Business & Finance - Current Affairs for June, 2017

Thomas Cook India Group, the holding company of Fairfax in India, has acquired five destination management companies of Kuoni Group for ₹125 crore.

The acquisition will deliver greater synergies and growth opportunities across inbound, outbound, MICE and corporate travel businesses.

In April, the company had entered into an agreement with Kuoni to acquire these businesses located in Asia, Australia, Middle East, Africa and Americas and the deal closed on June 29, 2017.

The acquisition will enable Thomas Cook India Group to expand its global footprint to 21 countries in 4 continents.

These companies include Asian Trails in Asia Pacific, Allied T Pro in North America, Desert Adventures in Middle East, ATM in Australia and Private Safaris across Southern and Eastern Africa.

With the addition of 17 new countries through the acquisition, Thomas Cook India Group’s travel business network had expanded significantly adding 1,000 crore to the company’s top line and ₹25 crore to profit before tax (PBT).

Prior to this acquisition, the Group’s Thomas Cook (India), SOTC Travel, TCI-SITA and Kuoni Hong Kong had a network spanning 4 countries which include India, Sri Lanka, Mauritius and Hong Kong.

Post acquisition, The Thomas Cook India Group’s employee strength has gone up to 6,500 people in 21 countries. It has a combined revenue of ₹8,700 crore.

The acquisition of a significant part of Kuoni’s Global Destination Management network represents an important milestone for a rapidly growing Thomas Cook India Group.

Travis Kalanick, the Chief Executive Officer of Uber announced his resignation from the post on 21 June 2017.

Kalanick reportedly took the hard decision after a group of major Uber investors demanded his immediate resignation.

Travis Kalanick will, however, stay on Uber’s board of directors and control a majority of its voting shares.

The ride-hailing company has been hit by a barrage of controversy and scandals over the past year.

The company’s troubles included widespread allegations of sexual harassment, a video showing Travis Kalanick engaging in a heated argument with a driver, a major lawsuit claiming intellectual property theft from Google’s Waymo self-driving car unit and uproar over an executive obtaining the medical records of a woman who was raped by a driver in India.

The company also reportedly fired more than 20 employees recently as a result of an investigation into its work culture.

Travis Kalanick: Know More

• Born on 6 August 1976, he is an American computer programmer and businessman.
• He co-founded two a peer-to-peer file sharing service companies between 1998 and 2007, Scour Exchange and Red Swoosh, both of which didn’t do very well.
• While Scour Exchange filed for bankruptcy to protect itself from a lawsuit, Red Swoosh was sold to another American technology company.
• He co-founded UBER, the transportation network company in 2009.
• In 2014, his name was featured on the Forbes list of the 400 richest Americans at 190th position, with an estimated net worth of US$6.3 billion.
• In December 2016, he along with CEOs of other leading American companies was appointed as an economic advisor on Trump’s Strategy and Policy Forum.

The Central Board of Direct Taxes (CBDT) on 15 June 2017 notified the Rule 10CB for operationalising the provisions of Secondary Adjustment under Section 92CE of Income Tax (IT) Act, 1961.

The provision prescribes the time limit of 90 days for repatriation of excess money. This time limit will begin when the primary adjustments exceeding INR 1 crore made in the year 2017-18 or later, attains finality.

In cases where the transfer pricing order is appealed against by the taxpayer, the time limit for repatriation will begin only after the appeal is finalised by the appellate authority.

The provision also prescribe the rate of interest for computing the income in case of failure to repatriate the excess money within the prescribed time limit.

Separate rates of interest are also prescribed for international transactions denominated in Indian currency and in foreign currency.

The rates of interest are applicable on an annual basis. The Income-tax Act, 1961 was inserted with the section 92CE through Finance Act, 2017.

The provisions of the same will come into effect from 1 April 2018 to provide for secondary adjustment by attributing excess money lying in the hands of the associated enterprise to make the actual allocation of funds.

The provision applies to the primary adjustments exceeding INR 1 crore made in respect of Assessment Year 2017-18 onwards.

Switzerland has ratified automatic exchange of financial account information with India and 40 other countries.

This will facilitate Switzerland to share information about suspected black money with India and other 40 nations.

According to the Swiss Federal Council, the implementation of the exchange sharing agreement has been planned for 2018 and hence the first set of data is likely to be exchanged in 2019.

The Swiss Federal Council is a top governing body of Switzerland. The exact date of automatic information exchange would be notified by the Swiss Federal Council soon as there were no procedural delays for the implementation.

However, the Swiss banks have started seeking new safeguards so as to protect the details of their clients against misuse that could expose them to crimes such as kidnapping or blackmail.

So, the Swiss Council had stated that they will prepare a situation report before the first exchange of data.

As per the process, it will be ascertained whether the states and territories concerned have put in place a standard, especially those concerning confidentiality and data security.

It will be assessed whether the democratic processes in these states and territories are robust or not and whether corruption is high or not etc.

Switzerland has long been perceived as one of the safest havens for black money stashed abroad by Indians.

The participation of Switzerland which is the world’s largest home for overseas wealth in the information sharing agreement would be a major boost in ending tax avoidance.

As a step towards fighting black money stashed abroad, ‘Joint Declaration‘ for implementation of Automatic Exchange of Information (AEOI) was signed between India and Switzerland on November 2016.

Switzerland agreed for the introduction of the AEOI (Automatic Exchange of information) on tax matters under the guidance of G20, OECD and other global organisations.

AEOI: Know More

• AEOI, based on Common Reporting Standards, when implemented fully would put in place a system wherein bulk taxpayer information will be sent periodically from the source country of income to the country of residence of taxpayer.
• It would enable India to get access to information virtually from almost all the countries in the world including offshore financial centres.
• Switzerland has said the AEOI will be implemented based on the Multilateral Competent Authority Agreement (MCAA) on the Automatic Exchange of Financial Account Information (AEOI).
• The MCAA is based on the international standard for the exchange of information developed by the OECD.
• India joined the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information on 3rd June, 2015.
• According to the OECD, MCAA is a multilateral framework agreement that provides a standardised and efficient mechanism to facilitate the automatic exchange of information and avoids the need for the conclusion of several bilateral agreements.
• Black money is that amount of money which is liable for taxation, but on which tax is not paid or evaded. It is usually received in cash from underground economic activity and, as such, is not taxed.

Telecom giant Verizon has acquired Yahoo’s core business for $4.48bn (£3.51m), thus ending Yahoo’s two-decade long run as an independent company.

Verizon is the No.1 wireless operator in the US. Salient Highlights Verizon will combine Yahoo with AOL which was bought by it two years ago to establish a venture called Oath.

The Oath is a division in Verizon’s Media and Telematics organisation. Oath owns more than 50 brands such as HuffPost, TechCrunch and Tumblr.

With the acquisition, Yahoo’s chief executive Marissa Mayer has resigned.

Verizon has not indicated how it proposes to use the Yahoo brand which is used by millions of people worldwide.

But it has stated that it will keep the names Yahoo Sports, Yahoo Finance, Yahoo Mail and more.

Yahoo’s acquisition brings to an end a long decline of its market value which peaked at $125 billion in 2000.

The remainder of Yahoo which is not acquired by Verizon will change its name to Altaba Inc. It will become a holding company with 15.5% stakes in Chinese Internet giant Alibaba and a 35.5% holding in Yahoo Japan Corp.

It will begin trading under the ticker symbol “AABA.” Thomas McInerney, a Yahoo board member will be made as Altaba’s chief executive officer.

SEBI has come up with comprehensive guidelines asking the Commodity derivatives exchanges to compulsorily set up investor protection and service funds.

The commodity exchanges should maintain separate bank accounts for maintaining the corpus of the IPF and the ISF.

The Investor Service Fund (ISF) is aimed at providing minimum facilities at various investor service centres. At the initial stage, the commodity exchange has to contribute at least Rs 10 lakh towards ISF.

Subsequently, the commodity exchanges are required to transfer 1% of the turnover fees charged from its members on monthly basis towards the ISF.

The Investor Protection Fund (IPF) of a Commodity Exchange should have a maximum of five trustees.

Out of these, three trustees should be public interest directors and a representative from Sebi-recognised investor association.

In addition, the commodity exchange’s compliance officer should be made part of the trust.

The IPF will comprise of all penalties levied and collected by the commodity exchanges except for the settlement related penalties.

The exchanges will have the freedom to fix suitable compensation limits in consultation with the IPF trust.

The exchanges can make use of the IPF corpus for investor education and other awareness programmes.

The trust will be responsible for the supervision of utilisation of interest on IPF. SEBI is the statutory regulator for the securities market in India established in 1988.

It was given statutory powers through the SEBI Act, 1992. SEBI’s headquarters is in Mumbai, Maharashtra.

SEBI’s mandate is to protect the interests of investors in securities, promote the development of securities market and to regulate the securities market.

SEBI Functions: Know More

• Regulating stock exchanges and other securities markets;
• Registering and regulating the working of intermediaries who are associated with securities markets in any manner;
• Registering and regulating the working of venture capital funds and collective investment schemes including mutual funds; promoting and regulating self-regulatory organizations and prohibiting fraudulent and unfair trade practices relating to securities markets.

The Reserve Bank of India has kept repo rate unchanged at 6.25% in its second bi-monthly monetary policy review.

Reverse Repo rate has been kept unchanged at 6%.

The RBI has cut the Statutory Liquidity Ratio (SLR) by 50 basis points to 20%. RBI has projected the headline inflation in the range of 2.0-3.5% in the first half of 2017-18 and 3.5-4.5% in the second half.

According to the central bank, the implementation of GST is not expected to have material impact on overall inflation. It has observed that the 7th Pay Commission allowances, geo political, financial risk pose upside risk to inflation.

RBI has reduced the growth projection for the current fiscal to 7.3% from 7.4%. The monetary policy decision has been taken by the six-member monetary policy committee (MPC).

The RBI has also revised its target for gross value added (GVA) by 10 basis points to 7.3%.

Statutory Liquidity Ratio/SLR: Know More

• SLR is the portion of bank deposits that have to be invested in government bonds.
• Components of SLR include cash in hand, gold owned by the bank, balance with RBI, Net balance in current account & Investment in Government securities.
• SLR has to be maintained at the close of business on every day.

Vijaya Bank is going to develop 100 digital villages spread across various states of the country.

The step is being undertaken by the bank as a part of its initiative to promote digital banking among the rural population.

Vijaya Bank is the only public sector financial institution to develop digital villages with a focus on rural areas and it has already developed five villages including the one in Guntur district.

The project of 100 digital villages will be inaugurated within a month.

The digital villages will comprise services such as internet, Wi-Fi connectivity, mobile payment facilities, ATM cards and online banking among others.

The bank would also be running a door-to-door campaign to educate the villagers. It will also open bank accounts to all the eligible villagers including children and encourage them to make transactions digitally.

The bank’s digital villages project was developed even before the announcement of demonetisation.

Already, the bank has developed 5 villages into Digital Villages. Out of the 100, Andhra Pradesh will be getting 10 digital villages.

Vijaya Bank: Know More

• Vijaya Bank is a public sector bank with its corporate office in Bangalore.
• As on March 31 2017, the business worth of the bank is estimated to be ?229833 Cr. The bank has around 1900 branches across the country.
• It boasts of about 13 lakh mobile banking users and 8 lakh Internet banking users. It is the first public sector bank to take up such initiative.
• The bank is further working on financing the metro project of the city.

The Income Tax (IT) Department on 31 May 2017 announced that taxpayers can now link their Aadhaar Card number with their Permanent Account Number (PAN) by using an SMS-based facility.

The two numbers can be linked by sending an SMS to either 567678 or 56161. Moreover, people can also use the I-T Department’s e-filing website to link the two numbers.

Aadhaar can also be linked into PAN database by quoting Aadhaar in PAN application form for new PAN allotment or by quoting Aadhaar in change request form used for reprint of PAN card.

After verification from the UIDAI (Unique Identification Authority of India), the linking will be confirmed.

In case of any minor mismatch in Aadhaar name provided by the applicant, Aadhaar OTP (one-time password) will be required.

The OTP will be sent to the mobile number registered in the Aadhaar database. The linking of Aadhaar number and PAN is a means to seamlessly avail income tax facilities online.

The I-T Department earlier this month launched an e-filing website to link Aadhaar number with PAN, a mandatory procedure for filing I-T returns now.

The e-filing website added a link on its homepage where people must enter their PAN numbers, Aadhaar numbers and names.

The Union Government, under the Finance Act, 2017, made it mandatory for taxpayers to quote Aadhaar number or the enrolment number of Aadhaar application form for filing I-T returns.

The government also made Aadhaar Card mandatory for applying for PAN with effect from July 2017.

The Asian Development Bank (ADB) and the Punjab National Bank (PNB) on 30th May signed a $100 million loan - to be guaranteed by the Government of India - that will finance large solar rooftop systems on industrial and commercial buildings throughout India.

The PNB will use the ADB funds to make further loans to various developers and end users to install rooftop solar systems.

This is the first tranche loan of the $500 million multi tranche finance facility Solar Rooftop Investment Program (SRIP) approved by ADB in 2016.

The financing includes $330 million from ADB’s ordinary capital resources and $170 million from the multi donor Clean Technology Fund (CTF) administered by ADB.

The first tranche loan of $100 million would be financed entirely from the CTF.

With a sharp drop in the price of solar panels, India has a huge potential to expand its use of solar rooftop technologies.

The program will contribute to the government’s plans to increase solar power generation capacity, and also help India meet the carbon emission reduction target in line with its commitment at the recent global climate change agreement.

India’s solar rooftop market is expanding fast with an estimated total capacity potential of 124GW.

The project is aligned with the goal set by Government of India to increase the country’s solar rooftop capacity by 40 GW by 2022, and would also contribute to Government’s efforts to promote solar energy solutions as affordable and sustainable energy sources.

The entire Solar Rooftop Investment Program will cost $1 billion, inclusive of ADB $500 million funding, and the projects financed under the program will install solar rooftop system of around 1 GW capacity.

This will contribute to the climate change goal of reducing greenhouse gas emissions by about 11 million tons of carbon dioxide equivalent over the typical 25-year lifetime of rooftop solar systems.