FM Arun Jaitley pushes GST, reassures on back taxes

Finance Minister Arun Jaitley said on Saturday he hoped the opposition Congress party will come round to backing a proposed Goods and Services Tax (GST) that it has opposed despite being the first to propose the reform.

“I hope they are flexible and see the rationale behind passing GST,” Jaitley said in an interview at the Economic Times Global Business Summit.

Jaitley reiterated a reassurances that India would not pursue foreign companies with new retroactive tax claims, adding that he would like to see the few remaining disputes resolved “as expeditiously as possible.”

Govt must invest in infrastructure to drive growth: Birla

Stating that there is a slowdown of private sector investments, Aditya Birla Group Chairman Kumar Mangalam Birla said government needs to invest in infrastructure to set off “virtuous circle” of investment and economic growth.

“I think we have some issues to deal with. Clearly, there is slowing down of investment in the economy specially in the private sector and I think to kickstart that investment by the government, infrastructure is something that becomes critical,” Birla said while speaking at the ET Global Business Summit here.

“I think that is (investment in infrastructure) one factor that will set off virtuous circle of investment and growth in the economy that all of us are looking for,” he said.

On other issues which India faces at the moment, Birla said: “You have issues about ease of doing business where you need ample co-operation between states and the Centre. States are where the real action happens and we cannot have, in a federal structure like ours, where state is not in sync with the centre.”

He said the way to go about that is to create as much of competitive environment where each state is vying with the other for the next dollar or rupee of investment.

Commenting on taxation, Birla said issues around it takes away the purpose of doing business.

He, however, said the advantages India have at this point in time far outweigh the problems.

“I think we have got great opportunity this time in the Budget. I think what government can do is put huge thrust in infrastructure and also many of us in this room would like lowering of corporate taxes and also simplification of tax processes and legal issues,” Birla said.

Expressing similar views, Bharti Group Chairman Sunil Mittal said India Inc was hopeful that the much-awaited GST would be passed in the coming Budget session.

Citing positives of India, Birla said “not long ago there were people saying that you should knock off India from BRICS and replace India with Indonesia.

“We have come a long way. We are a spot of sunshine and really it is up to us what we want to do with this position of advantage that we find ourselves in,” Birla said.

Expressing similar views, Kotak Mahindra Bank Executive Vice Chairman and Managing Director Uday Kotak said four main factors of low oil prices, huge capacities, low current account deficit and low inflation rate is favouring India in a global perspective on Friday.

“This is our time to really think as a perfect batting wicket and go out and play our strokes. At times I really feel that certain level of despondency is more from within than from lot of global players outside who from outside feel that India is such a wonderful place,” he said.

Kotak said Indians need to get the “animal spirit” out to build the country.

“This is the best opportunity to build India,” he said.

FTIL sells 27.3% stake in Dubai Gold Exchange for $11 mn

Financial Technologies   has exited Dubai Gold Exchange by selling its 27.3 percent stake for USD 10 million (about Rs 75 crore) to Dubai Multi Commodities Centre (DMCC).

In two separate transactions, Financial Technologies (India) Ltd and its wholly-owned subsidiary FT Group Investments Pvt Ltd, Mauritius (FTGIPL) would be selling the stake. FTIL and FTGIPL will sell 13 percent and 14.3 percent stakes, respectively.

In two different regulatory filings, the company informed that it has sold its 27.3 percent stake in Dubai Gold and Commodities Exchange (DGCX) for USD 11 million. “Financial Technologies (India) Ltd.

(FTIL), entered into a Share Purchase Agreement with Dubai Multi Commodities Centre (DMCC) for sale of its 13 percent stake in DGCX for an aggregate consideration of USD 5,225,000,” the company said in a filing.

In another filing the company said it has entered into a share purchase agreement for sale of 13 percent stake in the DGCX to DMCC for USD 5.25 million.

Post completion of the transactions, the company would be completely exiting Dubai Gold and Commodities Exchange (DGCX), it added. In November, the company had concluded the sale of its stake in IEX.

The Jignesh Shah-led Financial Technologies (India) Ltd had nearly 26 percent stake in the largest power trading exchange, IEX, but started divesting in the bourse following an order by power regulator CERC to sell out completely.

The move followed the erstwhile regulator FMC declaring FTIL and the promoter unfit to run exchange business following the payment crisis at its subsidiary, NSEL.

Similarly, the Securities and Exchange Board of India (Sebi) had said FTIL is ‘not fit and proper’ to own stakes in any stock exchange and directed it to divest existing holdings in MCX-SX and four other entities.

CFCL Tech inks pact to sell part of business for Rs 88 cr

Software firm CFCL Technologies, a US-based subsidiary of Chambal Fertilisers and Chemicals   , signed a pact to sell part of its BPO business for about Rs 88 crore.

Of the existing subsidiaries of CFCL Technologies, ISGN Corp and ISG Novasoft Technologies entered into an agreement, said Chambal Fertilisers in a BSE filing.

ISGN Corp has entered into a stock purchase agreement to sell and transfer its entire shareholding in its wholly-owned subsidiary ISGN Solutions to the US-based firm Firstsource Group for USD 12.56 million (about Rs 85 crore).

ISG Novasoft Tech has entered into a slump sale agreement to sell and dispose off part of its BPO business to Bangalore -based firm Firstsource Process Management Services for Rs 3 crore, the filing said.

On January 21, Chambar Fertilisers’s Board had approved CFCL Technologies to sell and dispose off the business it is carrying through its subsidiaries and step down subsidiaries. CFCL Tech provides information technology solutions, outsourcing and other services through its subsidiaries.

Fed worried about growth, trying to keep statements neutral: Hui

Federal Open Market Committee (FOMC) statement released on Wednesday had a neutral tone, carefully drawing a line between dovish and hawkish, says Ian Hui, Global Market Strategist of JP Morgan Asset Management.

Speaking to CNBC-TV18, Hui says the Fed will closely monitor the US economic trend and will look for market stability. He is of the view that the monetary policy regulator is worried about growth and is likely to raise rates twice this year.

Talking about the markets, he says January equity selling was overdone. He prefers the European market over US and Japan among developed markets as he believes it has more growth potential.

On the India story, Hui says it will remain unaffected by the commodity story and will be a beneficiary of oil prices, adding, fiscal and deficit problems will be helped by oil prices going forward. India is going through a cyclical downturn and not a structural downturn, he adds.

Q: The US markets tanked after the Federal Open Market Committee (FOMC) statement. What was so bad about it?

A: Yesterday, or early today, this morning, we had the FOMC statement. I did think or how US at least thinks that it was not that bad. It did not take the March rate increase off the table at least. They did make several comments that were of note, below the market situation improve further, they did mention that they will still closely monitor global economic and financial developments. So, that means that they will keep an eye on how the other countries markets and financial developments are going. So, I think it was a fairly neutral statement overall. A fairly carefully towing a line between a dovish and a hawkish attempt to try and reassure markets, but maybe the market probably expected certainty for either direction for a bit more.

Q: Why do you say that it is not dovish? We were just putting together the additions in the statement and I will recount them to you. Growth slowed further late last year. Inventory investments slowed, inflation expected to remain low in the near-term, that sentence was not there previously. Committee will closely monitor global and financial developments to assess impact on labour market and inflation and even importantly, the statements that they dropped. Committee judges there is considerable improvement in the labout market – dropped. Reasonably confident inflation will rise to 2 percent – dropped. You will not read that as dovish? You will not read that as a Fed worried about growth?

A: I do think that it is the Fed worried about growth, but I do think that it is trying to tow the line between dovish and hawkish. They tried to keep a fairly neutral statement to make sure that they did not go either way. I do believe that. Looking at what they did do and how everybody else has reacted to it, looking at what others have written though, they seem to have taken it as either not keeping the March rise off the table or totally taking the March rise off the table. At least from the market perspective, it seems that it is still probably looking at only around 1-2 rate rises this year and then I think the March rate rise is still only something like between 20 and 25 percent probability looking at the implied futures. So, overall, I would not say it is dovish or hawkish either way but, it is sort of a fairly neutral tone.

Fed in wait & watch mode; expect 3 hikes in 2016: Deutsche Bk

The Federal Reserve on Wednesday kept the interest rates unchanged and acknowledged that the US economy was slowing down. In this dovish statement, Federal Open Market Committee (FOMC) was trying to be cautious, says Peter Hooper of Deutsche Bank.

Speaking to CNBC-TV18, Hooper says the US Fed will have a “wait and watch approach” and will be recognising the downside risks amid the recent softening of data.

He expects three gradual rate hikes within this year and is of the view that it may hike once in March. Until the markets bounce back with a significant change, there won’t be a rate hike, he adds.

Reema: What were the key takeaways from you and therefore what should we expect in terms of the number of rate hikes in 2016 and when will the next one be?

A: Certainly the Fed is being more cautious. They are in a wait and see mode. They recognise the downside risk in light of the recent softening of the data and what has been happening in the financial markets. They told us they are still leaving the door open to a possible rate hike in March but things have to get better.

Economic fundamentals look okay for consumers but businesses aren’t expanding, the markets are weak and we have to see some bounce back.

They will perhaps see how the data come out in the next few weeks. Our forecast is for three rate hikes but that obviously has some downside risk.

Nigel: You are saying that in March are we likely to see a rate hike or not?

A: The way things look right now, it doesn’t seem very likely. We do have to see some improvement in the data.

Global growth strong; expect dovish Fed statement: JP Morgan

January has been a month of uncertainties, triggered globally by a volatile Chinese market and crude price fall. However, the reason pulling down the Chinese equities is still unclear, says James Glassman, Senior Economist at JP Morgan.

Speaking to CNBC-TV18, Glassman insists this doesn’t mean global economy is in trouble, rather it is in a positive state. He believes oil market conditions are positive for emerging markets like India and China.

Talking on the Federal Reserve announcements scheduled on Wednesday, he expects the US monetary policy regulator to say that the country’s (US) economy is on course and is growing faster than the long-term estimates on the back of improving labour markets.

He is of the view that Fed would sound dovish and will try to talk the worries down of September, where they had highlighted the concerns about the global economy. He does not expect Federal Open Market Committee (FOMC) to move on policy till March.

Latha: This volatility, when does it end? We are discounting the same cues over and over again. The low growth story or the Chinese instability, the Chinese currency has behaved itself admirably for the last 10 days. Does this volatility end?

A: I do not know. It is peculiar to me. To an outsider it is peculiar because obviously, China has challenges, but China has a lot more control over the situation than many people understand. The thing that is most strange for an economist is that the equity market seems to be uncertain about what is happening with oil markets and what that means for these economies. For the global economy, it may be neutral. For every winner there is a loser. But, for countries like India and China and Japan and Korea and the US and Europe, what has been going on in the oil markets is a net positive. So, it is a little odd. I suppose we are going to see this volatility for a little while longer until we see a little more clarity on what is happening to growth in these regions.

But, I really think that the benefit to countries, to regions like Europe and the US and much of Asia is very overwhelming. It is a very big challenge for the Middle-east and for Russia and for all the oil producers like Canada and Mexico. So, it is a little unclear where the volatility is coming from because I do not really think that these events mean the global economy is in trouble. I think the global outlook for 2016 looks fairly positive.

Sonia: Do you expect the US Federal Open Market Committee (FOMC) tone to be dovish at the policy today, purely because of the volatility that we have seen globally?

A: That is the expectation and frankly, there is no reason for them to have a strong view, because most people do not think that they would do anything anyway until March or April or maybe June. So, my guess is that there is a lot of information out between now and the March Fed meeting so, my sense is they will give a nod to the concerns about what is going on globally, but I do not think that the basic story is going to change much.

I do not think they are going to leave you with the impression that they have given up on the idea that they need to normalise interest rates. I think that idea will still be in the background. It is just that for now, the tone of this statement may be a little more dovish and you might have thought before, but only because the markets are kind of volatile and there is a little bit of concern about what is going on in the rest of the world.

Latha: As a market expert, what are you expecting the Fed to say? What is it they should say that might be a sal for the markets?

A: I think they will say that the US economy is still on course, it is growing faster than it is long-run trend which is why the labour market is doing so well, but they will try to acknowledge the dangers that the struggles are having without making too much of it. If you remember, back in September, when they decided not to raise interest rates when many people thought they would, they highlighted, they almost exaggerated the worries about the global economy and it actually had a very negative impact on the market. So, my guess is recalling that experience, my guess is that they might be inclined to not try to make as much, they will downplay it a little bit, the concerns about the global economy.

Kotak Realty exits investment in Sunteck project for Rs 270 cr

Kotak Realty Fund has exited its investment in a mixed-use development project of Sunteck Realty   in suburban Mumbai for Rs 270 crore. The Fund had invested Rs 150 crore in the project ‘Sunteck City’ spread across 23 acre in Goregaon during the acquisition of 16 acre land in 2012.

“In less than four years, Sunteck Realty managed to provide Kotak an exit for around Rs 270 crore, a return of nearly 22 percent,” Sunteck Realty said in a statement here.

“We have always been able to provide exits to private equity partners successfully. We have grown with a good mix of debt and equity in the past which has helped us to keep our debt levels low and optimise cost of funding for growth,” CMD Sunteck Realty Kamal Khetan said.

The company has been able to monetise its assets faster and give exits to its partners with excess cash flows, thus generating attractive returns on investment for Sunteck as well as its partner, he added.

Kotak Realty Fund’s Chief Executive S Sriniwasan said the company managed to exit the project successfully.

“We could participate at an early stage in this city-centric project with a good brand and could exit in a timely manner with good returns. We continue to look for such opportunities and would try to maximise the return for our investors going forward as well,” he said.

After its success in the central business district of Bandra Kurla Complex (BKC), Sunteck is betting big in the micro-market of Goregaon (West), a fast developing commercial hub for the banking and financial sector.

The 23-acre luxury township, Sunteck City is conceptualised as a mixed-use development spread across 6 mn sqft that comprises of residential complex, commercial space, retail outlets and entertainment zones. “We hope to create similar value for our customers and stake holders in Goregaon as it created in BKC,” Khetan added.

Govt looking at Shome panel report to simplify tax system: FM

Ahead of the Budget 2016-17, Finance Minister Arun Jaitley today said the government is looking into the recommendations of Parthasarathi Shome committee for simplifying tax administration.

“The Shome Committee report has given several recommendations which we are at a very advanced stage of looking into. It has suggested certain reforms in tax administration,” he said addressing the Platinum Jubilee celebrations of Income Tax Appellate Tribunal here.

Jaitley said a committee has also been set up under Justice R V Easwar to simplify the the Income Tax Act. “Laws must be simple, so even if you have a large number of assessees and you have a large number of population, if your laws are simple, then the possibility of excessive litigation itself does not arise,” Jaitley added.

Referring to his last Budget proposal of reducing corporate tax from 30 percent to 25 percent over 4 years along with removal of tax exemptions, Jaitley said it would make the tax system cleaner and simpler and will ensure that “oppressive taxmen does not hover over us”.

The Tax Administration Reform Commission (TARC), headed by Shome, had in its report pitched for a separate budget allocation to ensure time bound tax refund and a passbook scheme for TDS (Tax Deduction at Source).

It had suggested that retrospective amendments to tax laws should be avoided as a principle and Income Tax Return forms should also include wealth tax details.

Recommending far-reaching reforms in tax administration, the panel had suggested abolition of the post of Revenue Secretary, merger of CBDT and CBEC and broadening the use of Permanent Account Number (PAN).

The TARC submitted report to Jaitley in June 2014. The Easwar Committee, in its draft report released last week, had recommended an across-the-board raising of threshold limits for TDS and halving of the withholding tax in most cases. It also suggested a 12 percent or 18 percent interest on delayed refunds.

Banks taking strong stance on corporate defaulters: Kochhar

With high NPAs weighing down on the books of several banks, ICICI Bank   has adopted a strategy of ‘proactive action’ on its corporate portfolio and is focussing on higher-rated clients, its chief Chanda Kochhar said here.

Besides, the bank’s strategy also involves increasing the proportion of retail clients in its portfolio, the top banker said. “Asset quality in the retail segment continues to be healthy and stable.

In the corporate sector, there continue to be challenges given the time taken for projects to generate cash flows and high leverage levels in some areas or companies.

“Banks are working actively to resolve these through asset sales and change in management; they are taking a strong stance vis-a-vis the promoters to ensure that these actions are taken,” Kochhar told PTI at the World Economic Forum (WEF) Annual Meeting.

“In cases where the promoters do not cooperate, the banks are enforcing contractual rights through the legal route,” she added.

Talking about her own bank, Kochhar said: “ICICI Bank’s strategy comprises close monitoring and proactive action on the corporate portfolio; increasing the proportion of retail in the portfolio mix; and focus on higher rated clients.”

Kochhar, Managing Director and CEO of ICICI Bank, further said that the regulator RBI is also in discussions with banks at various level to address these concerns. “I am confident that over time the coordinated efforts of the government, regulator and banks should help in addressing these concerns,” she added.

Asked about the her outlook for the banking sector’s financial performance in the quarters to come, Kochhar said, “In the banking sector, retail business will continue to grow at a faster pace.

Corporate lending may take some time to pick-up. “We will see gradual improvement as recovery in economic activity strengthens. In fact, if we look at the history of the Indian financial sector, we have never seen the level of crises that we have witnessed in other regions.”

Giving credit to the strong regulatory framework in the country, Kochhar said, “The Reserve Bank of India has norms which are in line with, or in some areas stricter than global standards, which has resulted in healthier position of Indian banks.”

“The capital requirement prescribed by RBI is a percentage point higher than the global standard prescribed by Basel committee on banking supervision. Banks in India are required to maintain statutory liquidity ratio, cash reserve ratio and liquidity coverage ratio requirements resulting in healthier liquidity position.”