Everest Kanto reported a total revenue of Rs. 380 Cr.

Editorials - October 12, 2022

Amid an energy crisis, desperate Europeans turn to firewood for warmth

Amid an energy crisis, desperate Europeans turn to firewood for warmth.

At a summit in Prague, European leaders fell short of agreeing on a price cap for gas amid concerns that any such move could threaten supplies to the region. the gas pipeline is the latest sign of the regions critical position as Russia slashes supplies in the standoff over the war in Ukraine. As much as 70% of European heating comes from the natural gas and electricity and with Russian deliveries drastically reduced.

In france prices for wood pellets have rised nearly doubled to 600 euros a ton. And there are signs of panic buying of the most basic fuel , meanwhile wood stoves can now take months to deliver. The energy level of crisis is intensifying a surge in living expenses , with inflation strapped households across the region are increasingly faced with choosing between heating and other essentials.

Europeans are so angry over sky-high bills and starting to gather the firewood for winter.,
For many Europeans the key concern is doing whatever it takes to stay warm in the coming months. The fear for heat could create health and environmental issues. the diseases can end up deep in the lungs and cause heart attack , strokes etc said by the expert. In Germany facing a yet another crisis after Russia shut down its Nordstrom one national gas pipeline due to technical issues. Germany, where the country’s association of chimney sweeps is dealing with a flood of requests to connect a new and old stoves, and peoples are inquiring about the burning horse dung.

People are anxious for wood and they are buying more than usual. In Berlin , crisis creates unsettling echoes of the desolation following world war 2 with fuel of short supply, residents chopped down nearly all the trees in the central tiergarten park for heating.

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Editorials, Equities, Markets - July 27, 2022

Government allows Indian public companies to directly list shares overseas.

Government allows Indian public companies to directly list shares overseas.

Government’s vision for betterment of Indian companies:

In late January 2020 Government of India communicated to media that they are planning to allow direct listing of Indian companies in foreign markets. This will help Indian companies to not only rely on domestic markets but they can also raise capital on large scale from various foreign markets which will help companies in diversification and growth. This move can directly help Indian companies in increasing their turnover and profits.

Till now Indian companies go for the depository receipts to attract investors globally but this is bit unfamiliar amongst the investors globally and been less attractive in recent years. A minimum of 15 Indian companies currently attract foreign investors via ADR’s and GDR’s. These companies includes Reliance Industry, HDFC Bank, Infosys and many others.

Green signal by Indian Government:

Finance Minister Nirmala Sitharaman had announced an economic package of ₹ 20 lakh crore under government’s Atma Nirbhar Bharat Abhiyan. This is done for the revival of Indian Economy. It is an umbrella of massive ₹ 20 lakh crore economic booster package. The government ensured to provide some relaxation in all the sectors.

To improve “ease of doing business” in India, government allowed Indian public companies to list their shares in foreign markets. This provision will help Indian companies for better valuations, rapid growth and expand their businesses on a large scale. This move will help Indian companies to get funds at a cheaper rate from various foreign markets. This will directly help Indian economy to recuperate in a speedy way.

Government noted private companies that listed Non-convertible debentures (NCDs) on Indian stock exchanges not to be considered as listed companies. It is also expected that this provision is to prevent Indian companies to register themselves in foreign markets like Singapore and London for raising a fund and going global.

Existing vs proposed rule:

The existing rule states that companies which are listed on Indian stock markets can only list their company in foreign markets. Whereas, new proposed rule states that there is no compulsion for it. Indian companies can list themselves directly in various foreign markets to raise capital.

Until now, only American Depository Receipt (ADR’s) and Global Depository Receipt (GDR’s) can collect capital from foreign market sources. At least 15 Indian companies follow this mechanism to raise capital from foreign markets. However, this is not much familiar amongst the global investors. To eradicate this the new provision will allow Indian companies to a fresh new issue of shares or sale of existing holdings.

Rules and regulation:

All the required rules and regulation for listing an Indian company at abroad will be notified soon by the government. Once the provisions to the Foreign Exchange Management Act (FEMA) and Company Law Regulations are passed. Media noted Indian foreign exchange control laws do not require free capital convertibility, and there are other regulatory limits on capital account transactions.

Nevertheless, this proposal has been under discussion for a couple of years between stakeholders and regulators, especially regarding the selection of foreign jurisdiction. SEBI had indicated in 2018 that this route would be open only to the financially sound companies, so that the mechanism could not be used for exploitation. Sources indicated that final rules in this respect would probably be based on the Financial Action Task Force’s recommendations.

Finance Minister Nirmala Sitharaman noted, this provision of direct listing. If Indian public companies are not available over the globe but will be allowed in permissible jurisdictions.

Precautionary measures:

However, the approval will not come without any protections. The Indian government is likely to go along with the recommendations raised by SEBI in 2018. This requires a direct listing of Indian companies in abroad. It had suggested 10 overseas jurisdictions, including the US, UK, Japan, China, Hong Kong and South Korea for Indian companies to list. The selection was based on the fact that these jurisdictions are part of the Financial Action Task Force (FATF), The Anti-Money Laundering Global Task Force (GTF-AML) and IOSCO.

SEBI also suggested that this provision should be available only for financially stable . This will aid to minimize frauds and manipulation. The firms with a paid-up capital of 10% will be allowed to list in the foreign market.

The provision of capital raising in an overseas market can also have an impact on the Indian currency market. Since the flow of overseas capital can put pressure on the Indian currency and may lead to volatility. RBI and SEBI can be jointly involved to check this.

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Commodities, Markets - June 28, 2022

Why do commodities Exchange Exist?

What are commodities Exchange?

The Commodities exchange allows traders to buy and sell goods. It includes both simple goods and manufacturing goods. The function of Commodity exchange is to provide a centralized marketplace where commodity producers and commercials can directly sell to those who want them for consumption or manufacturing. Commodity future exchange connects buyers and sellers easily. It helps businesses to enhance while there is a buyer for every seller. It makes the economy much more efficient with standardized prices for a commodity. Commodities are into two broad categories: hard and soft. Hard commodities consist of natural resources that must be mined or extracted, whereas soft commodities are agricultural products such as grain, meat, dairy, and livestock. Investors use these commodities to diversify their portfolios. Commodities are considered a risky investment class.
It is affected by many uncertainties and risks, such as epidemics, natural calamities, or other unpredictable circumstances. Individuals can invest in commodities through futures, options, exchange-traded funds, and contracts. There are six major commodity trading exchanges in India:

1. Multi Commodity Exchange (MCX)
2. National Commodity and Derivatives Exchange (NCDEX)
3. National Multi Commodity Exchange (NMCE)
4. Indian Commodity Exchange (ICEX)
5. Ace Derivatives Exchange (ACE)
6. The Universal Commodity Exchange (UCX)

Types of commodities:

1. Metals Commodities – This includes the trading of precious metals such as gold, silver, copper, and platinum. Gold is traded by investors as it is the safest way to diversify their portfolios against any uncertainties like inflation or currency devaluation.

2. Energy – This includes commodities like gasoline, natural gas, heating oil, and crude oil. Normally, oil price fluctuates due to the increasing demand for energy commodities. However, individuals entering energy commodities should be aware of economic reforms, a shift in production by OPEC, and new advances in technology.

3. Agriculture commodities – Commodities such as soya, rice, wheat, coffee, corn, cocoa, sugar, and cotton come under agriculture commodities. These commodities are bought by the wholesaler or a firm that uses them as a raw material.

4. Meat and livestock – This includes commodities like feeder cattle, pork bellies, lean hogs, and live cattle. The trading of livestock is not popular in India. It is mostly done in the US, UK, China, etc.

Ways to Invest:

A derivative Contract (Financial Instrument) is a contract between two parties for deriving value from any underlying assets. As the Price of underlying assets changes, the value of underlying assets also fluctuates.

The types of Derivative Contracts:

Options – Options are contracts where the buyer has a right to buy or sell a particular security at a predefined price. It is commonly known as a strike price. However, they don’t have obligation to buy or execute the option. One who executes the contract is known as the option writer.
Forwards – It has an obligation in the contract, which is unstandardized and not traded on stock exchanges. Forwards are available over the counter only and cannot de traded directly on market. However, forwards can be customized according to the parties involved. Forwards contract has third party risk. There are chances that the other party defaults in the payment or delivery of the product are not done as there is no regulatory party involved.
Futures – This is the same as forwards, but futures are standardized and allow holders to sell or buy security at a specified price and date. Futures can directly be traded on market.
Swaps – It involves swapping of obligations between the two parties depending on cash flows which are depended on the rate of interest and agreed upon at the period while entering into the contract. Here, one cash flow is fixed and the other depends on the market interest rate and usually, these rates are swapped.

The best way to trade in commodities is through futures contracts. An agreement to buy or sell a commodity in the future agreed on a date at a pre-determined price.

Role of commodity market:

1. Food security – Farmers can use the future market more effectively by selling at a future price by fixing the price. This will ensure that they are not susceptible to future fluctuation in price. Hence, food security can be achieved using the commodity market. Many times commodity markets help farmers in hedging the commodity which is prone to uncertainties and risk.
2. Agricultural ecosystem – Substantial amount of food grains are lost in the transmission process. The commodity market helps farmers, brokers, middlemen, and customers. If the food gains are not stored properly they get attacked by rats and pests.
3. Aggregation – Currently, the middleman acts as an aggregator which is not a transparent mechanism. So, commodity exchange provides an organized and guaranteed mechanism for all the essential commodities.
4. Hedging and risk – One important role and function of the commodity market is to hedge and distribute the risk in the market.
5. Speculative excess – The commodity market absorbs speculative excess risk in the market, especially in the spot market. It helps various retail investors to participate in the new asset class.

What are Gold funds and what are the benefits?

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Shaping the Future: Key Trends in the Hospitality Industry

Business, Economy - May 22, 2020

Airport Authority of India provides new air travel guidelines.

Airport Authority of India provides new air travel guidelines.

The Minister of Civil Aviation has declared that domestic air operations will start in a structured format starting from 25th May. The Airport Authority of India (AAI) has released new guidance until the nation resumes air services. Stringent sanitation standards will be implemented at all airports while the airplanes restart all around the country. These instructions are provided by the Ministry of Aviation and is to be practiced by travelers beginning from 25th May during their journeys.

Guidelines to be followed:

1. Social distancing and minimal contact is to be maintained.

2. Sensitive individuals such as people with sickness, elderly, and pregnant women, are recommended to avoid traveling. A traveller should not travel if he/she is in containment zone. The traveller should not travel if he/she is tested positive for COVID-19. Passengers will have to wear a mask throughout the journey.

3. If a traveller is not allowed to air travel, he / she will be liable for penal charges.

4. Travellers should give the following declarations:

-I / we are not staying in a containment zone.

-I / we are not experiencing any coughing, fever or breathing difficulties.

-I / we are was never under quarantine.

-If I / we develop any of those mentioned symptoms, should notify the health department immediately.

-I / we have not tested positive for COVID-19.

-I / we are eligible to travel as per the extant standards.

-If needed, I / we should make the mobile number accessible to the airline.

-I agree that if I were to fly by air without satisfying the eligibility criteria, I will be subject to penal charges.

5. Airlines need to ensure that the border pass is provided only when the passenger has confirmed the above declarations.

6. Passengers should arrive at the airport according to the updated arrival period of 2 hours before departure.

7. All departing travellers should be registered with the ‘Aarogya Setu’ App on their cell phones and reviewed by CISFI Airport workers at the entrance gate. Also, Aarogya Setu is not compulsory for children under 14 years of age. If the app is not available, the passenger will be required to go to the counter at which the Aarogya Setu app is available for download.

8. For travellers and employees travelling from and to the airport, either private cars or selected approved taxi services with limited seating is allowed. Travellers must get down from the vehicles with mask, gloves and necessary documents.

9. Travelers will have to walk via the Thermal Scanning Zone at a particular location in the city side before accessing the terminals.

10. Travellers should test their temperature and show the status of the Aarogya Setu application to the employees at the entrance gate.

11. Traveller to display his / her identity, the boarding pass at the entry gate to the CIFS workers

12. The traveller should be given an electronic receipt.

13. Travellers to complete check-in and luggage drop at least 60 minutes prior to departure.

14. Passengers should follow the directions suggested by the authorities to remove all metals on the body to enable security checking.

15. To make sure that social distancing is followed, marks such as triangles, squares will be given across the cart selection of luggage to facilitate social distancing.

16. Limitation on baggage – Only one check-in luggage and one cabin suitcase is allowed.

17. Passengers should be responsible for their own protection by following the health and security directions. Hand sanitizers for travellers and airport personnel at different locations will be made available by the airport operators.

18. While waiting in the security hold zone, travellers must maintain social distancing and sanitization.

19. Usage of trolleys in departure and arrival field will not be allowed. Although, specifying a few travellers needing a trolley for a genuine reason, will be given on request.

20. Airport authorities should make sufficient provisions for the sanitation of luggages.

21. Plexiglass will be used for security test counters and check-in.

22. Passenger seats at airports should be configured in such a way as to preserve the social distancing measures between passengers by utilizing chairs and covering certain seats which will not be utilized, with appropriate identifying marks/tapes.

23. In compliance with the guidelines provided by the Ministry of Health and Family Welfare (MOHFW), all airport personnels managing the airplane should be supplied with hand sanitizers and other necessary safety equipment like face masks, etc.

24. Passengers will need to do a web check-in and then will get a boarding pass.

25. Travellers will have to download the luggage label, print it, and affix that to the luggage in a significant place. If the traveller is unable to print the luggage tag, he/she must note the PNR and the traveller name on paper and affix it to a strong string.

26. Magazines and newspapers will not be made available in lounges and terminal buildings.

27. Wherever feasible, open-air ventilation in airports will be used rather than air conditioning systems.

28. Chairs labelled “Not for use” should not be used

29. Travellers should be aware of social distancing and preserve hygiene when going to F&B, retail stores, etc.

30. The whole terminal disinfection with legally registered disinfectants should be done by spraying disinfectants or by physical cleanings at periodic times.

31. The airport operator must maintain cleanliness and hygiene in all buildings, nooks and corners and public spaces, like restrooms, railings, tables, shelves, escalators, walls, ramps, trolleys etc., to be completed prior the flight arrives and after the last person exits the terminal.

32. Travellers must dispose of all bio hazardous items such as used gloves, masks, tissues, etc, in a yellow disposable bin situated at a convenient place in the airport.

33. Travellers should be pay attention to the different communication materials shown at the airport on the numerous safety advisories related to pre-boarding and during flight precautions.

34. Throughout the aircraft, passengers will observe hygiene and sanitation. Face-to-face engagement should be limited.

35. Travellers to minimize the use of toilets and avoid any activity which is not necessary.

36. No queuing outside the bathroom and one person to aid the kids and seniors citizens will be allowed.

37. No food will be served on the airplane. Bottle of water will be made accessible in the galley area or on the chair.

38. When the traveller is feeling uneasy or suffering from renal distress, it should be immediately notified to the crew.

39. The airlines will disembark passengers in a sequential manner.

40. Trolley to be used sparingly in the arrival area.

41. Travellers to wait in the luggage hold area until the luggage arrives in batches.

42. Passenger travel will not be allowed to leave the transit zone.

43. Daily disinfection should be done at the pick-up taxi and drop off locations outside the airports.

44. Upon arrival at the airport, travellers must comply with the safety guidelines specified by the destination state / Union Terriority.

FPIs exit markets after economic package announcement.

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Supriya Lifescience Ltd Q1 FY23 Result Updates.

Economy, Market News, Markets - May 19, 2020

FPIs exit markets after economic package announcement.

FPIs exit markets after economic package announcement.

On 12th May 2020, Prime Minister Narendra Modi announced an economic package of ₹ 20 lakh crore under government’s Atma Nirbhar Bharat Abhiyan / Self-Reliant India. The national movement of Atma Nirbhar Bharat Abhiyan / Self-Reliant India initiated by Prime Minister Narendra Modi is to support India’s all small and local business. He emphasized on slogan viz. #VOCALFORLOCAL.

Scamper among FPIs:

Approximately 40% of FPI sales in cash and derivatives sectors were observed in second week of May. The data derived from stock exchange indicates some break up figures such as FPI’s sold stock worth ₹6,486 crore. Additionally, sales worth ₹2,869 crore and ₹737 crore were observed in index futures and stock futures respectively. These sales was executed in just 4 trading days in the second week of May 2020. The data further states that since the announcement of economic booster package of worth ₹20 lakh crore, FPIs buying activity has drastically declined.

Decline in NIFTY:

On 13th May 2020, Nifty observed its peak of 9,584 within the span of 2 days. Nifty abruptly fell by 534 points and on 15th May 2020 Nifty observed its low of 9,050. In the same time period, it has also been observed that there is a sudden decline in Nifty Bank. Nifty Bank dropped 1,440 points from 20,122 to 18,663.

If we compare between Indian stock market and global stock market, the sudden change is only observed in Indian stock market and not in global stock market. The Nifty and Nifty Bank indices are two of India’s largest traded derivatives, and both of these derivatives are struggling under pressure from FPI’s as they are selling their investment in a massive quantity since the announcement of economic booster package by Indian government. In second week of May 2020, the indices decreased by 5.6% and 7.15% respectively, compared to their respective highs.

Support from DII’s:

During the same period i.e. in the second week of May, there was no support from Domestic institutional investors (DIIs). Purchases from domestic institutional investors (DIIs) was also low, and they purchased stocks of only ₹1,896 crore in cash. There are several rules and restrictions on the companies who are doing business of mutual funds & insurance on derivative speculations. Therefore, they are virtually absent in the field of futures and options.

Massive sales by FPIs:

The media report noted that FPIs have been selling massively since the second week of May 2020 and have been slamming markets after the announcement of the financial package by Indian Government. In addition, the figures apart from second week of May 2020, the FPI’s net figures appear to be clearly positive, this is a bit misleading.

Loopholes while extracting data:

Exchanges will not adapt these facts when foreign companies sell shares and FPIs buy them This was the case on 7th May 2020, when a massive block of shares entered the market of Hindustan Unilever (HUL). Shares of HUL worth ₹26,300 crore were sold by international investors on 7th May 2020. The FPI’s bought a total worth ₹19,000 crore from the market in the same period, while DIIs bought stocks from the market in the same period worth ₹3,818 crore. Nearly all FPI’s and DIIs purchases were in HUL for that particular period.

When these ₹19,000 crore investments are removed from Hindustan Unilever shares, then FPI’s were net sellers in the cash and future segments. Sellers and major buyers of HUL were both international entities, but only those registered as FPIs are required to report their numbers to Securities and Exchange Board of India (SEBI) and stock exchanges viz. NSE & BSE. Meanwhile, net buying by DIIs in the month of May 2020 is just ₹1,056 crore after adjusting the activity of Hindustan Unilever.

Corporate bond funds: A mix of risks and returns.

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Tips Industries generated a net profit of Rs. 17.17 cr. in Q1 FY23.

Economy - May 18, 2020

Fifth tranche of economic package covers MNREGA, Health and more.

Fifth tranche of economic package covers MNREGA, Health and more.

Finance Minister Nirmala Sitharaman, on May 17, 2020 announced the 5th and concluding tranche of the economic package. In order to make India “Atma Nirbhar”, the last tranche of the economic package emphasizes on land, labour, liquidity and laws. The focus is on 7 things including, Health and Education related sector, Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), businesses and COVID-19, ease of doing business, decriminalization of Companies Act, Public Sector Enterprises- related points and State Governments and related resources.

The 1st tranche was announced on May 13, 2020 following the 2nd, 3rd and 4th tranche on May 14, 15 and 16. All the 5 tranches sums up the detailed guidelines and strategy of allocation of total fund as announced earlier by Prime Minister Narendra Modi. This pool of the Rs 20 lakh crore package, that amounts to 10 percent of our GDP aims to help Nation survive the economic crisis that has arisen due to cross country lockdowns laid to curtail spread of COVID-19.

Let’s have a look at the 7 points as aired on May 17, 2020:

Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA):

The government has planned to increase the budgeted estimate by Rs 40,000 crore. Previously, the budgeted estimate for the same was Rs 61,000 crore. This increase is estimated to generate 300 crore additional labour days of work. Also, this will aid in provision of work for the returning migrants.

Health and Education Sector:

Since public expenditure on health will increase, Government has planned to ramp up investments in building health and wellness centers both in rural and urban regions. Further, every district will have special blocks in hospitals for treatment of infectious diseases.

The Finance minister announced about the technology driven education via “Diksha”. The government is soon planning to launch PM e-VIDYA programme. This programme will provide digital and online access to education. Also, there will be one earmarked channel on television catering to students of class 1 to 12. Adding further, the substantial use of community radio and podcasts will be made. Special online content will be made available for visually and hearing impaired students.

Further, top 100 universities have been granted authorization to start online courses by May 30. Apart from this, an initiative under the name “Manodarpan” will be launched soon. This programme will help in extending socio-psychological support to students and families regarding mental and emotional well-being.

Insolvency and Bankruptcy Code (IBC):

Under this, the debts related to corona cirus pandemic will be excluded from defaults under IBC. No new proceeding for insolvency to be carried out for the next one year. Special provisions will be notified under section 240-A of IBC for MSMEs. In order to insulate MSMEs, the minimum threshold limit to initiate proceedings of insolvency has been raised to Rs 1 crore from previous limit of Rs 1 lakh.

Companies Act:

Announcement as to decriminalize the companies Act was made in order to reduce the burden of criminal courts and the National Company Law Tribunal (NCLT).

Ease of Doing Business:

Public companies can go for direct listing of securities in permitted foreign jurisdictions. Private companies will be considered as unlisted even if they have debentures in the stock exchanges.

Public sector enterprise policy:

Under this policy, the government thinks that it is high time that India sees private sector participation in all the sectors while public sector still plays important role. Therefore, the government has planned to broadly categorize sectors into strategic and others. In strategic sector there will be minimum one to four public sector enterprises in order to safe guard public interest and others will be privatized or merged Whereas in other sectors, public sector enterprise will be privatized. List of the same will soon be notified.

State Governments:

The Central Government is facing steep fall in revenues in the same manner State Governments are also facing huge revenue losses. Around Rs 46,038 crore was delegated as tax revenue from the Centre to State Governments. Adding to this, nearly Rs 12,000 crore was also distributed on timely basis. In spite the borrowing limits of states raised, states have only borrowed 14 percent of the authorized limit, 86 percent still remains unused as of date. Government has now raised the borrowing limit of Gross State Domestic Product (GSDP) from 3 percent to 5 percent. This will result in availability of additional borrowing amount of Rs 4.28 lakh crore for the states.

Market update 18th May 2020. SENSEX crashes 1,069 points on a volatile day.

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Autos - May 18, 2020

Auto sector seeks special package to save industry from Covid-19 crisis

Auto sector seeks special package to save industry from Covid-19 crisis

A few automobile producers have supported the decision of PM Narendra Modi to inject Rs.20 lakh crore financial package announced on 12th May, 2020. Most of them still want to see a particular stimulus program aimed at reviving the automobile sector. They is seeking to recover from the outbreak of the COVID-19 pandemic and the recession that has struck the sector from last year. The overwhelming reaction will go a long road ahead towards strengthening the Indian economy and preparing it for post-pandemic revival. It will also help business initiatives to get millions of Indian people back to work safely and mitigate the spread of the COVID-19.

Problems faced by the auto sector:

It is recognized that the automobile industry is a big pillar of the Make in India and contributes a significant part of the country’s GDP. The sector often provides job opportunities for thousands of individuals and utilizes an unaccented supply chain. As indicated by Society of Indian Automobile Manufacturers (SIAM), the Indian automotive sector registered a decrease of more than 18 percent in sales of 2,15,48,494 units and a decline of 15 percent in vehicle yield to 2,63,62,284 units in FY20. CV revenue over this time fell by 28.75 percent to 7,17,688 units year-on-year. A release from SIAM reported that the automobile industry was bleeding Rs. 2,300 Crore regularly. The economic plan will also provide funding for the auto sector which will be of great benefit.

While these factories now have the freedom to restart dealerships and begin manufacturing again, they remain handicapped as they can not run at 100 percent. The staff at such plants has declined dramatically as a consequence of the COVID-19 pandemic. Without a doubt, the last few months have been tough for not just the people of India, but also the international automotive sector. Though, the Minister for Road Transport and Highways, Nitin Gadkari, has assured India of a policy of scrapping cars, there is no guarantee as to the other demands raised by the sector so far. Having been economically ineffective over the last few months, particularly in April, when auto firms have for the first time reported zero sales in history. This economic stimulus package could be the only thing expected to get the business back to its original state.

Relief:

The package revealed by the Prime Minister will arrive as a significant boost to the auto sector, particularly during this lock down. However, with this recent plan, events may be turned around shortly. Many automotive manufactures and regulators of the auto sector have come forward in favor of the proposal. Economic assistance will be required to restore what remains of the automotive sector following the pandemic.

Package:

The Rs 20 Lakh Crore package involves the Reserve Bank’s liquidity initiatives and interest rate cuts, as well as the Rs 1.7 Lakh Crore Free Food Grains to Poor and cash to Poor Women declared in March. Although, the March stimulus amounted to 0.8% of GDP, RBI’s interest rate reductions and liquidity enhancing initiatives amounted to 3.2% of GDP. The package will concentrate on laws, liquidity, property, labour. It would include various sectors, including the agricultural industry, the middle class, small and medium-sized businesses, and employees. Self-reliant India will stand on five pillars viz demand, technology-driven system, vibrant demography, infrastructure, and economy. The package accounts for around 10 % of GDP, rendering it one of the highest in the country. India has been on the scientific front in the war against Covid-19.

According to SIAM President Rajan Wadhera, this will indeed provide the right stimulus for the market and rise of our economy. The automotive sector is a solid base of Make in India with major contributions to GDP and employment, and it relies on its supply chain. The package can give tax cuts to small scale and medium-sized organizations and open doors for improving local interest. Anand Mahindra, Chairman of the Mahindra Company, expressed gratitude toward Prime Minister Narendra Modi of a need to render India self-reliant and the 20 Lakh Crore financial package. The introduction of this package to the tune of 10 % of GDP can help all segments of the economy. Indian auto manufacturers have proposed multiple measures to restart the market, such as a temporary tax cut on automobiles, as well as proposals to scrap old vehicles.

What RERA timeline extension means for developers, homebuyers?

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Rail Vikas Nigam Ltd (RVNL) Q1FY24 results updates

Economy - May 17, 2020

Fourth tranche includes structural reforms in various sectors

Fourth tranche includes structural reforms in various sectors

In the 4th tranche of the economic package, Finance Minister Nirmala Sitharaman basically focuses on various sectors aiming towards growth stimulation and job creation. This time the utmost focus has been on sectors like coal, minerals, defence, aviation, power distribution, space and atomic energy sector. All the 4 tranches sums up the detailed guidelines and strategy of allocation of total fund as announced earlier by Prime Minister Narendra Modi. This pool of Rs 20 lakh crore package, that amounts to 10 percent of our GDP aims to help the nation survive the economic crisis that has risen due to cross country lockdowns laid to curtail spread of COVID-19.

Details of previous tranches:

The 1st tranche was announced on May 13, 2020 following the 2nd and 3rd tranche on May 14 and 15 respectively. The announcements in 3 tranches summed up to Rs 10.73 lakh crore. Similarly, 4th tranche has been aired on May 16, 2020 providing further details regarding the balance amount of fund dispersal strategy.

The 20 lakh crore package includes the amounts of earlier announcements made in March. Like the fund of Rs 1.7 lakh crore to take care of provision of free food grain and cash to poor for three months period, and monetary policy announced by RBI amounting to Rs 5.6 lakh crore. The First 3 tranches focuses on MSMEs, NBFCs, relief measures for poor migrant workers, street vendors, small businesses and farmers and agricultural sector.

Major announcements and reform in policies:

Investment upgradation:

States will be ranked on investment attractiveness to compete for new investments for industrial upgradation and infrastructure facilities and expansion of its reach. Major sectors in radar are Coal, Minerals, Defence, Airspace, Power distribution, Space and Atomic Energy. Let us consider them one by one.

Coal:

Government removes its monopoly over coal and announces commercial mining of this black diamond. Emphasizing on reduction of imports and increasing “Atma Nirbharta”. She also announces that government will spend Rs. 50,000 crores to develop this sector and looks forward to transparent and healthy competition welcoming private sector participation. Adding further, she tells around 50 blocks of coal will be auctioned.

Minerals:

Similarly, she announces that the government is looking forward to enhance private investment in this sector. Open and transparent auctions will be held to offer around 500 mining blocks. In order to boost competition in Aluminium industry, joint auction will be arranged for Bauxite and coal ores.

Defence Production:

With the aim of reducing dependence and becoming Atma Nirbhar, Foreign Direct Investment (FDI) in manufacturing under automatic route has been raised to 74% as compared to 49% previously. For domestic production of imported spares, budget provisioning has been done. These steps are taken to enhance autonomy, accountability and improvise efficiency in this sector.

Civil Aviation:

Limitations levied on usage of Indian Air Space will be uplifted, in order to make flying more efficient. This liberation will earn an annual benefit of around Rs. 1,000 crores for this sector. She also mentions vision of building world-class airports via Public Private Partnerships (PPP). Adding further, she said Government is taking efforts to make our country an international hub for repairs and maintenance and overhaul for aircrafts under authorization of the Airports Authority of India. Untill now 3 out of 6 airports have been authorized for the same on PPP basis.

Power:

In accordance with the newly laid tariff policies, Government opens doors for private players to enter into power distribution sector in the Union Territories. This is supposed to strengthen, stabilize and improvise efficiency in this sector.

Stimulating investments:

A revival scheme amounting to Rs 8,100 crores, has been launched to stimulate social infrastructure. This will boost private sector investment in social infrastructure.

Space:

Government welcomes private sector to become part of journey in space, launching rockets, satellite services and others. This will stimulate private participation in this sector. The finance minister also mentions that the government is trying to liberalize geo-spatial policy.

Atomic Energy:

Government wishes to see new startups in the nuclear sector. For stimulating this vision, government will set up incubation centres. These incubators are termed as Technology Development cum Incubation Centres. The welcoming the PPP model will help in establishing research reactors and making of medical isotopes.

Lastly, the above mentioned strategic plans and reforms are built with a vision of creating opportunities for businesses and at the same time generating employment and contributing to economic upswing.

Third tranche of economic package to support farmers along with governance reforms

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Monsoon May Not Save Fertilizer Sector from Rising Costs

Economy - May 17, 2020

Third tranche of economic package to support farmers along with governance reforms

Third tranche of economic package to support farmers along with governance reforms

On 12th May 2020, Prime Minister Narendra Modi announced a Rs 20 lakh crore stimulus package to tackle the impact of COVID-19. This special economic package is equivalent to about 10 percent of India’s GDP. It includes all the previous packages announced by the government and the Reserve bank of India with new reforms and packages to make the country self-reliant. New governance includes supply chain mend for agriculture. Other factors include simple and clear laws, rational tax system, a strong financial system and capable human resources. However, the main focus of the packages are labour, land, liquidity and laws and sectors such as micro, small and medium enterprises, cottage industries and middle class working people.

On 13th and 14th May, the finance minister, Nirmala Sitharaman announced first and second the tranches of Rs 20 lakh crore package. First tranche includes funds for MSMEs, NBFCs, HFCs and MFIs while focus of second trance was migrant workers, street vendors, small farmers and the poor. She also announced that single ration card will be applied across the country and free ration will be given to those, who do not have ration card in the states they are currently residing. Announcement related to incentives for rental accommodation for migrant workers were also made.

Third tranche of 20 lakh crore announcement:

Total eleven measures were announced in the third tranche, to deal with the farm infrastructure, fisheries, agriculture and animal husbandry. However, some governance reforms were also included. Among these measures, eight measures are related to strengthening infrastructure and rest are related to governance and administrative reforms. Most of the announcement is related to the infrastructure because government wants to empower people and to make sure that India is assisted to stand up on its own through creation of skills and development in logistics sector.

During the last 2 months, the government has already announced relief packages for agriculture and dairy sector which includes Rs 74,300 crore purchase of MSP and under PM Kisan yojana and fasal bima yojana, Rs 18,700 crore and Rs 6,400 crore are transferred and claimed to farmers.

Animal husbandry:

Dairy sector is already facing losses and severe difficulty as demand for milk is reduced by 20-25% during the lock down. Around 560 lakh litres of milk per day is procured by overall co-operatives. Therefore, Rs 5,000 crore liquidity funds will be given to the farmers and around 2 crore farmers will be benefited. A new scheme will provide interest subvention at 2 percent per annum for 2020-21 and 2 percent for prompt service. The government has decided to give Rs 15,000 crore for overall dairy infrastructure.

Around 800 hectare of area is been allocated to develop the corridors of medical plant near River Ganga. Rs 4,000 crore is allocated for growing herbal and medical plants which will cover ten lakh hectares of land and provide income of nearly Rs 5,000 crore to farmers.

Marine and fisheries:

Under Pradhan Mantri Matsya Samapada yojana, Rs 20,000 crore will be given to fulfil the gap between value chains and for development of the marine and inland fisheries. This will give fish production of around 70 lakh tons and produce employment to 55 lakh people in next five years. Under national animal disease control programme, Rs 13,343 crore is given for vaccinations and for eradicating foot and mouth disease.

Schemes for micro food enterprises and bee-keepers:

Government has allocated Rs 10,000 crore fund for micro food enterprises which will benefit up to 2 lakh micro food enterprises and also promote PM’s vision “ vocal for local with global outreach”. For example, Telangana can have turmeric cluster and Bihar can have Makhana cluster. To increase the income of bee-keepers, government has implemented Rs 500 crore for development of infrastructure related to bee-keeping development and storage centers and other value added facilities such as post-harvest. Around 2 lakh beekeepers will be benefitted with this scheme.

Agri-infrastructure:

For Agri-infrastructure, the government has allocated Rs 1 lakh crore so that farm gate infrastructure such as cold chain is strengthened and Rs 500 crore for operation greens has implemented, for better price realisation for farmers. Government will amend essential commodities act and allow market force to deregulate price. The government will intervene if any emergency situation arise such as drastic hike in price or any other crisis.

Reforms:

Government will formulate law for farmers so that they have adequate choices to sell produce at attractive prices and ensure that there is barrier free interstate trade. Framework for e-trading agriculture products will also be made. To ensure that farmers are engaged in fair and transparent deal with processors, aggregators, large retailers and exporters government will facilitate legal framework which will include risk mitigation measures.

Goods exports decline in April

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Business, Economy - May 17, 2020

Disunion between goods may percolate to GST

Disunion between goods may percolate to GST

Actions under lock down:

COVID-19 has entirely changed the lifestyle of every human being. The emergence of this pandemic has incited the whole country to be under lockdown. This pandemic altered various activities like how we work, how we shop and notably physical communication with people. This pandemic enforced to maintain social distancing for a long stretch. Many businesses are impacted at an unparalleled scale which includes all the sectors of retail, wholesale, consumer markets and others.

Consumer are pilling stock of essential goods such as groceries, fruits & vegetables, packed food products, and hygiene products. As the country is under lockdown with several rules and regulation, the consumers are pilling the essential goods in massive quantities. In contrast, luxury goods and fashion merchandise observed an enormous decline in their sales in the past 2 months.

Due to plunging demand for discretionary goods, many sellers from this category are giving enormous discount like buy one get one, bulk discount, cash discounts, vouchers, coupons and many more. To clear up the spilled stock, many retail sellers from this category are also offering discounts on a large scale.

Effect in taxation:

The trend of consumer has wholly changed and consumption of essential goods on a large scale is observed. The consumption of non-essential goods have abruptly declined and this is likely to drain the taxation regime as well. As a result, tax concerns resulting in cost-saving steps, credit allocation, etc. will come into the new category of “must-haves” vis- a – vis routine enforcement and filing problems, which do not require considerable attention or time for management.

Accordingly, it will become crucial to examine these schemes from a Good and service tax (GST) perspective, i.e. if reversal of the input tax credit (ITC) is needed under GST on supplies produced under these schemes, particularly since issues are litigious. Moreover, GST impacts on marketing instruments such as vouchers, cash cards, discount coupons for example, timing of payment of taxes in the case of vouchers, whether those instruments qualify as actionable statements will also be important.

The chaos of perishable goods:

The perishable goods and goods with shelf life are impacted critically in this pandemic. If goods with a certain shelf life does not sell in a stipulated time period, then it turns to direct loss as the product turns into unusable. GST provides provision for reversal of Input tax credit (ITC) on destroyed goods. There is a provision in GST that if goods are destroyed or expired, then there will be credit reversal for such products. There is some dispute, as to whether ITC reversal is only needed for goods that have been completely written off from account books or even for goods that have been partially written off from account books.

The rise of a new online world:

Media reports noted, due to this pandemic they observed huge traffic in consumption of goods and services through e-commerce websites in the month of March and April 2020. Considering the ongoing situation and lasting effect of this pandemic, the retailers need to shift their business model to online up to some extent. Doing offline business may not fetch hefty gains, as maximum consumers will shift to online shopping as a precautionary method and to maintain social distancing. The maximum category of products like groceries, fruits & vegetables, hygiene products and many more will be consumed through online buying.

All the GST compliance related to online business will be properly managed by online businesses. The demand for consumer goods are at peak whereas manufacturers and retailers can’t make undue advantage by increasing price of essential goods and services as the government has kept all these activities under surveillance. They should be mindful of the anti-profit provisions pursuant to GST rules, which require the passing of any benefit obtained due to rate reduction or additional ITC to consumers by way of a commensurate price reduction.

Doing legal business:

It is significant for all businesses that they should follow all rules and regulation protocols and ensure legal practice in their business. Furthermore, businesses in consumer markets need to evaluate and enforce cash management steps such as deferred tax liability by deferred invoice issuance period, flexible vendor payment terms for reverse charge transactions, and timely refund filing. It will be hard to predict how events for the consumer business sector will unfold in the future. Nevertheless, some pro-activity review and introduction of tax reforms may help not only to save money but also to prevent needless tax conflicts and exposures.

Mutual funds make limited borrowing from RBI’s credit lines

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