Tuesday, November 2, 2010

Thursday, June 24, 2010

ASEAN offers on services poor - India

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Thursday, June 17, 2010

Help us try and solve our car parking problems

Increase in purchasing power has resulted in an exponential growth in demand for, and the use of LCVs & Two-wheelers. This growth has caused an equal demand for parking spaces. Close to eight lakh cars are sold in India every year, growing at an average of 10% p.a. Each year five million two-wheelers are being added at an astounding 15%. Though the growth reflects the growing wealth of Indians, both material and monetary, cities are rapidly losing comfortable space in which to move about. What’s more, the problem has now shifted into tier II and tier III towns where infrastructure development is still weak.

Advanced Strategies (www.astrategies.com/astrategies.pdf) and the Abhyas program (www.abhyas.org) have engaged summer interns Gagan Kumar Singh and Santosh Manshiramani of the Sadhana Centre for Management Leadership & Development, Pune (www.scmld.org - beyond conventional management programs) to work on a research paper.

Responding to these questions will be your contribution to our ongoing efforts to create a collaborative dialogue, and combine efforts to find solutions that meet the increasing need of parking, as well as to formulate policies and regulations for the creation and use of parking space. These questions are targeted at residents of Mumbai and Pune, as these cities are being covered for the study at present. Thank you for your kind co-operation.

Click on link http://tinyurl.com/2vy77co

Saturday, May 8, 2010

Private Equity & Venture Capital

1.    Equity capital that is not quoted on a public exchange.
2.    Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity.
3.    Capital for private equity is raised from retail and institutional investors, and can be used to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet. 
4.    The majority of private equity consists of institutional investors and accredited investors who can commit large sums of money for long periods of time.
5.    Private equity investments often demand long holding periods to allow for a turnaround of a distressed company or a liquidity event such as an IPO or sale to a public company.
6.    Among the most common investment strategies in private equity include leveraged buyouts (LBO), venture capital, growth capital, distressed investments and mezzanine capital.

1.    Leveraged Buyouts (LBO):
1.      The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition.
2.      Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company.
3.      The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital.
2.    Venture Capital:
1.      Financing for new businesses. In other words, money provided by investors to startup firms and small businesses with perceived, long-term growth potential.
2.      This is a very important source of funding for startups that do not have access to capital markets.
3.      It typically entails high risk for the investor, but it has the potential for above-average returns.
3.    Growth Capital:
1.      It is equity investments, most often minority investments, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a major acquisition without a change of control of the business.
2.      Growth capital can also be used to, effect a restructuring of a company's balance sheet, particularly to reduce the amount of leverage (or debt) the company has on its balance sheet.
4.    Distressed Investments:
1.      Distressed or Special Situation is a broad category referring to investments in equity or debt securities of financially stressed companies.
2.      The "distressed" category encompasses two broad sub-strategies including:
1.      "Distressed-to-Control" or "Loan-to-Own" strategies where the investor acquires debt securities in the hopes of emerging from a corporate restructuring in control of the company's equity.
2.      "Special Situations" or "Turnaround" strategies where an investor will provide debt and equity investments, often "rescue financing" to companies undergoing operational or financial challenges.
3.      In addition to these private equity strategies, hedge funds employ a variety of distressed investment strategies including the active trading of loans and bonds issued by distressed companies.
5.    Mezzanine Capital:
1.      A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies.
2.      Mezzanine financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full.
3.      It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies.
4.      Since mezzanine financing is usually provided to the borrower very quickly with little due diligence on the part of the lender and little or no collateral on the part of the borrower, this type of financing is aggressively priced with the lender seeking a return in the 20-30% range.
6.    Secondary Investments:
1.      Secondary investments refer to investments made in existing private equity assets.
2.      These transactions can involve the sale of private equity fund interests or portfolios of direct investments in privately held companies through the purchase of these investments from existing institutional investors.
3.      Secondary investments provide institutional investors with the ability to improve vintage diversification, particularly for investors that are new to the asset class.
4.      Often investments in secondary are made through third party fund vehicle, structured similar to a fund of funds although many large institutional investors have purchased private equity fund interests through secondary transactions.
5.      Sellers of private equity fund investments sell not only the investments in the fund but also their remaining unfunded commitments to the funds.

1.    Business in India operates with a considerable degree of freedom from political interference.
2.    Accounting systems are similar to US GAAP and there exists a large pool of well-trained managers.
3.    India’s robust public markets provide a reliable route to exit.
4.    Indian law prevents companies borrowing in order to make acquisitions prohibits the leveraged buyout deals. If the deal is structured outside India there can be a certain amount of leverage, but this is likely to come in at around 20 percent rather than 60 or 70.
5.    Most are family-owned and although their shareholding founders are usually willing to exchange equity for cash, they also generally wish to retain control. Thus, the majority of Private Equity deals are minority investments rather than buyouts.

1.    In the second quarter of 2009 global funds accounted for 32 percent of the market. Funds based in India and Asia Pacific comprise 42 percent and 25 percent respectively.[i]
2.    Forty-eight percent of India-focused funds operate as overseas limited liability partnerships. [ii]
3.    Current transactions have much higher levels of equity than previously seen, new types of structures are introduced, but the underlying theme remains that raising new debt for deals is challenging.
4.    The stock market though recovered is more volatile which means that high returns on exit are no longer guaranteed.

As on Dec 31, 2009 (Rs. in Crore)
Sectors of Economy
Information technology
Media/ Entertainment
Services Sector
Industrial Products
Real Estate
*includes Rs.9661 crore of FVCI investments in VCF
Source: SEBI

Friday, March 26, 2010

Maharashtra Budget 2010-11


1. An outlay of Rs 2,480 crore is proposed for 2010-11 for development of roads.

2. A sum of Rs 520 crore has been proposed for the improvement of 1,500 kms of road under the NABARD-backed scheme

3. Under the Jawaharlal Nehru urban renewal mission, Maharashtra will construct 75,000 dwelling units in 2010-11 and an outlay of Rs 1,240 crore and Rs 300 crore have been proposed as the Centre’s and the state’s share, respectively.

4. Four laning of Mumbai-Goa national highway to be completed by 2014.

5. A special project of Rs 189 crore to construct roads in the Naxal-infested Gadchiroli and Gondia districts has been okayed by the Centre.

6. A sum of Rs 7,366 crore has been earmarked for completing the on-going projects in the irrigation sector, and a special provision of Rs 650 crore has been set aside, following the governor’s suggestion, to remove the physical backlog in Amravati, Akola, Washim, Buldhana and Ratnagiri.

Power and Energy

1. 500 MW from Khaparkheda thermal power station and 1,000 MW from the Bhusawal station will be available

2. The state government has recently sanctioned the extension of the Uran gas project which will add about 1,200 MW power in the next three years.

3. Land acquisition work for the Rs 8,508 crore Dondaicha thermal power project, which is expected to generate 1,320 MW power, is underway and the project will be on stream by 2014-15.

4. Vidarbha will get a massive Rs 3,248 crore in 2010-11 for its irrigation projects, while Marathwada’s share will be Rs 973 crore.

5. A provision of Rs 1,840 crore has been proposed in 2010-11 for the urban infrastructure development scheme

6. Thermal power projects set up in Dhule and Ratnagiri


1. There are plans to make a massive investment in the agro-marketing sector through a slew of new schemes. With the assistance of the international fund for agricultural development, the ‘Convergence of Agricultural Interventions’ project is being implemented in the six Vidarbha districts at an investment of Rs 593 crore.

2. To strengthen and modernize the basic infrastructure of agricultural marketing

in the state, the World Bank assisted ‘Maharashtra Agriculture Competitiveness

Project’ and the Asian Development Bank assisted “Agri -business

3. Terminal market complexes will be set up at Mumbai, Nagpur, Nashik and modern agro-market projects at Basmatnagar, in Hingoli district.


1. Medical colleges at Raigad and Nandurbar districts Computer labs in 2,500 secondary schools

2. A Rs 300 crore plan to set up computer laboratories in 2,500 secondary schools in the next five years.

3. Rs 5 crore for a proposed performing arts university in Pune.

4. Rs. 35 crore has been proposed for the year 2010-11.

5. During the year 2010-11 as pilot project Government intends to start sub-centres at Satara, Nanded, Jalna and Raigad Districts. For this purpose provision of Rs. 2 crore is proposed.


1. Rs 494 cr for developing places of pilgrimage.

2. The state government has introduced a slew of projects for Maharashtra’s popular pilgrim centres — a master plan of Rs 315 crore for the fabled Bhavani Mata shrine at Tuljapur; Rs 681 crore for the development of Dehu, Alandi, Pandharpur, Bhandaradongar and Palkhi Tal.


1. 1% VAT on price of flats One-time motor vehicle tax on autos and black-and-yellow taxis.

2. Relief in luxury tax to small hotels and lodges. No tax on daily rent up to Rs 750 Concessional VAT (5%) for raisins, currants and tea continues.

3. Tax exemption on solar lanterns, camphor, dhoop, cotton-seed oil cake

1.A knowledge corridor between Mumbai and Pune to provide employment opportunities

2. A golden quadrilateral between Mumbai-Pune-Nashik-Aurangabad

3. Rs 960-crore project for the four-laning of Talegoan-Chakan-Shikrapur-Nhavra-Chaufula road to reduce traffic pressure in Pune
4. A university for performing arts
5. Rs 1 crore for the Pune International Film Festival

Friday, March 5, 2010

What's in the budget 2010 for MSME's ?

What's in the budget 2010 for MSME's ?

1. Extension of existing interest subvention of 2% for one more year for exports covering handicrafts, carpets, handlooms and small and medium enterprises.
2. High Level Council on Micro and Small Enterprises to monitor the implementation of the recommendations of High-Level Task Force constituted by Prime Minister.
1. Increase sub-limit to 6 percent from 4.9 percent
2. Shortage of credit
3. Need for a focused procurement policy
4. Prompt payment of MSME dues
5. Additional finances from SIDBI
6. Simplification of labour laws to prevent inspector raj
7. Formulation of a one-time settlement policy to strengthen the MSME industries
8. Remove bottlenecks in their development.
3. The corpus for Micro-Finance Development and Equity Fund doubled to Rs. 400 crore in 2010-11.
4. National Social Security Fund for unorganized sector workers to be set up with an initial allocation of Rs. 1000 crore. This fund will support schemes for weavers, toddy tappers, rickshaw pullers, bidi workers etc.
5. Limits for turnover over which accounts need to be audited enhanced to Rs. 60 lakh for businesses and to Rs. 15 lakh for professions.
6. Limit of turnover for the purse of presumptive taxation of small businesses enhanced to Rs. 60 lakh.
7. To facilitate the conversion of small companies into Limited Liability Partnerships, transfer of assets as a result of such conversion not to be subject to capital gains tax.
8. To ease the cash flow position for small-scale manufacturers, they would be permitted to take full credit of Central Excise duty paid on capital goods in a single installment in the year of their receipt. Secondly, they would be permitted to pay Central Excise duty on a quarterly, rather than monthly basis.
9. Reduction in central excise duty on corrugated boxes and cartons from 8% to 4%.
10. Enhancement of weighted deduction on payments made to National Laboratories, research associations, colleges, universities and other institutions, for scientific research from 125% to 175%.

Thursday, March 4, 2010

Needed,a tax policy to support small businesses

Needed,a tax policy to support small businesses
Economic Times 04-Mar-10 pg 17

AS PER estimates,the Small and Medium enterprises (SMEs) contribute about 8% of our countrys GDP and provide employment to more than 6-crore people.Therefore,it is important to provide necessary tax and policy support to the individuals/SMEs to ensure overall inclusive growth.This also has been one of the underlying themes of the current years Budget.In this context,the following proposals are worth noting.


Under the existing provisions of the Income-Tax Act,1961 (the Act),every person carrying on business is required to get his accounts audited if the total sales,turnover or gross receipts in business exceed Rs 40 lakh in a particular financial year.Similarly,a person carrying on a profession is required to get his accounts audited if the gross receipts in profession exceed Rs 10 lakh.

There has been a long pending demand to increase theses limits as they have lost their utility and not kept pace with the changing business reality.In the current years Budget,it is proposed to increase the aforesaid threshold limit to Rs 60 lakh for business and to Rs 15 lakh for profession.This would help reduce compliance burden of small businesses and professionals.


Currently,an individual,a Hindu undivided family or a partnership firm,engaged in any business other than the business of plying,hiring or leasing goods carriages and whose total turnover or gross receipts in a financial year does not exceed Rs 40 lakh,could avail of the concessional treatment under the presumptive basis of income taxation.In such case,a sum equal to eight percentage of the total turnover or gross receipts of such business in a financial year is deemed to be the profits and gains of such business chargeable to tax.It is now proposed to raise this threshold limit to Rs 60 lakh.

The key advantages are that the tax payer is not required to maintain detailed books of accounts.The records prepared by it are used as the basis for determining the total turnover/gross receipts.Further,the tax payer is not required to pay advance tax instalments,which otherwise are required to be paid on a periodic basis as prescribed under the Act.This helps in better management of their funds during the year.


It is proposed that Small Scale Industrial (SSI) units can avail full Cenvat credit on capital goods in one instalment in the year of receipt of such goods.Further,they can pay excise duty on quarterly basis instead of monthly basis.


It is proposed that,in case of a company whose total sales,turnover or gross receipts in business do not exceed Rs 60 lakh in any of the preceding three financial years,and it converts itself into a Limited Liability Partnership (LLP),then such conversion would not be regarded as a transfer and hence,not subject to capital gains tax.It is pertinent to note that certain conditions need to be satisfied for availing of this benefit,else taxability would get triggered.
It is proposed to allow carry forward and set off of business loss and unabsorbed depreciation to the successor LLP.Other key advantages post conversion into LLP includes exemption from levy of minimum alternate tax (MAT) and dividend distribution tax.Thus,small companies may consider these beneficial provisions.


Of course,small businesses require much more support from different stake holders like ease of availability of finance,access to cost-effective technology,effective lower tax cost,etc.Nevertheless,the proposed changes are moves in the right direction from a tax policy perspective and would help reduce compliance and administrative costs for small businesses.