Friday, October 21, 2011

Corporate Accounts: Accounting substandard

Companies are able to hide more than they reveal and auditors are strangely comfortable with that
There is an organisation called the Institute of Chartered Accountants of India (ICAI). It is supposed to set standards for fair accounting and transparency in communication of financial information to anyone who reads an audited annual report. It is also obliged to make written comments on any aspect that it finds unreasonable or not satisfactorily explained. Under law, chartered accountants are supposed to be appointed as auditors by shareholders of companies. In practice, it is the promoter who appoints them. At every annual general meeting, a routine resolution is approved by shareholders, appointing the auditor chosen by the promoter. The shareholder is not given any information about the audit firm, its capabilities or its size. In reality, the shareholder has no control or clue about who the company’s auditor is. 
Over the years, there has been total laxity and dilution of accounting standards in India, under the guise of ‘conforming’ to international standards. I have been analysing balance sheets for a long time and I can see disclosure standards falling dramatically. Let me start with subsidiary companies. In the past, the annual report would have the full accounts, with schedules, of the subsidiary companies. Today, these are missing. If the company is somewhat generous, it may put up the subsidiary companies’ accounts on its website. This presumes that every shareholder has Internet access. However, the Web does not allow for a friendly read or enable you to move from page to page, quickly. Unless you sit down with a detailed paper report in your hand, you cannot see the accounting interconnections easily. 
Companies have abused the Internet to upload accounts in various formats that are difficult to read and engage in cross-reference. Now, one understands that there is a move to make reporting in one uniform language, but it seems unlikely that things will get any better. I see that companies have managed to lobby with the government, in the garb of the ‘green’ movement, and move to electronic delivery of annual reports. I do hope this will not become mandatory because it is sheer nonsense. Unless one has a printed annual report, it is impossible to analyse the books of accounts. One would have to take a printout of the soft copies in any case—which undermines the whole ‘green’ concept. And don’t forget that companies do print fancy and glossy annual reports for giving to fund managers and the media. 
To explain what the disclosure standards have come down to, let me take the annual report of Reliance Industries Ltd (RIL), one of the most widely-tracked companies in India. I read from the P&L (profit & loss) account that the sales for the year 2010-11 were Rs2,48,641 crore. However, what product/s the company sold cannot be fathomed from the accounts. There is no schedule that gives the break-up of sales. Of course, one schedule mentions ‘production meant for sale’, listing different products and quantities, but not their value. Whether they were sold and what they contributed, the accounts do not tell me. The same is the case with purchases. Manufacturing & other expenses were Rs2,11,823 crore. The explanatory schedule gives one line saying ‘raw material consumed’ at Rs1,93,234 crore! Wonder what this is. The term is in the singular, so it must be one mighty raw material! A small item of Rs68 lakh of lease rent is detailed in this schedule but something that is thousands of times more in value is dismissed in one line!
If I go to the balance sheet, it is very impressive, indeed. Net worth of Rs1,51,548 crore. The net block of fixed assets is slightly larger than this. Investments made by the company are Rs37,651 crore. If I go to the ‘consolidated’ accounts, this figure drops to Rs21,596 crore. I see that the company has listed 142 ‘related parties’! It will take expert scanning and working to fathom how much money is invested in any associate, what stake the company has, etc. Again, different year-end dates for many subsidiaries/associates add to the confusion. There are three pages in small print which give ‘financial information’ of 120 subsidiaries! The size of the letters bothers me and I give up on reading the balance sheet. 
I am sure RIL discloses everything to the research analysts or on its websites. But the point is that 200+ pages of the mandatory financial disclosures are not enough to apprise you about the company’s operations. This is so different from the past, when there would be detailed schedules from which one could work out the unit costs, unit realisations, etc. Today, in the name of saving on postage, printing, etc, reporting standards have gone to the dogs. 
About accounting standards, the less said the better. Companies are allowed to follow different standards if they go to a court of law. Even if they do, it should be the job of ICAI to qualify and quantify the issue. It rarely does so. The balance sheet of Tata Steel also throws up an interesting issue as far as accounting standards are considered. The notes to the accounts (page 160 of the annual report) show an ingenious accounting of the interest on ‘perpetual’ debentures. Here is an excerpt:
“c) The Company has raised Rs1,500 crores through the issue of Hybrid Perpetual Securities in March 2011. These securities are perpetual in nature with no maturity or redemption and are callable only at the option of the Company. The Distribution on the securities, which may be deferred at the option of the Company under certain circumstances, is set at 11.80% p.a., with a step-up provision if the securities are not called after 10 years. As these securities are perpetual in nature and ranked senior only to share capital of the Company, these are not classi´Čüed as ‘debt’ and the distribution on such securities amounting to Rs4.54 crores (net of tax) not considered in ‘Net Finance Charges’.”
When the company has an option to repay at the end of 10 years, how can it not be considered as debt for the first 10 years? Or is the company so sure of its abilities that it assumes the entire amount will never have to be repaid? And how can the interest on that be classified as something else? The company distorts its financial cover ratios if it does not include the amount under interest. Who knows? Maybe after 10 years, the entire debt can be converted into ‘other income’!
These two are only broad examples of what our disclosure standards have come to. Balance sheets are getting difficult to read and understand. This is surely not the road to increased transparency. The ICAI seems to be on a mission to help promoters to bring in opacity in the only formal communication that is made to the shareholders. And to think that under law, it is the shareholders who appoint the auditors! 
I would urge that SEBI (the Securities and Exchange Board of India) look into the accounting (sub)standards that are currently being followed with regard to listed companies. Left to the ICAI, we will never achieve any transparency in reporting.
R Balakrishnan

Google launches 'self-driving' car technology

Search giant Google has now unveiled a self-driving car technology that is designed to help people with mobility issues and to combat congestion.
The website's co-founder, Sergey Brin, recently announced that ten percent of the company is working on innovative projects outside the web domain, the first of which is the building of "autonomous" cars.
The driverless vehicles would travel through normal roads under the instruction of computers and would help people to combat congestion.
"There are a lot of people who can't get around, whether you have a disability, whether you're old or you're young," Fox News quoted Brin, as saying.
"There's also just incredible urban congestion caused by the need for parking. There's highway congestion because humans don't accurately drive on roads with smaller spacing. There's a tremendous opportunity to improve the world," he added.
According to the report, the car works using a rotating 75,000-dollars laser on its roof called a "lidar" that gives a 360-degree, 3D understanding of the car's surroundings that is accurate to two centimeters.
A computer in the trunk compares this information with known maps, and as a result, the car knows every road and traffic light.
The car is also capable of reacting to other cars and pedestrians, in any weather conditions and at any time of day.
Brin said that autonomous cars successfully completed a "1,000-miles challenge," in which they drove through a complex route including city streets and fast highways without human intervention.
But he also said the project remains in the research and development stage and will not go on sale for some time. (ANI)

Wednesday, October 19, 2011

Euro zone must assess solvency issues first - Mukherjee

NEW DELHI (Reuters) - The G-20 nations believe that the euro zone should first "credibly assess" their own solvency issues before the international community could extend any help, Finance Minister Pranab Mukherjee said on Wednesday.
"The overwhelming consensus in the G-20 is that euro zone should first identify and cridibly assess their own solvency problems before the international community can step in," Mukherjee told reporters.
Finance ministers and central bankers of the Group of 20 major economies pressed Europe last week to act decisively within eight days to resolve the euro zone's sovereign debt crisis which is endangering the world economy.
Countries outside the euro zone have warned of damage the European crisis was already doing to their economies and underlined the urgent need for action by the 17-nation single currency area.

Tuesday, October 18, 2011

Smartphones increasing global cyber crime

Cyber security experts have warned that the world is facing a wave of cyber crime, and blame it on our newly found addiction to the smartphone for the cause.
"This is a fully fledged computer that's sitting in your pocket," Sky news quoted Henry Harrison, from UK cyber security experts Detica, as saying.
The flaw in the smartphone is that it is too useful and too user friendly - for users who trade convenience for security.
They collect our emails, store our bank details, we tweet and use Facebook on them. They are our bank vault, our confidante, and our guide.
Criminals use Wi-Fi connection to harvest passwords and other sensitive data from smartphones or computers - often giving their Wi-Fi hotspots fake names familiar to punters at cafes and in airports.
Many smartphones are set up to automatically leap on to available Wi-Fi hotspots and start downloading emails.
Forty per cent of mobiles sold this year have been smartphones - and this has been a bumper year for malware developers who have focussed their attention on smartphones.
Those running Google's Android system have been especially targeted.
Bitdefender's Catalin Cosoi said: "We have investigated applications for Android devices and basically, based on our statistics, we've seen a 2,000 percent increase of malicious applications compared to the last year...Our prediction is that in the following 6 months, we will have a 6,000per cent increase in malicious applications."
Smartphones are becoming the gateway for cyber criminals and cyber spies into sensitive personal data, industrial and state secrets.
"Once you have a smartphone, you probably can't go back to an older version of a phone now that you have access to a computer, social media, emails, pictures and so on. You sort of get addicted, so smartphones are becoming very important," Cosoi added.
"On the other hand, it's very, very easy to create malware for smartphones.
"Sometimes you can take a malicious part from one application and insert it into another and start propagating an application on the web. So smartphones are increasing and also, it's very easy to create malicious applications for smartphones," he added.(ANI)

Monday, October 17, 2011

Bring public expenditure under purview of audit: CAG

Shimla, Oct 16 (IANS) Comptroller and Auditor General (CAG) Vinod Rai Sunday underlined the need for amending the CAG's mandate to bring all public expenditure within the purview of public audit.
He highlighted that audit laid great emphasis on interaction with the institution under audit.
'Dialogue is absolutely essential both for the smooth conduct of audit and for successful outcome from the audit,' Rai observed at a two-day seminar on 'CAG's audit mandate' that concluded at the National Academy of Audit and Accounts here Sunday.
In his inaugural address Saturday, Union Rural Development Minister Jairam Ramesh had advised the auditors to appreciate and be sensitive to the genuine constraints faced by the executive in implementation of government programmes.
'While the executives should interact with the auditors and use the audit recommendations as an input for good governance, the auditors should also be sensitive and appreciate the genuine constraints faced by the executive in implementation of the programmes,' he said.
Seven secretaries of the government of India, principal secretary (finance) of some states and higher officials of the CAG across the country participated in the seminar.

India sees 8.5-9% growth in medium-to-long term

Finance Minister Pranab Mukherjee said India is on track to achieve growth of up to 9 percent in the medium-to-long term and should invest in quality infrastructure to keep up momentum in the economy.

Saturday, October 15, 2011

Learn from India, put economics in foreign policy: Hillary Clinton

New York, Oct 15 (IANS) The United States should take a cue from the leaders of emerging powers like India and Brazil who put economics at the centre of their foreign policies, Secretary of State Hillary Clinton has urged policymakers.
'When their leaders approach a foreign policy challenge -- just as when they approach a domestic challenge -- one of the first questions they ask is, 'how will this affect our economic growth?'' she told the Economic Club of New York Friday in what was billed as a major economics and foreign policy speech.
'We need to be asking the same question -- not because the answer will dictate our foreign policy choices, but because it must be a significant part of the equation,' she said declaring she is updating US foreign policy priorities to include economics 'every step of the way.'
The United States must position itself to lead in a world 'where security is shaped in boardrooms and on trading floors -- as well as on battlefields,' Clinton said noting 'We have seen governments toppled by economic crisis.'
The United States is 'modernising (its) agenda on trade, investment and commercial diplomacy to deliver jobs and growth for the American people,' she said. But Washington cannot compete if it is frozen in domestic political fights.
'Washington has to end the culture of political brinksmanship -- which, I can tell you, is raising questions around the world about our leadership.'
Asked how corporate strength could be used to benefit the creation of jobs and enhance economic growth in the United States, Clinton acknowledged 'It's not as though American companies go invest in China or India or Brazil and there's no benefit back home. there is.'
'But the quality of the benefit, the amount of the benefit, and the durability of the benefit depend upon decisions we make here as to how we think about our competitive stance in this new challenging environment.'
The world's 'strategic and economic centre of gravity is shifting east', she said and the United States is now focusing more on the Asia-Pacific region.

Friday, October 14, 2011

Govt unveils export sops in trade policy

Commerce minister Anand Sharma (centre) is flanked by commerce secretary Rahul Khullar (right) and director general of foreign trade Anup K Pujari as they release booklets on the foreign trade policy in New Delhi on
BS REPORTER New Delhi, 13 October
FEARINGa slowdown in exports due to external headwinds, the government today announced a slew of measures to boost exports from the highvalue engineering, pharma and chemical sectors as well as traditional textile items.
The measures, announced by commerce minister Anand Sharma at a review of the Foreign Trade Policy, will have revenue implications of
`800900 crore this fiscal. Along with atwo per cent interest subvention on rupee export credit to some labour intensive sectors announced by the Reserve Bank two days back, these steps will hit the exchequer by
`1,700 crore this fiscal. The sops will allow exporters in these areas to get cheaper imports, depending on the value of their exports.
Turn to Page 16
SPECIAL BONUS BENEFIT SCHEME: Concession on duty rates on imports to the tune of 1% of export value (freight on board) to 50 products in engineering, pharma and chemical sectors
SPECIAL FOCUS MARKET SCHEME: Concession of 1% of value of freight-on-board exports for exporting to countries in South America, Africa and Confederation of Independent States
SUPPORT TO APPAREL SECTOR: Apparel sector exports will get benefits to the tune of 2% of their exports to the US and EU
FOCUS PRODUCT SCHEME: Concession of 2% of freight-on-board value of exports
MARKET-LINKED FOCUS PRODUCT SCHEME: Scrip to the tune of 2% of freighton-board value of exports
1 Q & A1
We’ll meet $300 bn export target, says Sharma ?5

Govt unveils..
Stating that it was difficult to put a number on revenue implications, commerce secretary Rahul Khullar said, “In a ballpark range, excluding interest subvention, it will be `800-900 crore. For interest subvention, it will be `800-1,000 crore... a total of about `1,700 crore.” Sharma said, “I have taken up the issue of extending a scheme for the import of capital goods at zero duty for exports of certain items and the status-holder incentive scheme beyond March 31, 2012 with the finance minister.” Sharma said the finance minister was receptive to the idea and a decision could come soon. He said a committee was set up to address the issue of dollar availability for exporters. The committee comprises the secretaries of finance, commerce and financial services.
The measures annnounced today include providing scrips to the value of one per cent of the freight-on-board value of exports, which could be used while importing goods. The special bonus benefit scheme will be provided to the engineering, pharmaceutical and chemical sectors.
The scheme would come into effect from October 1 to March 31, 2012. However, commerce ministry officials believe exporters will start to benefit from November onwards. Though the scheme is for six months, officials do not rule out an extension.
Engineering goods were the success story behind good exports during the first six months of this fiscal, growing 103 per cent at more than $42 billion.

Thursday, October 13, 2011

Repaying a personal loan!

If you are stuck in a personal loan debt, here are some ways to free yourself:
Asset monetization
If you have one or more of these assets such as car, home, life insurance policies, tax saving certificates, shares, bonds and debentures, or gold jewelry, bank fixed deposits, or mutual funds, you could monetize them to pay off your debt. In fact, some banks offer loan against assets that carry a lower rate of interest which could be used to settle your personal loan.
Consider debt consolidation
Another effective way of dealing with your debts is through what is called debt consolidation. In this method, you could pay a relatively lower installment every month over a longer tenure to the lender who will combine all the components of your debt portfolio into one. Debt consolidation is an effective option if you have too many loans to take care of and not enough monetary capacity for astute financing as this method will give you a built-in view of your credit worthiness. Though beware that when you calculate the total loan cost in the long run, it might become expensive. However, the idea is to obtain a short term relief under the current circumstances. Once your finances improve aim to close the loan earlier than planned.
Top up or convert to a secured loan
If you had taken a home loan you can move to a lower cost credit by going for a top up on your current loan. Another viable option would be to talk to your bank and if they agree convert the current loan into a secured loan against your vehicles, house, but only if the property is free from debts, liens or mortgages. This way you can restructure the loan for a lower monthly payment after taking into consideration the loan tenure and the interest rate.
Perhaps, the only drawback in converting a personal loan into other loans having collateral is that you stand to lose the collateral at risk in case of default on your loan amount, which could mean a lot when there is a contingency in the future. Hence, it is advisable to convert your current debt into a secured loan only after analyzing your capacity to repay the secured loan so that you don’t stand to lose the collateral at risk.
Remember that even a single default on your personal loan could trigger unexpected after effects in the repayment of your current loan and getting a future loan. In cases of the first default, it is ideal for you to talk to your lender and find a way out. Under normal circumstances the lender could impose a penalty of roughly around 2% on the default amount, which will only add to your current burden! So strive to discuss any problems you face with the lender to seek advise on possible solutions.
A personal loan is always a risky alternative finance with a higher rate of interest and it is better to close the loan as early as possible.
Evaluate other options before you take up a personal loan
In a case of any eventuality you could try the other time tested avenues of finding emergency funds. Monetizing your assets, or selling off your shares, bonds or debentures or premature closing of your fixed deposit could help! If you are a salaried individual the best way to get funds to meet a contingency is to approach the bank where your salary credit is done. Having known your track record and your exact income and withdrawal transactions, the banks are the best option available for you to secure a loan. The rate of interest could be relatively lower for you, as you bank with them. The same option holds good for any businessman having a current/savings account with a bank.
You should opt for a personal loan only if you do not have any assets to monetize or other options don’t work for you as interest rates are the highest next to only credit cards!

Wednesday, October 12, 2011

New telecom policy puts roaming to rest

Extra charges to end in single-licence regime; operators can share, trade spectrum; infra status for telcos; stocks rise.
Consumers will not have to pay roaming charges and mobile number portability will be available nationwide under a new telecom policy draft released by communications minister Kapil Sibal on Monday.
The policy envisages a ‘one nation-one licence’ regime: companies will not have to apply for separate licences in every circle/service area and users will not have to pay roaming charges. A single licence will do across all the 22 service areas in the country.
The policy will allow mobile operators to share, pool and trade spectrum. Spectrum will, in fact, be delinked from licences in future and priced at market value. In the existing policy, start-up spectrum of 4.4 MHz is bundled with the licence.
The department of telecommunications (DoT) will unveil an exit policy for operators. It has been referred to the Telecom Regulatory Authority of India (Trai) for formulation. That should aid consolidation in the industry, which has 12-13 players in each circle. DoT will also seek Trai recommendations on the new licensing framework and migration of licences. An additional 300 MHz of spectrum will be made available by 2017 and another 200 MHz by 2020. The telecom sector will get infrastructure status under the new policy.
“We’ll ensure adequate availability of spectrum and its allocation in a transparent manner through market-related processes. We’ll prepare a road map for the availability of additional spectrum every five years,” Sibal said.
The minister ruled out the auction of broadband wireless access spectrum in the current fiscal. “We’ll audit spectrum and its use,” he said. “In achieving the goals of the national telecom policy 2011, revenue generation will play a secondary role. Our vision is to have broadband on demand.”
DoT had started work on the new telecom policy - 2011 in January in the wake of the 2G spectrum allocation controversy. Former telecom minister A Raja and officials of various companies are in judicial custody in connection with that. Operators battling intense competition and low tariffs will be hit by the end of roaming charges. According to industry estimates, roaming charges account for eight per cent of telecom players’ revenues.
“There will only be a short-term impact on revenues because of no roaming charges. But, it will definitely increase the usage of services, voice or data,” said KPMG’s Romal Shetty.
Bharti Airtel stocks closed 2.38 per cent higher at Rs 363.25 on the Bombay Stock Exchange on Monday. Idea closed 2.33 per cent higher at Rs 92.40 while Reliance Communications was up 1.72 per cent at Rs 74.05.
Cellular Operators Association of India director general Rajan Mathews said, “The draft policy has given clarity and a direction to the industry. But, details will have to be worked out. On the abolishment of roaming charges, how the existing licensees will be able to make their licenses pan-India, the new numbering plan, how the networks will be configured — all these issues will have to be sorted out before any plan.”
The policy aims to provide on-demand broadband for all citizens and increase rural teledensity to 100 per cent by 2020 and 60 per cent by 2017 (it is 35 per cent at present). There will be focus on the convergence of TV, internet and internet services. Broadband download speed will be revised to 512 kbps from 256 kbps currently. The policy also aims to make India a hub for telecom equipment manufacturing.
Reacting to the policy draft, Bharti Airtel said in a statement, “It signals the government’s focus on future growth areas such as broadband and convergence. Infrastructure status for the sector and rationalisation of taxes and levies will provide relief.” “The policy will take the country into the next stage of inclusive growth. We’ll actively participate in the government’s consultative process with various stakeholders,” said a statement by Idea Cellular.

Tuesday, October 11, 2011

BSE Sensex ends down 21 points

MUMBAI (Reuters) - The BSE Sensex erased early gains to end down 0.13 percent on Tuesday, as investors turned cautious ahead of the start of the quarterly earnings parade and the release of industrial production data.
The main 30-share BSE index ended down 20.76 points at 16,536.47, with 16 of its components closing higher.
The 50-share NSE index fell 0.11 percent to 4,974.35 points.
(Reporting by Prashant Mehra; Editing by Aradhana Aravindan)

Sunday, October 9, 2011

PM to mediate in DIPP, PlanCom slugfest on pharma FDI

The Department of Industrial Policy & Promotion (DIPP) and Planning Commission member Arun Maira are sticking to their guns on foreign direct investment (FDI) in the pharmaceutical sector. Prime Minister Manmohan Singh will hold a meeting with the stakeholders on Monday to sort out the differences.
The Maira Committee draft recommends the rules guiding 100 per cent FDI in pharma through the automatic route should not be changed, but the Competition Commission of India (CCI) should vet all mergers and acquisitions (M&As).

However, four of the eight panel members, representing the ministries of health (two members), commerce, and science and technology (one each), have opposed the report.

The DIPP, on its part, has submitted a dissent note against the contents of the draft, which is being added to the report. Singh will consider the report on Monday.
On allowing 100 per cent FDI in acquiring pharma companies, the DIPP said: “We are worried a stage may come when we may not have a company ready to manufacture drugs on behalf of the government, even if the provision of compulsory licence is invoked.”
A senior official from the health ministry said the report had failed to recognise the difference between sectors where 100 per cent FDI was allowed and the health sector. “It’s not just an issue of competition,” he said. Favouring 100 per cent FDI, Maira wants monitoring of this overseas investment through the CCI. “We still believe the CCI should be used to keep a tab on M&As in the pharmaceutical sector as it is a competent body,” Maira told Business Standard.
The DIPP, however, has raised serious questions on the roles and powers of CCI, which, it says, were approved recently and would take substantial time before being effectively implemented. It said the CCI had been mandated to work on anti-competitive practices and, thus, it would not be able to address public interest issues on health.
The health ministry official said the country’s health care security could not be protected by mere competition control or price control. “You need to build and sustain health care capabilities through sufficient generic competition and national ownership of such capabilities,” the official said.
The fact that acquiring companies were paying huge valuations, which were many times the cost of setting up greenfield projects, did raise a question on their motivation, said the DIPP, adding the (Maira) Committee should have appreciated this position. Earlier, the health ministry had raised concerns on the impact of a series of takeovers happening since 2006 in the domestic drug industry. Subsequently, it urged the ministry of commerce and industry to tweak the FDI policy, following which the Maira Committee was formed to examine the current policy on pharma.

Friday, October 7, 2011



To trace the secret bank accounts of Indians abroad, the finance ministry is considering reopening accounts of such individuals for the past 16 years, against the present norm of only six years.
“We may inspect past records. The number of years may be extended from six years to 16 years,” said a ministry official. This might, he said, help in seeking information from tax havens on such individuals, as the government would be in a condition to have more relevant details. Currently, the ministry can seek information from tax payers on unexplained investment under Section 69 of the Income Tax Act. Likewise, it can seek details on unexplained expenditure under Section 69C of the Act. The assessing officer has the power to reopen a case up to six years from the end of the relevant assessment year.
India has been revising its tax treaties with many tax havens to crack down on evaders. However, the revised agreements, including a recent one with Switzerland, allow India to access information from these countries only from prospective effect. India and Switzerland will start exchanging information on tax matters from the next financial year after the new treaty is ratified by the Swiss parliament tomorrow, paving way for obtaining data on unaccounted money stashed there.
Last month, a government panel had ruled out any Voluntary Disclosure of Income Scheme, creation of a new Act and capital punishment as measures to deal with the issue of black money abroad. The committee suggested only strengthening of the administrative machinery and better sharing of intelligence.
The government has adopted a five-pronged strategy on unaccounted money. It includes creating an appropriate legislative framework, joining the global crusade against black money, setting up institutions for dealing with illicit funds, developing a system for implementation, and imparting skills to its staffers for effective action. It has entered into pacts with three economic think tanks —National Institute of Public Finance and Policy, National Council of Applied Economic Research and National Institute of Financial Management — to arrive at an official figure on the extent of the problem.

Tata Motors launch Manza, Prima in South Africa

New Delhi, Oct 7 (IANS) Automobile major Tata Motors Friday launched premium sedan Manza and its trucks range Prima at the Johannesburg international motor show in South Africa.
'The new Tata vehicles being introduced in South Africa will bolster our already significant portfolio in the country,' P.M. Telang, Tata Motors managing director - India operations, said in a statement here.
He said the company hopes to penetrate further in the African market with its new offerings. 'We look forward to a deeper presence in South Africa, which is already a focus market for us.'
Other top company officials said the African continent presented an enormous potential for the company in the automobile sector.
'We see Africa as a region of tremendous potential for the group and our participation in the motor show with the introduction of the latest products will serve to further strengthen the Tata brand in these markets,' said Tata International managing director Noel
The auto-giant's sedan will sport a new body, interiors and platform. The car will be powered by Fiat's 66 kw quadrajet diesel and safire petrol engines.
'The Tata Manza will be available across dealerships in South Africa next year,' the company said in the statement.
Meanwhile, the company also launched its international range of trucks - Prima - in South Africa. The trucks will be available in South Africa by early 2012.
The company has been exporting its commercial vehicles to South Africa since 1998, while the exports of passenger vehicles began in 2004.
It has so far sold over 32,000 passenger vehicles and over 35,000 commercial vehicles in South Africa.

Wednesday, October 5, 2011


The Empowered Committee of State Finance Ministers will meet on October 14, the first since it returned from aEurope trip last month to study the Goods and Services Tax (GST) model there and how it can be implemented in India.
The learning from the fourcountry tour tops the agenda of the meeting, while the GST structure, the compensation package on account of the Central Sales Tax phase-out, and the information technology platform will also be discussed.
The implementation of the indirect taxation system has been stuck following opposition from some states. The Centre was expecting states opposing GST might soften their stance after seeing how GST works in other countries. But now there are indications that the 10-day tour of France, Spain, Luxembourg and Belgium might have reaffirmed the states’ beliefs about their demands on GST.
Some finance ministers have come home convinced that if countries in Europe can have multiple rates for GST so can India. For some others, the European structure cannot be compared with India.
After seeing how GST works in Europe, Empowered Committee Chairman and Bihar Deputy Chief Minister Sushil Modi has arrived at a conclusion that a rate band instead of fixed and uniform rates of taxes should be adopted in India on the lines of Europe to provide flexibility to states.
European countries have kept the standard rate at 15 per cent and there is a band ranging between 15 and 25 per cent.
Also, there is a reduced rate of five per cent. They also have an exemption threshold.
For Madhya Pradesh Finance Minister Raghavji, who has strongly opposed all the GST models suggested by the Centre from the beginning, the trip was an eye-opener. He says he realised the federal structure in Europe is much different from ours and a cash economy like India cannot adopt GST in the form suggested by the Centre.
A finance ministry official, however, said states had conveniently learnt from Europe whatever suited them, but when it came to various other things, like a dispute resolution panel with binding decisions, they felt India was different and could not copy these things.
During the tour, the ministers had met Spain’s secretary general for finance, the French minister for foreign trade, Belgium’s deputy prime minister and minister of finance, the OECD deputy secretary general, and secretary of the Eu
The implementation of the indirect taxation system has been stuck following opposition from

Tuesday, October 4, 2011

MCA makes it mandatory for CAs, CSs, CWAs to digitally sign DIN applications

Permanent Account Number (‘PAN’) has been made mandatory for DIN applications. Also, previous DIN holders are required to add their PAN details vide form DIN-4 on or before 30 September 2011.
THE Ministry of Corporate Affairs has vide General Circular No. 32/2011, New Delhi Dated 315t May, 2011 decided that with effect from 12th June, 2011, all DIN-1 & DIN-4 applications have to be digitally signed by the practicing Chartered Accountants, Company Secretaries or Cost Accountants who shall also verify the particulars of the applicant given in the applications. All these applications will be approved online.
At present, the PAN of the applicant is not a mandatory field in DIN eform-1. In order to examine DIN e-forms through the system and to avoid duplicate DIN, it has been decided that all existing DIN holders who have not furnished their PAN earlier at the time of obtaining DIN, are required to furnish their PAN by filing DIN-4 e-form by 30th September, 2011 failing which their DIN will be disabled and they shall also be liable for heavy penalty
It may be noted that the Ministry has already issued instructions on April 7 this year regarding the intention to allot all DIN applications online and to examine the DIN-1 and DIN-4 e-form through the system.

 Accordingly, following fields in the DIN e-form will be mandatory :

(i) Name of Applicant
(ii) Father’s name of the Applicant
(iii) Date of Birth
(iv) Income Tax Permanent Account Number (PAN) in case of all Indian Nationals.
(v) Passport in case of all Foreign Nationals.


MANYincome-tax (I-T) payers, especially businessmen or people with many sources of income, may file returns that need to be revised. This could happen when income from some sources were not determinable or because of some mistake during the time of assessment. In such circumstances, the I-T department allows for revision of returns.
While doing so, some clauses need to be adhered to. For one, you can only revise the return if the original one was filed on time, that is by July 31. Belated returns cannot be revised. Revision becomes extremely important for people who are filing for losses. If the returns are not filed on time, losses cannot be carried forward.
Also, revision is allowed only if the omission was unintentional. The benefit of Section 139 (5) cannot be claimed by a person who has filed fraudulent returns. Section 139 (5) will apply only to cases of omission or wrong statements and not to cases of concealment or false statements. And, once you revise returns, the original stands withdrawn. If the omission(s) in the original return is intentional, the assessee will be penalised, warns Nagaraju PS, director of
There is also a time line. You can revise I-T returns before the expiry of a year from the end of the assessment year or before the completion of assessment of returns, whichever is earlier. So, the returns of assessment year 2010-11 can be revised till March 31, 2012, or before the completion of the assessment.
A notice under Section 148 is issued for not paying the entire tax liability. "You need to file tax returns pursuant to this notice and this return can be revised," says Kaushik Mukherjee, ED (tax & regulatory practices), PricewaterhouseCoopers. Reason: Section 148 says for such returns, all the provisions of Section 139 would apply.
Here, you need to pay the additional tax due, with an interest of one per cent a month on the delayed tax amount, reminds Vishwanathan K, executive director, RSM Astute Consulting Group.
There is a penalty for non-payment as well. Section 271(1)(c) levies a penalty for concealing income and furnishing inaccurate details at the time of filing returns. The penalty can be 100 to 300 per cent of the tax due, says Mukherjee. Some say if the returns are revised before the notice under Section 148 is issued, then there is no penalty.
Experts say if income was hidden in the original return and is revised and disclosed after the assessing officer pursued it, then apenalty is levied. If the revised return shows a higher income than originally declared, a penalty may or may not be levied.

Sunday, October 2, 2011

Airports authority says it won't finance DIAL bailout

The Airports Authority of India (AAI) has rejected a move to bail Delhi International Airport Ltd (DIAL) out of a financial crisis by extending it a Rs 350 crore loan at nine per cent rate of interest.
The proposal was mooted at a Prime Minister’s Office (PMO) meeting, chaired by the principal secretary to the prime minister in August.
AAI has also not accepted another proposal to let DIAL pay its share of revenue on a ‘cash’ basis, saying it was not found to be in conformity with its accounting principles. Paying on a ‘cash’ basis would mean the payment would be made based on actual revenues, excluding dues from Air India.
DIAL has been facing a cash crunch because the state-owned Air India has not paid dues of over Rs 250 crore. However, the company has to pay its 45.99 per cent revenue share to joint venture partner AAI at the beginning of the month, based on normal revenue projections.
During the meeting at the PMO chaired by its principal secretary, it was decided that AAI, being one of the shareholders of DIAL, may explore various possibilities, including a short-term loan, to avoid the risk of the airport facing financial problems on account of non-payment of dues by Air India.
The meeting was also attended by Nasim Zaidi, civil aviation secretary, AAI chairman V P Agarwal, Vini Mahajan and Davinder Sandhu from the PMO, as well as GM Rao and Kiran Grandhi, chairman and managing director of DIAL, respectively.
Rejecting the proposal, AAI said it had no provision for extending any such loans to any entities, including its joint ventures. The state-owned airport operator said it had already borrowed Rs 1,500 crore from the open market at an interest rate of 10 per cent per annum.
AAI has argued its dues with various airlines and concessionaries as on March 31, 2011 amounted to Rs 1,687 crore. The dues against Air India rose to Rs 845 crore till June 30, 2011.
It has also argued against the loan, saying it would need to finance ongoing airport projects, including the mega projects of Kolkata (Rs 1,000 crore) and Chennai (Rs 590 crore). The other reason for rejection it has given is it has to pay advance tax and service tax. The payment of these taxes in respect of the billing on Air India without realisation has adversely affected the company's cash flow.
DIAL says it needs money primarily because of two reasons: its Airport Development Fee (ADF) has been stopped and Air India has not been paying it for a year.
“Our short-term borrowings have increased to Rs 650 crore and we are in a tight liquidity situation.
The government needs to ensure Air India starts paying something to us and we are allowed to charge ADF,” said a GMR spokesperson.
AAI chairman V P Agarwal did not respond to an SMS query and phone calls.
DIAL's cash crunch was compounded by a court order to stop charging ADF, leading to a daily loss of Rs 2 crore. Before the order, every domestic passenger leaving the Delhi airport was charged Rs 200 and every international passenger Rs 1,300 as development fee.
Delhi airport has been upgraded and is being maintained by DIAL, a joint venture led by Bangalore-based GMR group (which holds 54 per cent stake). AAI holds 26 per cent. Malaysia Airports Holdings and Fraport hold 10 per cent each in the joint venture company.
According to the agreement between the government and DIAL, the latter is required to share 45.99 per cent of its gross revenue with the public sector airport operator.