Archive for Finances

admin | March 17, 2016
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Start Up India.. Whats So New About It ? What More is Needed ?

What I feel is that there does exist a good bit of confusion about who exactly is a Start Up.

Simply put, any newly started business is a start up. As far as way of doing business, and the complexities of business is concerned, a start up is on the same grounds as that is there for any other new ventures.

But in order to encourage budding entrepreneurs the Government and certain organisations are offering certain free bees , training ,incentives, concessions and even financial support . For receiving entitlements for such advantages one needs to see that his or her new business venture falls within the definition of a Start UP.

Looking to the past history of incentives, one sees that giving concessional finance, providing infrastructural support at a concessional rates , giving subsidies etc have always been there. For instance, in Gujarat, GIDC, GSFC, GIIC, GSIC etc Government Organisations have played this role quite effectively in the past.

So what new is happening now ?

It is the participation of government and even the private sector by opening up their purses for providing business incubation and hand holding support that is note worthy. Earlier this role was being played by relatives and friends, which kept many budding , but not so well connected entrepreneurs at a clear disadvantage.

Secondly, over time, investors have realized that there are many brilliant ideas which , if nurtured to a business reality, has unbelievable possibilities of growth. Google, flip cart, etc speak for themselves. For investors there is a huge possibility of making good money if they take an equity exposure at the right time in right venture.
This business arena is fast catching up and there are real hectic activities growing between newer entrepreneurs with good ideas and opportunity seeking investors.

It is this Eco system that being nurtured and developed under the name and style of Start UP .

At the same time, we should look at the hard realities of actually doing business in India. The Administrative lethargy, the small time corruption, the end less delays and the evasive attitude in the real time world puts off many new entrants. These factors have resulted into numerous closures of potentially viable units. We need to also develop an Eco system that enables the picking up of potentially viable units and separating them from truly nonviable units. The BIFR experiment has failed to live up to its expectations. I see it as a great opportunity for the private sector to evolve a business model for reviving such units and share the fruits .Encouraging and setting up of merger mechanism and mechanism for taking over of the management of identified units is an area worth looking at .

There are units which go Sick and are not viable. Sometimes the promoters lack honesty and integrity.
For such units, the Bankruptcy laws and speedy legal actions will go a long way in unlocking the precious assets that get entangled with such ventures through revival.

Such holistic approach towards the entire field of industrial and service sector development will go a long way in giving a further boost to the economy .

Category: Finances, General, Uncategorized | Tags: , , ,
admin | March 10, 2016
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EPF Roll Back /Budget 2016.Buying peace at a high cost

The roll back of the provisions of EPF Taxability , is a step much appreciated by one and all affected tax payers and tax experts.
But if we look at the reasons behind introducing this provisions, one would realise that it was anaborted attempt to plug a huge loophole.

The wealthy salaried employees were contributing the maximum amount possible under the rules , which is 12% of their slalries, without any cap.

All that was required to be done was to put a maximum limit of 150,000 on employee contribution as well. This could have met the good objective of plugging the loophole. In stead , a clumsy provision was drafted and explained in a vague manner, which resulted into sufficient confusion and uproars , leading to its pre matured abortion. The high flying executives have perhaps earned one more tax free gift , at least for one more year. Many will join their club , who have realised that they could also have made merry while the sun was shinnig unabated till now.

But in budget presentations, peace is required to be bought in favor of the vocal fews, anyway.

Category: Finances, Taxation | Tags: , ,
admin | March 2, 2016
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Lessons From A Union Budget !

A Union Budget in India is one of the most debated Subject. It is so healthy to note that the attention of the intellectuals is , at least temporarily, diverted to some issues faced by the nation . We need more and more of such debates and interactions with those who govern us .

No matter how strongly we criticize the Governments, it remains a fact that year after year, they do come out with the budgets where in the Actual performance is also compared with the originally budgeted and revised Estimates. May I know, how seriously this is being done even in the private and personal sectors ? My gut feel is, the private and family pwned businesses in India fall pitiably short of our expectations when it comes to budgeting and transparency .There are some good points to learn even from Public sector, which has strictly followed this tradition left by the much criticized British Raaj !

Category: Finances, General | Tags: ,
admin | February 24, 2016
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Budget Expectations

The Budget Fever is picking up for the Budget 2016.
We all have read and heard many opinions and expectations .
Details apart, the following is quite visible and desirable

SWEETNERS

1… Reduce the burden of tax of common man by enhacing the exemption limit
2… Provide addition in ceiling of Sec 80C to provide incentive towards savings
3… The Exemption limit and 80C limits be made inflation adjustible henceforth
4…Enhance HRA, Edu Allo, Hosing loan interest etc deductions
5… Make Pension schemes more attractive
6… No TDS on Interest income from Banks upto Rs 50,000 pa
7… Withdraw in phases, the additional depreciation and similar incentives
8… Simplifications in Transfer pricing and normal assessment procedures
9… Reduce the Corporate rate of taxation

BITTER

1… Increase in Service Tax on certain services
2… Enhancing Wealth Tax and reintroduction of Estate Duty

GENERAL

Various Rural Schemes will be announced . NAREGA will be streamlined. Strict action against defaulting borrowers( NPA) will be announced

On the whole it will be a consumer oriented budget, giving higher purchasing power . The dependance on market borrowing and PPP will enhace substentially

NOW, LET’S Wait and Watch

Category: Finances, Taxation |
admin | February 17, 2016
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The NPA Volcano

I feel RBI deserves full credit for digging the surface of the NPA Volcano before it is too late. We as a nation and I in my individual capacity should be and are proud of their action.

A lot is being talked about NPA and therefore I prefer to be brief and to the point.

1. There is a need to redefine and large and willful defaulters. Their wings have to be curtailed. Some of the ways of curtailing or disciplining them can be :

a) Appointment of auditors should be by consortium of lenders. They should be provided additional special terms of reference.

b) The majority in the Board in no case should be with thedefaulting promoters’ group. Even without holding majority in the Board, the promoters can and should run the unit well within the permissible limit.

c) If, the above fails to remedy the situation, the management should be completely taken over and for that matter, out banking system will have to create a pool of professionals and other promoters with proven track record.

2. Over a long period of my career as a professional CA and with the experience of being professional independent director in one of the nationalised banks, I have seen that the name of the ‘consultant’, ‘adviser’ etc functionaries who peddled the Loan is not referred to in the files once the loan is disbursed and turns into NPA. In fact, there should be a directory of consultants etc. who have played a role during the relevant period.I am sure a clear track will emerge.

3. We need to bring in an element of incentive towards the loan which did not get converted in to NPA. The bank officers responsible and associated with such accounts and also the Borrowers need to be given incentives.

4. A time has come to have a relook at the constitution of the boards of the nationalized banks.Too much presence of Controlling authorities bring an element of undue influence as well.

5. As a practitioner, at BIFR, I also observed the tremendous delays in settling ( if at all it is settled ) a bad loan. The entire legal structure and the legal system needs to be re looked. Mere changing of law ( as envisaged in the amended Companies Act 2013 ) will not be adequate. The parties and institutions involved in delivery of justice needs a closer look. This includes the role and manning of DRTs, ARCs , Legal and other professional fraternities’.

These are some stray observations, but the fact remains that in the Banking Sector a major operation is required.If defaulting promoters are allowed to get away with Restructuring the Loan portfolios and Banks are saved through Injunction of more Capital what I fear is that there would be an indirect incentive for a willful defaulter to first commit a default and then take the bonanza of large scale write-offs and settle it.

Even the banks appear to be in a mood to declare a huge NPAs so that more capitalization is justified.

I am sure the readers will appreciate what I’m trying to point out.

Category: Finances, General, Uncategorized |
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