OPINION, P6 ECONOMY, P2 CASH FLOW Judiciary needs to fix its own house, not just take on govt Aadhaar needs to be opened to pvt firms as well, it is not just for a few users MORE INVESTMENT `500 notes worth `3k cr being printed daily, says DEA secy Garg EDITORIAL INTERNATIONAL, P4 Warren Buffett craves more Apple shares, endorses its buybacks NEW DELHI, MONDAY, MAY 7, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 56, 18 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E INSOLVENCY CODE Explicit bar likely on bids by promoters’ relatives Move to define ‘kin’ aimed at preventing defaulting promoters’ back-door entry into their companies IN THE NEWS Isha Ambani, Anand Piramal to tie the knot in Dec BANIKINKAR PATTANAYAK New Delhi, May 6 THE GOVERNMENT IS set to define the term‘relatives’in the context of persons considered ‘relatedparties’whowillbeineligible to bid for stressed assets undertheInsolvencyandBank- ISHAAMBANI, THE only daughter of Reliance Industries chairman Mukesh Ambani and wife Nita, will tie the knot with Anand Piramal, the son of billionaire Ajay Piramal and wife Swati, reports fe Bureau in Mumbai. The wedding will take place in India in December this year, a statement from Piramal Group said on Sunday. Anand and Isha have been long-time friends and both their families share a strong bond of friendship for over four decades, it said. Isha, twin sister of Akash Ambani, is on the boards of Reliance Jio and Reliance Retail. She is a graduate from Yale University with double majors in psychology and South Asian studies. She will be completing her MBA from the Graduate School of Business, Stanford, by June. Anand is executive director of the Piramal Group and is the founder of its real estate business — Piramal Realty. RELATIVELY SPEAKING ■ ‘Relatives’ to be defined as members of a Hindu undivided family, among others ■ IBC already defines ‘related party’ of a debtor, but it doesn’t define ‘related party’ (or ‘relatives’) of those who run such a firm ■ Clear-cut definition of ‘relatives’ will better equip RPs and lenders to reject bids placed by kin of promoters even via fronts ■ IBC panel recently suggested the need for a definition of ‘relatives’ ruptcy Code (IBC), sources told FE.Analysts said anysuch move couldmakethedisqualification offamilymembersofdefaulting promoters more explicit, and willlikelyimpactcaseslikeEssar SteelinwhichRewantRuia,son of the company’s co-promoter RaviRuia,issaidtobeoneofthe beneficiaries, and owners of a shareholderofNumetalthathas bid forthe stressed steel firm. While IBC has already defined‘relatedparty’ofacompanyfacinginsolvency,ithasn’t defined‘related party’(or‘relatives’)ofthose(individuals)who were running such a stressed firm, said the analysts. So even thoughIBCsays‘relatedparty’in the context of a stressed company means“a director or partner of the corporate debtor or a relative of a director or partner ofthecorporatedebtor”,among others,it doesn’t,at present,say clearlywhoqualifiestobearelative of a directororpromoter. Continued on Page 2 KEEN ON INDIAN ASSETS ‘IBC’s intent not to thwart reputed overseas companies’ SHAMIK PAUL Paris, May 6 LN MITTAL, CHAIRMAN and CEO of theworld’s largest steelmaking company,ArcelorMittal,hasmaintainedthathisfirm was never the promoter of Uttam Galva Steel and is therefore an eligible bidder for Essar Steel under the Insolvency and Bankruptcy Code. He said his firm would continue to engage withthecommitteeofcreditors (CoC) on the issue of eligibility. In an interview with FE, he Our fundamental position is that we are eligible (for Essar Steel) and in reality, were never the promoters of Uttam Galva... — LN MITTAL CHAIRMAN & CEO, ARCELORMITTAL Continued on Page 2 NHPS ● FORTIS SALE Manipal Health sweetens offer further Premium may exceed `1,082 State governments likely to pick up tab for higher premium WHAT THE INSURERS WANT CHIRAG MADIA Mumbai, May 6 ■ Demand more powers to INSURANCE PREMIUM FOR the National Health Protection Scheme (NHPS), to provide an insurance cover of around `5 lakh to 10 crore families,will not be capped at `1,082 or thereabouts as was indicated earlier.At a meeting with insurance/reinsurance companies held last week, the government indicated that the ceiling has not been fixed as yet, but if it is, say `1,100 and the insurance bid is for `1,700, the difference will be picked up by the ■ They argue against the reverse bidding clause, saying it defeats the purpose empanel and de-empanel registered hospitals ■ Feel that too many insurance packages are on the pre-approval list ` state government. This was a key concern of insurance companies that had pointed out the cap being talked of was too low and any scheme based on this would run into large losses. The government mayrelax theeligibilitycriterioninorder to bring in more competition. Insurers argued against the reverse bidding clause, but government officials said this was to create competition among the bidders. One official present at the meeting said,“Weexplainedthattender document demands a certificate from actuary along with the initial pricing to ensure thatasustainablepriceisbeing quoted but the reverse bidding methoddefeatsthewholepurpose of such certification. Additionally, there is a profit refundclauseinthetenderand therefore there is no need fora reverse bidding.” Station F is a one-of-a-kind place in the tech world The world’s largest start-up campus has tech heavyweights such as Facebook, Microsoft and AWS, which were themselves once start-ups, showing the way to young entrepreneurs ■ eFE, P8 Pradhan Mantri Vaya Vandana Yojana: Fixed income in old age Senior citizens can now invest up to `15 lakh in the Centre’s flagship pension scheme to get `10,000 a month for 10 years and protect against any fall in the interest rate ■ Personal Finance, P9 QuickPicks Telecom min to decide on Idea’s 100% FDI proposal: Prabhu THE TELECOM ministry is the competent authority to take the final call on Idea Cellular’s proposal for infusing 100% foreign direct investment (FDI) in the company, commerce and industry minister Suresh Prabhu has said, reports PTI. The Department of Telecom (DoT) has put some condition while seeking views of the Department of Industrial Policy and Promotion (DIPP) on the proposal. “The matter is completely in the domain of the line ministry. We have already clarified. No need of our approval,” Prabhu said during an interview. PAGE 3 NCLT suggests IBBI review insolvency code regulations THE NATIONAL Company Law Tribunal (NCLT) has suggested to the Insolvency and Bankruptcy Board of India (IBBI) that there is a need to review the insolvency code regulations to ensure that they are not “misused or misinterpreted”, reports PTI. The tribunal also said that the resolution professional (RP) should be competent and independent so that there are no interruptions in the process. Power supply to houses to cost `32k crore extra ANUPAM CHATTERJEE New Delhi, May 6 THEGOVERNMENT’SSTATED plan to provide electricity connections to 3.63 crore households by December this year, if implemented, will raise the power distribution companies’ (discoms) supply cost by an annual `32,200 crore or roughlyaquarter.Sincethediscoms aren’trecoveringtheirfullcosts fromhouseholdconsumers,the additional supplies under the Saubhagya scheme could add some`3,800croretotheirannual losses,if all the new ones to be electrified have a consumptionpatternlikethatoftheaverage electrified household. PRESS TRUST OF INDIA New Delhi, May 6 Check-up An aspirant undergoes a security check outside the examination centre for the National Eligibility Cum Entrance Test 2018 for medical courses, in Bhopal on Sunday Continued on Page 2 SAUBHAGYA TARGET Special Features said,“Ourfundamentalposition isthatweareeligibleandinreality,were neverthe promoters of Uttam Galva.We do not believe theintentionofSection29Awas to exclude reputable, experienced international investors from bidding for Indian assets. So,any discussion about repaymentofanydueswouldneedto be considered in this context”. He went on to add,“We look forward to continuing our dialogue with the committee of creditors, to demonstrate our commitment to EssarSteel and theIndiansteelindustry,andto consider any specific feedback they have around the subject of eligibility”. Annual financial impact on discoms if 3.6 crore more households are electrified under Saubhagya scheme Additional power supply cost `32,200 cr Extra under-recovery `3,854 cr^ Discom losses in FY16 `63,000 cr ^Over `7,100 crore sans state subsidy; if cross-subsidy is capped at 20% as proposed, losses could be even higher; loss figure might reduce if ACS-ARR gap comes down Continued on Page 2 MANIPAL HEALTH ENTERPRISES on Sunday revised yet againitsofferforFortisHealthcare (FHL), raising the value to `8,358 crore. “For the purposes of the merger, we propose a value of `8,358croretobeattributedto FHLandavalueof`6,070crore tobeattributedtoMHEPL,”the revised offer said, as per the FHL filing on BSE. It translates into `160 per equityshare. MHEPLalso offered to subscribe to equity shares of FHL by way of preferential allotment for `2,100 crore at a price perequityshare of `160. Continued on Page 2 WINDOW DRESSING Pay in advance, IR tells bulk customers NTPC, others oblige; move to help national transporter improve balance sheet Operating ratio# 90.5 96.5 98.5 (` lakh crore) FY17 FY16 FY17 FY18 rupees spent to earn every `100, the lower the ratio, the higher the railway's surplus SAURABH KUMAR New Delhi, May 6 (million tonne) 1,109 FY18 ORwouldhavebeenevenworse at104orthereaboutshadthese ‘advances’were not factored in. Given that the transporter’s 1,101 1,162 1.04 1.17 FY16 FY17 FY18 ~70% } ` Freight loading FY16 1.1 # SOME `7,300 CRORE the Indian Railways got as advance freight from bulk consumers and as proceeds of land monetisationfromfellowPSUs enabled it to avoid reporting a deficit in FY18. It reported an operating ratio (OR) of 98.5 for thelastfinancialyear,asagainst the revised estimate (RE) of 96 announced when the general Budget was presented, but the Freight revenue Share of freight revenue in gross traffic receipt finances are not in for a major overhaulinthenearfuture,ithas decided to make this (seeking a tidy sum as advance payments) acustom.Ifthesystemrunsona continuous basis, it would amounttosomebulkcustomers like NTPC, cement companies and steelmakers taking a hit on theirbottomlines,whiletherailway’sfinancesaredressedup. According to an official source,thetransporterisdevising a policywherein customers will be encouraged to deposit their estimated annual freight payable in advance and in return get sweetened deals like assured availability of rakes, preferential loading etc.While the bulk customers may not be any freight rebate under the scheme, the rates could be capped for them for the year, making them immune to any rate hike during the period. Continued on Page 2 GST Marked rise in compliance by composition-scheme dealers SUMIT JHA New Delhi, May 6 WHILE COMPLIANCE UNDER the goods and services tax (GST) is improving slowly forregulartaxpayers,the January-Marchquarteralsosawthe composition-scheme dealers reporting average annual revenue of `20 lakh,over twice as much as they reported in the previoustwoquarters.Thissignalled increasing compliance by this segment of relatively small taxpayers and officials attribute the same to recent efforts to nail down evaders. Composition scheme is open for all taxpayers with annual sales between `20 lakh and `1.5 crore, except for service providers. Clearly, there is still much scope forimproving compliancebythesetaxpayers. The scheme offers easier compliance requirements including facility to file simple quarterlyreturnsandpayafraction of sales as GST,rather than pay the tax at item-wise rates. While earlier different rates of tax for composition-scheme manufacturers, traders and restaurants existed, the GST Council in November had reduced the rates to flat 1% for all categories and this became from January. In January-March quarter, thegovernmentreceived`579 crore from 12 lakh such composition-scheme taxpayers. This means that each taxpayer filing returns under this scheme reported an average annual revenue of close to `20 lakh. While this was still a tad Composition-scheme dealers* Returns filed Tax collected (lakh) (` cr) Average annual revenue/ taxpayer (` lakh) Jul-Sept 8.1 336 8 Oct-Dec 9.3 421 9 Jan-Mar 11.5 579 20 ` ` ` ` ` ` *Available to firms with turnover between `20 lakh & `1.5 crore below the GST’s lower threshold of `20 lakh, it was much higher than `8 lakh and `9 lakh reported by such assessees in the July-September and October-December quarters respectively. Currentlythereare19.31lakhtaxpayers registered under this scheme but only 60% of them filed returns for the fourth quarter of last fiscal year. Explaining the better reportingfromthesetaxpayers, a tax department official told FE: “All taxpayers are slowly realising that it’s counter-productive to evade taxes in GST systemasmismatchesbetween purchaseandsaleswould show upeventually.Wehavealsosent hundreds f some notices on these mismatches which have played its part in improving bettersales reporting.” The government had estimated large-scale evasion among composition dealers after it collected a paltry sum from sum for the first quarter underGST.If the sales reported by these units were correct, mostofthemwouldhavefallen below the threshold for GST registration. Obviously, there wasmassiveunder-reportingof sales.However,intheabsenceof anti-evasiontoolslikee-waybill and comprehensive return-filing system at that time,the tax department has found it difficult to plug revenue leakages. “Increased tax collections from composition taxpayers can’t be traced back to a single reason;infact,itisduetomultiplefactorsincludingloweringof tax rates with effect from January, 2018, fear of harsh penalties, and regular outreach programmes by the government. Besides this smaller taxpayers generally tend to draw up accounts at the year end and show augmented revenue to justifythelevelofoperationsfor the financial year pushing up the tax collections for March quarter.Easing out of technical glitches by GSTN would have also encouraged the taxpayers to file returns and pay taxes.” Rajat Mohan,partner,AMRG & Associates said. Continued on Page 2 ■ Firms get scrutiny notices for GST returns mismatch, P2
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