Sunday, 18 June 2017

Draft rules released to prevent tax evasion via unquoted shares

India’s apex body for direct taxes has proposed new rules for bringing the value of unquoted shares on a par with the fair market value of underlying assets, seeking to prevent tax avoidance by firms that use the historical acquisition cost to set the price of unlisted stock. 
The Finance Act, 2017, inserted a new section to the Income tax Act on the valuation of unquoted shares — those not listed on any exchange — at fair market value for computing capital gains tax. It had also introduced new provisions to expand the scope of taxation of any gift or property received for inadequate consideration. 

The Central Board of Direct Taxes on Friday released draft rules prescribing the method of valuation of any such property, jewellery, artistic work, immovable property, or shares and securities. Stakeholders have until May 19 to provide their comments. 

According to the draft rules, the “net asset book value” method is proposed to be adopted for the valuation of shares. For valuation of immovable property, the registration value will be taken into account. For jewellery, the valuation provided by the registered valuer would be used. 

Experts say the new rules bring clarity. “Draft rules appear to bring clarity on the valuation of these assets or properties and reduce ambiguity,” said Shailesh Kumar, director at Nangia & Co LLP. 

Any transaction in unquoted shares will now have to be carried out at its fair value and if done at a level lower than this, both the buyer and seller will be liable to pay additional taxes based on the fair value. 

“Applying a fair value basis for unquoted shares instead of book value will create subjectivity, particularly for businesses where business models are unique and untested,” said Abhishek Goenka, partner and leader for direct taxes at PwC. 

Sandip Ginodia , Director 
ALTIUS INVESTECH PVT LTD | ABHISHEK SECURITIES

We deal in over 60 unlisted companies with 15 years of experience .
For latest prices visit : www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .

Tata Sons to buy Tata Steel's 2.9 per cent stake in Tata Motors

In a move to consolidate cross-holdings across group firms, Tata Group’s holding firm Tata Sons is set to acquire Tata Steel’s 2.9 per cent stake in Tata Motors.
The announcement on Saturday, made through a filing with the stock exchanges, confirms reports that the Tata Group is planning widespread consolidation of holdings.  
The issue of cross-holdings has already come up several times, even during the tumultuous few months following the sacking of Cyrus Mistry from the group’s top post. In November, a group of foreign institutional investors wrote to Tata Steels’ board raising concerns about its cross-holdings in other Tata firms.
According to the filing, Tata Sons will buy around 83.6 million shares in Tata Motors at or around the prevailing price of the stock on the date of the planned acquisition, it said, citing “restructuring of investment portfolio” as the reason for the planned deal.
As per details available, Tata Sons owned 29.75 per cent of Tata Steel at the end of March, while Tata Motors owned a 0.46 per cent stake in the steel major.
While Tata Steel has had a troubled few years, reports have spoken about a proposed merger between the firm’s European business and German industrial group Thyssenkrupp AG.
The merger is estimated to save Tata Steel around 400-600 million euros annually and shares of the Indian-steel major rose sharply driven by improved investor sentiment in late May, hitting a two and a half year high of Rs 514.80.
Share prices have since fallen, with Tata Steel shares closing at Rs 455.75 in Mumbai trading on Friday.
According to analysts, a reduction in cross holdings inside Tata Group are set to unlock a significant amount of value for the group.
Kotak Institutional Equities in a report in March pointed out that Tata Power, Tata Chemicals, Tata Global and Tata Motors would alll benefit from lower debt and interest expenses.

Sandip Ginodia , Director 
ALTIUS INVESTECH PVT LTD | ABHISHEK SECURITIES

We deal in over 60 unlisted companies with 15 years of experience .
For latest prices visit : www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .

RBL Bank posts 55% increase in Q4 profit at Rs130.13 crore

RBL Bank Ltd, formerly known as Ratnakar Bank, reported a 55% increase in profit for the March quarter on higher interest income.

Profit rose to Rs130.13 crore in the three months to March from Rs84.18 crore a year ago.

Net interest income, the difference between interest earned on loans and that paid on deposits, rose 47% from a year ago to Rs352.16 crore. Other income rose 66% to Rs236.55 crore.

Net interest margin widened to 3.52% from 3.21% a year ago. Provisions more than doubled to Rs82.10 crore, compared to Rs36.17 crore in the preceding quarter.
Gross non-performing assets (NPAs) as a ratio of gross advances as of the March quarter were at 1.20%, compared to 0.98% as of 31 December. Net NPA ratio at the end of the fourth quarter was 0.64%, slightly up from 0.59% in the third quarter.

Capital adequacy ratio on 31 March stood at 13.72% against 12.94% a year ago.

“There was one corporate account in engineering, procurement and construction (EPC) worth Rs65 crore in loan value, for which additional provisions were made based on central bank review. This contributed for 22 basis points increase in the gross NPA,” said Vishwavir Ahuja, managing director and chief executive officer of RBL bank. A basis point is a hundredth of a percentage point.

Money at risk in the microfinance portfolio is 2% of a Rs2,150 crore portfolio (direct lending), according to Ahuja.

Shares of RBL Bank gained 3.7% to close at Rs585.55 per share on Tuesday on BSE, while the benchmark Sensex index gained 0.01% to close at 29,921.18 points.

Sandip Ginodia , Director 
ALTIUS INVESTECH PVT LTD | ABHISHEK SECURITIES

We deal in over 60 unlisted companies with 15 years of experience .
For latest prices visit : www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .

Sura Chawla sells stake in CSB

Non-resident Indian Sura Chansri Chawla is reported to have struck a deal with the Bhansalis of Enam group to sell the entire remaining part his stake in Thrissur-based Catholic Syrian Bank Ltd. (CSB).

The sale is believed to have been done at a price of about ₹160 a share.

The NRI, it is gleaned from reliable sources, has sold close to 5% of his holding in the bank.

When contacted, former chairman of the bank S. Sananthanakrishnan confirmed that the deal had indeed taken place.

Queried on the exact sale price, he, however, said he would not hazard any guess,

Sources indicated that the reported sale price of Rs. 160 a share would definitely set the bench-mark for any future sale of the bank shares.

The deal comes at a time when Fairfax was widely reported to be contemplating equity stake in the Thirusur-based private sector bank.

Sandip Ginodia , Director 
ALTIUS INVESTECH PVT LTD | ABHISHEK SECURITIES

We deal in over 60 unlisted companies with 15 years of experience .
For latest prices visit : www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .

HDFC Life inks distribution tie-up with Catholic Syrian Bank

  • HDFC Life has entered into a bancassurance (the selling of life assurance and other insurance products and services by banking institutions) tie-up with Catholic Syrian Bank to distribute its individual life insurance products to the private lender’s customers.

    HDFC Life inks distribution tie-up with Catholic Syrian Bank

  • HDFC Life will offer its leading range of individual life insurance, health and pension products to the Catholic Syrian Bank’s 1.5 million customer base across all its branches over a period of time.

Sandip Ginodia , Director 
ALTIUS INVESTECH PVT LTD | ABHISHEK SECURITIES

We deal in over 60 unlisted companies with 15 years of experience .
For latest prices visit : www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .

Centre plans to divest near 25% stake in MSTC


The Centre is planning to bring down its stake in MSTC, the company’s Director (Finance) AK Basu said here on Thursday. The Centre’s stake in the Miniratna PSU currently stands at over 89 per cent.
The remaining 10-odd per cent is held by various industry associations.
According to Basu, the plan is to opt for an “offer-for-sale” and not an IPO to bring down the stake to 65 per cent.
“The government’s stake post-dilution will stand at 65 per cent,” he told reporters on the sidelines of the foundation stone-laying ceremony of its corporate building in the satellite township of New Town on the north eastern fringes of the city.
He further maintained that the company was also exploring options to divest stake in its subsidiary Ferro Scrap Nigam.
Having reported a turnover of ₹51,000 crore last fiscal, it is eyeing 10-20 per cent growth this fiscal. “We should cross ₹60,000 crore at least,” Basu said.
JV with Mahindra

Meanwhile, BB Singh, CMD, MSTC, pointed out that the company would invest close to ₹120 crore to set up its auto shredding and vehicle recycling unit. It has already entered into a joint venture with Mahindra Intertrade in this regard.
According to the CMD, around ₹20 crore will be spent towards purchasing eight acres of land around Delhi and NCR (national capital region). The collection unit will be set up on this parcel of land.
Shredding unit

Plans are also afoot to set up a shredding unit — for dismantling vehicles — with Dahej (Gujarat), NCR and Chennai being the probable destinations.
The proposed shredding and dismantling unit — with a capacity of one lakh tonnes a year — is expected to help reduce India’s dependence on imports for shredded scrap. Nearly, six million tonnes is imported every year at an appropriate cost of $2 billion. The shredding unit is a part of the ₹120-crore project and a joint venture with Mahindra Intertrade.
MSTC will also focus on the north eastern States as thrust area. It will look to increase its portfolio of auction offerings to include agri produce (from the region) apart from forest products and metal scrap.

Sandip Ginodia , Director 
ALTIUS INVESTECH PVT LTD | ABHISHEK SECURITIES

We deal in over 60 unlisted companies with 15 years of experience .
For latest prices visit : www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .