Category: Finance

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Finance

Mukesh Ambani’s RIL Announces Acquisition of Future Group’s Retail, Wholesale, Logistics and Warehousing Businesses for Rs 24,713 Crore

Reliance Market. (Photo Credit: Facebook)
Reliance Market. (Photo Credit: Facebook)

Mumbai, August 29: Reliance Retail Ventures Ltd. (RRVL), a subsidiary of Mukesh Ambani’s Reliance Industries Limited, on Saturday announced the decision to acquire Future Group’s retail, wholesale, logistics and warehousing businesses for Rs 24,713 crore. The latest deal between RRVL and Kishore Biyani’s Future Group has been carried on a slump sale basis.

Informing about the latest development, RIL said in a statement, “Reliance Retail Ventures Ltd (RRVL), subsidiary of Reliance Industries Ltd will acquire the retail and wholesale business and the logistics and warehousing business from the Future Group as going concerns on a slump sale basis for lumpsum aggregate consideration of INR 24,713 crore.”

With the latest acquisition, Reliance Retail will now have the access of Future Group’s Big Bazaar, FBB, Easyday, Central, and Foodhall formats. The acquisition will enable RRVL to acquire Future Group’s over 1,800 stores spread over 420 cities in India. It is to be known that Future Group houses leading retail formats, including supermarket chain Big Bazaar, upmarket food stores Foodhall and bargain clothing chain Brand Factory.

Under the acquisition, Future Group would merge certain companies carrying on the aforesaid businesses into Future Enterprises Limited (FEL) of RRVL. Ahead of selling retail assets to the retail subsidiary of RIL, Future Retail Ltd, Future Consumer, Future Lifestyle Fashions, Future Supply Chain and Future Market Networks will be merged into FEL. Following this, all the retail and wholesale undertaking of Future Group will be transferred to Reliance Retail and Fashion Lifestyle Limited (RRFLL).

RRVL Director Isha Ambani said, “With this transaction, we are pleased to provide a home to the renowned formats and brands of Future Group as well as preserve its business ecosystem, which has played an important role in the evolution of modern retail in India.”

Adding more, she said, “We hope to continue the growth momentum of the retail industry with our unique model of active collaboration with small merchants and kiranas as well as large consumer brands. We are committed to continue providing value to our consumers across the country.”

Apart from the retail and wholesale transfer to RRFLL, the logistics and warehousing undertaking is also being transferred to RRVL under the deal. RRFLL is proposing to invest Rs 1,200 crore in the preferential issue of equity shares of FEL to acquire 6.09 per cent of post-merger equity holding and Rs 400 crore in a preferential issue of equity warrants which, upon conversion and payment of balance 75 per cent of the issue price, adds the Reliance statement.

This is not the first time Future Group’s CEO Kishore Biyani sold his assets. Earlier on September 30, Future Group’s debt rose to Rs 12,778 crore. In 2012, Biyani sold his most valuable asset Pantaloons Retail to Aditya Birla group for Rs 1,600 crore after grappling with an equally heavy debt of Rs 12,000 crore. He had also sold Future Capital to Warburg Pincus for Rs 4,250 crore.

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Finance MSME Process & Business Expansion

Jio Mart, Facebook Tie-Up Aims to Bring 25 Million SMEs Online in Near Future

Facebook and JIO Mart (Photo Credit: pixabay and Facebook)
Facebook and JIO Mart (Photo Credit: pixabay and Facebook)

Mumbai, August 29: With an aim to help millions of COVID-19 affected Kirana stores in India, JIO Mart has tied up with Facebook to bring 20-25 million small businesses online in the near future. The two business giants have joined hands to help these small and medium enterprises digitise their product catalogues through the use of instant messaging app Whatsapp.

Speaking at an event organised by Internet and Mobile Association of India (IAMAI), Facebook India’s vice-president and managing director Ajit Mohan said, as quoted by Business Standard, “Our excitement is with connecting the dots between WhatsApp and Jio with the objective of helping millions of Kirana owners to digitise their product catalogues.”

Mohan was of the opinion that the move will fundamentally change the consumer behaviour in India and help in changing consumers change from opting to digital payments from physical cash. Citing a recent Boston Consulting Group-Facebook consumer behaviour study, Mohan stated that digitally-influenced purchases had gone up by 15-20 per cent for consumer goods brands like apparels, mobile phones and packaged goods. He added, as the daily quoted, “Video and virtual experiences will be at the heart of buying in the upcoming festive season.”

During the interaction, the Facebook-India MD said that the launch of Instagram’s Reels and WhatsApp video calls had reflected users’ changing consumer behaviour. It is to be known that Facebook recently acquired a 9.99 per cent stake in Jio Platforms, which houses many digital platforms like JioSaavn and Radisys. Also, Reliance’s fully-owned subsidiary is the biggest disruptor in the Indian telecom market as Jio.

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Finance

Open Digital Ecosystems Have Potential to Contribute Rs 35 Lakh Crore in India by 2030, Around 5.5% of the Projected GDP: Report

ODE (Representational Image) Photo Credits: mygov.in

Mumbai, August 28: Amid the coronavirus pandemic, Indian enterprises are increasingly working on their digital transformation. According to a joint report by investment firm Omidyar Network India and Boston Consulting Group, by 2030,  10 high potential national open digital ecosystems (NODEs) in sectors like health, agriculture and justice has the potential to create Rs 35 lakh crore in India by 2030.

This is expected to be around  5.5 per cent of the projected GDP in 2030, and also generate over Rs 15 lakh crore in savings.  Roopa Kudva, MD, Omidyar Network India said, “India has been a pioneer in the movement to build ‘digital highways.’ We were one of the first developing countries to have a population scale Digital ID initiative, and have built digital payments infrastructure such as UPI.”

The government was able to transfer Rs 37,000 crore directly to the bank accounts of 16 crore citizens using India’s digital infrastructure even during the pandemic. However, Kudva stressed that critical issues like privacy must be taken care of.  ODEs are defined as open and secure digital platforms that enable a community of actors to unlock transformative solutions for society, based on a robust governance framework.

The report envisioned three layers – digital platforms, community and governance – to transform service delivery through ‘Responsible ODEs’. The ODE approach suggests that the government should focus on creating the ‘digital commons’ and enable interoperability between siloed systems.

J Satyanarayana, Advisor, National Digital Health Mission and former chairperson, UIDAI said, “We need to raise the bar from systems-thinking to ecosystems-thinking. Digital ecosystems can evolve faster if we create the right environment, which includes open-standards-based architecture, data policies, collaborative design, and innovation.”

 

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Finance

GST Council Meet: Compensation Gap Stands at Rs 2.35 Lakh Crore for FY 2020-21 Amid COVID-19 Pandemic, Centre Places 2 Options Before States

41st GST council meeting. (Photo Credit: PIB)
41st GST council meeting. (Photo Credit: PIB)

New Delhi, August 27: Union Finance Minister Nirmala Sitharaman on Thursday chaired the 41st Goods and Services Tax Council Meeting. During the meeting, the council estimated the compensation gap at around Rs 2.35 lakh crore in GST collections due to COVID-19 pandemic.

Addressing the press conference, Revenue Secretary Ajay Bhushan Pandey stated that the total shortfall in collection of GST is estimated at Rs 2.35 lakh crore, out of which Rs 97,000 crore is on account of GST shortfall while the rest is due to COVID-19 pandemic.

Following this, the Union Finance Ministry gave the states seven days time to get back on filling the compensation gap of Rs 2.35 lakh crore and hinted brief GST Council meeting soon. The Union Ministry also gave two options for states to fill the compensation gap.

The first includes a special window which can be provided to the states, in consultation with the Reserve Bank of India, at a reasonable interest rate for the borrowing of Rs 97,000 crore. The amount can be repaid after five years (of GST implementation) ending 2022 from cess collection. While the second option is to borrow the entire Rs 2.35 lakh crore shortfall under the special window.

Apart from this, the Union Ministry stated that it will provide a further relaxation of 0.5 per cent in states’ borrowing limit under Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act, 2003). With this, states can choose to borrow more, beyond the expected compensation itself, since that is the injury caused by COVID-19.

Among other details, Union FM Revenue Secretary said that there was hardly any GST Collection in April and May. Adding more, he said, “Total GST compensation during April-July 2020 to be paid is Rs 1.5 lakh crores.” The Union Ministry informed that Centre released more than Rs 1.65 lakh crore as GST compensation to states for FY 2019-20, including Rs 13,806 crore for March.

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Finance Startup

Why Do Investors Invest in Startups? Here’s How Investors Add Value to Startups and Help Entrepreneurs

Startups and Investors (Photo Credits: Pexels)

For any business to flourish, there needs to be good investment and planning that will help the firm reach its target audience and go beyond! Here’s where the role of an investor comes into picture. An investor puts capital to use for long-term gains, while an entrepreneur seeks to generate profits by using those funds. Thus an investor is a crucial aspect for any startup, who typically generates returns by deploying capital. Investing in startups is a risky proposition. However, the low requirement for overhead capital along with high upside potential, makes it lucrative for the investors to put their bets on startups.

Basically, an investor is a person that allocates capital with the expectation of a future financial return or to gain an advantage. An investor can choose to invest in-equity, debt securities, real estate, currency, commodity, token, derivatives such as put and call options, futures, etc.

According to the official website of Startup India- startupindia.gov.in, investors particularly venture capitalists (VCs) add value to startups in a lot of ways. Some of them are listed below:

  1. Stakeholder Management: The investors are the ones who manage the company board and leadership to facilitate smooth operations of the startup. Moreover, their functional experience and domain knowledge of working and investing with startups imparts vision and direction to the company.
  2. Raise Funds: Investors are best guides for the startup as they help to raise subsequent rounds of funding on the basis of stage, maturity, sector focus etc. The investors aid in networking and connection for the founders to pitch their business to other investors.
  3. Recruiting The Best to Achieve Business Goals: Finding great talent and best-fit human capital is critical for startups, especially when it comes to recruiting senior executives to manage and drive business goals. The venture capitalists, with their extensive network can help bridge the talent gap by recruiting the right set of people at the right time.
  4. Proper Marketing of the product: The venture capitalists (VCs) assist with marketing strategy for your product/service.
  5. Merger and Acquisition (M&A) Activity: VCs have their eyes and ears open to merger and acquisition opportunities in the local entrepreneurial ecosystem to enable greater value addition to the business through inorganic growth.
  6. Organizational Restructuring:As a young startup grows to an established company, they help with the right organizational structuring and introduce processes to increase capital efficiency, lower costs and scale efficiently.
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Finance

Gold Price & Silver Rates Slip Ahead of Federal Reserve Chairman Jerome Powell’s Address

Gold jewellery (Photo Credits: Wallpaperflare)

Mumbai, August 27:Gold and silver rates slipped in the Indian market on Thursday. On MCX October gold futures were down 0.22 percent to Rs 51,665 per 10 gram. Silver futures fell to Rs 66,821 per kg.

The gold rate in the Indian market tracked a muted trend in the international spot prices as investors waited for Federal Reserve Chairman Jerome Powell’s address. The dollar index fell to a near one-week low against its rivals, making gold less expensive for holders of other currencies.

According to Good Returns website, the cost of 24 carat 10-gram was Rs 51,410 in Mumbai. The price of 10-gram 24-carat gold in Delhi, on the other hand, was at Rs 54,390. Customers can buy a 10-gram 24-carat gold in Kolkata at Rs 52,880.

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Finance

Delayed GST Payment: Govt Changes Interest Liability Rules, Interest to Be Charged on Net Tax Liability From September 1, 2020

GST Payment (Photo Credits: Unsplash)

New Delhi, August 26: The government on Wednesday changed the interest liability rules and said that the interest on delayed payment of Goods and Services Tax (GST) will be charged on net tax liability with effect from September 1. Reports inform that the industry had earlier this year raised concern over the directive of recovery of about Rs 46,000 crore of unpaid interest on delayed GST payment. The interest was charged on gross tax liability.

It was in March that the GST Council, which comprises of centre and state finance ministers, had decided in its 39th meeting that interest for delay in payment of GST to be charged on net tax liability with effect from July 1, 2017, and law would be amended retrospectively. However, on August 25, the Central Board of Indirect Taxes and Customs (CBIC) notified September 1, 2020, as the date from which interest would be charged on net tax liability.

Earlier, the CBIC had said that GST law permits interest calculation on delayed GST payment on the basis of gross tax liability. This position has been upheld in the Telangana High Court’s decision dated April 18, 2019. It must be noted that the net GST liability is arrived at after deducting input tax credit from gross GST liability. Therefore, calculating interest on gross GST liability increases the payout burden on businesses.

According to AMRG & Associates Senior Partner Rajat Mohan, this notification seems to be in disconnect with decisions of GST Council wherein it was assured to the taxpayers that the said benefit would be available retrospectively from July 1, 2017. “Prospective availability of this benefit would mean that millions of taxpayers may be looking at demand of interest for over 3 years from the date of GST implementation. Businesses are expected to approach the High Courts again on this unjustified and illegal demand of interest basis the ”principle of estoppel”, Mohan said.

Businesses, which are other than those under the composition scheme and quarterly return filers, registered under goods and services tax (GST) have to file returns (GSTR-1). They have to show tax liability by 11th of following month and pay taxes by filing GSTR-3B between 20-24 (due date varies according to the state in which businesses are registered). There have been cases where GST assessees have paid taxes after due date but did not pay the interest due on account of delayed payment.

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Finance

MSMEs in Maharashtra: State Government Mulling Relief Package For Lockdown-Hit Sector, Says Industries Minister Subhash Desai

MSME (Photo Credits:
Emergency Credit Facility Under ECLG for small businesses hiked from Rs 25 crore to Rs 50 crore by NCGTC. | Representational Image.

In what is believed to be a move to revive the Micro Small and Medium Enterprises (MSME) sector in Maharashtra, the state government is planning to provide some relief to the sector which has been severely impacted due to coronavirus lockdown. Maharashtra industries minister Subhash Desai was quoted in a TOI report saying that the MSME sector has asked for relief which includes interest subvention, relief in electricity duty and support for wages to be dispensed during the lockdown.

Desai said that the state government will consider providing a relief package to MSME sector after this issue comes up in the cabinet. The state has 20 lakh units registered as MSMEs, of which, six lakh are in the manufacturing sector, while the others are in service sector.

Indian Merchants Chamber president Rajiv Podar said that the biggest challenge for MSMEs is a fund crunch and a large chunk is blocked by PSUs. “In addition, 65% of MSMEs are below the investable grade and are therefore, not able to access the Centre’s relief package,” he said. Podar said the RBI’s interest rate transmission has not trickled to MSMEs adding that the government will need to stimulate demand in the economy.

Meanwhile, Anant Singhania, director of J K Organisation and CEO of J K Enterprises was quoted in the report saying that the Centre’s Atmanirbhar package catered more to MSMEs, who were already borrowers, to able to borrow more. He said the rest got excluded from the package and are in need of help. “The industrial sector on the whole, “faces a funding challenge since cash flow has come to a grinding halt,” said Singhania, adding that the industry is functioning at a sub-optimal level, facing a lack of demand and lack of workers.

Further, Singhania said that the governments had to give some assurance to the large number of migrants who left the cities so that they would return. “There also needs to be some monetary infusion in the market from the government and public sentiment needs to change on the ground,” he said.

Categories
Finance MSME Startup

Ministry of MSME Issues Circular Stating RBI’s Criteria for Classification of Enterprises Under MSMED Act, 2006, Here Are the Details

Ministry of MSME
Ministry of MSME (Photo Credit: PIB)

New Delhi, August 24: The Ministry of Micro, Small and Medium and Medium Enterprises on Monday issued the Reserve Bank of India’s notification for clarifications of small and medium and medium enterprises in the country. The re-classification of MSMEs have been done by the Union government under the Micro Small and Medium Enterprises Development Act, 2006 and is effective from July 1, 2020.

Under the Gazette notification, released by the RBI and reissued by Ministry of MSMEs, several criteria have been mentioned which contains the definition of Micro, Small and Medium Enterprises as per Section 7 (I) of the MSMED Act, 2006.

Definition of MSMEs under MSMED Act:

Micro Enterprise: A firm where the investment in plant and machinery or equipment does not exceed Rs 1 crore. Also, turnover does not exceed Rs 5 crore.

Small Enterprise: A firm where the investment in plant and machinery or equipment does not exceed Rs 10 crore. Also, turnover does not exceed Rs 50 crore.

Medium Enterprise: A firm where the investment in plant and machinery or equipment does not exceed Rs 50 crore. Also, turnover does not exceed Rs 250 crore.

Apart from this, the RBI notification mentioned composite criterion of investment and turnover for the classification of MSMEs. It says that if an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category.

The notification said that all the enterprises — whose Goods and Services Tax Identification Number (GSTIN) are listed against the
same Permanent Account Number (PAN) — will be collectively treated as one enterprise. Adding more, it said that the turnover and investment figures for all of those entities will be seen together and only the aggregate values will be considered for classification of MSMEs.

Calculation of Turnover:

For the calculation of investment in plant and machinery or equipment in an enterprise, RBI said that it will link Income Tax Return (ITR) of the previous years filed under the Income Tax Act, 1961. For new enterprises — whose ITR details are not available — the investment will be based on self-declaration of the promoter of the enterprise.

However, those relaxations will end after the March 31 of the financial year in which it files its first ITR. Also, purchase — invoice — the value of a plant and machinery or equipment will be taken into account excluding GST — on self-disclosure basis — if the enterprise is a new one without any ITR.

Among other details, RBI said that it will exclude exports of goods or services or both while calculating the turnover of any enterprise for MSMEs for classification. Adding more, RBI circular stated that information related with turnover and exports turnover for an enterprise will be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN. For an enterprise, who don’t have PAN, their turnover will be considered on a self-declaration basis for a period up to March 31, 2021. Following this, PAN and GSTIN will be mandatory.

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Finance Legal Startup

RBI Extends Deadline For Udyog Aadhaar Memorandum of MSME Registrations Till March 31, 2021

Reserve Bank of India
Reserve Bank of India. (Photo Credit: Facebook)

New Delhi, August 24: The Reserve Bank of India on Monday extended the validity of Entrepreneurs Memorandum (EM) Part II and Udyog Aadhaar Memorandum (UAMs) from June 30, 2020, to March 31, 2021. The RBI circular even stated that all the enterprises are required to register online and obtain ‘Udyam Registration Certificate’ to be classified as MSME as per new definition.

Issuing the circular, RBI said, “The existing Entrepreneurs Memorandum (EM) Part II and Udyog Aadhaar Memorandum (UAMs) of the MSMEs obtained till June 30, 2020, shall remain valid till March 31, 2021. Further, all enterprises registered till June 30, 2020, shall file new registration in the Udyam Registration Portal well before March 31, 2021.”

Adding more, the circular noted, “‘Udyam Registration Certificate’ issued on self-declaration basis for enterprises exempted from filing GSTR and/or ITR returns will be valid for the time being, up to March 31, 2021.”

Following this, the Ministry of MSME said that the registration for Udyog Aadhaar Memorandum website is up and the registrations are underway. The Ministry said that the need for a document for classification purpose has been dispensed for a paperless approach.

Here’s what MSME tweeted:

Apart from this, the Ministry of MSMEs said in its circular that classification and re-classification of MSMEs is the statutory responsibility of the government. These classifications are done as per the provisions of the MSMED Act, 2006. With this, all lenders will have to obtain ‘Udyam Registration Certificate’ from the entrepreneurs.