BQuick On March 6: Top 10 News Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. No Relief In Ongoing Angel Tax Cases
The tax department’s much-awaited notification on angel tax is out and it doesn’t bring good news for startups facing scrutiny.
- The uproar by the startup community had prompted the Ministry of Commerce to approve a more lenient framework for startups last month.
- The Department for Promotion of Industry and Internal Trade had specified certain conditions for startups which, if met, would exempt them from the application of Section 56(2)(viib). And businesses were keenly awaiting the stance of the tax department on the issue.
- The department has now stated that Section 56(2)(viib) will not apply to amounts received by a company for issue of shares that exceed face value of such shares.
- This relief will be available to startups that fulfill the eligibility criteria laid down by the DPIIT.
But the benefit of the relief offered by the tax department will be limited. Here’s why.
2. Rafale Documents Stolen: Government
The government on Wednesday told the Supreme Court that documents related to the Rafale fighter jet deal have been stolen from the Defence Ministry and threatened The Hindu newspaper with the Official Secrets Act for publishing articles based on them.
- Those who put documents on the Rafale deal in the public domain are guilty under the Act as also contempt of court, Attorney General KK Venugopal said before a three-judge bench headed by Chief Justice Ranjan Gogoi.
- While publishing articles based on stolen documents amounts to violation of the Official Secrets Act, entailing maximum punishment of up to 14 years, the contempt law attracts six months jail as also a fine of Rs 2,000.
- Unruffled by the Centre's stand, Hindu publishing group Chairman N Ram said nobody would get any information from the newspaper on the confidential sources who provided the documents.
- The bench, also including Justices SK Kaul and KM Joseph, was hearing a batch of petitions seeking a review of its Dec. 14 verdict dismissing all the pleas against the deal procured by India from France.
- Former Union ministers Yashwant Sinha and Arun Shourie and advocate Prashant Bhushan, who had jointly filed the petition, alleged that the Centre suppressed crucial facts when the apex court decided to dismiss the batch of PILs.
The bench will now resume hearing the matter on March 14 at 3 p.m.
3. Infosys To Cut Margin Forecast Again?
Analysts expect Infosys Ltd. to lower margin guidance for the second straight year as it continues to invest in digital services, increases salaries to retain talent and hires more employees overseas.
- India’s second-largest software services provider may cut its operating margin guidance to 21-23 percent for the financial year starting April, Nomura said in a research note.
- Motilal Oswal expects it to report margin forecast between 21.5 percent and 23 percent during the period.
- Infosys projected operating margin to be in the range of 22-24 percent for the financial year ending March 2019.
- That’s lower than the 23-25 percent forecast in the preceding fiscal.
Here’s why Infosys is expected to lower its margin forecast for the next financial year.
4. Nifty Closes Above 11,000
Indian equity benchmarks ended higher for the third consecutive trading session.
- The S&P BSE Sensex ended 0.53 percent or nearly 200 points higher at 36,636.
- The NSE Nifty 50 ended above 11,000 for the first time in a month.
- Nine out of 11 sectoral gauges compiled by NSE advanced, led by the NSE Nifty Pharma Index’s 1.1 percent rally.
- On the flipside, the NSE Nifty Media Index was the top sectoral loser, down 1.3 percent.
Follow the day’s trading action here.
5. The DHFL Reroute
Dewan Housing Finance Corporation Ltd.’s independent audit firm T. P. Ostwal & Associates said the money disbursed for the purpose of slum rehabilitation projects may have found its way to promoter entity—Kyta Advisors Pvt. Ltd., previously known as Wadhawan Realtors Pvt. Ltd.
- “Our examination of available financial statements of Darshan Developers indicates that the shareholding has indeed undergone a change during the period of our review,” the chartered accountant firm said.
- “It is highly probable that certain amounts lent to the four companies may have been used to purchase shares of Darshan Developers aggregating to Rs 1,424.16 crore from Kyta Advisors and other instruments worth Rs 299.28 crore (total Rs 1,723.44 crore).”
- In January, investigative portal Cobrapost had alleged a Rs 31,000-crore scam by the promoters of the non-banking finance company.
- Kyta Advisors was wholly-owned by the promoters of DHFL—Kapil Wadhawan, Dheeraj Wadhawan and Aruna Wadhawan—till March 2015, according to its filings with the Ministry of Corporate Affairs which were reviewed by BloombergQuint.
The auditor said there have been some shortcomings in due diligence related to loan sanctions.
6. SEBI Moves To Reduce Liquid Fund 'Subsidy'
The decision to further tighten norms for valuing money market and debt securities will largely be relevant for liquid funds which are the biggest investors in near-term instruments, writes IDFC AMC's Suyash Choudhary.
- The intent seems to be to increase the element of price discovery via the open market for the net asset value of such funds.
- Liquid funds are less of investment products and more of cash management products.
- There are three elements of ‘subsidy’ embedded in the product which now get altered.
7. Tata Group’s Silver Bullet!
Tata Group should treat the speed bump at Jaguar Land Rover as a timely memo: The $102 billion salt-to-software conglomerate can no longer put off listing its closely held parent, writes Bloomberg Opinion's Andy Mukherjee.
- Jaguar Land Rover is burning cash on electric-vehicle technology just as the double whammy of a Chinese auto slowdown and Brexit threatens margins and sales.
- At average cash burn rates of $882 million a quarter, the British carmaker may struggle to make it through another year.
- Had holding company Tata Sons Ltd. been a publicly traded firm, it could have raised equity relatively easily to help tide JLR over.
It’s time N. Chandrasekaran put an IPO plan into top gear.
8. Modi's $27-Billion Bet On Women
To see how India’s women are becoming a powerful political force ahead of next month’s election, look no further than Neelam Kumari and her bright yellow van.
- The 35-year-old living in one of India’s poorest states bought the vehicle with a Rs 6 lakh loan from a government programme, allowing her to earn Rs 14,000 rupees a month ferrying children to a nearby school.
- She gives the credit—and plans to give her vote—to Prime Minister Narendra Modi.
- Kumari is among 5.63 crore rural women—equivalent to the population of Italy—who have received small loans worth about $27 billion since Modi took office in 2014.
- They could help swing the next election in May.
Modi sees women as a key demographic and BJP believes the women will reward them for welfare schemes.
9. Gloomy Global Outlook
The global economy is suffering more than expected from trade tensions and political uncertainty which are clouding prospects particularly in Europe, according to a gloomy report from the OECD.
- As these are the organization’s first forecasts in almost four months, it’s partly playing catch-up with developments since then.
- In that period, little has gone right for the world’s biggest economies: Weakness in the euro area and China are proving more persistent, trade growth has slowed sharply and uncertainty over Brexit has continued.
- The OECD’s numbers are more downbeat than the IMF’s for many economies.
Here’s why global expansion is continuing to lose momentum.
10. India’s Minting Millionaires!
The number of ultra-wealthy individuals is expected to rise the most in India compared with other Asian peers in the next five years.
- Ultra-high net worth individuals—people with net assets of $30 million or more, excluding primary residence—is expected to grow 39 percent to 2,697 in India between 2018 and 2023, according to a report by property consultant Knight Frank.
- That compares with growth of 38 percent in the Philippines and 35 percent in China during the period.
- “This is primarily because of the general confidence in growth of the Indian economy, hovering at 7-7.5 percent. This is a big growth number.
Find out where India’s ultra-rich are investing.