo Global – AION has raised $325 Mn to invest in distressed companies in India. It plans to raise additional $175 Mn increasing the corpus to $500 Mn, signalling investment opportunities in stressed companies as economic growth slows. [Source: Economic Times, January 7, 2013] Templeton Fund Invests In Globus Spirits Globus Spirits Limited is set to receive fund infusion to the tune of Rs. 90 Cr from Templeton Strategic Emerging Markets Fund IV, L.D.C and the promoters. Incorporated in 1993 by Ajay Kumar Swarup, Globus Spirits is engaged in the business of manufacture, marketing and sale of industrial alcohol comprising rectified spirit and extra-neutral alcohol, country liquor and Indian Made Foreign Liquor (IMFL). [Source: Deal Curry, January 8, 2013] Alok Gupta Headed 4Sight Capital Invests In Lazarus Hospitals 4Sight Capital LLP, the family investment unit of Alok Gupta, ex founding CEO of Axis PE has invested in Lazarus Hospitals. The multi-specialty hospital chain raised somewhere around Rs. 30 Cr by divesting more than 25% stake in the company. Founder of the hospital chain, Varma Vegesna, added that the funds will be utilized to expand into four other cities and that the funds will suffice for two years, after which it will go for an follow on investment from an institution. [Source: Economic Times, January 8, 2013] ICICI Venture raises $700 mn in 2012 ICICI Venture (I-Ven), one of India’s largest private equity entities has successfully closed a $100-million (Rs500 crore) second real estate fund, the India Advantage Fund Real Estate Series 2. I-Ven made two investments from the new realty fund. One was in a group housing project in the National Capital Region (NCR) region, being developed by Advance India Projects Ltd. The other was in a Mumbai-based, high-end residential project, of Ahuja Developers. It is learnt about Rs100 crore was invested in both. The real estate fund will primarily focus in projects in the bigger cities — Mumbai, NCR, Bangalore, Chennai, Hyderabad, Kolkata, Pune. [Source: Business Standard, January 10, 2013]

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Issue No. 49: January, 2013 Page 15 of 22

Norwest Venture Invests In Perfint Healthcare Norwest Venture Partners has invested $11 Mn in Perfint Healthcare Private Limited in Series D round of funding. The funds raised will be used for commercialisation of its product Maxio, expanding to new markets including US, Japan and China, and for setting up an R&D base in Seattle. Founded in 2005, Chennai-based Perfint Healthcare is a medical devices company. It offers PIGA, a tool for performing facilitating image guided minimally invasive procedures in CT environment. [Source: Livemint, January 17, 2013] IIFL Realty Fund Invests In Assotech's Haryana Project India Infoline group’s PE arm, IIFL Domestic Series 1 fund has invested R75 Cr (approx.$13.9 Mn) in a plotted development project in Faridabad, Haryana. The investment is in a plotted project being developed by Assotech Ltd., wherein developers build the basic infrastructure on such land before breaking it into smaller saleable plots. [Source: Livemint, January 22, 2013] Everstone Capital picks Rs 220-crore stake in Transpole Everstone Capital, which has assets under management worth is $1.7 billion (Rs 9,141 crore), has acquired a significant minority stake in Transpole Logistics. The deal size is learnt to be around Rs 220 crore. Headquartered in New Delhi, Rs 500-crore Transpole has a presence across India and in other regions such as China, South Korea and South-east Asia. Founded in 2004 by logistics professionals Anant Kumar Choudhary, Vivek Shukla and Praveen Chand Rai, Transpole is one of the leading freight forwarders in India. It offers logistics services in areas of freight forwarding, transportation, customs clearance, project logistics, warehousing and distribution. Transpole plans to expand its international offices in China, Malaysia, Singapore and South Korea with the new funding. Also, it will explore opportunities in value-added services business such as and warehousing and distribution. [Source: Business Standard, January 22, 2013] Ratnakar Bank finalizes PE investors Kolhapur-based Ratnakar Bank Ltd is set to raise Rs.330 crore from a group of domestic and global private equity (PE) investors by issuing 30 million new shares, pegging its value at Rs.2,500 crore. Domestic investors Aditya Birla PE, ICICI’s Emerging India Fund, IDFC Spice, Ascent Capital and Faering Capital have confirmed they will invest in the bank. Ratnakar will use the fresh money to meet demand for credit. [Source: Livemint, January 30, 2013]

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Issue No. 49: January, 2013 Page 16 of 22

Mergers & Acquisitions Godrej Consumer Unit Buys British Brand - Soft & Gentle Keyline Brands Limited, the U.K subsidiary of domestic FMCG major Godrej Consumer Products, has acquired the Soft & Gentle brand from Colgate-Palmolive. The acquisition amount remains undisclosed with the BSE disclosure by the company stating the purchase being funded by low cost debt and impacting GCPL’s consolidated debt/equity ratio by 0.03. [Source: Business Today, January 2, 2013] Sequoia Backed Moolchand Healthcare Acquires Pankaj Apollo Hospital Moolchand Healthcare has acquired Pankaj Apollo Hospital, a 200-bedded tertiary care hospital based in Agra. With this acquisition, Moolchand Healthcare has strengthened its footprint in the national capital region and adjoining areas. The move is in line with the company’s plan for pan-India expansion through acquisitions and growth and has outlined R500 Cr for the same. [Source: Vccircle, January 2, 2013] R Jhunjhunwala Portfolio Firm Geometric Acquires 3Cap Technologies Geometric Limited, a consulting and technology outsourcing firm, acquired German company 3Cap Technologies GmbH for Euro 11 Mn (over R78 Cr) through its German subsidiary - Geometric Europe GmbH. The amount of Euro 7.5 Mn will be paid up front and the buyout is financed through accrued cash. Balance payment will be subject to mutually agreed terms of earn-out over 3 years. 3Cap, founded in 2004, is a specialist in electronics engineering, primarily for the automotive industry, based near Munich, Germany. [Source: Business Standard, January 2, 2013] Gaja Capital-led consortium buys 50% in pre-school chain EuroKids from Educomp Educomp Solutions said that it has sold its 50 per cent stake in pre-school chain EuroKids International to consortium of financial investors led by Gaja Capital Partners. The deal size or other details of the transaction were not disclosed. Educomp, currently backed by Mount Kellett Capital and International Finance Corporation (IFC), had acquired the stake in EuroKids for Rs 39 crore in 2008. [Source: Vccircle, January 8, 2013] Dabur India promoters pick up stake in DMI Finance The Burman family, promoters of consumer goods company Dabur India, has acquired a minority stake in DMI Finance, a non-banking finance company (NBFC). The investment marks the Burman family’s entry into the NBFC market and secured lending space. As a result of the investment, Gaurav Burman — who has 20 years of experience in the financial services industry — will join the board of DMI. Established in 2009, DMI Finance was founded by Yuvraj C. Singh and Shivashish Chatterjee, both former senior executives of Citigroup, with the aim of participating in the growth of the debt market in India. DMI, which recently bagged a licence for a housing finance company, has built an equity capital

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Issue No. 49: January, 2013 Page 17 of 22

base of Rs 500 crore. According to Yuvraj Singh, co-founder and Joint Managing Director, DMI Finance, in the next 12-18 months, plans are afoot to raise Rs 1,000-1,500 crore, of which about 50 per cent could be via debt. [Source: The Hindu Business Line, January 10, 2013] Turkish firm buys 42% stake in Hind Glass arm Turkey’s Trakya Cam Sanayii AS, sixth largest global player in float glass, plans to manufacture automotive glasses as well as set up more float glass facilities in India following picking up of a stake in HNG Float Glass Ltd, which has a plant in Gujarat. Hindusthan National Glass & Industries Ltd (HNGI), the largest glass bottle maker in the country, the company and its promoter, the Somany family, are divesting 42.6% stake in HNG Float Glass (HFG) to Turkey’s Trakya Cam Sanayii AS. The deal comes at a time when HFG is currently working on creating a new line of float glass capacity of 1,000 tonne a day at its Gujarat plant, adding to its existing 600 tonne a day capacity. [Source: DNA India, January12 , 2013] RHI acquiring 43.6% in Orient Refractories for $41M If the mandatory open offer for buying another 26% is fully successful, RHI may have to pay around $66 million in total to buy 69.6% stake in the firm. Austrian firm RHI AG is acquiring almost the entire promoter holding in the public-listed Orient Refractories Ltd (ORL) in a deal worth Rs 225 crore ($41 million) as it expands into emerging markets. ORL is a producer of special refractories and monolithic products, and is promoted by the family members of SG Rajgarhia. [Source: Vccircle, January 15, 2013] SAIF Partners-backed Persistent Systems acquires NovaQuest from Dassault Systems Persistent had raised two rounds of venture funding in 2000 and 2005 before it went public in 2010. Pune-based Persistent Systems Ltd has acquired NovaQuest, a product lifecycle management (PLM) and search-based technology solutions company from Dassault Systemes America Corp, for an undisclosed amount, the company informed the Bombay Stock Exchange. [Source: www.frrole.com, January 16, 2013] Crompton Greaves to acquire lighting business of Karma Industries for $2.6M This acquisition will double CGL’s capacity in the fast-growing CFL segment and will be integrated with its consumer business unit. Mumbai-based Crompton Greaves Ltd (CGL), the flagship company of Gautam Thapar-promoted Avantha Group, has entered into a definitive agreement with Himachal Pradesh-based Karma Industries to buy its compact fluorescent (CFL) manufacturing business for $2.6 million (Rs 14.5 crore), as per a BSE filing. This acquisition will double CG’s capacity in the fast-growing CFL segment and will be integrated with the consumer business unit. [Source: Money Control, January 17, 2013]

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Issue No. 49: January, 2013 Page 18 of 22

Exide Industries to buy remaining 50% stake in ING Vysya Life Insurance for $102.5M In July 2005, Exide bought 50 per cent stake in IVL for $47m from GMR Industries Ltd. Nalanda Capital-backed Exide Industries Ltd (EIL), a manufacturer of automotive lead-acid batteries and provider of stored energy solutions, is acquiring the remaining 50 per cent stake in ING Vysya Life Insurance Company Ltd (IVL) for around Rs 550 crore ($102.5 million). Exide is buying the minority stake held by ING Group (26 per cent), former promoter of financial services firm DSP- Hemendra Kothari Group (16.32 per cent) and Enam Group (7.68 per cent). Post acquisition, Exide will induct a new international player in the life insurance venture to infuse fresh equity into the business. [Source: Vccircle, January 23, 2013] Coromandel to buy majority in Liberty Phosphate for up to $53M In 2011, the Murugappa Group flagship had also acquired Sabero Organics in a similar deal. Fertiliser producer Coromandel International Ltd is acquiring almost the entire stake held by promoters of Liberty Phosphate besides two other private group firms for around Rs 284 crore ($53 million). The stake purchase from the promoters of Liberty, which could vary between 53.6 per cent and 61.4 per cent as per the agreement, has also triggered an open offer for another 26 per cent public stake that could cost another Rs 90.5 crore, if fully successful. [Source: Vccircle, January 24, 2013] DLF sells part of wind power asset to VC-backed Bharat Light & Power for $90M This is first leg of the deal which would be followed by sale of the remaining asset to the same firm founded by Tejpreet Singh Chopra, former chief of GE India. DLF Ltd has struck a deal to sell a part of its wind power asset to Bharat Light & Power Pvt Ltd for Rs 282.3 crore ($53 million) in cash as it continues its strategy to exit non-core businesses to cut debts. Given the firm’s multi-billion-dollar debt pile, it means the firm is sticking to its promise of divesting units which are not related to its real estate business. [Source: Reuters, January 31, 2013]

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Issue No. 49: January, 2013 Page 19 of 22

Venture Capital Crystal Horse Investments leads investment in Investopresto Investopresto, the online financial investment and research platform, has raised an undisclosed amount of funds from angel investors based out of Singapore led by Crystal Horse Investments, as stated on nextbigwhat.com. The startup is already backed by Crystal Horse when it invested $300,000 in the firm last year. Investopresto is an investment portal that primarily aims at young and beginner class of investors that look to gain from the social integration. [Source: Deal Curry, January 2, 2013] Online photo printing startup Zoomin raises $1.5M venture debt fund from SVB India Finance The company is backed by early-stage investment firms Sherpalo Ventures and First Round Capital, and raised around $12m from them in two rounds. Zoomin.com, an online digital photo printing and merchandise company run by Mumbai-based ZoomIn Online (India) Pvt Ltd, has raised Rs 8 crore or around $1.5 million in venture debt funding from SVB India Finance, a subsidiary of the Silicon Valley Bank, which provides debt funding for startups who have raised earlier rounds of venture capital. [Source: Vccircle, January 2, 2013] Mysore-based Vinyas raises $1.8M from CanBank Venture Capital Fund In a span of nine years, the organisation has grown to a net worth of $6 million and has a workforce of over 600 people. Mysore-based electronic manufacturing services firm Vinyas Innovative Technologies Ltd has raised Rs 10 crore ($1.8 million) from CanBank Venture Capital Fund, the PE unit of Canara Bank. CanBank Venture Capital received convertible preference shares for its investment. The money raised will be used for the construction of a manufacturing facility at Mysore Industrial Park in Koorgally. [Source: Reuters, January 7, 2013] Drishti Eye Care raises Series A funding from Lok Capital This is the first investment by the venture capital firm in the healthcare segment. Drishti Eye Care Pvt. Ltd., a social enterprise providing eye care to underserved populations, has raised an undisclosed amount in Series A funding from Lok Capital, a venture capital firm focused on bottom-of-the-pyramid (BoP) market. [Source: Vccircle, January 7, 2013] ScaleArc raises $12.3M Series C funding from Accel, Trinity & Nexus Ventures The funds will be used primarily to invest in sales and marketing to fuel the company’s global expansion in the Big Data market. Mumbai and Silicon Valley-based database infrastructure software developer ScaleArc, Inc. has raised $12.3 million in Series C round of funding led by Accel partners. Existing investors Trinity Ventures and Nexus Ventures also took part in the round. The funds will be used primarily to invest in sales and marketing to fuel the company’s global expansion in the Big Data market, as well as product development. The company is also looking to significantly ramp up hiring.

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Issue No. 49: January, 2013 Page 20 of 22

[Source: vcnewsdaily.com, January 10, 2013] NVP Invests In Nueclear Healthcare Radiology diagnostics company and division of Thyrocare Group and GE Healthcare - Nueclear Healthcare has raised R22 Cr from Norwest Venture Partners. Nueclear Healthcare will use the funds for making affordable PET (Positron Emission Tomography scan) accessible to cancer patients, according to Nextbigwhat. As per the deal agreement, Sohil Chand, M. D. of NVP India, will join NHL’s board of directors. Founded by A Velumani, Thyrocare is a thyroid testing laboratory and also caters to critical diagnostics services related to growth metabolism, cancer, infectious diseases and infertility. It follows a centralized laboratory (single location) testing model with a nationwide franchise network for fast-track sample collection and result delivery. [Source: Reuters, January 18, 2013] Kaizen And Bertelsmann Invest In Online Business Of Educomp PE Firm – Kaizen and German Media Company – Bertelsmann has co – invested R22 Cr in Authorgen Technologies which operates WizIQ. WizIQ offers online education platform that offers SaaS based virtual classroom for teachers, trainers, colleges and universities and tutoring centers around the world. [Source: Money Control, January 24, 2013] Sequoia Capital Invests In ASG Eye Hospitals Sequoia Capital has made yet another investment in the healthcare space with R50 Cr infusion in ASG Eye Hospitals, stated ET. ASG is a super specialty eye hospital chain operating out of Rajasthan. Smart Economics Consultancy Pvt. Ltd. was the sole advisor to ASG for this transaction. ASG currently operates nine centres across Rajasthan and the funds raised would be utilized for pan-India presence, particularly in the northern and central areas along with a target to have 30 centres operating by 2014. [Source: Money Control, January 24, 2013] Fulcrum Venture picks 20% stake in Congruent Solutions for $1.4M This is the third investment by Fulcrum in the past one year. Chennai-based early-stage and sector-agnostic investment firm Fulcrum Venture India has invested Rs 8 crore ($1.4 million) in Congruent Solutions Pvt Ltd, an IT services provider specialising in pension administration industry, for 20 per cent stake in the company. The deal puts a post-money valuation of Rs 40 crore for Congruent. [Source: Livemint, January 24, 2013] Pune MFI Suryoday raises $3.7M from Aavishkaar Goodwell, Lok Capital Aavishkaar Goodwell was the first-round investor, followed by Lok Capital in 2010. Pune-based non-banking finance company Suryoday Microfinance Pvt Ltd has raised Rs 20 crore ($3.7 million) from its existing investors Aavishkaar Goodwell and Lok Capital. The funding will be used to strengthen its presence in Maharashtra, Tamil Nadu, Gujarat and Orissa, and also to expand into neighbouring states. [Source: Vccircle, January 28, 2013]

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Issue No. 49: January, 2013 Page 21 of 22

Debt

Suzlon gets approval for debt restructuring proposal of $1.8B CVCI struck a multi-bagger in its pre-IPO investment in Suzlon in 2004 and still retains stake; IDFC PE has seen its holding value shrink 85%. Wind turbine manufacturer Suzlon Energy Ltd has got the formal approval for its proposal to restructure domestic debt from the corporate debt restructuring (CDR) cell, according to a BSE disclosure. A consortium of 19 banks approved the CDR package of Rs 9,500 crore ($1.8 billion) including a two-year moratorium on principal and term-debt interest payments, 3 per cent reduction in interest rate and a six-month moratorium on working capital interest. [Source: Vccircle, January 24, 2013]

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Issue No. 49: January, 2013 Page 22 of 22

OUR OFFICES

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